EPA rules turn up heat on automakers' EV goals

WASHINGTON — In contrast to President Joe Biden's nonbinding zero-emission vehicle goal, the EPA's aggressive new campaign would have the legal authority to force the automotive industry to make some tough decisions as it hastens its electrification strategies.

The agency last week unveiled its strictest-ever vehicle pollution standards for cars and light trucks for the 2027-32 model years, requiring 13 percent fleetwide average emissions reductions each year and a 56 percent reduction in average emission target levels from the 2026 model year.

If finalized, the proposed standards could mean electric vehicles would make up more than half of new-vehicle sales by the 2030 model year and two-thirds by 2032. It would mark a massive leap from the current market, with EVs accounting for 5.6 percent of U.S. light-vehicle registrations, according to Automotive News data.

"This is a big step toward the sunset of the combustion engine," said Nick Nigro, founder of EV research group Atlas Public Policy. "Autos have to make tough choices in the near term about the kind of product they're going to invest in and which products and product lines they're willing to sunset in favor of electrification."

The EPA's EV projections are more aggressive than Biden's goal, which was supported by major automakers nearly two years ago.

Biden's executive order called for ZEVs — battery-electric, plug-in hybrid and fuel cell — to make up 50 percent of new-vehicle sales by 2030. Since then, more automakers have committed to EV-only goals, with some aiming to surpass the target and others lagging behind it.

But unlike Biden's ZEV goal and automakers' voluntary commitments, the EPA's car pollution standards must be followed.

"This regulation … is providing some binding limits and holding manufacturers accountable to those promises," said Dave Cooke, senior vehicles analyst at the Union of Concerned Scientists. "But I don't think that this is moving beyond where the auto industry itself was well-positioned to be."

Automakers already will have invested $1.2 trillion in electrification globally by 2030, according to the Alliance for Automotive Innovation, which represents many of the automakers aiming for between 40 and 50 percent U.S. sales of ZEVs in that time frame.

In the U.S., automakers and their battery partners have committed at least $110 billion to electrify their products.

Those investments, in part, have been driven by policies such as manufacturing incentives and consumer tax credits in the Inflation Reduction Act as well as funding for EV chargers and updates to the electric grid in the Infrastructure Investment and Jobs Act.

Neither of those laws was enacted when Biden set the ZEV goal in 2021.

"Today, both of these massive investment laws are in place that should be expediting the ability of car and truck manufacturers to meet more ambitious standards than what the president expected in 2021," said Margo Oge, a former director of the EPA's Office of Transportation and Air Quality.

She referred to the standards as "the single most important regulatory initiative by the Biden administration" to combat climate change.

Still, of the EPA's proposal, Alliance CEO John Bozzella said it was "aggressive by any measure," adding that the 50 percent target "was always a stretch goal" reliant on several conditions, such as supportive public policies, widespread and reliable EV charging infrastructure, vehicle affordability and access to battery critical minerals.

"The question isn't can this be done, it's how fast it can be done," he said, "and how fast will depend almost exclusively on having the right policies and market conditions in place to achieve the shared goal of a net-zero carbon automotive future."

One big risk to that future, however, is infrastructure, which Nigro referred to as one of the major challenges and unknowns for achieving the targets, calling the current U.S. policy framework "insufficient to the task."

"Whether it be electric utilities or charging providers, they're not positioned to be able to build the amount of infrastructure that's necessary to meet the demand that is likely to come with not just the EPA rule but what the auto industry was already doing," he said.

In a statement Wednesday, April 12, Stellantis — whose COO for North America, Mark Stewart, joined Biden at the White House when the 2030 goal was announced — said it was "surprised" none of EPA's options in the proposal aligned with the target of 50 percent EVs by mid-decade.

General Motors, whose CEO Mary Barra also stood beside the president, said it was still reviewing the proposal but supports "economywide efforts to address climate change," including a push toward EVs and improving its overall fleet efficiency.

But Ford Motor Co.'s Bob Holycross said it will take "more than just emissions standards" to reach the EV targets, noting that many of the provisions in the Inflation Reduction Act are still being implemented.

"We're going as fast as we can," Holycross, vice president of sustainability, environment and safety engineering, told Automotive News Wednesday at an event at EPA headquarters.

"It's a matter of all the things that we're going to need in terms of the supply chain and just the overall economic conditions to continue to make that a reality," he said. "But we're not backing off or taking our foot off the accelerator."

Electric pickup maker Rivian Automotive applauded the EPA's proposal, calling the targets "realistic" and adding that the standards will "guide the industry's technological trajectory for decades to come."

To be sure, neither Biden nor his administration has called for a ban on sales of new combustion engine vehicles by a certain date — actions that are underway in places such as California and the European Union.

The EPA's proposal also does not mandate a specific technology such as EVs. Instead, it is designed to allow automakers to meet the performance-based requirements through multiple pathways, including efficiency improvements in internal combustion engine vehicles.

For example, the agency projects the standards will drive widespread use of gasoline particulate filters to reduce emissions and support the use of other carbon dioxide-reducing technologies.

"We're not prescribing any mandates, and we're not driving any particular technology out of business, so to speak," EPA Administrator Michael Regan told reporters during the announcement. "I think we're giving the markets and the automobile industry, the private sector, the options to choose on how we best move forward to reach these very, very, very ambitious climate goals."

The agency's proposal has met criticism, however, and could face legal challenges if finalized.

Republican lawmakers in both chambers of Congress questioned the stringency of the standards, stating the proposal would make new vehicles more expensive and that the EPA did not consider supply chain and infrastructure challenges.

"This will hurt low-income families the most, while also making us more reliant on China for critical materials necessary for electric vehicles," said Rep. Cathy McMorris Rodgers, R-Wash., who chairs the House Energy and Commerce Committee.

The EPA estimates it would add about $1,200 per vehicle in upfront costs by the 2032 model year to meet the proposed standards. However, consumers would save $12,000 over the vehicle's lifetime compared with one not subject to the same emissions limits.

Regan also said it would reduce dependency on foreign oil imports while providing some years for a domestic EV supply chain to ramp up before the proposal's requirements take effect.

"We hope that we can take advantage of that runway and follow the investments of historic legislation to bring manufacturing, especially battery manufacturing, back here domestically," he said.

The UAW, while supportive of an EV transition, expressed concern over the potential job losses to auto workers.

"The early signs of this industry are worrying, prioritizing corporate greed over economic justice," the UAW said in a statement. "Forcing workers to decide between good jobs and green jobs is a false choice. We can and must achieve both."