Since CAFE standards increase the price of larger, heavier vehicles, consumers are incentivized to drive them for longer than they otherwise would and to postpone purchasing a new vehicle. This decreases the supply of used cars and drives up their prices, which disproportionately harms lower-income households, who rely more on the used car market. The incentive to drive heavier, less fuel-efficient vehicles for longer also offsets some of the mileage gain from CAFE standards.
Mark Jacobsen and Arthur van Bentham find that a 1% increase in used car prices results in a 0.7% decrease in the number of used cars that are scrapped, meaning these cars are driven for longer than they would have been.[65] They estimate that a one-mpg increase in CAFE standards results in a $164 increase in the average price of a large used car and a $92 increase in the average price of a large used truck. When consumers drive older vehicles longer than they would otherwise would, it works against the purposes of CAFE standards. In fact, Jacobsen and van Bentham estimate that this price effect on used cars leads to a 16% reduction in the gasoline savings expected under the new footprint-based CAFE standards.[66]
Jacobsen also estimates that a one-mpg increase in CAFE standards costs consumers of all income levels approximately 0.5% of their income in the first year of the increase. By the 10th year following the increase, however, this cost becomes regressive, as the increase drives up the price of used cars. A one-mpg increase in CAFE standards costs consumers earning less than $25,000 per year 1.12% of their income, but only costs consumers earning more than $75,000 per year 0.41% of their income.[67] University of California-Berkley economist Lucas Davis and MIT economist Christopher Knittel also find that CAFE standards are effectively a regressive tax. They estimate that CAFE standards create a tax on new vehicles equal to about 0.7% of income for those in the bottom 10th of the income distribution. In contrast, the tax is only 0.25% of income for those in the upper 10th of the income distribution.[68] Thus, CAFE standards cost lower-income consumers a larger proportion of their income than higher-income consumers, even if higher-income consumers spend a larger dollar amount on purchasing a vehicle.