Title: Biden Administration Proposes Fuel Economy Standard to Accelerate Electric Vehicle Transition

The National Highway Traffic Safety Administration (NHTSA) has presented a proposal to automakers, urging them to achieve an average fuel economy of nearly 58 miles per gallon by 2032. The plan outlines a gradual increase in fuel efficiency for passenger cars and light-duty trucks, starting in the model year 2027. The agency is also considering more ambitious targets.

In addition, the NHTSA recommends a 10% annual fuel economy improvement for commercial vehicles weighing between 8,500 to less than 14,001 pounds, from 2030 through 2035. This proposal aims to reduce climate pollution and promote the adoption of zero-emission vehicles, with a strong focus on electric vehicles. The estimated net benefits of this proposal exceed $18 billion.

Acting Administrator Ann Carlson of NHTSA emphasizes that the proposed standards have a track record of driving innovation and improving fuel economy within the auto industry, benefiting the nation and its citizens. The primary objectives are to enhance energy security, reduce harmful emissions, and provide cost savings for families and business owners at the fuel pump.

Recently, the U.S. Environmental Protection Agency (EPA) proposed tailpipe emissions standards, with a requirement that approximately two-thirds of new vehicles be zero-emission. NHTSA is working closely with the EPA to ensure that the proposed fuel economy standards align with the EPA’s regulations, making compliance less complex and costly for automakers.

John Bozzella, president and CEO of the Alliance for Automotive Innovation, a lobbying group representing U.S. automakers, commended the coordinated effort to avoid conflicting and overlapping regulations, as these situations can be burdensome for manufacturers.

According to NHTSA’s estimates, automakers would need to spend $932 per vehicle to meet the proposed fuel economy standards for light-duty vehicles and $131 per vehicle for heavy-duty pickups and vans. Notably, while NHTSA does not consider electric and alternative fuels when setting the standards, manufacturers have the flexibility to use a range of technologies, including advanced internal combustion engines, hybrids, and electric vehicles, to meet the requirements.

This proposed policy is expected to yield significant benefits. It is projected to save consumers over $50 billion in fuel costs and reduce U.S. gasoline consumption by more than 88 billion gallons by 2050. Additionally, it would lead to a reduction of over 900 million tons of greenhouse gas emissions by 2050, which is equivalent to removing more than 233 million vehicles from the road between 2022 and 2050.

However, it is important to note that the actual fuel economy may vary as CAFE standards rely on the mix of vehicles sold by automakers. Selling more fuel-efficient cars would increase the average fuel economy, while the sale of light-duty trucks and SUVs, which are typically less efficient, would lower the average fuel economy.

Real-world fuel economy typically falls 20-30% below the CAFE standard, suggesting that by the year 2032, the fuel economy may range from 40.5 to 46.2 mpg instead of the target of 57.8 mpg. It is crucial to keep in mind that the current law mandates a fleet average of 49 mpg for new vehicles by 2026, for model years 2024-2026.

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