Biden Administration Proposes Aggressive Fuel Economy Standards

EPA unveiled stringent new tailpipe emission standards last week for model years 2027 to 2032, which could result in electric cars making up as much as 67 percent of new vehicle sales by 2032. A companion proposal from EPA is designed to have 25 percent of new heavy trucks be all-electric by 2032. Separately, the Department of Energy (DOE) proposed on Monday to revise how it determines “miles per gallon equivalent” or “MPGe” ratings for EVs.

EPA’s proposed auto emissions rule is more ambitious than President Biden’s previous target to ensure that half of new cars sold in 2030 would be EVs, and it is seen as synchronizing with California’s ban on the sale of new gasoline-powered cars in the State after 2035. The proposal still must go through public notice-and-comment before being finalized later this year.

Even though automakers are committed to boosting EVs, many of them, as well as Capitol Hill, are raising questions about the Biden Administration’s new approach, from securing critical materials needed for EV batteries, to the availability of EV charging stations and the ability of electric grids to meet power needs. China’s stranglehold on the critical minerals industry and mining in Africa is a major concern.

DOE’s proposal would drastically alter how it determines petroleum-equivalent fuel economy ratings for EVs and plug-in hybrids, thereby affecting automakers’ “Corporate Average Fuel Economy” or “CAFE” requirements. DOE’s proposal, if finalized, would lower the mileage ratings for EVs, compelling automakers to actually sell more EVs.

Legal Challenges in the Works

Legal challenges to both EPA and DOE’s proposals are likely. Multiple business groups and States who already have asked the courts to review EPA’s prior tailpipe emissions standards for model year 2025 and 2026 vehicles and the Agency’s reinstatement of California’s Clean Air Act waiver to issue climate-based vehicle emissions standards.