US Eases Up on Truck, SUV Fuel Economy Goals

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The new rules are a win for the Detroit Three automakers, who had lobbied heavily for revised regulations. The automakers had argued that the initial proposal was unfeasible and would result in dramatically higher vehicle prices. They also claimed that they cannot stop manufacturing large, fuel-inefficient light trucks while transitioning to manufacturing electric vehicles.

Environmental groups have criticized the new rules as not strict enough, while automakers have hailed the decision. The Biden administration is running for reelection in November and is working to build support among autoworkers and their unions, which had warned against the earlier vehicle proposals. Republican candidate Donald Trump has blasted the administration’s backing of electric vehicles (EVs) and stricter vehicle rules.

In July 2023, NHTSA had proposed boosting CAFE requirements by 2% per year for passenger cars and 4% per year for light trucks from 2027 through 2032. The final rule has no increase for light trucks for 2027 and 2028 and will only require 2% increases from 2029 through 2031.

The new rules are expected to slash compliance penalties from what they would have been under the original proposal. NHTSA explained that the change was necessary because automakers said they cannot stop manufacturing large, fuel-inefficient light trucks while transitioning to manufacturing electric vehicles.

Under the final rule, the auto industry is collectively expected to face a total of $1.83 billion in fines from 2027 through 2031 — and it could be as little as nothing — based on various models. This is significantly lower than the $14 billion in projected fines over a five-year-period that NHTSA had estimated last year, which included $10.5 billion for the Detroit Three.

The final rule is a compromise between the automakers and the environmental groups. While it is less stringent than the initial proposal, it still represents a significant increase in fuel economy standards. The Biden administration is hoping that the new rules will help to reduce greenhouse gas emissions and promote the adoption of electric vehicles.

In conclusion, the Biden administration has finalized new vehicle fuel economy rules through 2031, which are significantly less stringent than initially proposed. The new rules are a win for the Detroit Three automakers, who had lobbied heavily for revised regulations. While environmental groups have criticized the new rules as not strict enough, automakers have hailed the decision. The final rule is a compromise between the automakers and the environmental groups and is expected to reduce greenhouse gas emissions and promote the adoption of electric vehicles.