- State & Local
- California
California has become the first state to adopt minimum energy-efficiency standards for replacement tires sold for passenger vehicles and light-duty trucks. The standards apply to covered tires manufactured on or after January 1, 2029, and become stricter on January 1, 2033. Covered tires must meet category-specific maximum rolling-resistance limits and a minimum wet-grip requirement, subject to specified exemptions.
The California Energy Commission (CEC) unanimously approved the regulations and expects nearly $1 billion annually in reduced gasoline and electricity expenditures by 2035, along with an annual reduction of approximately 2 million metric tons of carbon-dioxide-equivalent emissions.
The CEC estimates that the regulations will improve the overall energy efficiency of affected passenger and light-duty vehicles by approximately 2 percent. However, the regulation’s direct effect on global greenhouse gases would be extremely small. Its projected annual emissions reduction of 2 million metric tons of carbon dioxide equals approximately 1.9 percent of California passenger-vehicle emissions, about one-half of 1 percent of total California greenhouse-gas emissions, and roughly 0.004 percent of global annual greenhouse-gas emissions.
While some specialty tires are exempt, Discount Tire estimated that if the 2033 standards were applied to the tires it currently sells in California, roughly 70 percent of those options would not comply as presently designed and would therefore have to be redesigned, replaced, or removed from the California market.
The vote initially flew under the media radar. Although the CEC issued the required public notices and notified its tire-program mailing list, KCRA investigative reporter Ashley Zavala wrote that the commission did not separately alert reporters when public comment began or when the vote was scheduled. Zavala said she learned about the vote from legislators and a contact in the tire industry and was the only reporter attending the hearing.
After Zavala’s KCRA reporting, the story went viral, as opponents argued that California drivers could make their own choices among the many tires available rather than being required to purchase only those satisfying what regulators decide is in Californians’ best interest.
In justifying the regulation, the CEC suggests that it is close to a no-brainer:
The CEC conducted extensive laboratory testing on the most popular replacement tires in California, as well as reviewed best-in-class industry data from companies such as Discount Tire. This analysis confirms that the regulation is cost-effective and feasible, and that there will be no adverse tradeoffs with tire lifespan, safety, or other characteristics.
The CEC estimates that compliance will add approximately $1.50 per tire during the first phase. For the stricter 2033 standards, it estimates an additional $6.50 per passenger-car tire and $9.75 per light-truck tire.
Getting a grip on the market
But is this regulation as much of a no-brainer as the CEC suggests? Perhaps, but I am skeptical. One reason is because if fuel economy on tires satisfying the regulations was significantly better than other tires, if cost was about the same, and if other tire attributes, ranging from vehicle stability during a downpour to ride comfort, were all the same, then tires with inferior gas mileage would likely have already been pushed out of the marketplace. The processes of innovation and competition for customers mean that better products at the same price point take over the market.
To paraphrase Ralph Waldo Emerson, “Build a better tire and the world will beat a path to your door.” Moreover, those who beat a path to the door of innovators receive nearly all the gains of innovation. Nobel economics laureate Bill Nordhaus estimated that only about 2 percent of the value of innovation is captured by the innovators themselves. Ninety-eight percent goes to the rest of society.
The coexistence of tires with substantially different rolling resistance in the marketplace suggests possible tradeoffs involving performance, production cost, and/or price. I’ll begin with performance.
Some of the evidence cited by CEC staff in support of the regulation came from testing commissioned from Smithers and data supplied through Discount Tire’s proprietary Treadwell program. The commissioned testing examined new tires for rolling resistance and relative wet-grip braking performance. The wet-grip test used an instrumented trailer on wet asphalt, not a complete vehicle, and did not directly measure vehicle stopping distance. In its pooled comparison, the CEC found no clear linear relationship between rolling resistance and new-tire wet grip.
The Treadwell data published by the CEC included reported dry-stopping distances, worn-tire wet-stopping distances, and estimated mileage. The CEC found little linear relationship between rolling resistance and these Treadwell measures, although the staff report does not disclose enough about the proprietary testing and estimation procedures to permit full independent replication.
This evidence is valuable and supports the limited conclusion that low-rolling-resistance tires already on the market perform well in terms of measured new-tire wet-grip, dry-stopping, worn-wet-stopping, and estimated tread-life measures. However, the commissioned testing and published Treadwell comparisons did not examine every relevant tire characteristic. They did not directly test ride comfort, hydroplaning performance, cornering, full-vehicle emergency braking or handling maneuvers, structural durability, or noise.
While this information is encouraging regarding the performance of existing low-rolling-resistance tires, in my opinion, these comparisons by themselves do not support the CEC’s much broader conclusion that there will be “no adverse tradeoffs with tire lifespan, safety, or other characteristics.”
Costs and uncertainty
More importantly, these comparisons principally concern different tire models already on the market. They do not establish what will happen when a particular noncompliant tire is redesigned to meet the regulation. Manufacturers may redesign such tires, replace them with existing compliant models, or discontinue them. The available comparisons therefore cannot determine whether redesigned versions of existing, noncompliant models will retain their current safety, comfort, durability, and price characteristics.
There is also the issue of price, as some tire manufacturers expect the new regulations to increase costs well beyond what the CEC assumes. Dunlop Tires North America President and CEO Darren Thomas said: “Will prices increase? You bet they’ll increase. It’s going to be a real issue, in terms of cost; it’s going to go up. By how much? We don’t know. Is there going to be fuel savings? In theory.”
Thomas also said: “Generally, when you attempt to regulate something you don’t understand, or don’t care much about, you create bad policy. And that’s probably what we have here.”
Moreover, Goodyear and Yokohama Tire executives were among the signatories to an April letter opposing the standards. The letter stated: “Tires capable of meeting rolling-resistance performance consistent with the proposed Phase 2 standard are typically priced hundreds of dollars more per set than baseline alternatives.”
When it comes to tires, the CEC should have been more like Consumer Reports and stopped at testing, disclosure, and consumer ratings and let drivers make their own decisions, rather than mandating standards that may provide only small efficiency gains but which may cost considerably more, and which may impact other tire characteristics in unknown ways.
