The U.S. Energy Department has announced final rules that will soften its proposal to reduce electric vehicles’ mileage ratings to meet government fuel economy requirements in 2027. This decision comes as a relief to the Detroit Three automakers and the United Auto Workers union, who raised concerns about potential fines that automakers could face for not meeting fuel economy requirements. The final rules will gradually reduce the petroleum equivalent EV fuel economy rating through 2030, giving automakers more time to adjust. Additionally, the Environmental Protection Agency is set to unveil revised vehicle greenhouse gas emissions requirements to cut tailpipe emissions and ramp up electric vehicle sales.
**Introduction**
The U.S. Energy Department has announced final rules that will soften its proposal to reduce electric vehicles’ mileage ratings to meet government fuel economy requirements in 2027. This decision comes as a relief to the Detroit Three automakers and the United Auto Workers union, who raised concerns about potential fines that automakers could face for not meeting fuel economy requirements. The final rules will gradually reduce the petroleum equivalent EV fuel economy rating through 2030, giving automakers more time to adjust. Additionally, the Environmental Protection Agency is set to unveil revised vehicle greenhouse gas emissions requirements to cut tailpipe emissions and ramp up electric vehicle sales.
**1. Concerns from Automakers and UAW**
The Biden administration considered concerns from automakers and the UAW in crafting the final rule for electric vehicle fuel economy ratings. This decision follows alarm raised by automakers that the initial proposal could result in significant fines. General Motors, Chrysler parent Stellantis, and Ford would have faced billions in fines under the 2023 proposals. The final rule will allow automakers more time to adjust to the changes, easing the compliance burden.
**2. Environmental Groups and EV Mileage Ratings**
Environmental groups urged the revision of EV mileage ratings, arguing that excessively high imputed fuel economy values for EVs could lead to a minimal number of EVs being the only vehicles to guarantee compliance without actual improvements in overall fleet fuel economy. The Miles Per Gallon equivalent ratings have not been updated in over two decades and are based on various values related to electricity, petroleum, and driving patterns. The changes in the final rule aim to address these concerns raised by environmental groups.
**3. EPA Revised Vehicle Greenhouse Gas Emissions Requirements**
The Environmental Protection Agency is expected to unveil revised vehicle greenhouse gas emissions requirements that will ease proposed yearly requirements through 2030. The initial proposal aimed for automakers to have 60% of new vehicles be EVs by 2030 and 67% by 2032 to meet stricter emissions requirements. The final rules will soften the pace of improvements and increase stringency requirements through 2032. Automakers will have more flexibility in producing EVs, with the potential to include plug-in hybrids to meet compliance.
**4. Boost for Plug-in Hybrid Vehicles**
The final greenhouse gas vehicle rules are expected to be a boost for plug-in hybrid vehicles. Automakers may have the option to produce more plug-in hybrids in 2032 under one compliance path. The Alliance for Automotive Innovation has recommended a 50% EV sales target by 2030, and the final rules will likely reflect this input. The changes in compliance requirements offer automakers more choices in meeting greenhouse gas emissions regulations.
**5. Expected EPA Changes in Particulate Matter Reduction**
The EPA is also expected to scale back its proposal to reduce particulate matter from gas-powered vehicles, which automakers have argued would require particulate filters on all gas-powered vehicles. Additionally, the plan to eliminate “enrichment” strategies, which boost performance and prevent engine damage, may be curtailed or dropped. This allows automakers more flexibility in utilizing engines while meeting emission standards. The final rules aim to strike a balance between reducing emissions and ensuring automakers can comply without significant disruptions in their operations.