Automakers will get significantly more mileage credits for building electric vehicles to meet U.S. fuel economy requirements than U.S. regulators initially proposed, under final rules released Tuesday.
The rule means automakers will now be able to build more gas-powered vehicles through 2030 and still meet overall Corporate Average Fuel Economy requirements than under the tougher, initial Energy Department (DOE) proposal.
DOE assigns miles per gallon equivalent (MPGe) ratings for electric vehicles that are averaged with internal combustion vehicles to meet an automaker's overall CAFE requirements.
The decision, first reported Monday by Reuters, is a win for the Detroit Three automakers, other major automakers and the United Auto Workers union that raised alarm that the proposal could have resulted in U.S. automakers facing $10.5 billion in CAFE fines through 2032 for not meeting fuel-economy requirements.
The final rule reduces the petroleum-equivalent EV fuel economy rating through 2030 and by 65% in total, giving automakers more time to adjust.
Under the prior proposal, General Motors (GM.N) would face $6.5 billion in fines, followed by Chrysler-parent Stellantis (STLAM.MI) with $3 billion, and Ford (F.N) $1 billion through 2032. The National Highway Traffic Safety Administration is set to proposal final revised CAFE rules this spring.
Alliance for Automotive Innovation CEO John Bozzella said Tuesday the earlier DOE proposal would "perversely disincentivize the production of battery electric vehicles" and would have forced automakers to pay hefty CAFE civil penalties.
He called the decision to phase in and make adjustments to the calculation "positive."
The NRDC and Sierra Club had urged EV mileage rating reductions after the DOE left them unchanged for two decades, arguing high ratings meant a "relatively small number of EVs will mathematically guarantee compliance without meaningful improvements" in the overall fleet.
"The automakers’ free ride is over," said Pete Huffman, senior attorney at NRDC on Tuesday, and the final rule "will curtail automakers’ use of phantom credits they used to keep selling gas guzzlers."
Separately, the Environmental Protection Agency on Wednesday will unveil revised vehicle emissions requirements that will ease proposed yearly requirements through 2030 in a bid to aggressively cut tailpipe emissions and boost EV sales, sources said.
