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Biden scales back fuel economy standards amid tough political and business realities

Grant Schwab
The Detroit News

Washington — In a move that tries to balance the fight against climate change with difficult business and political realities, President Joe Biden's administration on Friday scaled back fuel economy standards set for new vehicle sales into the next decade.

The administration released its final regulation Corporate Average Fuel Economy standards, commonly known as CAFE. The new rules represent a final piece in Biden's vision — put into practice by a series of regulations — for how big a role the auto industry should play in curbing U.S. greenhouse gas emissions.

The standards come as the president faces a tough reelection battle this fall with former President Donald Trump, a persistent critic of electric vehicles and high fuel economy standards. Trump has vowed on this year's campaign trail to do away with policies he frequently labels as electric vehicle mandates. Such comments have helped turn zero-emission electric vehicles — so far a rocky, unprofitable business for most domestic car companies — into a polarizing political issue.

President Joe Biden's administration has issued final fuel economy rules that will require automakers' fleets to average 53.5 miles per gallon eight years from now.

Biden's new fuel economy standards still are ambitious. But his retreat from the initial CAFE proposal issued last year represents a compromise with automakers who say they are committed to reducing emissions but need more time to do so.

Under the final rules, automakers' fleets must achieve an average fuel economy of 53.5 miles per gallon by 2032, instead of the initially proposed standard of 57.8 mpg.

"It looks like the left hand knew what the right hand was doing. That’s the kind of coordination we recommended. So that’s good and appreciated," said John Bozzella, president of the Alliance for Automotive Innovation, commending the Biden administration for producing a rule that fits well with others issued earlier this year.

The Biden administration rules do not require automakers to produce or sell particular kinds of vehicles, though it is widely acknowledged that growing the market for EVs will be crucial to meeting new regulations.

Still, critics slammed the new standards. “This final rule is yet another Biden administration policy that furthers its effort to force the electrification of the transportation fleet despite what consumers want or need in a vehicle," said Chet Thompson, CEO of the American Fuel and Petrochemical Manufacturers, a top oil and gas lobbying group. "It is unlawful and bad for consumers, the U.S. economy and our national security,”

The overall fleet target for 2032 is 53.5 miles per gallon, but that number diverges significantly for cars and trucks. The target for cars is 72.3 miles per gallon as compared to 47.3 mpg for trucks, which are among U.S. consumers.

“Not only will these new standards save Americans money at the pump every time they fill up, they will also decrease harmful pollution and make America less reliant on foreign oil,” U.S. Transportation Secretary Pete Buttigieg said in a press release. “These standards will save car owners more than $600 in gasoline costs over the lifetime of their vehicle.”

The new standards officially come from the National Highway Traffic Safety Administration, which is part of the Department of Transportation.

“When Congress established the Corporate Average Fuel Economy program in the 1970s, the average vehicle got about 13 miles to the gallon. Under these new standards, the average light-duty vehicle will achieve nearly four times that at 50 miles per gallon,” NHTSA Deputy Administrator Sophie Shulman said. “These new fuel economy standards will save our nation billions of dollars, help reduce our dependence on fossil fuels, and make our air cleaner for everyone. Americans will enjoy the benefits of this rule for decades to come.”

Industry praises rule

Bozzella, whose organization acts as a voice for all major U.S. automakers except for Tesla Inc., said that higher standards and fines that were likely to result from NHTSA's initial proposal "wouldn’t have produced any environmental benefits or additional fuel economy and would’ve foolishly diverted automaker capital away from the massive investments required by the electric vehicle transition."

General Motors Co. praised the rule, too: "GM supports the goals of NHTSA’s final CAFE rule and its intention to significantly improve market-wide vehicle fuel economy. The fleet efficiency steps we have taken and the groundwork we have laid on the path to an all-electric future will help us meet the more stringent requirements," spokesperson Bill Grotz said in a statement.

"While we review the details, we believe continued coordination across the U.S. federal government and the California Air Resources Board will help ensure the auto industry can successfully transition to electrification." 

Ford Motor Co. and Stellantis NV did not immediately offer comments on the new standards. Both deferred to the statement from the Alliance on Automotive Innovation.

Automakers seem pleased with the final rule. Yet some in the industry say it does not go far enough to pressure companies into becoming more competitive when it comes to EVs. China, notably, has emerged as the world leader in the increasingly important segment.

Consumer Reports, a leading nonprofit and nonpartisan consumer group known for its auto reviews, wrote in a statement that it "does not expect this rule to deliver any incremental improvements to new vehicles beyond those delivered by EPA’s new vehicle emissions standards."

It added: "CR advocated for NHTSA to set a stronger rule that would have prevented automakers from backsliding on the efficiency of their gasoline-powered vehicles as they roll out more electric vehicles, and that would have pressured automakers to ensure the EVs that they do build are as efficient as possible. The final standards are not strong enough to achieve either of these objectives."

One big decision remains

The CAFE rule is the last of three major federal rules that will regulate pollution from consumer vehicles.

The other rules, which were similarly scaled back amid industry feedback, came from the Environmental Protection Agency and the Department of Energy. The EPA rule regulates allowable carbon dioxide emissions from vehicle tailpipes, and the Energy Department rule adjusted an important calculation impacting the fuel economy scores for EVs.

EPA:Automakers get more time to ramp up EVs under final EPA emissions rules

Energy:How an obscure energy calculation could dramatically speed up America’s EV future

Despite issuing a less-stringent final EPA rule, agency administrator Michael A. Regan still called the regulation the "strongest vehicle pollution technology standard ever finalized in United States history" during a news conference in March.

Even with the CAFE rule now finalized, one more decision on vehicle emissions — and perhaps the most important one — remains for Biden.

California is seeking federal approval for even tougher standards beginning in 2026. Their standards, which 11 other states have already committed to copying, would effectively mandate a full shift to electric vehicles in those states.

gschwab@detroitnews.com