US aims to dramatically expand EV fleets with tough new emissions rule

US environmental regulators on Wednesday proposed tough new emissions limits that would force carmakers to make 67 per cent of their American models electric by 2032.

EPA administrator Michael Regan called it “the most ambitious pollution standards ever for cars and trucks”. It would significantly increase EVs share of the new vehicle market, which stood at about 7 per cent in 2022.

The proposed rule would limit tailpipe emissions across all the vehicles in a carmaker’s fleet, forcing companies to make more battery-powered vehicles to meet the new standard. It would affect models built starting in 2027 through to 2032.

The proposal would also curb air pollution, boosting the US’s chance of achieving its Paris Agreement pledge to lower emissions by 50-52 per cent below 2005 levels by 2030. The rules would also force carmakers to speed up their timetables for electrification, and in doing so tilt the US car market towards EVs even as they remain more expensive than vehicles with traditional engines.

General Motors, Ford and Stellantis have pledged to make between 40-50 per cent of their US sales electric by 2030, and they have invested billions of dollars in developing new models and building factories. But there are questions about whether the carmakers can build cheaper electric vehicles, which continue to cost more than gas-powered equivalents.

The regulation was an “ambitious goal in a pretty short time period”, said Cox Automotive analyst Michelle Krebs.

“The big question is, ‘What is consumer acceptance?’” she said. “You can mandate them, but people have to buy them. A lot of that will depend on can automakers produce affordable ones, and ones they can be profitable with?”

Transportation generates more greenhouses gases than any other sector in the US. “If you’re serious about dealing with climate change problems, then you need to address the transportation sector,” said Howard Learner, executive director of the Environmental Law & Policy Center.

President Joe Biden issued an executive order in August 2021 calling for half of all new US car and truck sales to be electric by the end of the decade. While that order was not legally enforceable, the EPA regulation setting a higher emissions threshold would be.

The federal government’s target follows regulation by California eight months earlier to ban sales of petrol-powered vehicles in the state by 2035. The state is a heavyweight in the US vehicle market, with 13 per cent of all car and truck sales last year, which has allowed it to influence environmental policy for decades.

John Bozzella, chief executive of the Alliance for Automotive Innovation, a trade group representing car and battery makers, called the new standard “aggressive by any measure”, pointing out it exceeded the goal the Biden administration set just 20 months ago. 

“The question isn’t can this be done, it’s how fast can it be done,” he said. 

In the short term, the rule benefits manufacturers such as Tesla that make only electric cars. But moving to green energy required a number of successful carmakers, Krebs said. “The pie is going to get bigger, so you need more pieces of pie.”