Biden Admin. Softens Both DOE and EPA BEV Rules

Bowing to consumer interest and softening demand for battery-electric vehicles in an election year, the Biden Admin. has backed off its clean-air regulations designed to have BEVs comprise 50% of new-vehicle sales by 2030.

Clean-air and emissions targets and rules set by the Department of Energy (DOE) and EPA have been relaxed, allowing more time for automakers to sell internal-combustion-engine (ICE) vehicles while consumers get oriented to all-electric cars and trucks.

The concession, brokered with DOE and the White House by the Alliance For Automotive Innovation and the Congressional Automotive Caucus, will help automakers avoid heavy financial penalties potentially reaching $10.5 billion through 2032.It will allow automakers to use a wider menu of technology offerings to meet emission targets and sell more ICE vehicles through 2030, especially fullsize pickups.

The final rule for Petroleum-Equivalent Fuel Economy Calculation softens the previous Biden Administration framework by adding three years to the phase-in of the new rule, cutting the PEF over that time by 65%, versus the previously proposed 72% by 2027, thus allowing OEMs to build more gas-powered vehicles through 2030 while still meeting Corporate Average Fuel Economy requirements. This was crucial to maximize profits of ICE vehicles until selling BEVs becomes profitable.

Under the prior proposal, General Motors, for example, would have potentially faced the heaviest penalties at $6.5 billion, with Stellantis facing $3 billion and Ford could be hit for $1 billion.

According to one Capitol Hill official who spoke with WardsAuto on background, the White House was seeking to find “a middle ground that allows it to keep environmental groups, the UAW and automakers all under the tent in what promises to be a contentious and mudslinging election year between Democrats and Republicans who are using the EV mandates as an issue about ‘big government.’”

Energy Secretary Jennifer Granholm, a former governor of Michigan, has also provided an open ear to the auto industry’s complaints about the previous proposed rule and was able to negotiate the revised standards.

The practical side of the decision to roll back the likelihood of penalties is that automakers have done their bit to put BEVs on the road, but consumer adoption of BEVs has softened because of prices, persistent inflation and underdeveloped public charging infrastructure. Biden Admin. officials also took into account automakers’ efforts to help build out charging stations and agreements with Tesla Motors to utilize the latter’s fast-charging network.

Automakers also are responding to the slowdown in consumer adoption of all-electric vehicles by fast-tracking more hybrid and plug-in-hybrid vehicles to market – vehicles that get greater fuel economy and don’t rely on public charging infrastructure.

Alliance for Automotive Innovation CEO John Bozzella says the earlier DOE proposal would “perversely disincentivize the production of battery electric vehicles” and would have forced automakers to pay substantial civil penalties.

“We appreciate that the Department of Energy is updating its old flawed and outdated calculation,” says Joshua Berman, senior attorney with the Sierra Club. “The prior calculation discouraged both widespread electric vehicle investments and improvements to the fuel economy of gas-power vehicles. Our communities will benefit from improving the accuracy of this fuel-economy calculation.” 

Dealers, too, have been vocal in asking for the proposed rules to be revised. Owners representing thousands of dealerships sent the second of two open letters so far to Biden on Jan. 25, asking the president to “hit the brakes” on the switch to BEVs. The group calls itself “EV Voice of the Customer.”

“Since the first letter, the evidence continues to mount that these regulations go too far, too soon,” says dealer Mickey Anderson, CEO of Baxter Auto Group, Omaha, NE, who says he organized the letter-writing campaign.

Meanwhile, the EPA on Wednesday announced new automobile emissions standards. The EPA said that under its final rule, the industry could meet emission limits if 56% of new vehicle sales are electric by 2032, along with at least 13% plug-in hybrids or other partially electric cars, as well as more efficient gasoline-powered cars that get more miles to the gallon.

The final rule, though, does reflect Biden Admin. resolve to push BEVs as fast as the market can absorb them. The target of 56% by 2032 compares with a BEV market share of 7.6% in 2023.

The EPA rule applies to model years 2027 to 2032 and significantly reduces emissions of greenhouse gases, nitrogen oxides and particulate matter from new passenger cars, light trucks and pickups. Transportation makes up the largest source of U.S. greenhouse gas emissions, and cars and trucks account for more than half of those emissions.