The EPA’s New EV Rules Could Test Carmakers’ Commitment To Zero Emissions

Bold zero emission vehicle (ZEV) commitments have accelerated in recent years, from President Biden, automakers, and state governments. But the U.S. Environmental Protection Agency’s (EPA) newly proposed tailpipe emissions standards – the most ambitious in U.S. history – will shift the country’s electric vehicle (EV) market into high gear.

It also brings automakers to a fork in the road: Will they support EPA’s proposal and double down on their ZEV commitments, or will they try to water down this historic proposal with lobbying and lawsuits?

Government and corporate momentum are behind EPA’s proposal. In August 2021, President Biden signed an Executive Order to make half of all new vehicles sold in 2030 ZEVs. The same year, GM announced it would phase out internal combustion engines by 2035. Ford, Volkswagen, and Stellantis committed to ZEVs composing half of their U.S. sales by 2030. Heavy-duty manufacturers have joined their light vehicle brethren, and Navistar and Volvo’s executives expect 50 percent heavy-duty ZEV sales by 2030 en route to 100 percent EV or fossil free by 2040.

But today’s EPA tailpipe emissions proposal is even more ambitious than Biden’s ZEV goal. EPA projects ZEVs could account for 67% of cars and 46% of medium duty vehicle sales by 2032. For heavy-duty commercial vehicles, based on application, 35-57% of new sales would be zero emission in 2032.

The overall public health, environmental, and consumer benefits from EPA’s light and medium duty vehicles proposal are massive: between $850 billion – $1.6 trillion dollars. Carbon pollution will be cut by 7.3 billion metric tons, roughly equivalent to the annual emissions of 1.6 billion passenger vehicles. Particulate emissions and nitrogen oxide pollution, which worsen local air quality and exacerbate respiratory problems like asthma, will also be reduced significantly. The proposed heavy duty truck proposal will reduce carbon pollution by 1.8 billion metric tons, roughly equivalent to the annual emissions of 480 coal-burning power plants, achieving $180-$320 billion net benefits.

These new standards are the Biden Administration’s most significant regulatory action to combat climate change through the transportation sector, which is the nation’s the largest emitter of greenhouse gases. They give the U.S. a chance of meeting its international climate pledges designed to avoid the worst impacts of global change. And they will sharpen domestic auto companies’ competitive edge in the booming international ZEV market.

So, the question is, are EPA’s tailpipe emissions standards achievable? In a word, yes. They are realistic and aligned with both the policies of the world’s major economies and the auto industry’s zeal for “electrification” of its future production – the best, current solution for ZEVs.

The U.S. is still well behind Europe and China in ZEV policies, and their economic head start. The EU has required 100% of new vehicles to be ZEVs by 2035 across member nations comprising about 450 million people. China’s “New Energy Vehicle” policies have helped it become the dominant player in the global EV value chain with domestic sales already surpassing the country’s targets. Their strong policies—and the signals they send to private sector—have led to EVs accounting for 30% of new passenger vehicles in China and 22% in Europe in 2022. The U.S. is currently lagging both at only 8%.

The auto industry’s record $1.2 trillion investment commitments in EV, battery, and materials manufacturing by 2030 have doubled in just the past year – roughly $120 billion has already been invested in the U.S. through 2023. The bipartisan Infrastructure Investment and Jobs Act adds $100 billion for EV and clean energy policy, and the Inflation Reduction Act (IRA) another $369 billion in economywide clean energy investments. The IRA provides up to $7,500 credit for new passenger EVs, $4,000 for used EVs, up to $1,000 for EV charging stations, $40,000 for commercial ZEVs, and $100,000 for truck charging stations.

The investments are rapidly changing the U.S. auto market. A recent JD Powers study found “about half of U.S. new-car buyers could find an EV at the price and size they want, from their favored brand, by the end of this year.” An ICCT study finds that passenger EVs with up to 300-mile range will be cheaper than gasoline vehicles before 2030. Among heavy-duty commercial vehicles, some electric trucks and buses will be cheaper to buy than their diesel counterparts by 2025-2030, and most will be cheaper to operate by 2030.

Americans who purchase EVs will also benefit from lower fuel and maintenance costs. When the savings from charging instead of gassing up are factored in, EVs will be cheaper to own by 2025 and generate savings over the first six years of $6,600 to $11,000.

The ambitious EPA standards are also well supported by state-based policy pillars already in place. For example, California has already adopted enforceable policies that require auto makers to sell 100% electric passenger vehicles by 2035. A progressive group of U.S. states, representing 40 percent of the U.S. passenger car market, have adopted the California’s low emission vehicle standards, with six aligning their programs with California’s 100 percent electrification pathway by 2035. For commercial trucks and buses, a similar group of progressive states representing 36% of the U.S. heavy-duty vehicle market signed a coordinated agreement to achieve 30% electric sales of commercial trucks and buses by 2030.

President Biden spoke clearly about the threat to U.S. global competitiveness in the EV transition at last year’s Detroit Auto Show, saying “we risk losing the edge as a nation” without rapid gains. If finalized, this proposal will allow the U.S. to catch up with the EU’s and China’s vehicle electrification rates.

EPA’s new proposed standards will have enormous impacts including meaningful steps to reduce the existential threat of climate change, health benefits for Americans, savings on vehicle maintenance and fuel costs, and improving the ability of U.S. companies to compete globally in the rapidly growing ZEV market.

The focus now shifts back to the auto and truck industry. Will they meet the moment and back up their back up their headline-grabbing electrification claims by supporting the proposed regulations, or will they lapse into their historic habits of using lawsuits and lobbying to push back on ambitious proposals?

If there is any time for the industry to “walk its talk,” it is now – the 2050 climate targets are fast approaching and we’ve no time to waste.