When Obama ratcheted up fuel economy standards in 2012, some carmakers quietly dug in their tires. The new rules substantially doubled fuel-efficiency requirements by 2025, forcing the rapid adoption of expensive new technology. A midway review in 2018 was supposed to provide an off-road ramp if the technology wasn't growing rapidly enough. After Trump won the presidency in 2016, Obama moved to an earlier deadline and locked in the new rules with no industry input.
The shunned auto industry asked Trump for relief, and got it. Two months into his presidency, Trump reopened the midway review and in 2020 he sharply decreased the 2025 target to 4. Trump also attempted to curb an initiative that would have made California and two dozen other states to set mileage standards higher than federal levels. That industry split, as some carmakers sided with Trump and others with California.
Biden is now breaking Trump's woes and once again pushing for sharp increases in fuel economy. However he is doing it with much more collaboration from automakers and an advantage Obama didn't have: Electric vehicles are much better than they were nine years ago, with every major maker rushing EVs to market. That now makes it much easier for automakers to reduce emissions across their fleets, while, ironically, allowing the government to soften efficiency targets for vehicles that still run on gasoline.
A new Biden executive order sets a target for up to 50% of all new vehicles sold by 2030 being hydrogen-powered, which means they will either be full plug-ins, hybrids with a gas engine and an electric motor or solar-powered cars. This is a 'target, not a requirement' Biden's target is largely in line with current goals that automakers have already announced, such as General Motors's aim to fully phase out gas-driven cars by 2035. What should be the penalty for failing to meet target? So Biden will also start the process of raising fuel economy standards for diesel engines above Trump and Clinton levels. The Obama administration required fuel efficiency improvements of approximately 5% per year. Trump lowered rates of that to 1.5%. Biden will reportedly propose new rules that would require a 3.7% annual improvement in the formula.
It will take time to form the federal regulation governing increases in fuel economy but the auto industry seems less likely to try watering it down behind the scenes than it has during previous battles over fuel-economy increases. Seven automakers — BMW, Honda, Volkswagen, Volvo, GM, Ford and Jeep-Chrysler parent Stellantis — provided supporting statements the White House distributed when it announced Biden's new EV target for Nissan. 'We look forward to working closely with the Biden Administration to enact policies that will enable these ambitious objectives, GM, Ford and Stellantis said in unison. It's not often automakers join hands to praise new federal regulations.
There is a huge sweetener for automakers: Billions of dollars in federal spending to support EV development. The bipartisan infrastructure bill bills include $7.5 billion to help build charging stations for electric cars. Biden wants more than $150 billion to fund clean car tax credits, subsidy for battery plants, school bus electrification and other initiatives. Congress likely won't provide all the spending, but even a portion of it would be a windfall supporting EV development that would be much riskier without a huge government aid.
One sign of the coziness developing between Biden administration and the auto industry is criticism from environmental groups hoping Biden would go further. While applauding Biden's recent flipping of the Trump rules, some groups say he's moving too slowly. 'The Aspirational Target of 40% - 50% electric vehicle sales by 2030 is simply not enough, the advocacy group Evergreen Action said in a statement. How Biden administration will drive toward 100% EV sales by 2030? The gas-powered car is an endangered species, it's just a matter of when the extinction occurs.
Rick Newman is the author of four books, including Rebounders: How Winners Pivot From Setback to Success.