The Environmental Protection Agency is on the precipice of reestablishing tougher emissions requirements for new vehicles, undoing the cuts implemented by the Trump administration. However, the new benchmarks may be problematic for automakers.
In August, the Biden administration suggested new requirements that would essentially rollback the rollbacks implemented by Trump. The plans are closer to the Obama administration’s mandates. The new rules would result in a fleetwide average of 40 mpg by 2026, which is slightly higher than the 38 mpg originally proposed by Biden.
The EPA standard actually equates to 55 mpg, but drops to 40 mpg in real-world driving conditions.
Trump’s rollbacks brought that number down to 32 mpg. The previous administration also reduced the requirements for efficiency improvements to 1.5% annually between now and 2026. The Obama administration set the number at 5% annually. The Biden administration plan calls for a 10% jump in 2023, then relaxes to 5% annual improvements until 2026.
“The final rule for light duty vehicles reflect core principles of this Administration: We followed the science, we listened to stakeholders, and we are setting robust and rigorous standards that will aggressively reduce the pollution that is harming people and our planet — and save families money at the same time,” said EPA Administrator Michael Regan.
Regan said the EPA estimates the targets can be met with EVs accounting for 17% of all new vehicles sold. American drivers will save between $210 billion and $420 billion through 2050 on fuel costs, Regan said. On average over the lifetime of an individual model-year 2026 vehicle, EPA estimates that the fuel savings will exceed the initial increase in vehicle costs by more than $1,000 for consumers.
The Detroit Three automakers had representatives at today’s announcement by Regan; however, none has offered any official comment on the new regs. However, the both the EPA and industry groups recognize a few things will need to change in order hit the new targets.
Starting with the increased sales of electric vehicles.
“EPA’s final rule for greenhouse gas emissions is even more aggressive than originally proposed, requiring a substantial increase in electric vehicle sales, well above the 4% of all light-duty sales today,” said John Bozzella, president and CEO of the Alliance for Automotive Innovation, which represents several automakers in the U.S. in their efforts to affect governmental policies impacting the industry.
The group noted the ongoing efforts between the U.S. government and the industry are going to need to continue, and perhaps expand, in order for automakers to meet the requirements. The group noted the auto industry is investing $330 billion in electrification by 2025.
However, the much of the help from the industry is tied up in the $1.75 trillion Build Back Better bill, which Sen. Joe Manchin (D-West Virginia) announced today he couldn’t vote for despite Democrats scaling the bill back to meet his demands to get his swing vote on it.
His proclamation predictably evoked responses ranging from head shaking to outward anger, especially from progressive Democrats who agreed to a less expansive infrastructure bill to cater to Manchin. His issues with the bill center on climate change measures, by holding up the legislation, he kills the parts aimed at helping automakers with electric vehicles.
Specifically, EV tax credits of as much as $12,500 to encourage Americans to buy battery-electric vehicles. The plan offers $7,500 in credits for EVs, plus an extra $5,000 for union-made EVs using union-made batteries.