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With the Change in Fuel-economy Objectives, US Soft-pedals on EV Adoption

The Biden administration’s relaxation of rules in the US translates to more lenient fuel economy average targets.

Under this change, the Corporate Average Fuel Economy (CAFE) standards have been eased, making it easier for car manufacturers to meet 2030 targets without relying as heavily on electric vehicles.

CAFE standards evaluate the fuel economy average of a manufacturer’s fleet, with electric cars also playing a significant role in reducing the overall score. The current targets aim for a fleet average of 5.5 liters per 100 kilometers for passenger cars and 7.6 liters per 100 kilometers for SUVs and pickups.

Last year, the US National Highway Traffic Safety Administration (NHTSA) proposed increasing CAFE standards by two percent per year for passenger cars and four percent annually for SUVs and pickups over the next eight years, causing concerns among many manufacturers.

The offset provided by electric vehicles in achieving CAFE targets was expected to decrease by 72 percent by 2030, but the Biden administration has now reduced this to just 65 percent.

This adjustment means that car manufacturers can still meet CAFE targets with a fleet mix closer to a 50/50 balance between internal combustion engines and electric vehicles by 2030, rather than relying predominantly on the latter.

Prior to these relaxed goals, major US automakers including General Motors, Stellantis, and Ford (representing the ‘Big Three’) were facing significant fines due to difficulties in keeping up with stringent regulations pushing for electric vehicles.

Reports indicate that GM and Stellantis have already paid approximately $US363 million ($AU574 million) in fines last year for failing to meet CAFE standards.

Meanwhile, in Australia, there’s a proposal to implement a New Vehicle Emissions Standard (NVES) next year, which assesses a manufacturer’s average fleet emissions rather than fuel economy.

Under the current proposal, passenger cars and light-commercial vehicle emissions averages are expected to decrease gradually to 141 and 199 grams of CO2 per kilometer, respectively, targeting annual reductions of 6.8 and 3.8 percent each.

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