Biden Administration Finalizes Vehicle Fuel Economy Standards Rule

On Monday, the Biden Administration released its final Corporate Average Fuel Economy Standards (CAFE) to significantly tighten light truck and car fuel efficiency. The new efficiency standards will result in a 40-mpg requirement for light trucks and cars by 2026.

By comparison, the Trump era CAFE standards required a 32-mpg efficiency requirement by 2026.

Under the EPA’s projections, CAFE standards are expected to begin a shift to electric vehicles over the next decade pushing sales of EVs and plug-in hybrids to about 17 percent in model year 2026 from an expected 7 percent in model year 2023, still far from President Biden’s goal for half of U.S. car sales to be EVs by 2030.

However, that goal is widely seen as overly optimistic given that EVs sales represented only 3 percent of all passenger cars sales in 2020.

Automakers are also concerned with Biden’s fuel economy plan as it represents a dramatic shift from the current U.S. auto market and can only happen with policies that include incentives for EV purchases, adequate government funding for charging stations and money to expand EV manufacturing and the parts supply chain.

Senator Manchin’s announcement on Fox News Sunday that he can no longer support Build Back Better (BBB) complicates Biden’s goal as it included tax credits and rebates to entice people into buying EVs.

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