The Biden administration proposed new fuel economy standards for passenger cars and light trucks which it said would save Americans hundreds of dollars at the gas pump – but will also drive car prices higher.
The new Corporate Average Fuel Economy (CAFE) standards — unveiled Friday afternoon by the Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) — requires passenger cars and light trucks to improve fuel efficiency 2% and 4%, respectively, beginning in 2027. Under the rules, pickup trucks and work vans must boost fuel efficiency 10% every year starting in 2030.
By 2032, the agency said average U.S. fleet fuel economy could reach 58 miles per gallon. According to the Environmental Protection Agency, the estimated average fuel economy for model year 2022 cars was 26.4 miles per gallon, meaning the proposed standards Friday would mandate automakers more than double fuel efficiency in less than a decade or face substantial penalties.
“Better vehicle fuel efficiency means more money in Americans’ pockets and stronger energy security for the entire nation,” Transportation Secretary Pete Buttigieg said in a statement.
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In their announcement, DOT and NHTSA said, if finalized, the new CAFE standards would save consumers more than $50 billion on fuel over vehicles’ lifetimes and reduce oil dependence by reducing gasoline consumption by 88 billion gallons through 2050.
The administration added the standards would curb carbon emissions by more than 900 million tons through 2050. It stated such a large emissions reduction is the equivalent of taking more than 233 million vehicles off the road in that time span.
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“CAFE standards have driven the auto industry to innovate in improving fuel economy in ways that benefit our nation and all Americans,” NHTSA Acting Administrator Ann Carlson said in a statement.
“The new standards we’re proposing today would advance our energy security, reduce harmful emissions, and save families and business owners money at the pump,” she continued. “That’s good news for everyone.”
The proposal Friday is sure to garner considerable pushback from both Republican lawmakers, the fossil fuel industry and automakers.
On July 17, General Motors Vice President of Global Regulatory Affairs David Strickland met with White House officials as part of the administration’s pre-rule procedure and presented data showing the CAFE standards could cost companies up to $300 billion. Those costs would come in the form of government fines for not meeting fuel efficiency requirement, according to the presentation.
In March 2022, NHTSA finalized its proposed CAFE standards for model years 2024-2026, mandating an industry-wide fleet average of about 49 miles per gallon by 2026. The agency acknowledged in an accompanying report the standards would cost automakers an estimated $236.5 billion and projected car prices to rise by more than $1,000.
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And the proposal Friday comes three months after the Environmental Protection Agency (EPA) proposed the most aggressive tailpipe emissions ever crafted which it said would cause 67% of new sedan, crossover, SUV and light truck purchases to be electric by 2032.
NHTSA said its rules would “complement and align with” EPA’s emissions standards.
“NHTSA will coordinate with the EPA to optimize the effectiveness of its standards while minimizing compliance costs, consistent with applicable statutory factors,” the agency said Friday. “With the release of today’s proposal, NHTSA invites comments from all stakeholders on how this goal can be achieved.”
On May 1, shortly after EPA releases its emissions standards proposal, Senate Commerce Committee Ranking Member Ted Cruz, R-Texas, led a letter to NHTSA Acting Administrator Carlson, warning her against following EPA’s lead cracking down on gas-powered vehicles.
“Based on your record, we are deeply concerned that the National Highway Traffic Safety Administration will follow the EPA’s lead and propose similarly radical vehicle fuel economy standards that run contrary to the law, diminish vehicle choice, impose higher costs on American families, and undermine our national and energy security all while benefitting China,” he wrote in the letter.
“As NHTSA finalizes a proposal for new fuel economy standards for model years 2027 to 2032, we urge you to reject the EPA’s economically destructive regulatory overreach,” Cruz continued.
The White House withdrew its nomination on May 30 for Carlson to lead NHTSA after she faced strong opposition from Cruz and other lawmakers for boasting that NHTSA — founded in 1970 to improve passenger car safety and reduce traffic deaths — could be transformed into a climate-centered agency. However, she remains the agency’s acting administrator, making her its effective leader.
