The Environmental Protection Agency (EPA) has announced the most stringent emissions rules in U.S. history. These regulations promote a shift towards an American car market more dominated by electric vehicles, but implementing these rules would now allow car companies some breathing room.

The move from the EPA marks the final version of emissions rules for light- and medium-duty vehicles sold between 2027 and 2032. In a departure from its initial proposal, the final ruling mandates a more gradual penetration of electric vehicles during the program's early stages.

However, the ultimate goal of serious emissions reductions by 2032 remains in place.

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Policy drives the EV transition

In countries where EV adoption has been successful, like Norway and China, policy and government-led push on the demand side made EVs popular and led to emissions reductions. The U.S. is comparatively late to the party, but these are the strictest measures it has ever passed to move away from gas cars.

The initial proposal, which the EPA released in April last year, recommended automakers increase their share of battery-powered EVs to account for two-thirds, or about 67%, of their new passenger vehicle sales by 2032 to meet the CO2 emissions criteria. That proposal got overwhelming support from environmental groups, but staunch opposition from others.

However, after months of lobbying and rebellion from automakers, dealer groups, and petroleum companies—many of whom argued Americans were not "ready" for such a drastic change, and neither is the nation's charging infrastructure—the EPA has amended its program.

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The amendments consider the challenges automakers are facing in expanding their EV businesses, the considerable time needed to expand the nation's charging infrastructure, and also gives consumers time to cultivate interest and education in EVs.

The EPA's final guidance emphasizes reducing emissions across a brand's entire fleet. For light-duty vehicles the industry-wide average target starts at 170 grams per mile of CO2 emissions by 2027 (as opposed to 152 grams/mile in the initial proposal), gradually reducing to 85 grams/mile by 2032 (instead of 82 grams/mile initially).

The rules also require automakers to significantly slash the number of hydrocarbons, nitrogen oxides, and particulate matter their vehicles emit. Here’s a table comparing the proposal and the final standards from 2027 to 2032:

EPA Emissions Standards 
(CO2 Compliance Targets)
Final Standards (Total light-duty fleet average, CO2 grams/mile) Initial Proposal
2027 170 152
2028 153 131
2029 136 111
2030 119 102
2031 102 93
2032 85 82

As you can see, the new standards require less CO2 emissions over time—especially coinciding with more EVs, which have no tailpipe emissions—but aren't as tough as before. Until America gets to 2032, of course, and then we start to see a closer target to the original plan.

Moreover, automakers can choose to sell between 30-56% BEVs as a part of their overall production to meet the emissions targets, according to a fact sheet the EPA shared with reporters—but these exact percentages aren't required, as long as OEMs meet the multi-pollutant criteria.

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During a virtual White House briefing with reporters that InsideEVs was a part of, a senior administration official said that the new standards are technology-neutral and that the governing metric is grams per mile, not any particular propulsion type or percentage of BEVs.

With the new standards, the EPA estimates that the average annual fuel savings in 2032 will be about $6,000, and the U.S. will save 14 billion gallons of oil between now and 2055.

Carmakers can choose what percentage of BEVs or PHEVs they want to sell. But to meet the targets, it goes without saying that they would have to ramp up their BEV sales significantly. The EPA estimates that its standards would give the EV market the time it requires to mature.

Still, they will help save about 7.2 billion metric tons of CO2 emissions over the life of the program.

2023 Toyota Prius Prime Plug-In Hybrid

Another senior official said that the Biden administration was confident that the availability of EVs would grow dramatically in the years to come.

Citing J.D. Power's data, he said that 70% of the American public will have an EV available in the price and product category that they typically shop by the end of 2024. That estimate feels a bit overly optimistic, considering the rate of EV adoption is slowing (though the category is growing quickly overall), but many new and affordable models are indeed launching in the next few years. 

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However, some environment advocacy groups think the EPA’s finalized emissions standards are inadequate.

"The [alternative ruling] will avoid more vehicle pollution and save more lives than we have under current regulations," Chelsea Hodgkins, Senior ZEV Policy Advocate at Public Citizen, told InsideEVs in an interview. "That's important to celebrate. But I think it doesn't go far enough to meet our obligations. The U.S. is the largest historic emitter."

Hodgkins added that even the EPA’s initial preferred standard would not have helped the U.S. get where it needs to. Citing data from Climate Action Tracker, Hodgkins said the U.S. requires between 95-100% EV penetration by 2030 to keep the planet from warming beyond 1.5 degrees Celsius compared to pre-industrial levels.

“It's hugely problematic because this slow rollout means more gas-powered vehicles on the road. There will also be more hybrids on the road, which from our perspective are gas-powered vehicles with better fuel efficiency,” Hodgkins said. “We want to celebrate progress, but we must acknowledge that this is so much more limited than what we need and it's disappointing that industry pressure is what got us here."

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Consumer insights and data analytics firm J.D. Power indicated that the charging infrastructure was the more urgent matter to address.

“The readiness of the charging infrastructure is well behind the readiness to produce and sell the vehicles. Until this disconnect is resolved, requiring automakers to produce more EVs will not cause consumers to buy more EVs,” Doug Betts, president of the auto division at J.D. Power, told InsideEVs.

Environmental non-profit Sierra Club, on the other hand, which was also lobbying for a stricter standard along with Public Citizen, Tesla, and several other pro-EV groups, had a more positive take on the final rules.

“The Biden administration’s new clean car standards will save lives and money for families,"  Sierra Club’s Executive Director Ben Jealous said. "With investments from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act underway, these new standards will further help U.S. manufacturers in building American-made and union-built zero-emission vehicles."

The Alliance for Automotive Innovation, the auto industry's main trade group that includes members like Toyota, General Motors, Ford, and pretty much every major automaker that sells cars in the U.S., likely played a significant role in influencing the EPA's final rules. Its main argument was to allow time for the market to shift organically.

“Pace matters. Moderating the pace of EV adoption in 2027, 2028, 2029 and 2030 was the right call because it prioritizes more reasonable electrification targets in the next few (very critical) years of the EV transition," John Bozzella, president and CEO of Alliance for Automotive Innovation said.

“These adjusted EV targets—still a stretch goal—should give the market and supply chains a chance to catch up. It buys some time for more public charging to come online, and the industrial incentives and policies of the Inflation Reduction Act to do their thing," he added.

The new emissions standards, with the updated fuel economy rules finalized by the U.S. Department of Energy yesterday, allow brands to sell polluting gas cars for an extended period. The impact of this slower approach will also likely have climate consequences. Regardless, these are the strongest standards the U.S. has ever passed to pivot towards cleaner transportation—a sector that causes the most pollution in the country.

With an impending presidential election, what remains to be seen is whether this new policy will stick through the decade. President Donald Trump, who almost certainly will be the Republican nominee again, worked to roll back EPA emissions standards and has lately vowed to undo the Biden administration's policies if reelected. 

At the same time, many car companies are moving forward with their EV plans regardless of regulatory uncertainty. This week alone, Stellantis joined with Ford, Honda, BMW, and Volvo to voluntarily reduce car emissions over time in an agreement with California, which has the power to set its own standards. 

Additional reporting by Tim Levin.

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