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US MPG rules to be relaxed for trucks and SUVs by 2031: New standards revealed

The federal government has unveiled new vehicle efficiency standards for 2027-2031 that will lead to modest improvements in the fuel efficiency of new cars and trucks. The final Corporate Average Fuel Economy (CAFE) rules announced by the National Highway Traffic Safety Administration (NHTSA) will require a 2% annual improvement in the fuel efficiency of passenger cars and a 2% annual improvement in the efficiency of light trucks during these years.

Proposed reforms and reality

This improvement is significantly less than the 4% annual increase previously proposed for trucks and SUVs, which are already held to lower standards and make up the bulk of US vehicle sales. According to the International Energy Agency (IEA), SUVs emit about 20% more CO2 than cars, whether they are electric or not. This fact is not only harmful to the environment but also presents a challenge to global climate change efforts.

US MPG rules to be relaxed for trucks and SUVs by 2031: New standards revealed

The EPA has estimated that their final rule will require 56% electric vehicles (EVs) and at least 13% plug-in hybrids by 2032. However, the rollout of EVs may be slow due to the tendency of automakers like GM to revive plug-in hybrids. According to its forecast, if more aggressive standards for light trucks were in place, 67% EVs were expected by 2032.

Impact of the new rules

According to the new rules, leniency for trucks and a lower number of EVs will result in fleet average efficiency of about 38 mpg by 2032, which is significantly lower than the original proposed 43.5 mpg. This difference shows how rule changes can have significant implications for both automakers and consumers.

US MPG rules to be relaxed for trucks and SUVs by 2031: New standards revealed

The 2024-2026 CAFE rules, which were finalized in 2022, call for aggressive increases of 8% in 2024 and 2025 and 10% in 2026. By the end of this period, real-world fleet averages are expected to be about 35 mpg in 2026 and about 29 mpg currently. This increase reflects not only technological improvements but also consumers’ growing environmental concerns.

Perspective of the rules

These fleet rules are one side of U.S. vehicle efficiency and emissions standards, which are typically set in coordination between different agencies. They follow EPA rules set in March, and they follow a familiar framework, with vehicle targets divided by “footprints” as well as passenger cars and light trucks.

The EPA rules continue to avoid a direct EV mandate and follow a slower ramp-up than originally proposed, but as set, they are largely considered a public health win. This rule is an important step toward reducing environmental impact and improving public health.

EVs will count as 300-mpg gas vehicles by 2027

To meet these pollution and efficiency rules, automakers already got a big reprieve. In March the Department of Energy announced it would take three years to phase in a revised petroleum equivalency factor (PEF). This would make EVs count as if they were going 300 miles per gallon, allowing automakers to produce hundreds of more gasoline vehicles.

US MPG rules to be relaxed for trucks and SUVs by 2031: New standards revealed

According to the PEF calculation, this equates a battery electric vehicle to a gasoline-powered vehicle that goes about 300 miles per gallon. This allows automakers to effectively produce hundreds of more gasoline vehicles for every one EV, and gives a boost to PHEVs (plug-in hybrid electric vehicles). After that three-year phaseout starting in 2027, EVs will count as just 120-mpg gasoline models, drastically reducing the number of lower-mpg models each EV enables.

The Wider Impact of CAFE Standards

While the EPA standards may be the most important building block, the CAFE standards themselves are the step that ultimately determines the mix of vehicles that will be sold and emphasized during this time period. This arguably gives the auto industry a greater incentive to shift its product mix toward heavier, less efficient SUVs rather than passenger cars.

Reaction from Consumer and Environmental Groups

The NHTSA is required by law to set standards for the “maximum feasible” average fuel economy levels that automakers can achieve in a given model year. Not all environmental and consumer groups saw these rules as meeting that maximum. Consumer organization Consumer Reports called them weak and said the NHTSA standards “merely check the box on its legal requirement.

Automakers’ response

John Bozzella, president and CEO of Automotive Innovation, praised the NHTSA rules and said that this interpretation will allow automakers to build more profitable gasoline-powered trucks. He told S&P Global that “it’s like the left hand knew what the right hand was doing.

US MPG rules to be relaxed for trucks and SUVs by 2031: New standards revealed

This positive comment could essentially mean that automakers are feeling confident that this interpretation will allow them to build more profitable gasoline-powered trucks without paying a penalty.

Future Outlook

At a time when another wave of true EVs – perhaps aided by affordability and battery breakthroughs – could catch on much faster, automakers may have a chance to prove regulators’ trendlines wrong. It is expected that the growing demand for EVs and PHEVs and improvements in technology will help automakers successfully operate under regulations and meet consumer requirements.

Thus, the relaxation of US fuel efficiency regulations for trucks and SUVs by 2031 is important not only for automakers, but also for the environment and consumers. It will be interesting to see how these changes will impact the auto industry and the environment in the future.

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