The National Highway Traffic Safety Administration has announced tougher new fuel economy standards for businesses through 2026, reversing former President Trump’s lowered standards set during the previous administration. Automakers will need to ensure their industry-wide fleet average fuel economy is 49 mpg by the 2026 model year.
Today’s final fuel economy standards follow President Biden’s Executive Order 13990, which directed NHTSA to review the previous final ruling of “The Safer and Fuel Efficient Vehicle (SAFE) Rule for passenger cars and light trucks of model years 2021-2026” by previous administration.
NHTSA’s new order calls for an 8% increase in fuel economy for the 2024 and 2025 model years, followed by a required 10% increase fleet-wide for the 2026 model year, to reach the final standard. The estimated fleet-wide average is now set to increase by 10 mpg by that year from 2021 figures, to around 39 mpg currently. Keep in mind that this CAFE mile per gallon figure is calculated differently than the ones you see on new vehicle window decals, so it’s not exactly representative of the kind of mileage you’ll see on average from automakers. . Cars are divided by the size of their footprint, which determines the mileage standards they adhere to, and their fuel economy is weighted differently.
The NHTSA says US oil consumption has dropped 25% since the original CAFE (Corporate Average Fuel Economy) standards were introduced in 1975, reducing average consumption by up to 5 million barrels of oil per day since. The new standards are expected to reduce the consumption of 200 billion gallons of gasoline by 2050. (In 2011, the US Energy Board claimed that we produced about 19 gallons of gas per barrel of oil.)
This helps achieve President Biden’s stated goals of reducing America’s dependence on fossil fuels and preventing international events, like Russia’s invasion of Ukraine, from having such a dramatic impact. on the US economy in the future. The president also ordered a record release of the US oil reserve to keep gas prices low. for the remainder of the year, and issued a new directive to use the Defense Production Act to bolster production of electric vehicle battery materials for future BEVs that are expected to replace ICE vehicles.
“Today’s rule means American families will be able to drive farther before they need to refuel, saving hundreds of dollars a year,” said US Transportation Secretary Pete Buttigieg. “These improvements will also make our country less vulnerable to global oil price changes and protect communities by reducing carbon emissions by 2.5 billion metric tons.”
If you’re wondering if tough new standards mean the price of new cars will have to go up, NHTSA documentation shows that the average cost increase per vehicle should be less than $2,000, which is the cost of a new, even stricter standard that NHTSA was considering, but ultimately declined to issue in favor of the standard announced today.
A stricter proposed alternative would have increased average costs per vehicle by as much as $2,000, but NHTSA says its chosen plan announced today is lower than that. It would seem that any stricter standard by 2026 would be too costly to justify, so the plan presented is “the maximum feasible alternative that manufacturers can achieve for the 2024-2026 marketing years”.
From NHTSA’s final order today: “NHTSA expects funding for the purchase of new vehicles to reduce the cost of fuel economy standards to consumers by allowing them to spread them over time… The sales effects we estimate, even with the most stringent regulatory alternatives, are modest.” NHTSA cites year-over-year increase in car sales, despite fuel shortages supply and a pandemic, as an indication that Americans will have no problem with CAFE-related cost increases.