The ever-stricter fuel efficiency requirements also impose strong constraints.
If the rules were sensible, we would have a taxes on carbon and dangerous features at amounts that reflected their actual negative impact, and the consumer could choose how much they were willing to pay for style. Instead we have a march toward uniform blandness and 99% of consumers don't know why because they never interact with the regulations.
The statistical value of life in the US, which is applicable to small diffuse risks, is ~$10M. When the NHTSA or EPA or whatever decide whether to spend money on clean up a river to reduce cancer risks or impose safety rules, they use that amount (to first order). If someone is willing to pay p*$50M for a p<<1 chance of killing a member of the general public, the gov't can allow them and then spend that money saving lives, leading to both net lives saved and additional freedom/flexibility.
The regulations already function as you describe. Changes in car design reflect what consumers are willing to pay for - or at least what manufacturers believe consumers are willing to pay for.
I think they do not value fuel economy nearly as much as they should because they do not bare most of the costs of externalities from carbon emissions.
Yeah. It's simply too juicy to pursue policies that artificially make cost of using petroleum lower. Many elections have been won and lost based on when fuel prices increased or decreased. This means incentives will never be what they should be to be efficient with use of gasoline.
No, because the size of the penalties do a terrible job of tracking the carbon emissions, e.g.:
> CAFE footprint requirements are set up such that a vehicle with a larger footprint has a lower fuel economy requirement than a vehicle with a smaller footprint
If the rules were sensible, we would have a taxes on carbon and dangerous features at amounts that reflected their actual negative impact, and the consumer could choose how much they were willing to pay for style. Instead we have a march toward uniform blandness and 99% of consumers don't know why because they never interact with the regulations.