The Biden Administration recently announced the finalization of new emissions rules that require roughly 50 percent cuts to greenhouse gas (GHG) emissions for passenger cars and trucks by 2032. While these rules are not as strict as initially proposed by the EPA, they will still have a significant impact on the automotive industry and the types of vehicles that dealerships sell in the coming decades.
Implementation of Emissions Rules
The new emissions rules are implementation-agnostic, allowing automakers to sell any drivetrains they want as long as they meet the emissions targets. Meeting these targets will likely require an increase in sales of hybrid and electric vehicles (EVs) to surpass the current proportion of EV new car sales at 7.6 percent. The EPA projects that by 2032, anywhere from 30 to 56 percent of new cars may be EVs, depending on how automakers choose to implement the new rules.
Reaction from Industry and Political Opponents
Automakers have largely welcomed the finalization of the new rules, as they are less stringent than the EPA’s initial proposal. However, political opponents such as former President Donald Trump and oil companies have criticized the rules as being too restrictive. Trump has harshly criticized Biden’s environmental and EV policies, while oil companies have deemed the rules a de facto ban on gas cars. The state of Texas is currently suing the EPA, challenging its authority to regulate auto emissions.
Challenges from the Left
On the other end of the political spectrum, nearly a hundred US lawmakers have urged Biden to implement tougher emissions rules rather than softening them for the sake of the auto industry. The history of changes in emissions rules from the Obama to the Trump administrations and back to the Biden administration highlights the potential for these rules to be reversed again depending on the outcome of the 2024 presidential election.
Impact on the Automotive Industry
The new emissions rules will likely lead to a shift in the types of vehicles that automakers produce and dealerships sell over the next decade. With an emphasis on reducing GHG emissions and transitioning towards EVs, automakers will need to adapt their strategies to meet the new targets set by the EPA. This could also have implications for consumer choices and preferences, as more EV options may become available in the market.
Future of Emissions Regulations
As the automotive industry continues to evolve and adapt to changing emissions regulations, it remains to be seen how the rules will be implemented and enforced in the coming years. The outcome of future elections and political decisions will likely play a significant role in determining the longevity and effectiveness of these emissions rules in reducing GHG emissions and promoting the adoption of EVs.