NHTSA finalizes stricter fuel economy standards for light vehicles

Washington — U.S. auto safety regulators have finalized fuel economy standards for light-duty cars and trucks that are more stringent than a proposal in August, pushing automakers to further improve the fuel efficiency of gasoline-powered vehicles as the industry shifts to electrification.

The U.S. Department of Transportation's NHTSA on April 1 said its new standards would increase fuel efficiency by 8 percent per year for cars and light trucks in the 2024 and 2025 model years, and by 10 percent for the 2026. The rules will require an industrywide fleet average of approximately 49 mpg in the 2026 model year.

NHTSA said U.S. gasoline consumption will be cut by more than 220 billion gallons in comparison with a continuation of the Trump-era standards. Under the rule, consumer fuel costs will be reduced by about $192 billion for new vehicles sold through 2030.

The agency's August proposal in comparison would have increased corporate average fuel economy, or CAFE, requirements by 8 percent annually over the 2024-26 model years and required an industrywide fleet average of roughly 48 mpg in the 2026 model year.

The proposed rule would have reduced consumer fuel costs by nearly $140 billion for new vehicles sold by 2030, NHTSA said.

During his first month in office, President Joe Biden ordered a review of regulations on vehicle fuel economy and greenhouse gas emissions after the Trump administration in 2020 enacted less stringent improvements in mileage than those put in place under predecessor Barack Obama.

The Trump-era rule required 1.5 percent annual increases in efficiency through 2026 compared with 5 percent annual increases under Obama.

NHTSA's fuel economy standards for the 2024-26 model years fulfill its portion of Biden's order.

During a press briefing, a senior administration official said the new standards are the most stringent year-over-year requirements thus far.

The official said automakers will be able to meet the more stringent standards with continued investments in more efficient gasoline-powered vehicles and electric vehicles.

The next round of standards will start with the 2027 model year, the official said. While NHTSA can set rules for five years at a time, the official added, the agency has not yet determined which model years will be covered in the next rule-making.

Also this week, NHTSA reinstated higher penalties for automakers whose vehicles do not comply with fuel economy standards for the 2019 model year and beyond. For the 2019-21 model years, the civil penalty rate is now $14, up from $5.50, for each tenth of a mile per gallon that an automaker's performance falls short of its compliance obligation, multiplied by the number of vehicles in its fleet. For 2022, the fine is $15.

Automakers argued in 2016 that the increased penalty could raise industry compliance costs by at least $1 billion annually.

NHTSA's more stringent fuel economy standards come as U.S. consumers face high prices at the pump triggered in part by a reduction in oil supply amid Russia's deadly invasion of Ukraine and rising inflation.

Biden in March banned imports of Russian oil, natural gas and coal in response to the invasion — a move supported by Democrats and Republicans in Congress.

The president on March 31 unveiled a plan to ease fuel prices by increasing the supply of oil, encouraging domestic production and urging Congress to pass clean-energy legislation.

The EPA in December finalized its rule on vehicle greenhouse gas emissions for the 2023-26 model years that — alongside NHTSA's fuel economy standards — could act as a regulatory driver for speeding up the industry's electrification plans.

Under the EPA's final rule, which is also more stringent than its August proposal and the Obama-era requirements, emissions standards increase between about 5 and 10 percent each model year. The standards mandate an industrywide target of 161 grams of carbon dioxide per mile — or 40 mpg on window stickers — by the 2026 model year.

Aspects of NHTSA's fuel economy standards have been harmonized with the EPA's rule in some areas to enable alignment and allow automakers to use the same compliance strategies across the two rules, the senior administration official said.