Electric vehicle sales set to rise under new EPA tailpipe pollution rule

Electric vehicle (EV) sales are set to rise in the 2030s under a far-reaching climate regulation issued by the Biden administration on Mar. 20.

Under the final rule, the Environmental Protection Agency (EPA) set national pollution standards for passenger cars, light-duty trucks, and medium-duty vehicles for model years 2027 through 2032 and beyond. While the new rules do not mandate that automakers transform fleets to sell more EVs by a certain date, those automakers could build more EVs to comply with stricter emissions standards.

The new standards would prevent more than 7 billion tonnes of carbon emissions by 2055, provide nearly $100 billion of annual net benefits to society, and avert 2,500 premature deaths from auto pollution by reducing emissions of fine particulate matter from gasoline-powered vehicles by more than 95%, EPA said.

The transportation sector represents nearly 40% of US climate emissions, the single is the largest source, EPA said. The proposed rule moves the Biden administration a step closer toward its goal to reduce emissions by 50-52% of 2005 levels by 2030.

Unlike 2023’s stricter proposed rule, automakers are not required to dramatically boost EV sales until after 2030 and they can use plug-in hybrid gasoline-electric vehicles as well as all-electric vehicles to meet new standards. Automakers may choose to produce 30-56% of new light-duty vehicle sales as battery-electric vehicles, with the rest consisting of a mix of other clean vehicle technology, according to an EPA fact sheet. The rule would continue to allow for gasoline-fueled vehicle sales.

The Biden administration eased the final standards after fierce opposition from the automotive unions, a key election-year constituency, and concerns about fueling infrastructure not keeping pace with EV growth. EPA projects US auto manufacturing employment to grow because of the new standards.

“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, said John Bozzella, president and chief executive officer of the Alliance for Automotive Innovation, a trade group representing Ford, General Motors, and Toyota, among others. “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.”

Several Republican-led states and oil and gas industry representatives have indicated they will challenge the rule. 

“At a time when millions of Americans are struggling with high costs and inflation, the Biden administration has finalized a regulation that will unequivocally eliminate most new gas cars and traditional hybrids from the US market in less than a decade, the American Fuel & Petrochemical Manufacturers and the American Petroleum Institute said in a joint statement. “This regulation will make new gas-powered vehicles unavailable or prohibitively expensive for most Americans…[O]ur organizations are certainly prepared to challenge it in court.”

Republicans in Congress are searching for ways to block the new regulations.

The rule comes as sales of EVs are slowing as consumers opt for cheaper hybrids and plug-in hybrids. Fourth-quarter 2023 EV sales increased 40%, down from a 49% jump in third-quarter 2023 and a 52% spike in the second quarter, according to Kelley’s Blue Book.