Biden Set to Tighten Fuel-Efficiency Standards for Automakers

by Ari Natter, and David Welch (Bloomberg) The Biden administration is poised to issue a proposal as early as Friday ordering automakers to increase the average fuel economy of their vehicles, according to people familiar with the matter.

The proposed rule, expected to be made public by the National Highway Traffic Safety Administration, will be applicable for model years 2027 and beyond, according to the people who asked not to be identified because they weren’t authorized to speak publicly about it.

The agency’s previous proposal, issued last April, ordered automakers to increase their average fuel economy to about 49 miles (78.8 kilometers) per gallon by 2026.

General Motors Co. has already voiced concerns to the US Environmental Protection Agency over requirements for proposed emissions rules.

The automaker said in a July 5 filing that federal rules and other regulations in six states could require automakers to sell more than the Biden Administration’s goal of 50% of volume from EVs by 2030, which could be difficult to achieve.

The Alliance for Automotive Innovation, which represents automakers including GM, in April said the Biden Administration’s goal to have EVs make up half the market by 2030, “was always a stretch.” READ MORE

Excerpt from Reuters: GM executive David Strickland met on July 17 with White House Office of Management and Budget (OMB) officials about the administration's vehicle fuel economy proposal, according to a slide on a White House website.

At the meeting, GM estimated the auto industry as a whole could face $100 billion to $300 billion in total penalties -- or $1,300 to $4,300 per vehicle -- from 2027 to 2031 depending on whether an Energy Department proposal to revise the petroleum-equivalent fuel economy rating for electric vehicles (EV) is enacted.

The National Highway Traffic Safety Administration, which oversees Corporate Average Fuel Economy (CAFE) regulations, said late on Thursday GM's "estimate is pure speculation and inaccurate." The agency will release its proposal to hike CAFE requirements for 2027 and beyond on Friday, sources familiar with the agency's plans said, after the White House signed off on Tuesday.

A Biden administration official said under one scenario the auto industry could face about $3 billion in fuel economy penalties in 2032 and in another it might face essentially no penalties.

Another official told Reuters NHTSA's preferred CAFE proposal is estimated to save consumers more than $50 billion on fuel over a vehicles' lifetime and reduce oil use by more than 88 billion gallons through 2050. Overall, the benefits of the rule would exceed costs by more than $18 billion, the official added.

GM, which in 2021 vowed to halt the sale of new gasoline-powered vehicles by 2035, said this month it could face compliance challenges under the EV efficiency rules and vehicle emissions regulations. The company said on Thursday it looks forward to "further and increased technical dialogue with the EPA and the White House as the rule is finalized."

NHTSA's plan will follow the Environmental Protection Agency's (EPA) April proposal to toughen 2027-2032 standards, requiring a 56% emissions cut that would result in 67% of new vehicles by 2032 being EVs.

A group representing major automakers including the Detroit Three wants EPA to significantly soften its requirements, calling it "neither reasonable nor achievable." READ MORE

Excerpt from Politico Pro Climatewire: The change in question is known as the petroleum equivalence factor, which is written by the Energy Department and calculates the emissions impact of EVs based on their electric consumption.

The Energy Department proposal would slash the "miles per gallon equivalent" ratings of some EVs by more than two-thirds. For example, the rating on the F-150 Lightning — Ford Motor Co.'s popular battery-powered pickup — would drop from the equivalent of about 237 mpg to 67 mpg, according to the Energy Department.

For years, EVs have helped inflate the average fuel efficiency of car manufacturers' fleets. Without that boost, carmakers will be forced to either produce more EVs or make their conventional cars more fuel-efficient in order to comply with upcoming federal regulations. READ MORE