Biden administration unveils new EV-oriented fuel economy standards

The Biden administration unveiled its latest regulations to reduce ground transportation greenhouse gas emissions and accelerate adoption of electric vehicles June 7, issuing a final rule on new vehicle fuel economy standards through the US Department of Transportation.

The new Corporate Average Fuel Economy (CAFE) standards will increase fuel economy requirements 2% per year for model years 2027-2031. Light trucks will increase 2% per year for model years 2029-2031. According to the DOT, these increases will increase minimum fuel economy for passenger vehicles and light trucks to approximately 50.4 miles per gallon by 2031, the agency said.

Heavy duty trucks and vans will increase 10% per year for model years 2030-2032 and 8% per year for model years 2033-2035, which DOT said would result in an average of 35 miles per gallon by the end of the period. The DOT estimated the new standards would displace 70 billion gallons of gasoline and prevent more than 710 metric tons of carbon dioxide emissions by 2050.

"Not only will these new standards save Americans money at the pump every time they fill up, they will also decrease harmful pollution and make America less reliant on foreign oil," US Transportation Secretary Pete Buttigieg said in a release. "These standards will save car owners more than $600 in gasoline costs over the lifetime of their vehicle."

The CAFE standards measure the fuel economy of all products across a manufacturer's lineup, allowing automakers to average their results across different vehicle types. Manufacturers will be able to comply with the new rules by not only raising fuel standards in conventional internal combustion engine vehicles or hybrids but by increasing sales of electric vehicles, which do not burn traditional fuel or release carbon dioxide tailpipe emissions.

Working with EPA

The DOT said its new standards were designed to dovetail with the US Environmental Protection Agency's recent auto pollution rules.

"NHTSA worked closely with the EPA to optimize the effectiveness of its standards while minimizing compliance costs, consistent with applicable statutory factors," according to a statement.

In March, the EPA announced its tailpipe emissions rule for light- and medium-duty vehicles for model years 2027-2032, which restricted tailpipe emissions for model years 2027-2032 such that EPA projected auto manufacturers "may choose" to produce EVs for 30%-56% of new light-duty vehicle sales from 2030 to 2032 in order to comply.

Officials in the Biden administration, which continues to roll out climate-oriented funding and regulations proposed in the 2022 Inflation Reduction Act, refer to their efforts as a "whole of government" approach, as the DOT's new standards attempt to reinforce the EPA's rules and vice versa, while IRA funding for EV purchaser tax credits and EV infrastructure continues to be doled out to states.

"These fuel economy standards, rigorously aligned with our investments and standards across the federal government, deliver on the Biden-Harris Administration's promise to build on this momentum and continue to spur job creation, and move faster and faster to tackle the climate crisis," White House national climate advisor Ali Zaidi said in a statement.

Critics say EV 'mandate,' but auto industry on board

Since the EPA's tailpipe emissions announcement Republicans, traditional oil interests and biofuels lobbying groups have criticized the Biden administration's push to electrify the ground fleet, calling it an "EV mandate" that robs US consumers of choice.

"This regulation will make new gas-powered vehicles unavailable or prohibitively expensive for most Americans. For them, this wildly unpopular policy is going to feel and function like a ban," American Fuel & Petrochemical Manufacturers President and CEO Chet Thompson and American Petroleum Institute President and CEO Mike Sommers said in a joint statement in March.

"This rule is delusional," US Senators Pete Ricketts (Republican-Nebraska) and Dan Sullivan (Republican-Alaska) said then. "This is the Biden administration's attempt to get rid of the internal-combustion engine without congressional authority."

Critics have also argued that despite investments in charging infrastructure, US drivers aren't ready for widespread EV adoption, and question whether demand for EVs matches the speed of the administration's ambition.

Still, the US auto industry is on board. John Bozzella, president and CEO of the Alliance for Automotive Innovation, which represents nearly every manufacturer selling cars and light duty trucks in the US, heaped praise on the EPA's rule in March.

"The future is electric," he said then.

In the wake of NHTSA's June 7 CAFE standards announcement, Bozzella said the last of the Biden administration's tailpipe rules would "only work" if all of the rules "worked together."

"It looks like the left hand knew what the right hand was doing," Bozzella said, praising the Biden administration for ensuring automakers won't be in violation of CAFE rules of they comply with EPA standards. "That's the kind of coordination we recommended. So that's good and appreciated."

Bozzella wrote that the auto industry's move toward electrification calls into question whether CAFE standards -- which were created in the 1970s and initially required automobiles to achieve a fuel economy of 13 miles per gallon -- are still needed.

"That's for later," Bozzella wrote. "For today, the administration appears to have landed on a CAFE rule that works with the other recent federal tailpipe rules."