Automaker group warns NHTSA's fuel economy proposal could threaten EV transition

WASHINGTON — The Alliance for Automotive Innovation on Thursday warned U.S. auto safety regulators at NHTSA that new fuel economy standards, if finalized as proposed, could threaten the industry's transition to electric vehicles.

NHTSA in July proposed fuel economy standards for the 2027-32 model years that would require a 2 percent per year improvement in fuel efficiency for cars and a 4 percent per year improvement for light trucks. The standards would require average fleet fuel economy of nearly 58 mpg — or about 40 to 46 mpg in real-world driving — by the 2032 model year.

At a virtual public hearing held Thursday, the alliance's Michael Hartrick said the proposal marked "an unprecedented rate of change" alongside standards finalized last year, which call for fuel efficiency to increase 8 percent per year for cars and light trucks in the 2024 and 2025 model years and 10 percent in 2026. The rule requires a combined fleet average of about 49 mpg in the 2026 model year.

However, "NHTSA's proposal exceeds maximum feasibility," said Hartrick, senior director of energy and environment, who also raised concerns over increased penalties for noncompliance and a pending rule at the U.S. Energy Department that, taken together, could make it difficult for automakers to balance efficiency improvements to internal combustion engine vehicles with investments in EVs.

The Energy Department's proposal would update a decades-old calculation that determines the petroleum-equivalent fuel economy of EVs for NHTSA's fuel economy standards. That proposal is expected to be finalized next spring.

"We are concerned that NHTSA's consideration of BEVs in developing its proposed standards, despite statutory prohibitions, combined with DOE's proposal to devalue the fuel economy of electric vehicles by 72 percent will result in serious misalignment, distracting manufacturers' attention and resources from the EV transition," Hartrick said.

To be sure, NHTSA is prohibited from considering EVs' fuel economy when determining its maximum feasible fuel economy standards for a given model year. However, in its environmental impact statement, the agency does model an "unconstrained" scenario that considers EV penetration.

Meanwhile, NHTSA last year reinstated higher penalties for automakers whose vehicles do not comply with fuel economy standards for the 2019 model year and beyond.

Automakers would pay more than $14 billion in noncompliance penalties, affecting 1 in every 2 light trucks in 2027 through 2032 and 1 in every 3 passenger cars in 2027 through 2029, Hartrick said, citing NHTSA projections.

"The number of noncompliant vehicles and manufacturers projected exceeds reason and simply put will increase costs to the American consumer with absolutely no environmental or fuel savings benefits," he said.

The alliance, once again, is calling for a single national standard that aligns NHTSA's fuel economy standards with both the EPA's vehicle emissions regulation and those set by the California Air Resources Board.

NHTSA's acting administrator, Ann Carlson, in opening remarks at the hearing, said the agency's standards will make vehicles more efficient, strengthen U.S. energy independence, save Americans money and increase consumer choice while also combating climate change.

"These targets are consistent with Congress' direction to conserve fuel and promote American energy independence and American auto manufacturing," she said.

Other commenters, including those representing environmental and consumer groups, argued NHTSA can pursue more stringent standards.

"While this is a move in the right direction, what is clear is that NHTSA can and must go further," said Kathy Harris, who leads the Natural Resources Defense Council's work on clean vehicle policies and programs.

"The agency should be looking at the limits of possibility rather than the limits of automaker ambition," she said.