This is the product of regulatory arbitrage of the fuel economy standards coupled with consumers’ nearly complete indifference to the virtues of greater fuel economy.
The Corporate Average Fuel Economy standards for new cars will become increasingly stringent over the next few years under. The standards target different levels of fuel economy for different vehicles but the way those standards are structured encourages automakers to sell more trucks, crossovers, and sport utility vehicles (hereinafter, “trucks”) and fewer cars. First, the standards impose much lower fuel economy standards on trucks. Second, the standards impose higher fuel economy standards on smaller vehicles than larger ones (whether they are cars or trucks) based on their “footprints,” that is, the area between the car or truck’s tires.
The targeted average fuel economy by 2025 for different types of cars and trucks looks like this:
Compact car - 40 sq. ft. footprint (e.g. Honda Fit) 61.1 mpg
Midsize car - 46 sq. ft. footprint (e.g. Ford Fusion) 54.9 mpg
Full size car - 53 sq. ft. footprint (e.g., Chrysler 300) 48.0 mpg
Small SUV - 43 sq. ft. footprint (e.g. Ford Escape) 47.5 mpg
Midsize crossover - 49 sq. ft. footprint (e.g. Nissan Murano) 43.4 mpg
Minivan - 56 sq. ft. footprint (e.g. Toyota Sienna 39.2 mpg
Large pickup truck - 67 sq. ft. footprint (e.g. Chevy Silverado extended cab, 6.5 foot bed) 33.0 mpg
(source (pdf): https://www.gpo.gov/fdsys/pkg/FR-2012-10-15/pdf/2012-21972.pdf
For any given sq. footage of vehicle, the truck is allowed to get much worse fuel economy than a comparable car. For example, the 43 sq. ft. “small SUV” is targeting only 47.5 mpg, whereas the slightly bigger midsize car (46 sq. ft.) has to get 54.9 mpg, or 15.5% higher fuel economy. Since it’s much easier for Ford to hit the lower fuel economy target with the smaller vehicle, it’s easier and cheaper for Ford to make a compliant truck than a compliant car. If automakers don’t want to bother spending money on the most fuel-efficient technology, the easiest change to make is to stop offering cars altogether (or nearly so).
Today’s new vehicle consumers will pay more money for a crossover than they will for a comparable sedan that costs at least as much to build, so the crossovers are much more profitable. There aren’t enough die hard sedan buyers to compel Ford to keep making them. Ford will lose a few customers who absolutely insist on buying a sedan but the vast majority of those would-be Ford sedan buyers will just get tomorrow’s Ford crossovers instead. The sales that Ford does lose will be among their least profitable. Only American consumers are harmed because they will lose the choice of relatively affordable, economical vehicles.
When the EPA adopted the current CAFE standards, it said “Footprint based standards promote fuel economy and…are not expected to create incentives for manufacturers to change the size of their vehicles in order to comply with the standards.” This was a stupid and wrong prediction. I suspect the EPA was just repeating what automakers told them to get footprint based standards in the rules even if the automakers knew it was just going to lead to more higher-riding trucks with smaller footprints. Ironically, Volkswagen was one of the companies who objected to the footprint based standards because they knew it would push people to buy more trucks and fewer small cars. Volkswagen really only made small cars at the time. Once the standards were finalized, Volkswagen too started expanding its offerings of crossovers in the U.S.