The distinction between "economy" and "efficiency" is astute and relevant.

A Ford Model-T got 20 mpg. Economically, it does about as well as modern pickup truck. However, a modern pickup will haul much more (including its own weight) than a Model-T could ever hope to carry for the same fuel. Thus a modern truck is more efficient. The increases in efficiency mean that more of the fuel is converted to power and less to waste heat.

Had the increases in efficiency over the last decade been reinvested into cars weighing a ton or less, people would easily be averaging 40 mpg or more. For example, in college I had a 1983 Subaru Wagon -- it got 30 mpg (less in 4wd). It wasn't a race car by any means, but it did the job. As engines became more efficient however, car manufacturers used that efficiency to make cars larger, or increase horsepower because consumers like the feeling of acceleration when they stomp on the gas, or the smooth ride of a 4000 pound beast.

Manufacturers could have used that efficiency to make smaller motors, keep the power around 80 horses, and in so doing, create cars that directed the efficiency gains toward gas savings, i.e., "economized" on fuel usage. Indeed, in many parts of the world, regular ICE powered cars get 60 or 70 mpg right now in a perfect example of how efficiency can be translated into more horses OR less fuel usage.

Anyway, I've suspected that cars have become more efficient because really big vehicles do a whole lot better than the really big '76 Impala I had in HS (10 mpg), and it has frustrated me that it's virtually impossible to find anything better than 35 mpg when even in the 80s, such cars were all around.