By David Shepherdson
WASHINGTON (Reuters) – President Joe Biden’s administration on Friday finalized tighter auto fuel economy rules through 2031 that are significantly less stringent than originally proposed, a victory for three Detroit automakers that lobbied heavily for revised rules.
The National Highway Traffic Safety Administration said it will raise Corporate Average Fuel Economy (CAFE) requirements from the current 39.1 mpg to 50.4 miles per gallon by 2031. The new requirement does not exceed the 49 mpg required before 2026. Last year, NHTSA projected that its tough plan would raise the requirements to 58 mpg by 2032.
The agency said the proposed new rules would ultimately reduce compliance penalties from what they were under the original plan. Automakers explained the shift by noting that they „can’t stop making large, fuel-inefficient light-duty trucks while also switching to electric vehicles.”
Environmental groups criticized the new rules as not strict enough, while automakers hailed the decision after calling the initial proposal unfeasible and warning it would result in dramatically higher vehicle prices.
Biden is running for re-election in November and is working to build support among auto workers and their unions, which have previously warned against auto plans. Republican nominee Donald Trump has blasted the administration’s support for EVs and stricter vehicle regulations.
In July 2023, NHTSA proposed increasing CAFE requirements by 2% per year for passenger cars and 4% per year for light trucks from 2027 to 2032. The final rule requires no increase for light trucks in 2027 and 2028 and only 2%. Increases from 2029 to 2031.
Last year, NHTSA said its proposal to raise fuel economy standards by 2032 would cost the industry $14 billion in penalties over five years. That includes $10.5 billion for the Detroit Three: $6.5 billion for General Motors, $3 billion for Chrysler parent Stellandis and $1 billion for Ford Motor.
Under the final rule, the auto industry is expected to face a total of $1.83 billion in fines from 2027 to 2031 — not much — based on various models, NHTSA said.
NHTSA says GM faces $906 million in fines by 2031, Stellantis faces $368 million and Ford nothing.
Automakers that buy credits or pay penalties if they can’t meet CAFE requirements individually face $1.5 billion in expected penalties for the 2024-2026 model years. In June 2023, Reuters first reported that Stellandis and GM paid a total of $363 million in CAFE penalties for failing to meet US fuel economy requirements in previous model years.
This is the third regulatory action taken by the Biden administration in recent months that has tightened less-than-promised auto regulatory programs. New compliance calculations for EVs that are less stringent than proposed and new tailpipe rules will ultimately require automakers to build fewer EVs than originally predicted.
John Bocella, president of the Alliance for Automotive Innovation trade group representing major automakers, praised the amendments.
„Those penalties would not have produced any environmental benefits or additional fuel economy, and would have foolishly diverted automaker capital from the massive investments needed for the electric vehicle transition,” Bocella said.
Dan Becker, director of the Center for Biological Diversity’s Safe Climate Transportation Campaign, said NHTSA has „bowed to pressure from automakers” and said the agency’s „weak final rule wastes more gas, spews more pollution and cedes the clean vehicle market to foreign automakers.” .”
Separately, NHTSA said it is finalizing new rules to increase heavy-duty pickup truck and van fuel efficiency by 10% annually from 2030-2032 and 8% annually from 2033-2035.
(Reporting by David Shepherdson; Editing by David Gregorio)