Biden aims to supercharge EV adoption with new emissions standards

The Biden administration wants Americans to replace their gas-guzzling vehicles with electric ones, and to encourage that shift, it has mostly relied on carrots, like tax credits that subsidize the cost of an EV.

Now the administration has introduced a stick. 

Today, the U.S. Environmental Protection Agency (EPA) unveiled strict tailpipe emissions regulations that, if adopted as written, would slash vehicle pollution and accelerate the country’s bid to decarbonize its vehicles. Transportation accounted for 27 percent of U.S. carbon dioxide emissions as of 2020, according to the EPA, and more than half of those emissions came from light-duty vehicles.

The proposed standards would require automakers’ fleets to produce far less pollution, both carbon emissions and ambient air pollution. Automakers would most likely comply with the standards by selling more EVs, potentially putting the country on track for electric models to make up two-thirds of new light-duty vehicle sales by 2032, the EPA says. President Biden had previously set a goal for EVs to make up half of new car sales by the end of the decade.

Meeting the more ambitious mark would require the rapid embrace of EVs among the car-hungry American populace. Last year, there were about 800,000 EVs sold in the U.S., accounting for almost 6 percent of new vehicle sales, according to Cox Automotive. The number of EVs sold in the country could push past 1 million this year, Cox forecasts, but that would still be just about 7 percent of the more than 14 million vehicle purchases expected in 2023.

The proposed rules, which would apply to light- and medium-duty vehicles for the 2027–2032 model years, are not guaranteed to be approved in their most ambitious form. Industry experts expect the proposal to face challenges in court, given that several red states are currently suing the EPA over less restrictive emissions standards for the 2024–2026 model years. The rules are unlikely to be finalized until next year, according to the Associated Press.

Even before this new proposal, analysts had projected that the U.S. EV market would grow exponentially in the coming years: In September, BloombergNEF forecast that just over half of new vehicles sold in the U.S. would be electric in 2030. 

That’s in part due to the billions of dollars in Inflation Reduction Act incentives for EV adoption and manufacturing, but it doesn’t hurt that two of the biggest car markets in the U.S. — California and New York — have each issued bans on the sale of new fossil-fuel-powered passenger vehicles starting in 2035.

Ultimately, though, the speed at which the country can shift to electric vehicles will depend in part on how fast it can scale up domestic EV manufacturing. That’s because federal purchase incentives meant to alleviate the main hurdle to EV adoption — cost — come with strict stipulations. 

The Inflation Reduction Act offers up to $7,500 in EV tax credits, but in order to qualify, vehicles must be partially assembled in North America and made with a certain percentage of materials from the U.S. or its free-trade partners. Qualifying EVs also can’t contain inputs from ​“foreign entities of concern,” a concept that the Treasury Department has yet to explicitly define, but which is expected to include many Chinese firms. (If you haven’t heard, China dominates the EV supply chain.)

The Treasury Department released new guidance around these incentives in late March, and the list of qualifying EV models is expected to be slim once the rules kick in on April 18. 

But that list should expand in the coming years: Based on current announcements, U.S. battery manufacturing capacity could grow to support 11.2 million vehicles annually by 2027, according to a March report from the Environmental Defense Fund. The same report also found that the U.S. could be capable of manufacturing 4.3 million EVs annually by 2026. 

For their part, automakers are investing heavily in EV production. In the U.S. alone, auto companies have so far committed a total of $110 billion to electrify their fleets, according to data from the Alliance for Automotive Innovation, a trade group representing major automakers including Ford, GM, Toyota and Volkswagen. Last month, the group wrote that its member companies aim to sell 8 million new EVs annually by 2030. 

Despite these efforts, the trade group released a memo last week expressing uncertainty about the current feasibility of the EPA’s new proposed rules. Beyond supply-chain challenges, it also pointed to the country’s dearth of public EV charging as another constraint on electrification efforts. Even with $7.5 billion in federal funding to build a public charging network, charger availability remains among the biggest barriers for consumers mulling the switch to electric. 

Alongside the rules for light- and medium-duty vehicles, the EPA also released a new proposal for regulating the emissions of heavy-duty trucks. If adopted, the EPA estimates it could put the U.S. on track to electrify 50 percent of new ​“vocational vehicles,” (e.g., garbage trucks and buses), 35 percent of short-haul freight tractors, and one-quarter of long-haul freight tractors. 

Should some version of these stricter auto emissions limits be adopted, there’s no question it would add further momentum to the country’s bid to electrify transportation. What’s less certain is just how quickly the shift can happen.