Washington – President Joe Biden's administration on Friday rolled back fuel economy standards set for new vehicle sales over the next decade in a move that seeks to balance the fight against climate change with difficult business and political realities.
The administration has announced the final rules for the Corporate Average Fuel Economy standard, commonly referred to as CAFE. The new rules represent the final step in Biden's vision for how big a role the auto industry should play in reducing U.S. greenhouse gas emissions, which is being implemented through a series of regulations.
The standards come as the president faces a tough re-election battle this fall against former President Donald Trump, a consistent critic of electric vehicles and high fuel economy standards. On the campaign trail this year, Trump has vowed to repeal what he often calls an electric vehicle mandate. Such comments have helped turn zero-emission electric vehicles, once a shaky and unprofitable business for most domestic automakers, into a politically divisive issue.
Biden's new fuel economy standards remain ambitious, but his move away from the original CAFE proposal released last year represents a compromise with automakers, who say they are working to reduce emissions but need more time.
Under the final rule, automakers' vehicles will have to achieve an average fuel economy of 53.5 miles per gallon by 2032, instead of the originally proposed standard of 57.8 miles per gallon.
“It seems like the left hand knew what the right hand was doing. That's the coordination that we encouraged. So that's a good thing, and we appreciate it,” said John Bozzella, president of the Alliance for Automotive Innovation, praising the Biden administration for crafting rules that are well aligned with others released earlier this year.
The Biden administration's rules don't require automakers to build or sell any particular types of vehicles, but it's widely acknowledged that a growing EV market will be crucial to meeting the new regulations.
Still, critics slammed the new standard. “This final rule furthers the Biden Administration's policy to force the electrification of transportation vehicles regardless of what consumers want or need from their vehicles,” said Chet Thompson, CEO of the American Fuel and Petrochemical Manufacturers Association, a major oil and gas industry lobbying group. “It's unlawful and bad for consumers, our economy and national security.”
The overall vehicle goal for 2023 is 53.5 miles per gallon, but this number varies greatly between cars and trucks: The goal for cars is 72.3 miles per gallon, compared to 47.3 miles per gallon for trucks, which are much more popular among U.S. consumers.
“This new standard will not only save Americans money on gas every time they fill up, it will also reduce harmful pollution and decrease our dependence on foreign oil,” U.S. Secretary of Transportation Pete Buttigieg said in a press release. “This standard will save car owners more than $600 on gasoline over the life of their vehicle.”
The new standards were officially announced by the National Highway Traffic Safety Administration, part of the Department of Transportation.
“When Congress enacted the Corporate Average Fuel Economy Program in the 1970s, the average car got about 13 miles per gallon. Under this new standard, the average light vehicle will get nearly four times that amount — 50 miles per gallon,” said NHTSA Deputy Administrator Sophie Shulman. “This new fuel economy standard will save our country billions of dollars, reduce our dependence on fossil fuels, and make the air cleaner for everyone. Americans will benefit from this rule for decades to come.”
Industry praises rules
Bozzella, whose group represents all major U.S. automakers except Tesla, said the increased standards and fines that would likely result from NHTSA's initial proposal “would not produce any environmental benefits or fuel economy gains and would be a foolish move to divert automakers' capital from the huge investments needed to transition to electric vehicles.”
General Motors Co. also praised the rule, saying, “GM supports the goals of NHTSA's final CAFE rules and their intent to significantly improve vehicle fuel economy across the market. The vehicle efficiency efforts we've taken and the groundwork we've laid as we pave the way to an all-electric future will help us meet the more stringent requirements.” Spokesman Bill Grotz said in a statement.
“We believe that continued coordination between the U.S. federal government and the California Air Resources Board as we work out the details will help the auto industry successfully transition to electrification.”
Ford Motor Co. and Stellantis did not immediately comment on the new standards. Both companies said they respected the Coalition for Automotive Innovation's statement.
Automakers seem pleased with the final rules, but some in the industry say they don't go far enough to pressure companies to be more competitive when it comes to EVs, especially as China emerges as a global leader in an increasingly important field.
“We do not expect this rule to result in incremental improvements in new vehicles that go beyond EPA's new auto emissions standards,” Consumer Reports, a leading nonprofit, nonpartisan consumer group known for reviewing cars, said in a statement.
It added, “CR urged NHTSA to enact stronger rules to prevent gasoline-powered vehicles from becoming less efficient as automakers launch more electric vehicles, and to pressure automakers to ensure the electric vehicles they build are as efficient as possible. The final standard falls short of achieving either of these objectives.”
One big decision remains
The CAFE rule is the last of three major federal regulations regulating pollution from consumer vehicles.
Other rules that were similarly scaled back after industry feedback came from the Environmental Protection Agency and Department of Energy. The EPA rule restricted how much carbon dioxide a vehicle's tailpipe can emit, while the Energy Department rule adjusted a key calculation that affects an electric vehicle's fuel economy score.
EPA:EPA's final emissions rules give automakers more time to ramp up EV production
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Despite issuing the weaker final rule, EPA Administrator Michael A. Regan called the regulations “the strongest auto pollution technical standards ever finalized in U.S. history” at a March press conference.
Even if the CAFE rules are finalized, Biden still has one more decision on auto emissions to make, and perhaps the most important one.
California is seeking federal approval of even stricter standards starting in 2026 that 11 other states have already pledged to copy, effectively mandating a complete shift to electric vehicles in those states.
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