The U.S. Department of Transportation (DoT) has announced a significant shift in fuel economy standards, directing the National Highway Traffic Safety Administration (NHTSA) to rescind regulations established under President Biden for the 2022-2031 model years. In January, Transportation Secretary Sean Duffy signed an Executive Order to “reset” the Corporate Average Fuel Economy (CAFE) Program. This program was initially intended to dramatically cut fuel use by passenger vehicles and big rigs.
The new CAFE rule, finalized and released by the DoT just yesterday, is poised to institute much looser fuel standards. This final rule will provide manufacturers increased flexibility in how they meet production of vehicles. The agency is touting these changes as saving the nation billions in taxpayer dollars. In doing so, they will help curb our reliance on fossil fuels and resulting air pollution.
Duffy highlighted the extent of the federal government’s commitment. They are both more narrowly focused on vehicle affordability and manufacturability in the United States. He stated, “The previous administration illegally used CAFE standards as an electric vehicle mandate.”
The NHTSA has just announced a radical new set of standards for passenger cars and light duty trucks. These changes are estimated to save Americans nearly 64 billion gallons of gasoline and reduce emissions by 659 million metric tons. According to the administration, these combined reforms will save American consumers $35.2 billion in fuel costs. This will result in billions of dollars of net benefits over time.
• The current CAFE requirement light-duty vehicles is 39.1 miles per gallon. The NHTSA intends to raise this standard to an estimated average of 50.4 miles per gallon by June 2024 and freeze it there through 2031. This change represents a significant rollback of the ambitious fuel efficiency standards laid out earlier by the Biden administration.
Senate Republicans have proposed legislative changes that would eliminate fines for failing to meet CAFE rules as part of a tax bill. This proposal would significantly relax the proposed constraints on automakers, especially for those dedicating themselves to the outcome of gas-powered vehicles.
Chrysler-parent Stellantis just got hit with a $190.7 million civil penalty. This move further indicates a zero-tolerance approach to U.S. enforcement of 2019 and 2020 U.S. fuel economy standards.
Sophie Shulman, then NHTSA Deputy Administrator, remarked on the positive impact of the new standards: “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.”
The NHTSA acknowledged that previous assumptions about EV manufacturing in the U.S. had put a stamp on previous rulemakings. These regulations were arguably out of step with today’s market realities.
“To provide relief while DoT develops its proposal to reset the CAFE standards … The standards are out of sync with the current market reality, and immediate relief is necessary to preserve affordability and freedom of choice.” – Stellantis
