Here's How Biden's Electric Vehicle Executive Order Effects Automaker Efficiency Standards

Joe Biden CAFE executive order
U.S. President Joe Biden signs an executive order after delivering remarks during an event on the South Lawn of the White House August 5, 2021 in Washington, DC. Biden delivered remarks on the administration’s efforts to strengthen American leadership on clean cars and trucks. Win McNamee/Getty Images

Today, President Joe Biden signed an executive order that will push automakers to have 50 percent of all vehicles sold come equipped with plug-in hybrid, battery electric or fuel cell powertrains by 2030. Developed with the input of automakers and the United Auto Workers union, the framework follows the laws and guidelines already in place in California and seeks to build on them.

The order extends to light-, medium- and heavy-duty vehicles. Traditional hybrids and newer mild-hybrid technology are not counted.

Separately, President Biden will direct the Environmental Protection Agency (EPA) and the U.S. Department of Transportation to change the rollbacks of Corporate Average Fuel Economy (CAFE) standards that were set into motion by the Trump Administration.

Those proposed rules will then be available for public comment.

In response to the move by the Biden Administration the Alliance for Automotive Innovation, a mobility industry trade association and lobby group, issued a statement of support that says that manufacturers are committed to a future of net-zero carbon transportation.

"This upcoming rulemaking for light-duty auto standards is a chance to realign the auto industry in preparation for greatly expanding electrification of the fleet and rapidly decreasing GHG emission after 2026."

According to the group, the automotive industry plans to have invested $330 billion in electrification by 2025. With more than 50 electric vehicle models on the market today, IHS Markit predicts that that number will expand to 130 by 2026.

With battery innovation and evolution, and new electric-powered vehicles on the horizon, the new standards and fresh direction of the government agencies will allow automakers to have government support for their products, a move that aims to push consumers into quickly adopting the advanced powertrain options that are coming to market to replace less efficient variants.

EV adoption in other countries has been successfully hastened through a series of regulatory measures and action to limit areas of the country where internal combustion engined vehicles can travel.

Current CAFE standards are 46.1 mpg for passenger cars and 32.6 mpg for light duty trucks. Those standards are set to gradually increase to 55.3 mpg and 39.3 mpg, respectively, by 2025.

Most manufacturers have failed to meet those standards intended to curb greenhouse gas emissions for the last five years. Of the major automakers that are tracked, only Volvo, Subaru, Tesla, Aston Martin and Honda ended 2019 under the suggested level.

In its 2020 Automotive Trends report, the EPA said that 11 of the 14 manufacturers tracked were able to increase fuel economy thanks to product innovation, consumer preferences and other market factors.

General Motors, Ford and Mazda all increased their new vehicle carbon emissions rates. Despite this, those three manufacturers ended the year in compliance by utilizing the EPA's averaging, banking and trading program for greenhouse gas emissions, which allows companies to trade credits to regain compliance.

In a December 2020 survey released by Consumer Reports, 71 percent of American adults with a valid driver's license said that they would be interested in purchasing an EV at some point. Thirty-one percent responded saying that they would consider an EV for their next vehicle purchase.

The adoption barriers that drivers most commonly cited was the desire for more varieties of EVs and more consumer-friendly charging stations, as well as added government investment in EV infrastructure.

The Biden Administration plans to make a significant investments as part of its proposed $1.2 billion infrastructure plan. Currently, $7.5 billion is earmarked for funding EV charging stations. Another $6 billion is intended to help factories make the adjustment to electrification.

Consumers have also expressed worries about how far they can go on a single charge. Dubbed "range anxiety," the consumer intelligence firm J.D. Power found in a January 2021 study with PlugShare that drivers were concerned with that distance even after purchasing an EV. Accuracy of the stated battery range versus the actual battery range accounted for 20 percent of owners' overall satisfaction.

Currently, Tesla advertises a range of 396 miles for its Model S, the highest on the market. Beyond Tesla, Ford says its most efficient Mustang Mach-E has a 305-mile range. Automakers have said that powertrains in the near future will best those marks pushing range to over 400 miles per charge.

Among the big automakers, the EPA's 2020 report lists Honda as the best when it came to average fleet fuel efficiency in 2019 with 28.9 mpg. Hyundai and Subaru follow with 28.5 and 28.4, respectively. Honda is projected to remain in the top spot when the 2021 report is published.

In July, the nonprofit American Council for an Energy-Efficient Economy argued that CAFE standards would need to be reach 55 mpg by 2026 in order to reverse the increased emissions released as a result of the Trump Administration's rollback.

Automakers are already engineering efficient future vehicles that are powered by more robust batteries and cut through the wind with added ease, a move likely to increase fuel efficiency if the changes are enough to offset the added weight of the large powertrain battery.

In reaction to the executive order and subsequent agency charges, the Environmental Protection Network, a non-profit organization dedicated to resetting the course of the EPA, issued a statement praising the administration's actions.

"The proposal announced today by the administration recaptures most of the pollution reductions that were lost under the Trump administration's senseless rollback that was finalized last year," former EPA official Jeff Aston said in the statement. "I'm also pleased to see U.S. automakers support EV sales targets for 2030 and trust that they will support future standards consistent with these targets."

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