The Biden Administration, under pressure from automakers, unions and political rivals, backed away this week from earlier proposals that could have forced automakers to boost electric vehicle sales to 67% of the total U.S. car and light truck market by 2032.
Alternatively, the lead could be: The Biden Administration this week laid out the most aggressive regulations yet to curb greenhouse gas emissions spewed out by cars and trucks. By 2032, just 17% to 29% of vehicles sold could run only on petrol.
Both statements are valid. Both understate the complex impact of the new Environmental Protection Agency rules designed to ratchet down vehicle pollution by 49% by 2032.
The Biden Administration is aiming its climate policies at the balancing point of a triangle formed by voters who support action to curb climate change, industry groups and consumers worried about the risks of new technology and workers whose livelihoods depend on fossil fuels – in this case, combustion trucks and SUVs.
Whether Biden located this magic spot with the new EPA tailpipe standards won’t be clear for years – or until November’s U.S. Presidential election votes are counted.
Here are some ways the Biden rules could change business as usual for automakers and consumers:
Biden stepped back from EPA proposals last year that required a rapid transition to a 67% EV new car and truck fleet by 2032.
The final rules give automakers more flexibility to offer a variety of cleaner powertrain technologies over the next eight years. The U.S. auto market could become the automotive powertrain equivalent of the breakfast buffet at a European hotel where you can get everything from croissants to omelets. Except here we are talking about hybrids, plug-in hybrids, EVs and maybe hydrogen-fueled vehicles.
There could be a smaller share of EVs in eight years than the administration once envisioned. But trucks with big V-8s could be expensive and rare. More on that in a minute.
Plug-in hybrids got a boost. Vehicles that have both a strong electric drive AND a combustion engine will continue to earn bonus regulatory credits on the assumption that they really will operate for miles on just battery power.
The EPA had previously proposed phasing out extra credits for plug-in hybrids starting in 2027, based on research that suggests many owners drive mainly on combustion power. The plug-in hybrid bonus is a win for Stellantis, Toyota, Ford and Germany’s BMW and Mercedes and other automakers which have continued investing in that technology (notwithstanding modest U.S. sales so far. ) GM and Volkswagen could add plug-in hybrids to their lineups, pivoting from previous all-electric strategies.
Politics are front and center. There is “absolutely no mandate” to switch to all EVs, said EPA Administrator Michael Regan, addressing Republican charges that Biden intended just that.
That won’t stop the election year attacks on the rule as a “ban” on combustion vehicles – a slogan Republicans hope will win votes in Michigan, which is one of seven pivotal states that will decide who sits in the Oval Office.
Combustion vehicles could drop to as little as 17% of the market, according to the EPA’s scenarios.
Or not. Because there are so many variables.
The EPA acknowledges that its EV sales forecasts assume that billions in federal subsidies will continue to flow for years to offset high EV production costs and charging network development expenses. The November election could change that. Cancel the subsidies and the auto industry would likely demand a do-over.
Automakers will struggle to achieve the new CO2 limits without big changes to popular models.
By 2027, the CO2 limit for the average car will be 131 grams per mile, and by 2032 that would drop to 73 grams per mile, under the EPA rules. The V-8 Mustangs Ford loves to sell won’t make the cut at today’s 467 grams/mile – unless they are balanced out with a lot of zero emissions Ford EVs.
Tailpipe-free EVs like the Tesla Model Y meet the 2032 passenger car standard today, of course. So do plug-in hybrids such as the Toyota Prius Prime plug-in hybrid (60 grams/mile), the Kia Niro plug-in hybrid (71 grams/mile) and the Ford Escape plug-in hybrid (52 grams/mile.)
Affordability is a challenge. Cheap Chinese EVs would be a fix, but President Biden and Republicans support trade barriers to keep them out.
The Motor City Three scored a win on big trucks. The EPA gave an easier path for heavy-duty pickup trucks such as the Ford Super Duty or the Ram 2500. These are the profit machines for the MC3 – and support thousands of their United Auto Workers employees. EV trucks that can match the towing capability of current heavy duty pickups haven’t been invented yet.
Medium duty pickups will be allowed to chug out more than four times the CO2 allowed for a standard car, according to the EPA.
A 2032 Ford Super Duty or Ram 2500 would need to be 25% more efficient than today’s F-150 hybrid to comply with the EPA limits. That’s a tall order. But automakers could sell heavy-duty pickups that emit more CO2 than the EPA standards if they ramp up sales of fully electric medium-duty vans to the likes of Amazon and FedEx, people familiar with the rules said.
Look for hybrid heavy-duty trucks, more electric vans like GM’s BrightDrop series or Ford’s electric Transits and perhaps hydrogen-fueled heavy pickups or commercial vans.
One more thing: Red State Attorneys General, groups representing the oil industry and the coalition of corn farmers and ethanol producers could persuade the Supreme Court to hear legal challenges to the EPA’s effort to change the auto market status quo. The justices are already weighing whether regulatory agencies have too much power.
Competing interest groups will now work the refs at the National Highway Traffic Safety Administration to craft Corporate Average Fuel Economy standards.
Automakers want those rules to act in harmony with the EPA CO2 rules. Why aren’t those rules already synchronized? Great question.
Readers who want to hack into the weeds can find the full text of the EPA rules here. A technical document explaining the agency’s methodology is here. If Moby Dick was too short for you, this is your read.
