Last week, the Biden administration issued a proposal by the National Highway Traffic Safety Administration (NHTSA) to increase the average fuel economy of vehicles sold in the United States. Under the proposal, automakers would be required to increase the average mileage of the passenger vehicles they sell by 2 percent a year for passenger cars, and 4 percent a year for light trucks, between 2027 and 2032. If implemented, the plan means new autos sold in the United States would achieve an average fuel economy of 58 miles per gallon by 2032. In order for automakers to achieve that average, about two-thirds of the new cars they sell by that year would have to be all-electric, which is exactly the same goal that was proposed by the Environmental Protection Agency in April. The proposed rules are part of President Biden’s climate agenda that aims to have half of all vehicles sold in the United States be electric by the end of this decade. The rules come from President Biden’s political appointees, interpreting various laws in such a way to reach the President’s “goal”.
General Motors Co. indicated that federal rules and other regulations in six states could require automakers to sell more than the Biden Administration’s goal of 50 percent of volume from electric vehicles by 2030, which is likely to be difficult to achieve. The Alliance for Automotive Innovation, which represents automakers, said the Biden Administration’s goal to have electric vehicles make up half the market by 2030 was a stretch. Major auto companies do “not believe they can be met without substantially increasing the cost of vehicles, reducing consumer choice, and disadvantaging major portions of the United States population and territory.” Yet, President Biden is pushing his Environmental Protection Agency and his Department of Transportation to do his bidding regardless of whether automakers can comply. Even if the proposals were feasible, the Biden administration is removing options from Americans to decide what is best for themselves. This is especially true when only one-third of Americans would consider purchasing an electric vehicle.
The Transportation Department estimates that the efficiency proposal would reduce the use of gasoline in the United States by 88 billion gallons through 2050 (about 2.1 billion barrels), which would be the equivalent of taking more than 233 million internal combustion vehicles off the road from 2022 through 2050 and replacing them with electric vehicles where about 60 percent of the electricity that would charge their batteries currently comes from coal and natural gas. That makes NHTSA’s emission reductions estimate of over 900 million metric tons of carbon dioxide questionable. NHTSA estimates that the combined benefits of the proposal would exceed costs by more than $18 billion, chiefly by saving consumers money on fuel. But, that number is also questionable since the Biden agencies do their analyses in a vacuum where they model new proposals without considering the cost of other proposals that are also needed, including the cost of new renewable electricity generation and transmission–the new “fuel” of Biden’s EV goal.
For example, a study by the Anderson Economic Group found the cost to fuel certain electric vehicles to be higher than similar gasoline-powered cars. In the fourth quarter of 2022, drivers fueling a typical mid-priced Internal Combustion Engine (ICE) car paid $11.29 to fuel their vehicle for 100 miles of driving. That cost was $0.31 cheaper than the amount paid by drivers in mid-priced electric vehicles charging mostly at home, and over $3 less than the cost borne by comparable EV drivers charging commercially. This occurred because gasoline prices were declining and electricity costs were increasing. As the Biden administration continues with rules for transitioning to green energy, electricity prices will continue to increase, despite its claim that renewable energy is practically free.
If automakers cannot reach the standards that NHTSA sets, they are forced to pay a fine, which will simply raise the cost of autos for consumers. Automakers must buy credits or pay fines if they cannot meet the Corporate Average Fuel Equivalent (CAFE) requirements. Stellantis, then known as Fiat Chrysler, paid $152.3 million in total CAFE fines for 2016 and 2017 and faced additional civil penalties. In 2022, NHTSA more than doubled CAFE penalties when it also ordered automakers to increase their average fuel economy to about 49 miles per gallon by 2026.
Conclusion
NHTSA estimates its new rule would save Americans a cumulative $50 billion in fuel costs over the long term, but consumers would incur up to $1,000 in upfront costs for vehicles and electric vehicles would be pushed onto consumers. The average new electric vehicle is about $5,000 more expensive than the average new internal combustion engine vehicle, according to July data from Kelley Blue Book. That number is larger in the case of the federal government where electric vehicles cost over $21,000 more per vehicle than internal combustion vehicles they are replacing. The proposed NHTSA rule will effectively require auto manufacturers to more than double the average fleet fuel efficiency, from the Environmental Protection Agency’s estimated 2022 efficiency level of 26.4 miles per gallon to “potentially reaching an average fleet fuel economy of 58 miles per gallon by 2032.”
Both the Transportation Department rule on auto fuel economy and the EPA rule on auto emissions are proposals, not yet final regulations. Both agencies will next request public comment on the rules, and they are to incorporate comments before issuing final rules next year. The Biden administration and legal experts believe that two measures — one from EPA and one from NHTSA — for the same goal, have a better chance of surviving legal challenges. If the courts strike down one, the other might survive, meaning that electric vehicles might possibly be pushed on Americans despite their higher cost, lousy range, and lengthy charging times. These massive changes in vehicle choice options for Americans come as a result of President Biden’s “goals,” rather than legal direction by statute and they will fundamentally transform personal transportation in the United States.
*This article was adapted from content originally published by the Institute for Energy Research.