President Joe Biden's administration is offering automakers more time to scale up production of electric vehicles (EVs) through landmark rules that aim to cut in half the tailpipe CO2 emissions from cars and trucks sold in model year 2032.
The tailpipe standards, finalized today, are among the most significant climate actions under Biden and will prevent through 2055 the release of an estimated 7.2bn metric tonnes (t) of CO2, or more greenhouse gas emissions than the US emitted last year. The regulations are also essential for Biden to stay on track with his nonbinding goal for EVs to account for half of new car and truck sales by 2030.
"These strongest-ever pollution standards for cars solidify America's leadership in building a clean transportation future and creating good-paying American jobs," US Environmental Protection Agency (EPA) administrator Michael Regan said.
The final standards will still require automakers to ramp up sales of cleaner vehicles through technology-neutral targets that will phase in between model years 2027 and 2032. But EPA decided to require a slower pace of efficiency gains in the early years of compliance. EPA chose to offer "a little bit more lead time" based on feedback from automakers and labor groups that targets the agency proposed last year would not be feasible, a senior administration official said.
Automakers aggressively lobbied the administration for a slower pace, citing a recent slowdown in EV sales growth, along with shortages of parts and consumer preferences for plug-in hybrid vehicles. EPA now anticipates that battery-only EVs will account for 56pc of light-duty vehicle sales during the final year of compliance, down from 67pc in the proposal, with plug-in hybrids taking the place of EV sales.
"I know I've been a thorn in your side this last year," Alliance for Automotive Innovation chief executive John Bozzella said to administration officials today during the rollout of the rule. "But it's only because automakers are committed to electrification."
The standards are expected to cut total retail gasoline and diesel consumption by a total of 15bn bl over the next 30 years, reducing US fuel consumption by 2.6mn b/d in 2055. US fuel consumption by light-duty vehicles is expected to be 7.8mn b/d this year, according to the US Energy Information Administration. Oil industry groups say the rules will make conventional vehicles "prohibitively expensive" and remove many models from the market. Because compliance is based on fleetwide sales, automakers may choose to comply by raising the cost of inefficient vehicles to subsidize the cost of highly efficient EVs.
"This wildly unpopular policy is going to feel and function like a ban," American Petroleum Institute president Mike Sommers and American Fuel & Petrochemical Manufacturers chief executive Chet Thompson said.
The tailpipe standards are expected to add $1,200 to the cost of light-duty vehicles, with those compliance costs adding up to $40bn/yr over the life of the program. But EPA said estimated fuel savings of $46bn/yr and maintenance savings of $16bn/yr will far outweigh those costs, resulting in $6,000 in lifetime savings per vehicle sold in model year 2032.
Even with the slightly weaker rule, environmentalists and many Democrats are largely supportive. The standards are "one of the most significant actions" the Biden administration has taken to address climate change, Sierra Club executive director Ben Jealous said. US House Energy and Commerce Committee ranking member Frank Pallone (D-New Jersey) said they will save consumers money, cut greenhouse gasses and "shore up our energy security by significantly reducing our dependence on oil."
'Unrealistic' transition
The longevity of the tailpipe standards is likely to hinge on a coming wave of lawsuits challenging the rule and the outcome of the 2024 presidential elections. Former president Donald Trump, who is the presumed Republican presidential nominee, has vowed to rescind the regulations and end subsidies for EVs. Trump argues the technology is too expensive, is unreliable and will end up shifting US auto manufacturing jobs to China.
"We're gonna put a 100pc tariff on every single [Chinese] car that comes across the line and you're not going to be able to sell them," Trump said on 16 March. "Now, if I don't get elected, it's going to be a bloodbath."
Republicans have been highly critical of the regulations. US senator Shelley Moore Capito (R-West Virginia) said the Biden administration was forcing an "unrealistic transition to electric vehicles that American do not want and cannot afford."
EPA's tailpipe standards are only one part of the administration's push to support EVs. The US Department of Transportation plans to finalize a related regulation setting corporate average fuel-economy standards within a few weeks, a senior administration official said. The US Department of Energy earlier this week finished changes to a "petroleum-equivalency factor" it said was creating a disincentive for automakers to sell more EVs.
Biden's push to scale up domestic manufacturing of EVs is supported by a part of the Inflation Reduction Act that offers consumers a federal tax credit of up to $7,500 per vehicle. Because the rule would boost EV sales, the overall cost of the tax credit over a decade is expected to be $224bn more than estimated, the US Congressional Budget Office said last month.
