# Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2024-06214 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** April 18, 2024 - **Citation:** 89 FR 27842 ## Text ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 85, 86, 600, 1036, 1037, 1066, and 1068 [EPA-HQ-OAR-2022-0829; FRL-8953-04-OAR] RIN 2060-AV49 Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles AGENCY: Environmental Protection Agency (EPA). ACTION: Final rule. SUMMARY: Under the Clean Air Act, the Environmental Protection Agency (EPA) is establishing new, more protective emissions standards for criteria pollutants and greenhouse gases (GHG) for light-duty vehicles and Class 2b and 3 (“medium-duty”) vehicles that will phase-in over model years 2027 through 2032. In addition, EPA is finalizing GHG program revisions in several areas, including off-cycle and air conditioning credits, the treatment of upstream emissions associated with zero-emission vehicles and plug-in hybrid electric vehicles in compliance calculations, medium-duty vehicle incentive multipliers, and vehicle certification and compliance. EPA is also establishing new standards to control refueling emissions from incomplete medium-duty vehicles, and battery durability and warranty requirements for light-duty and medium-duty electric and plug-in hybrid electric vehicles. EPA is also finalizing minor amendments to update program requirements related to aftermarket fuel conversions, importing vehicles and engines, evaporative emission test procedures, and test fuel specifications for measuring fuel economy. DATES: This final rule is effective on June 17, 2024. The incorporation by reference of certain publications listed in this regulation is approved by the Director of the Federal Register beginning June 17, 2024. The incorporation by reference of certain publications listed in this regulation is approved by the Director of the Federal Register as of March 27, 2023. ADDRESSES: EPA has established a docket for this action under Docket ID No. EPA-HQ-OAR-2022-0829. All documents in the docket are listed on the https://www.regulations.gov website. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy form. Publicly available docket materials are available electronically through https://www.regulations.gov . FOR FURTHER INFORMATION CONTACT: Michael Safoutin, Office of Transportation and Air Quality, Assessment and Standards Division (ASD), Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: (734) 214-4348; email address: safoutin.mike@epa.gov . SUPPLEMENTARY INFORMATION: A. Does this action apply to me? Entities potentially affected by this rule include light-duty vehicle manufacturers, independent commercial importers, alternative fuel converters, and manufacturers and converters of medium-duty vehicles ( i.e., vehicles between 8,501 and 14,000 pounds gross vehicle weight rating (GVWR)). Potentially affected categories and entities include: Category NAICS codes a Examples of potentially affected entities Industry 336111 336112 Motor Vehicle Manufacturers. Industry 811111 811112 811198 423110 Commercial Importers of Vehicles and Vehicle Components. Industry 335312 811198 Alternative Fuel Vehicle Converters. Industry 333618 336120 336211 336312 On-highway medium-duty engine & vehicle (8,501-14,000 pounds GVWR) manufacturers. a North American Industry Classification System (NAICS). This list is not intended to be exhaustive, but rather provides a guide regarding entities likely to be affected by this action. To determine whether particular activities may be regulated by this action, you should carefully examine the regulations. You may direct questions regarding the applicability of this action to the person listed in FOR FURTHER INFORMATION CONTACT. B. Did EPA conduct a peer review before issuing this action? This regulatory action was supported by influential scientific information. EPA therefore conducted peer review in accordance with OMB's Final Information Quality Bulletin for Peer Review. Specifically, we conducted peer review on six analyses: (1) Optimization Model for reducing Emissions of Greenhouse gases from Automobiles (OMEGA 2.0), (2) Advanced Light-duty Powertrain and Hybrid Analysis (ALPHA3), (3) Motor Vehicle Emission Simulator (MOVES), (4) The Effects of New-Vehicle Price Changes on New- and Used-Vehicle Markets and Scrappage; (5) Literature Review on U.S. Consumer Acceptance of New Personally Owned Light-Duty Plug-in Electric Vehicles; (6) Cost and Technology Evaluation, Conventional Powertrain Vehicle Compared to an Electrified Powertrain Vehicle, Same Vehicle Class and OEM. All peer reviews were in the form of letter reviews conducted by a contractor. The peer review reports for each analysis are in the docket for this action and at EPA's Science Inventory ( https://cfpub.epa.gov/si/ ). Table of Contents I. Executive Summary A. Purpose of This Rule and Legal Authority B. Summary of Light- and Medium-Duty Vehicle Emissions Programs C. Summary of Emission Reductions, Costs, and Benefits II. Public Health and Welfare Need for Emission Reductions A. Climate Change From GHG Emissions B. Background on Criteria and Air Toxics Pollutants Impacted by This Rule C. Health Effects Associated With Exposure to Criteria and Air Toxics Pollutants D. Welfare Effects Associated With Exposure to Criteria and Air Toxics Pollutants Impacted by the Final Standards III. Light- and Medium-Duty Vehicle Standards for Model Years 2027 and Later A. Introduction and Background B. EPA's Statutory Authority Under the Clean Air Act (CAA) C. GHG Standards for Model Years 2027 and Later D. Criteria Pollutant Emissions Standards E. Modifications to the Medium-Duty Passenger Vehicle (MDPV) Definition F. What alternatives did EPA consider? G. Certification, Compliance, and Enforcement Provisions H. On-Board Diagnostics Program Updates I. Coordination with Federal and State Partners J. Stakeholder Engagement IV. Technical Assessment of the Standards A. What approach did EPA use in analyzing the standards? B. EPA's Approach to Considering the No Action Case and Sensitivities C. How did EPA consider technology feasibility and related issues? D. Projected Compliance Costs and Technology Penetrations E. How did EPA consider alternatives in selecting the final program? F. Sensitivities—LD GHG Compliance Modeling G. Sensitivities—MD GHG Compliance Modeling H. Additional Illustrative Scenarios V. EPA's Basis That the Final Standards are Feasible and Appropriate Under the Clean Air Act A. Overview B. Consideration of Technological Feasibility, Compliance Costs and Lead Time C. Consideration of Emissions of GHGs and Criteria Pollutants D. Consideration of Impacts on Consumers, Energy, Safety and Other Factors E. Selection of the Final Standards Under CAA Section 202(a) VI. How will this rule reduce GHG emissions and their associated effects? A. Estimating Emission Inventories in OMEGA B. Impact on GHG Emissions C. Global Climate Impacts Associated With the Rule's GHG Emissions Reductions VII. How will the rule impact criteria and air toxics emissions and their associated effects? A. Impact on Emissions of Criteria and Air Toxics Pollutants B. How will the rule affect air quality? C. How will the rule affect human health? D. Demographic Analysis of Air Quality VIII. Estimated Costs and Benefits and Associated Considerations A. Summary of Costs and Benefits B. Vehicle Technology and Other Costs C. Fueling Impacts D. Non-Emission Benefits E. Greenhouse Gas Emission Reduction Benefits F. Criteria Pollutant Health and Environmental Benefits G. Transfers H. U.S. Vehicle Sales Impacts I. Employment Impacts J. Environmental Justice K. Additional Non-Monetized Considerations Associated With Benefits and Costs IX. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review and Executive Order 14094: Modernizing Regulatory Review B. Paperwork Reduction Act (PRA) C. Regulatory Flexibility Act D. Unfunded Mandates Reform Act E. Executive Order 13132: “Federalism” F. Executive Order 13175: “Consultation and Coordination with Indian Tribal Governments” G. Executive Order 13045: Protection of Children from Environmental Health Risks and Safety Risks H. Executive Order 13211: Energy Effects I. National Technology Transfer and Advancement Act (NTTAA) and 1 CFR part 51 J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations and Executive Order 14096: Revitalizing Our Nation's Commitment to Environmental Justice for All K. Congressional Review Act (CRA) L. Judicial Review M. Severability X. Statutory Provisions and Legal Authority I. Executive Summary A. Purpose of this Rule and Legal Authority The Environmental Protection Agency (EPA) is finalizing multipollutant emissions standards for light-duty passenger cars and light trucks and for Class 2b and 3 vehicles (“medium-duty vehicles” or MDVs) under its authority in section 202(a) of the Clean Air Act (CAA), 42 U.S.C. 7521(a). The program establishes new, more stringent vehicle emissions standards for criteria pollutant and greenhouse gas (GHG) emissions from motor vehicles for model years (MYs) 2027 through 2032 and beyond. Section 202(a) requires EPA to establish standards for emissions of air pollutants from new motor vehicles which, in the Administrator's judgment, cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare. Standards under section 202(a) take effect “after such period as the Administrator finds necessary to permit the development and application of the requisite technology, giving appropriate consideration to the cost of compliance within such period.” Thus, in establishing or revising section 202(a) standards designed to reduce air pollution that endangers public health and welfare, EPA also must consider issues of technological feasibility, the cost of compliance, and lead time. EPA also considers safety, consistent with CAA section 202(a)(4), and may consider other factors, and in previous vehicle standards rulemakings as well as in this rule, has considered impacts on the automotive industry, impacts on vehicle purchasers/consumers, oil conservation, energy security, and other relevant considerations. This final rule follows a Notice of Proposed Rulemaking published on May 5, 2023. 1 EPA has conducted extensive engagement with the public, including a wide range of interested stakeholders to gather input which we considered in developing both the proposal and this final rule. In developing this final rule, EPA considered comments received during the public comment process, including the public hearings. EPA held three days of virtual public hearings on May 9-11, 2023, and heard from approximately 240 speakers. During the public comment period that ended on July 5, 2023, EPA received more than 250,000 written comments. Through the public comment process, we received comments, data and analysis from a variety of stakeholders including auto manufacturers, state and local governments, non-governmental organizations (NGOs), labor organizations, environmental justice groups, suppliers, consumer groups, academics, and others. 1 88 FR 29184, May 5, 2023. 1. Need for Continued Emissions Reductions Under 202(a) of the Clean Air Act Since 1971, EPA has, at Congress' direction, been setting emissions standards for motor vehicles. The earliest standards were for light-duty vehicles for hydrocarbons, nitrogen oxides (NO X ), and carbon monoxide (CO), requiring a 90 percent reduction in emissions. Since then, EPA has continued to set standards for the full range of vehicle classes (including light-duty, medium-duty and heavy-duty vehicles and passenger, cargo and vocational vehicles) to reduce emissions of pollutants for which the Administrator has made an endangerment finding pursuant to CAA section 202. In 2009, EPA made an endangerment finding for GHG, and in 2010 issued the initial light-duty GHG standards. More recently, in 2014, EPA finalized criteria pollutant standards for light-duty vehicles (“Tier 3”) that were designed to be implemented alongside the GHG standards for light-duty vehicles that EPA had adopted in 2012 for model years 2017-2025. 2 In 2020, EPA revised the GHG standards that had previously been adopted for model years 2021-2026, 3 and in 2021, EPA conducted a rulemaking (the “2021 rulemaking”) 4 that again revised GHG standards for light-duty passenger cars and light trucks for MYs 2023 through 2026, setting significantly more stringent standards for those MYs than had been set by the 2020 rulemaking, and somewhat more stringent than the standards adopted in 2012. 2 79 FR 23414, April 28, 2014, “Control of Air Pollution From Motor Vehicles: Tier 3 Motor Vehicle Emission and Fuel Standards. 3 85 FR 24174, April 30, 2020, “The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks.” 4 86 FR 74434, December 30, 2021, “Revised 2023 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions Standards.” Despite the significant emissions reductions achieved by these and other rulemakings, air pollution from motor vehicles continues to impact public health, welfare, and the environment. Motor vehicle emissions contribute to ozone, particulate matter (PM), and air toxics, which are linked with premature death and other serious health impacts, including respiratory illness, cardiovascular problems, and cancer. This air pollution affects people nationwide, as well as those who live or work near transportation corridors. In addition, the effects of climate change represent a rapidly growing threat to human health and the environment, and are caused by GHG emissions from human activity, including motor vehicle transportation. Addressing these public health and welfare needs will require substantial additional reductions in criteria pollutants and GHG emissions from the transportation sector. Recent trends and developments in vehicle technologies that reduce emissions indicate that more stringent emissions standards are feasible at reasonable cost and would lead to significant improvements in public health and welfare. Addressing the public health impacts of criteria pollutants (including particulate matter (PM), ozone, and NO X ) will require continued reductions in these pollutants (and their precursors) from the transportation sector. In 2023, mobile sources accounted for approximately 54 percent of anthropogenic NO X emissions, 5 percent of anthropogenic direct PM 2.5 emissions, and 23 percent of anthropogenic volatile organic compound (VOC) emissions nationwide. 5 6 7 Light- and medium-duty vehicles accounted for approximately 23 percent, 20 percent, and 52 percent of 2023 mobile source NO X , PM 2.5 , and VOC emissions, respectively. 6 7 7 The benefits of reductions in criteria pollutant emissions accrue broadly across many populations and communities. As of November 30, 2023, there are 12 PM 2.5 nonattainment areas with a population of more than 32 million people 8 and 54 ozone nonattainment areas with a population of more than 119 million people. The importance of continued reductions in these emissions is detailed at length in section II of this preamble. 5 U.S. Environmental Protection Agency (2021). 2016v1 Platform ( https://www.epa.gov/air-emissions-modeling/2016v1-platform ). 6 U.S. Environmental Protection Agency (2021). 2017 National Emissions Inventory (NEI) Data. https://www.epa.gov/air-emissions-inventories/2017-national-emissions-inventory-nei-data . 7 U.S. Environmental Protection Agency (2023). MOVES 4.0.0. https://www.epa.gov/moves . 8 The population total is calculated by summing, without double counting, the 1997, 2006 and 2012 PM 2.5 nonattainment populations contained in the Criteria Pollutant Nonattainment Summary report ( https://www.epa.gov/green-book/green-book-data-download ). The transportation sector is the largest U.S. source of GHG emissions, representing 29 percent of total GHG emissions. 9 Within the transportation sector, light-duty vehicles are the largest contributor, at 58 percent, and thus comprise 16.5 percent of total U.S. GHG emissions, 10 even before considering the contribution of medium-duty Class 2b and 3 vehicles which are also included under this rule. GHG emissions have significant impacts on public health and welfare as evidenced by the well-documented scientific record and as set forth in EPA's Endangerment and Cause or Contribute Findings under CAA section 202(a). 11 Additionally, major scientific assessments continue to be released that further advance our understanding of the climate system and the impacts that GHGs have on public health and welfare both for current and future generations, as discussed in section II.A of this preamble, making it clear that continued GHG emission reductions in the motor vehicle sector are needed to protect public health and welfare. 9 Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2021 (EPA-430-R-23-002, published April 2023). 10 Ibid. 11 74 FR 66496, December 15, 2009; 81 FR 54422, August 15, 2016. In addition to and separate from this final rule, the Administration has recognized the need for action to address climate change. Executive Order 14008 (“Tackling the Climate Crisis at Home and Abroad,” January 27, 2021) recognizes the need for a government-wide approach to addressing the climate crisis, directing Federal departments and agencies to facilitate the organization and deployment of such an effort. On April 22, 2021, the Administration announced a new target for the United States to achieve a 50 to 52 percent reduction from 2005 levels in economy-wide net greenhouse gas pollution in 2030, consistent with the goal of limiting global warming to no more than 1.5 degrees Celsius by 2050 and representing the U.S. Nationally Determined Contribution (NDC) under the Paris Agreement. These actions, while they do not inform the standards established here, serve to underscore the importance of EPA acting pursuant to its Clean Air Act authority to address pollution from motor vehicles. EPA is establishing both criteria pollutant and GHG standards in this rulemaking given the need for additional reductions in emissions of these air pollutants to protect public health and welfare and based on EPA's assessment of the suite of available control technologies for those pollutants, some of which are effective in controlling both GHGs and criteria pollutant emissions. Under these performance-based emissions standards, manufacturers have the discretion to choose the mix of technologies that achieve compliance across their fleets. EPA's modeling provides information about several potential compliance paths manufacturers could use to comply with the standards, based on multiple inputs and assumptions ( e.g., in what we have termed the central case, that manufacturers will seek the lowest cost compliance path). EPA's central analysis shows that both within the product lines of individual manufacturers and for different manufacturers across the industry, manufacturers will make use of a diverse range of technologies, including advanced gasoline engines (reducing engine-out emissions), improvements to tailpipe controls, additional electrification of gasoline powertrains, and electric powertrains. EPA recognizes that, although it has modeled individual compliance paths for each manufacturer, manufacturers will make their own assessment of the vehicle market and their own decisions about which technologies to apply to which vehicles for any given model year. The standards are performance-based, and while EPA finds modeling useful in evaluating the feasibility of the standards, it is manufacturers who will decide the ultimate mix of vehicle technologies to comply. Although EPA cannot model every possible compliance scenario, EPA did model several sensitivity analyses which identify a number of example alternative compliance scenarios for the industry. EPA has evaluated these alternative scenarios and has concluded that the lead time and estimated costs to manufacturers under each of these alternative compliance scenarios are reasonable and appropriate for standards under CAA 202(a). Furthermore, EPA finds that it would be technologically feasible to meet these standards without additional zero-emission vehicles beyond the volumes already sold today. 12 Although our modeling projects that such a fleet would not be the lowest cost alternative for complying with the standards, the fact that it would comply underscores both the feasibility and the flexibility of the standards, and confirms that manufacturers are likely to continue to offer vehicles with a diverse range of technologies, including advanced gasoline technologies as well as zero- and near-zero emission vehicles for the duration of these standards and beyond. 12 EPA has analyzed this scenario as an illustrative scenario, which we refer to as the “No additional BEVs above base year fleet” scenario. For further details, please refer to Section IV.H of this preamble. The Administrator finds that the standards herein are consistent with EPA's responsibilities under the CAA and appropriate under CAA section 202(a). EPA has carefully considered the statutory factors, including technological feasibility and cost of the standards and the available lead time for manufacturers to comply with them. Our analysis for this action supports the conclusion that the final standards are technologically feasible and that the costs of compliance for manufacturers will be reasonable. The standards will result in significant reductions in emissions of criteria pollutants, GHGs, and air toxics, resulting in significant benefits for public health and welfare. We also estimate that the standards will result in reduced vehicle operating costs for consumers and that the benefits of the program will exceed the costs. Based on EPA's analysis, it is the agency's assessment that the standards are appropriate and justified under CAA section 202(a). 2. Recent and Ongoing Advancements in Technology Enable Further Emissions Reductions Over five decades of setting standards, EPA has developed extensive expertise in assessing the availability of new and existing technologies to control pollution from motor vehicles. In some cases, EPA has adopted standards based on its judgment that the industry could further develop and commercialize technologies. In others, EPA has based standards on the further deployment of existing technologies, rather than on the further development of new technologies. Both approaches are consistent with EPA's general authority for emissions standards under section 202(a)(1)-(2), although Congress has specified under 202(a)(3) that for heavy-duty criteria standards the Administrator should identify the greatest degree of emissions reduction achievable, taking into consideration certain factors. In 2000, EPA adopted the Tier 2 standards, which required passenger vehicles to be 77 to 95 percent cleaner (and encouraged certification of zero-emitting vehicles through the establishment of “Bin 1”, which is now referred to as “Bin 0”). 13 More recently, in 2014, EPA adopted Tier 3 emissions standards, which required a further reduction of 60 to 80 percent of emissions (depending on pollutant and vehicle class). 14 Similar to the prior Tier 2 standards, Tier 3 established “bins” of Federal Test Procedure (FTP) standards, including bins for zero-emitting vehicles. 13 65 FR 6698 (Feb. 10, 2000). 14 79 FR 23414 (Apr. 28, 2014). EPA has also consistently set GHG emission standards applicable to light-duty vehicles pursuant to CAA section 202(a), beginning with the 2010 rule, and continuing through subsequent rulemakings in 2012, and 2021. 15 These rules achieved very significant reductions of GHGs (with significant anticipated impacts on liquid fuel consumption and costs to manufacturers which were, in some cases, comparable to or greater than the impacts anticipated under this rule). 15 See 75 FR 25324 (May 7, 2010) (setting GHG standards applicable to model year 2012-2016 LD vehicles); 77 FR 62624 (Oct. 15, 2012) (setting GHG standards for model year 2017-2025 LD vehicles and “building on the success of the first phase of the National program for these vehicles”); 86 FR 774434 (Dec. 30, 2021) (revising GHG standards for model year 2023 and later light-duty vehicle). In designing the scope, structure, and stringency of these standards, the Administrator again considered a comprehensive array of updated, real-world information related to advancements in vehicle emissions control technologies. These include previous standards and their impacts on emissions control technologies; the activities, investments, and plans of manufacturers and other entities regarding the adoption of new technologies related to vehicle emissions control; trends in technology adoption by vehicle owners and operators, including individual consumers and fleets; and related legal requirements and government incentives, including most notably Congress's recent actions in the Bipartisan Infrastructure Law (BIL) and the Inflation Reduction Act (IRA). This action continues EPA's longstanding approach of establishing an appropriate and achievable trajectory of emissions reductions by means of performance-based standards, for both criteria pollutant and GHG emissions, that can be achieved by employing feasible and available emissions-reducing vehicle technologies for the model years for which the standards apply. CAA section 202(a) directs EPA to regulate emissions of air pollutants from new motor vehicles and engines, which in the Administrator's judgment cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. While standards promulgated pursuant to CAA section 202(a) are based on application of technology, the statute does not specify a particular technology or technologies that must be used to set such standards; rather, Congress has authorized and directed EPA to adapt its standards to emerging technologies. Thus, as with prior rules, EPA has assessed the feasibility of the standards considering current and anticipated progress by automakers in developing and deploying new technologies. The levels of stringency for the standards established in this rule continue the trend of increased emissions reductions which have been adopted by prior EPA rules. For example, the Clean Air Act of 1970 required a 90 percent reduction in emissions, which drove development of entirely new engine and emission control technologies such as exhaust gas recirculation and catalytic converters, which in turn required a switch to unleaded fuel and the development of major new infrastructure to support the delivery and segregated distribution of a different fuel. Similarly, the 2014 Tier 3 standards achieved reductions of up to 80 percent in tailpipe criteria pollutant emissions by requiring cleaner fuel as well as improved catalytic emissions control systems. Compliance with the EPA GHG standards over the past decade has been achieved through both the application of advanced technologies to internal combustion engine (ICE) vehicles as well as the increasing adoption of electrification technologies. Notably, as the EPA GHG standards have increased in stringency, automakers have relied to a greater degree on a range of electrification technologies, 16 including idle stop-start, mild hybrid electric vehicles with a belt integrated starter-generator, hybrid electric vehicles (HEVs) and, in recent years, plug-in electric vehicles (PEVs), which include plug-in hybrid electric vehicles (PHEVs) and battery-electric vehicles (BEVs). As these technologies have been advancing rapidly in the past several years, becoming more popular with consumers and benefiting from continued declines in battery costs, automakers are now including PEVs as an integral and growing part of their current and future product lines. This has also led to an increasing diversity of PEVs already available and with an increasing array of makes and models planned for the market. As a result, zero- and near-zero emission technologies are more feasible and cost-effective now than at the time of prior rulemakings and, together with advanced gasoline technologies, offer manufacturers a wider array of compliance technologies. 16 Electrification technologies can range from electrification of specific accessories (for example, electric power steering to reduce engine loads by eliminating parasitic loss) to hybrid electric vehicles, which use a combination of batteries and an engine for propulsion energy, to electrification of the entire powertrain (as in the case of a battery electric vehicle). Separately from this final rule, the Administration has recognized the recent industry advancements in zero-emission vehicle technologies and their potential to bring about dramatic reductions in emissions. Executive Order 14037 (“Strengthening American Leadership in Clean Cars and Trucks,” August 5, 2021) identified a goal for 50 percent of U.S. new vehicle sales to be zero-emission 17 vehicles by 2030. 18 Congress passed the Bipartisan Infrastructure Law 19 in 2021, and the Inflation Reduction Act 20 in 2022, which together provide further support for a government-wide approach to reducing emissions by providing significant funding and support for emissions reductions across the economy, including specifically, for the component technology and infrastructure for the manufacture, sales, and use of zero- and near-zero emission vehicles. 17 The Executive Order (E.O.) defines zero-emission vehicles to include battery electric, plug-in hybrid and fuel cell vehicles. In this Preamble we refer to these vehicles collectively as zero-emission and near-zero-emission vehicles. 18 This Executive Order does not delegate any legal authority to EPA and this final rule is promulgated under and consistent with EPA's CAA section 202(a)(1)-(2) authority. 19 Public Law 117-58, November 15, 2021. 20 Public Law 117-169, August 16, 2022. As an important addition to the suite of control technologies that can reduce emissions, zero- and near-zero emission cars and trucks can simultaneously reduce both criteria pollutant and GHG emissions by a large margin. Production and sale of these vehicles is already occurring both domestically and globally, due to significant investments from automakers, increased acceptance by consumers, added support from Congress and state governments, and emissions regulations in other countries. EPA recognizes that these industry advancements, along with the additional support provided by the BIL and the IRA, represent an important opportunity for achieving the public health goals of the Clean Air Act. Recognizing that these technologies reduce both criteria pollutant and GHG emissions and are already forming an increasing portion of the fleet, EPA finds it appropriate to coordinate new standards for both criteria pollutants and GHG in a single rulemaking, rather than continuing its prior approach of coordinating the standards but setting them in separate regulatory actions. 21 21 We emphasize, however, as discussed further in Section X of this preamble, that the standards are severable. In the U.S., recent trends in PEV production and sales show that demand continues to increase. Even under current standards, BEVs and PHEVs are becoming a rapidly increasing part of the new vehicle fleet. On a production basis, PEVs are growing steadily, expected to be 11.8 percent 22 of U.S. light-duty vehicle production for MY 2023, 23 up from 6.7 percent in MY 2022, 4.4 percent in MY 2021 and 2.2 percent in MY 2020. 24 On a sales basis, U.S. new PEV sales in calendar year 2023 alone surpassed 1.4 million, 25 26 an increase of more than 50 percent over the 807,000 sales that occurred in 2022. 27 This represents 9.3 percent of new light-duty passenger vehicle sales in 2023, up from 6.8 percent in 2022 28 and 3.2 percent the year before. 29 As depicted in Figure 1, this continues the growth trend seen in previous years. In California, new light-duty zero-emission vehicle sales have reached 25.1 percent through the third quarter of 2023, after reaching 18.8 percent in 2022, up from 12.4 percent in 2021. 30 31 22 At time of this publication, MY 2023 production data is not yet final. Manufacturers will be confirming production volumes delivered for sale in MY 2023 later in calendar year 2024. 23 Environmental Protection Agency, “The 2023 EPA Automotive Trends Report: Greenhouse Gas Emissions, Fuel Economy, and Technology since 1975,” EPA-420-R-23-033, December 2023. 24 Environmental Protection Agency, “The 2022 EPA Automotive Trends Report: Greenhouse Gas Emissions, Fuel Economy, and Technology since 1975,” EPA-420-R-22-029, December 2022. 25 Argonne National Laboratory, “Light Duty Electric Drive Vehicles Monthly Sales Updates,” January 30, 2024. Accessed on March 7, 2024 at https://www.anl.gov/esia/light-duty-electric-drive-vehicles-monthly-sales-updates. 26 Department of Energy, “FOTW #1327, January 29, 2024: Annual New Light-Duty EV Sales Topped 1 Million for the First Time in 2023,” January 29, 2024. Accessed on February 2, 2024 at https://www.energy.gov/eere/vehicles/articles/fotw-1327-january-29-2024-annual-new-light-duty-ev-sales-topped-1-million. 27 Colias, M., “U.S. EV Sales Jolted Higher in 2022 as Newcomers Target Tesla,” Wall Street Journal, January 6, 2023. 28 Argonne National Laboratory, “Light Duty Electric Drive Vehicles Monthly Sales Updates,” January 30, 2024. Accessed on March 7, 2024 at https://www.anl.gov/esia/light-duty-electric-drive-vehicles-monthly-sales-updates. 29 Colias, M., “U.S. EV Sales Jolted Higher in 2022 as Newcomers Target Tesla,” Wall Street Journal, January 6, 2023. 30 California Energy Commission, “New ZEV Sales in California” online dashboard, viewed on February 13, 2023 at https://www.energy.ca.gov/data-reports/energy-almanac/zero-emission-vehicle-and-infrastructure-statistics/new-zev-sales. 31 California Energy Commission, “New ZEV Sales in California” online dashboard, viewed on December 15, 2023 at https://www.energy.ca.gov/data-reports/energy-almanac/zero-emission-vehicle-and-infrastructure-statistics/new-zev-sales. ER18AP24.000 Figure 1: U.S. PEV Sales by Calendar Year, 2010-2023 (Department of Energy) 32 32 Department of Energy, “FOTW #1327, January 29, 2024: Annual New Light-Duty EV Sales Topped 1 Million for the First Time in 2023,” January 29, 2024. Accessed on February 2, 2024 at https://www.energy.gov/eere/vehicles/articles/fotw-1327-january-29-2024-annual-new-light-duty-ev-sales-topped-1-million. Before the IRA became law, analysts were already projecting that significantly increased sales of PEVs would occur in the United States and in global markets. For example, in 2021, IHS Markit predicted a nearly 40 percent U.S. PEV share by 2030. 33 Projections made in 2022 by Bloomberg New Energy Finance suggested that under then-current policy and market conditions, and prior to the IRA and this final rule, the U.S. was on pace to reach 43 percent PEVs by 2030 and when adjusted for the effects of the IRA, this estimate increased to 52 percent. 34 35 Another study by the International Council on Clean Transportation (ICCT) and Energy Innovation that includes the effect of the IRA estimates that the share of BEVs will increase to 56 to 67 percent by 2032. 36 These projections typically are based on assessment of a range of existing and developing factors, including state policies (such as the California Advanced Clean Cars II program and its adoption by section 177 states); although the assumptions and other inputs to these forecasts vary, they point to greatly increased penetration of electrification across the U.S. light-duty fleet in the coming years, without specifically considering the effect of increased emission standards under this rule. 33 IHS Markit, “US EPA Proposed Greenhouse Gas Emissions Standards for Model Years 2023-2026; What to Expect,” August 9, 2021. Accessed on March 9, 2023 at https://www.spglobal.com/mobility/en/research-analysis/us-epa-proposed-greenhouse-gas-emissions-standards-my2023-26.html. The table indicates 32.3 percent BEVs and combined 39.7 percent BEV, PHEV, and range-extended electric vehicle (REX) in 2030. 34 Bloomberg New Energy Finance (BNEF), “Electric Vehicle Outlook 2022,” from chart labeled “Global long-term EV share of new passenger vehicle sales by market—Economic Transition Scenario.” 35 Tucker, S., “Study: More Than Half of Car Sales Could Be Electric By 2030,” Kelley Blue Book, October 4, 2022. Accessed on February 24, 2023 at https://www.kbb.com/car-news/study-more-than-half-of-car-sales-could-be-electric-by-2030/. 36 International Council on Clean Transportation, “Analyzing the Impact of the Inflation Reduction Act on Electric Vehicle Uptake in the US,” ICCT White Paper, January 2023. Available at https://theicct.org/wp-content/uploads/2023/01/ira-impact-evs-us-jan23.pdf. Recent analyses of the market penetration of plug-in electric vehicles have been completed that include the effects of the IRA. Researchers from Harvard University, MIT, and Cornell University examined the effects of subsidies and tax incentives provided by the BIL and the IRA to promote plug-in electric vehicle sales and the deployment of charging infrastructure. This study predicted plug-in electric vehicle sales shares of 55 to 58 percent in 2030 when both sales and infrastructure subsidies and incentives were considered. 37 In addition, the U.S. Department of Energy, Office of Policy provided updated economy-wide analysis that represents IRA and BIL impacts in which they project 49 to 65 percent zero emissions light-duty vehicle sales shares in 2030. 38 Bloomberg's EV Outlook for 2023 projects that “a major push from the Inflation Reduction Act means EVs make up nearly 28 percent of passenger vehicle sales by 2026.” Finally, the International Energy Agency estimates U.S. PEV sales share of approximately 50 percent in 2030 in both stated policies and announced pledges scenarios. 39 As with earlier analyses that EPA cited in the proposal, assumptions and inputs vary across forecasts. However, all of these recent studies point to greatly increased penetration of PEVs across the U.S. light-duty fleet in the coming years, even more so when the IRA and BIL are considered, and before considering the effect of the revised emissions standards under this rule. As discussed in detail in section IV.C.1 of this preamble, these trends echo an ongoing global shift toward electrification and indicate that an increasing share of new vehicle buyers are concluding that a PEV is the best vehicle to meet their needs. 37 Cole, C., Droste, M., Knittel, C., Li, S., and James, J.H., “Policies for Electrifying the Light-Duty Vehicle Fleet in the United States,” AEA Papers and Proceedings 2023, 113 (pp.316-322). 38 U.S. Department of Energy, Office of Policy, “Investing in American Energy: Significant Impacts of the Inflation Reduction Act and Bipartisan Infrastructure Law on the U.S. Energy Economy and Emissions Reductions,” August 16, 2023. Accessed on November 30, 2023 at https://www.energy.gov/policy/articles/investing-american-energy-significant-impacts-inflation-reduction-act-and. 39 International Energy Agency, “Global EV Outlook 2023,” p. 114, 2023. Accessed on November 30, 2023 at https://www.iea.org/reports/global-ev-outlook-2023. Accompanying this trend has been a proliferation of announcements by automakers in the past several years, signaling a rapidly growing shift in product development focus toward electrification. For example, in January 2021, General Motors announced plans to become carbon neutral by 2040, including an effort to shift its light-duty vehicles entirely to zero-emissions by 2035. 40 In March 2021, Volvo announced plans to make only electric cars by 2030, 41 and Volkswagen announced that it expects half of its U.S. sales will be all-electric by 2030. 42 In April 2021, Honda announced a full electrification plan to take effect by 2040, with 40 percent of North American sales expected to be fully electric or fuel cell vehicles by 2030, 80 percent by 2035 and 100 percent by 2040. 43 In May 2021, Ford announced that they expect 40 percent of their global sales will be all-electric by 2030. 44 In June 2021, Fiat announced a move to all electric vehicles by 2030, and in July 2021 its parent corporation Stellantis announced an intensified focus on electrification, including both BEVs and PHEVs, across all of its brands. 45 46 Also in July 2021, Mercedes-Benz announced that all of its new architectures would be electric-only from 2025, with plans to become ready to go all-electric by 2030 where possible. 47 In December 2021, Toyota announced plans to introduce 30 BEV models by 2030. 48 In August 2023, Subaru announced that its previous plan to target 40 percent combined HEVs and BEVs was being revised to 50 percent BEVs globally by 2030. 49 Some automakers have also indicated a strong role for PHEVs in their product planning. For example, Toyota continues to anticipate PHEVs forming an increasing part of their offerings, 50 and Stellantis will be introducing a plug-in version of its Ram pickup for MY 2024. 51 As discussed in more detail in section IV.C.1 of this preamble, the number of PHEV and BEV models has steadily grown and manufacturer announcements signal the potential for significant growth in the years to come. 40 General Motors, “General Motors, the Largest U.S. Automaker, Plans to be Carbon Neutral by 2040,” Press Release, January 28, 2021. 41 Volvo Car Group, “Volvo Cars to be fully electric by 2030,” Press Release, March 2, 2021. 42 Volkswagen Newsroom, “Strategy update at Volkswagen: The transformation to electromobility was only the beginning,” March 5, 2021. Accessed June 15, 2021 at https://www.volkswagen-newsroom.com/en/stories/strategy-update-at-volkswagen-the-transformation-to-electromobility-was-only-the-beginning-6875 . 43 Honda News Room, “Summary of Honda Global CEO Inaugural Press Conference,” April 23, 2021. Accessed June 15, 2021 at https://global.honda/newsroom/news/2021/c210423eng.html. 44 Ford Motor Company, “Superior Value From EVs, Commercial Business, Connected Services is Strategic Focus of Today's `Delivering Ford+' Capital Markets Day,” Press Release, May 26, 2021. 45 Stellantis, “World Environment Day 2021—Comparing Visions: Olivier Francois and Stefano Boeri, in Conversation to Rewrite the Future of Cities,” Press Release, June 4, 2021. 46 Stellantis, “Stellantis Intensifies Electrification While Targeting Sustainable Double-Digit Adjusted Operating Income Margins in the Mid-Term,” Press Release, July 8, 2021. 47 Mercedes-Benz, “Mercedes-Benz prepares to go all-electric,” Press Release, July 22, 2021. 48 Toyota Motor Corporation, “Video: Media Briefing on Battery EV Strategies,” Press Release, December 14, 2021. Accessed on December 14, 2021 at https://global.toyota/en/newsroom/corporate/36428993.html. 49 Subaru Corporation, “Briefing on the New Management Policy,” August 2, 2023. Accessed on December 5, 2023 at https://www.subaru.co.jp/pdf/news-en/en2023_0802_1_2023-08-01-193334.pdf. 50 Toyota Motor Corporation, “New Management Policy & Direction Announcement,” April 7, 2023. Accessed on December 5, 2023 at https://global.toyota/en/newsroom/corporate/39013233.html. 51 Stellantis, “All-new 2025 Ram 1500 Ramcharger Unveiled With Class-shattering Unlimited Battery-electric Range,” Press Release, November 7, 2023. Accessed on December 5, 2023 at https://media.stellantisnorthamerica.com/newsrelease.do?id=25436. On August 5, 2021, many major automakers including Ford, GM, Stellantis, BMW, Honda, Volkswagen, and Volvo, as well as the Alliance for Automotive Innovation, expressed continued commitment to their announcements of a shift to electrification, and expressed their support for the goal of achieving 40 to 50 percent sales of zero-emission vehicles by 2030. 52 In September 2022, jointly with the Environmental Defense Fund (EDF), General Motors (GM) announced a set of recommendations including a recommendation that EPA establish standards to achieve at least a 60 percent reduction in GHG emissions (compared to MY 2021), and that the standards be consistent with eliminating tailpipe pollution from new passenger vehicles by 2035. These announcements have been accompanied by continued major investments across the automotive industry in manufacturing facilities for PEVs, production capacity for batteries, and sourcing of critical minerals, as described further in sections IV.C.1 and IV.C.7 of this preamble. 52 The White House, “Statements on the Biden Administration's Steps to Strengthen American Leadership on Clean Cars and Trucks,” August 5, 2021. Accessed on October 19, 2021 at https://www.whitehouse.gov/briefing-room/statements-releases/2021/08/05/statements-on-the-biden-administrations-steps-to-strengthen-american-leadership-on-clean-cars-and-trucks/ . In comments on the proposal, submitted in July 2023, manufacturers reiterated their continued commitment to electrification. Ford, for example, stated “Ford is all-in on electrification. We are investing more than $50 billion through 2026 to deliver breakthrough electric vehicles (EVs)” and expressed their support for a 2032 endpoint of approximately 67 percent PEVs. 53 GM's comments “reiterate[ ] our commitment” to sell 50 percent EVs by 2030 as “the appropriate path toward all EVs by 2035.” 54 Stellantis stated it “is unwavering in its commitment to an all-electric portfolio and building an EV dominated market” including a 50 percent EV mix for passenger cars and light trucks by 2030. 55 Volkswagen expressed its goal of 20 percent BEV sales globally by 2025, and more than 50 percent by 2030. 56 Other OEMs also restated their own significant commitments to electrification, with Honda restating its commitment to selling 40 percent zero-emitting vehicles by 2030 and 80 percent by 2035 57 and Hyundai noting their support for selling 50 percent PEVs in 2030. 58 In addition there were automakers supporting stronger standards that would lead to somewhat higher levels of BEVs in 2032, 59 and some making commitments to significantly reduce vehicle emissions without identifying a particular level of PEVs they intend to sell. 60 53 Ford Motor Company, EPA-HQ-OAR-2022-0829-0605 at p. 1. 54 General Motors, LLC, EPA-HQ-OAR-2022-0829-0700 at p. 3-4. 55 Stellantis, EPA-HQ-OAR-2022-0829-0678 at p. 2. 56 Volkswagen Group of America, Inc., EPA-HQ-OAR-2022-0829-0669 at p. 2. 57 American Honda Motor Co. Inc., EPA-HQ-OAR-2022-0829-0652 at p. 3. 58 Hyundai Motor America, EPA-HQ-OAR-2022-0829-0599 at p. 2 59 Tesla, Inc., EPA-HQ-OAR-2022-0829-0792, at 2 (supporting greater than 69% BEV penetration in 2032). 60 Toyota Motor North America, EPA-HQ-OAR-2022-0829-0620 at 1 (plan to reduce average CO 2 emissions for all new vehicles worldwide by 33% by 2030 and by 50% by 2035, as compared to 2019). In the second half of 2023, some automakers announced changes to previously announced investment plans and made statements suggesting increased attention to PHEVs or HEVs in their future product plans. For example, in mid-2023, Ford paused construction (and then restarted construction in November 2023, as discussed below) of their recently announced battery plant in Marshall, Michigan, 61 and in November 2023 announced a reduction in the size of the plant from 50 GWh to 20 GWh. 62 In 2024, Ford also signaled a growing interest in producing HEVs and a shift from large BEV SUVs toward smaller BEVs. 63 64 65 66 Similarly, General Motors indicated increased attention toward producing PHEVs in addition to BEVs, 67 68 and in an earnings call Mercedes suggested that it would reach 50 percent “xEVs” in “the second half of the decade.” 69 70 Some industry analysts have commented on the possibility that these developments indicated a drop in PEV demand or a weakening of manufacturer interest in investing in PEV technology. 71 72 73 74 61 Reuters, “Ford pauses work on $3.5 bln battery plant in Michigan,” September 25, 2023. Accessed on December 15, 2023 at https://www.reuters.com/business/autos-transportation/ford-pauses-work-35-billion-battery-plant-michigan-2023-09-25/. 62 New York Times, “Ford Resumes Work on E.V. Battery Plant in Michigan, at Reduced Scale,” November 21, 2023. Accessed on December 15, 2023 at https://www.nytimes.com/2023/11/21/business/ford-ev-battery-plant-michigan.html. 63 CNBC, “Ford is reassessing its EV plans, including vertical battery integration,” February 6, 2024. Accessed on February 7, 2024 at https://www.cnbc.com/2024/02/06/ford-reassessing-ev-plans-including-vertical-battery-integration.html. 64 Reuters, “Ford slows EVs, sends a truckload of cash to investors,” February 7, 2024. Accessed on February 14, 2024 at https://www.reuters.com/business/autos-transportation/ford-offer-regular-supplemental-dividend-2024-02-06/. 65 Green Car Reports, “Ford CEO: Hybrids will play `increasingly important role' alongside EVs,” February 7, 2024. Accessed on February 9, 2024 at https://www.greencarreports.com/news/1142233_ford-ceo-hybrids-alongside-evs. 66 Green Car Reports, “Ford seeks smaller, lower-cost EVs to rival $25,000 Tesla, China,” February 7, 2024. Accessed on February 9, 2024 at https://www.greencarreports.com/news/1142232_ford-smaller-lower-cost-ev-platform-tesla-china. 67 Forbes, “GM Does a U-Turn: Plug-In Hybrids are Coming Back,” January 31, 2024. Accessed on February 14, 2024 at https://www.forbes.com/sites/michaelharley/2024/01/31/gm-does-a-u-turn-plug-in-hybrids-are-coming-back/. 68 Detroit Free Press, “General Motors to bring back hybrid vehicles in North America, stay focused on EVs,” January 30, 2024. Accessed on February 14, 2024 at https://www.freep.com/story/money/cars/general-motors/2024/01/30/gm-hybrid-vehicles-north-america/72406811007/. 69 Reuters, “Mercedes-Benz delays electrification goal, beefs up combustion engine line-up,” February 22, 2024. Accessed on March 6, 2024 at https://www.reuters.com/business/autos-transportation/mercedes-benz-hits-cars-returns-forecast-inflation-supply-chain-costs-bite-2024-02-22/. 70 Mercedes-Benz Group, “Outlook,” February 22, 2024. Accessed on March 6, 2024 at https://group.mercedes-benz.com/investors/share/outlook/. 71 Reuters, “US EV market struggles with price cuts and rising inventories,” July 11, 2023. Accessed on December 15, 2023 at https://www.reuters.com/business/autos-transportation/slow-selling-evs-are-auto-industrys-new-headache-2023-07-11/. 72 Marketplace, “Electric vehicles face reality check as automakers dial back production targets,” November 2, 2023. Accessed on December 15, 2023 at https://www.marketplace.org/2023/11/02/ev-demand-production-reality-check/. 73 The Wall Street Journal, “EV Makers Turn to Discounts to Combat Waning Demand,” November 7, 2023. Accessed on December 15, 2023 at https://www.wsj.com/business/autos/ev-makers-turn-to-discounts-to-combat-waning-demand-3aa77535. 74 The Wall Street Journal, “The Six Months That Short-Circuited the Electric-Vehicle Revolution,” February 14, 2024. Accessed on February 15, 2024 at https://www.wsj.com/business/autos/ev-electric-vehicle-slowdown-ford-gm-tesla-b20a748e. EPA acknowledges these recent announcements regarding investment plans. We have carefully considered these announcements, in light of the larger universe of information about manufacturer plans including comments submitted by the manufacturers on this rulemaking and our ongoing engagement with the manufacturers. Overall, EPA finds that these recent announcements do not reflect a significant change in manufacturer intentions regarding PEVs generally or specifically through the 2027-2032 timeframe of this rule. We also take into consideration that sales of PEVs have increased dramatically in recent years so periods where demand and supply of vehicles are temporarily misaligned (either creating shortages or an over-supply of vehicles) is not unexpected. Ford has since restarted construction of its plant; 75 at about the same as time Ford announced the delay, Toyota announced an $8 billion increase in investment in its North Carolina plant. 76 Nor are U.S. PEV sales data for 2023 (presented previously in Figure 1) consistent with a reduction in PEV demand, 77 78 with sales up by 50 percent from 2022 to 2023, consistent with and slightly larger than the 46 percent increase from 2021 to 2022 and in line with the average year-over-year increase of 52 percent from 2012 to 2023. 79 Both Ford and GM have characterized their recent moves as complementary to their continued plans to electrify an increasing portion of their product lines. For example, GM stated that it is “deploying plug-in technology in strategic segments,” and that “for calendar year 2024, EV is our focus,” 80 while Ford stated that its next generation of BEVs “will be profitable and return their cost of capital.” 81 It is also difficult to draw conclusions about industry-wide PEV demand or investment from only these two examples. Specific factors have been active during the same period, such as the 2023 United Auto Workers strike, 82 and an increase in inventories for light-duty vehicles of all types, 83 which may be related to economic conditions such as high interest rates and higher average transaction prices. 84 85 86 Economic conditions across the industry have also been cited in relation to manufacturers' recent investment decisions. 87 88 89 For example, Mercedes-Benz cited slower economic growth, 48-volt component shortages, European policy uncertainty, lower than expected demand in China, and trade tensions with China as all affecting its earnings outlook. 90 91 Meanwhile, some other manufacturers have seen strong BEV demand and have reaffirmed their plans, for example, Hyundai and Kia have indicated strong demand and are maintaining or accelerating investment plans, 92 93 and Stellantis reported making a profit on EVs globally and stated that it is “keeping full speed on electrification.” 94 95 At the same time, automakers continue to compete in a global market where emission reduction targets and PEV demand continue to spur investments in these technologies. Given the unprecedented rate and size of recent investment activity in PEV technology, adjustments to previously announced plans would ordinarily be expected to occur, and to date have included both reductions and increases in investment amounts and pacing. Our assessment of the feasibility of the standards is based on our assessment of the full record as discussed in sections III and IV of this preamble and in the RIA, and EPA does not consider such adjustments to be indicative of any broad trend that would change our assessment of PEV feasibility as an emission control technology. Further, the rulemaking establishes performance-based standards, which manufacturers can meet using a variety of technologies, including ICE vehicles across a range of electrification, and the sensitivity analyses confirm that the standards are feasible and appropriate under a range of future circumstances. At the same time, the final standards incorporate a reduced rate of stringency increase in the early years as compared to the proposed standards, providing additional lead time which supports the kinds of product planning changes described in these recent announcements. 96 75 CBS News, “Ford resuming construction of Michigan EV battery plant delayed by strike, scaling back jobs,” November 21, 2023. Accessed on December 15, 2023 at https://www.cbsnews.com/detroit/news/ford-resuming-construction-of-michigan-ev-battery-plant-delayed-by-strike-scaling-back-jobs/ . 76 Toyota Newsroom, “Toyota Supercharges North Carolina Battery Plant with New $8 Billion Investment,” Press Release, October 31, 2023. Available at https://pressroom.toyota.com/toyota-supercharges-north-carolina-battery-plant-with-new-8-billion-investment/ . 77 Fortune, “EV sales expected to hit new U.S. record in 2023—but Germany, China and Norway still lead the way,” November 23, 2023. Accessed on December 11, 2023 at https://fortune.com/2023/11/23/us-electric-vehicle-sales-2023-record/ . 78 BloombergNEF, “Four Takeaways on the Future of the Global EV Market,” June 8, 2023. Accessed on December 8, 2023 at https://www.bloomberg.com/news/articles/2023-06-08/global-ev-sales-have-soared-as-overall-new-car-sales-sag . 79 Derived from the yearly sales depicted in Figure 1. 80 Detroit Free Press, “General Motors to bring back hybrid vehicles in North America, stay focused on EVs,” January 30, 2024. Accessed on February 14, 2024 at https://www.freep.com/story/money/cars/general-motors/2024/01/30/gm-hybrid-vehicles-north-america/72406811007/ . 81 Reuters, “Ford slows EVs, sends a truckload of cash to investors,” February 7, 2024. Accessed on February 14, 2024 at https://www.reuters.com/business/autos-transportation/ford-offer-regular-supplemental-dividend-2024-02-06// . 82 CBS News, “Ford resuming construction of Michigan EV battery plant delayed by strike, scaling back jobs,” November 21, 2023. Accessed on December 15, 2023 at https://www.cbsnews.com/detroit/news/ford-resuming-construction-of-michigan-ev-battery-plant-delayed-by-strike-scaling-back-jobs/ . 83 National Automobile Dealers Association, “NADA Market Beat,” November 2023. Accessed on December 11, 2023 at https://www.nada.org/nada/nada-headlines/nada-market-beat-new-light-vehicle-inventory-reaches-20-month-high . 84 Reuters, “More alarm bells sound on slowing demand for electric vehicles,” October 25, 2023. Accessed on December 15, 2023 at https://www.reuters.com/business/autos-transportation/more-alarm-bells-sound-slowing-demand-electric-vehicles-2023-10-25/ . 85 CNBC, “Sparse inventory drives prices for new, used vehicles higher,” October 17, 2023. Accessed on December 15, 2023 at https://www.cnbc.com/2023/10/17/sparse-inventory-drives-prices-for-new-used-cars-higher.html . 86 San Diego Union-Tribune, “Has enthusiasm for electric cars waned?,” October 27, 2023. Accessed on December 15, 2023 at https://www.sandiegouniontribune.com/business/story/2023-10-27/has-enthusiasm-for-electric-cars-waned . 87 Reuters, “Hyundai, Kia see strong demand for EVs, despite rivals' concerns,” November 17, 2023. Accessed on February 14, 2024 at https://www.reuters.com/business/autos-transportation/hyundai-kia-see-strong-demand-evs-despite-rivals-concerns-2023-11-17/ . 88 Reuters, “Mexico gives Tesla land-use permits for gigafactory, says state government,” December 12, 2023. Accessed on February 14, 2024 at https://www.reuters.com/business/autos-transportation/mexico-gives-tesla-land-use-permits-gigafactory-says-state-government-2023-12-13/ . 89 Mexico Now, “Taxes and global economy stop Tesla plant in Nuevo Leon,” October 23, 2023. Accessed on February 14, 2024 at https://mexico-now.com/taxes-and-global-economy-stop-tesla-plant-in-nuevo-leon/ . 90 Mercedes-Benz Group, “Outlook,” February 22, 2024. Accessed on March 6, 2024 at https://group.mercedes-benz.com/investors/share/outlook/ . 91 Seeking Alpha, “Mercedes-Benz Group AG (MBGAF) Q4 2023 Earnings Call Transcript,” February 22,2024. Accessed on March 6, 2024 at https://seekingalpha.com/article/4672324-mercedes-benz-group-ag-mbgaf-q4-2023-earnings-call-transcript . 92 Reuters, “Hyundai sticks to EV rollout plans, sees solid growth this year,” October 26, 2023. Accessed on February 14, 2024 at https://www.reuters.com/business/autos-transportation/hyundai-motors-q3-net-profit-rises-151-beats-forecasts-2023-10-26/ . 93 Reuters, “Hyundai, Kia see strong demand for EVs, despite rivals' concerns,” November 17, 2023. Accessed on February 14, 2024 at https://www.reuters.com/business/autos-transportation/hyundai-kia-see-strong-demand-evs-despite-rivals-concerns-2023-11-17/. We note that Hyundai submitted a late comment on November 1, 2023 reiterating its support for a mechanism to potentially revise the stringency of the standards in future years in light of developments (EPA-HQ-OAR-2022-0829-5102) but neither Hyundai nor any other automaker submitted additional comments after the close of the comment period indicating they were adjusting their plans for future PEV products and sales. 94 CNN, “A traditional automaker just turned a profit on EVs,” February 15, 2024. Accessed on February 15, 2024 at https://www.cnn.com/2024/02/15/business/stellantis-earnings-electric-vehicles/index.html . 95 The Wall Street Journal, “Chrysler-Parent Stellantis Staying the Course on EVs, Despite Slowdown,” February 15, 2024. Accessed on February 16, 2024 at https://www.wsj.com/livecoverage/stock-market-today-dow-jones-02-15-2024/card/chrysler-parent-stellantis-staying-the-course-on-evs-despite-slowdown-pCHVXXe6Igo4do3pBFoQ . 96 Of course, as with any rulemaking, the Administrator has the discretion to propose modifications to the program through the public notice and comment process, in the case that modifications are found to be appropriate in the future to address any constraints that might have developed. Electrification plans are not limited to light-duty vehicles. Electrification of MDVs is also increasing rapidly, primarily within the area of last-mile delivery. MDV delivery vans using dedicated battery-electric vehicle (BEV) architectures are beginning to enter the U.S. market, with the first mass-produced models having become available for MY 2023 and additional production volume and models announced for MY 2024. Initial dedicated BEV van chassis have been predominantly targeted towards parcel delivery and include the GM BrightDrop Zevo 400 and Zevo 600; and the Rivian EDV 500 and EDV 700. 97 98 97 https://www.gobrightdrop.com/ . 98 https://rivian.com/fleet . Numerous commitments to purchase all-electric medium-duty delivery vans have also been announced by large fleet owners including FedEx, 99 Amazon, 100 and Walmart, 101 in partnerships with various OEMs. For example, Amazon has deployed thousands of electric delivery vans in over 100 cities, with the goal of 100,000 vans by 2030. Many other fleet electrification commitments that include large numbers of medium-duty and heavier vehicles have been announced by large corporations in many sectors of the economy, including not only retailers like Amazon and Walmart but also consumer product manufacturers with large delivery fleets ( e.g., IKEA, Unilever), large delivery firms ( e.g., DHL, FedEx, USPS), and numerous firms in many other sectors including power and utilities, biotech, public transportation, and municipal fleets across the country. 102 As another example, Daimler Trucks North America announced in 2021 that it expected 60 percent of its sales in 2030 and 100 percent of its sales by 2039 would be zero-emission. 103 99 BrightDrop, “BrightDrop Accelerates EV Production with First 150 Electric Delivery Vans Integrated into FedEx Fleet,” Press Release, June 21, 2022. 100 Amazon Corporation, “Amazon's Custom Electric Delivery Vehicles from Rivian Start Rolling Out Across the U.S.,” Press Release, July 21, 2022. 101 Walmart, “Walmart To Purchase 4,500 Canoo Electric Delivery Vehicles To Be Used for Last Mile Deliveries in Support of Its Growing eCommerce Business,” Press Release, July 12, 2022. 102 Environmental Defense Fund and ERM, “Electric Vehicle Market Update: Manufacturer Commitments and Public Policy Initiatives Supporting Electric Mobility in the U.S. and Worldwide,” September 2022. 103 Carey, N., “Daimler Truck 'all in' on green energy as it targets costs,” May 20, 2021. Investments in PEV charging infrastructure have likewise grown rapidly in recent years and are expected to continue to climb. According to BloombergNEF, total cumulative global investment in PEV charging reached almost $55 billion in 2022 and was estimated to reach nearly $93 billion in 2023. 104 U.S. infrastructure spending has also grown significantly over the past several years with estimated public charging investments of $2.7 billion in 2023 alone. 105 104 BloombergNEF, “Zero-Emission Vehicles Factbook, A BloombergNEF special report prepared for COP28,” December 2023, at https://assets.bbhub.io/professional/sites/24/2023-COP28-ZEV-Factbook.pdf . 105 BloombergNEF, “Zero-Emission Vehicles Factbook, A BloombergNEF special report prepared for COP28,” December 2023, at https://assets.bbhub.io/professional/sites/24/2023-COP28-ZEV-Factbook.pdf . As described in the next section, the U.S. government is making large investments in infrastructure through the Bipartisan Infrastructure Law 106 and the Inflation Reduction Act. 107 However, we expect that private investments will also play a critical role in meeting future infrastructure needs. Private charging companies have already attracted billions globally in venture capital and mergers and acquisitions indicating strong interest in the future of the charging industry. 108 And Bain projects that by 2030, the U.S. market for electric vehicle charging will be “large and profitable” with both revenue and profits estimated to grow by a factor of twenty relative to 2021. 109 The White House estimates over $25 billion in commitments to expand the U.S. charging network has been announced as of January 2024. 110 This includes more than $10 billion in private sector investments from automakers, charging companies, and retailers among others. See section IV.C.4 of this preamble and Chapter 5 of the Regulatory Impact Analysis (RIA) 111 for a discussion of public and private infrastructure investments. 106 https://www.congress.gov/117/plaws/publ58/PLAW-117publ58.pdf . 107 https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf . 108 Hampleton, “Autotech & Mobility M&A market report 1H2023”. Accessed March 4, 2023, at https://www.hampletonpartners.com/fileadmin/user_upload/Report_PDFs/Hampleton-Partners-Autotech-Mobility-Report-1H2023-FINAL.pdf . 109 Zayer, E. et al., “EV Charging Shifts into High Gear,” Bain & Company, June 20, 2022. Accessed March 4, 2023, at https://www.bain.com/insights/electric-vehicle-charging-shifts-into-high-gear/ . 110 The White House, “FACT SHEET: Biden-Harris Administration Announces New Actions to Cut Electric Vehicle Costs for Americans and Continue Building Out a Convenient, Reliable, Made-in-America EV Charging Network”, January 19, 2024. Accessed at https://www.whitehouse.gov/briefing-room/statements-releases/2024/01/19/fact-sheet-biden-harris-administration-announces-new-actions-to-cut-electric-vehicle-costs-for-americans-and-continue-building-out-a-convenient-reliable-made-in-america-ev-charging-network/ . 111 Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles—Regulatory Impact Analysis; EPA-420-R-24-004. Taken together, these developments indicate that proven technologies such as BEVs and PHEVs are already poised to become a rapidly growing segment of the U.S. fleet, as manufacturers continue to invest in these technologies and integrate them into their product plans, and infrastructure continues to be developed. Accordingly, EPA considers these technologies to be available and feasible for controlling motor vehicle emissions, and expects that these technologies will likely play a significant role in meeting the standards for both criteria pollutants and GHGs. At the same time, EPA anticipates that a compliant fleet under the final performance-based emissions standards will include a diverse range of technologies. The advanced gasoline technologies that have played a fundamental role in meeting previous standards will continue to play an important role going forward 112 113 114 as they remain key to reducing the criteria and GHG emissions of ICE, mild HEV, strong HEV and PHEV powertrains. PHEVs also provide a technology option that combines the benefits of both electric and ICE technology. EPA's standards are performance-based and allow each manufacturer to choose the array of technologies it wishes to use, without requiring any particular technology for any particular vehicle category. The final standards will also provide regulatory certainty to support the many private automaker announcements and investments in PEVs that have been outlined in the preceding paragraphs. In developing these standards, EPA also considered many of the key issues associated with growth in penetration of PEVs, including charging infrastructure, consumer acceptance, critical minerals and mineral security, and others, as well as the emissions from the wide range of ICE-based vehicle technologies ( e.g., non-hybrid ICE, mild HEVs, strong HEVs) that will continue to be produced during the timeframe of these standards. We discuss each of these issues in more detail in respective sections of the preamble and RIA. 112 Wards Auto, “GM Investing Billions in ICE Truck, SUV Production,” June 13, 2023. Accessed on January 5, 2024 at https://www.wardsauto.com/industry-news/gm-investing-billions-ice-truck-suv-production . 113 Forbes, “GM To Put Nearly $1 Billion More Into Production of Internal Combustion Engines,” January 20, 2023. Accessed on January 5, 2024 at https://www.forbes.com/sites/edgarsten/2023/01/20/internal-combustion-engine-production-wins-nearly-all-1-billion-of-new-gm-plant-investments/?sh=ec7346969383 . 114 Wards Auto, “BMW `Not Ready' to Give Up on ICE,” August 3, 2023. Accessed on January 5, 2024 at https://www.wardsauto.com/industry-news/bmw-not-ready-give-ice . 3. The Bipartisan Infrastructure Law and Inflation Reduction Act A particular consideration with regard to the increased penetration of zero-emission vehicle technology is Congress' passage of the Bipartisan Infrastructure Law (BIL) 115 116 in 2021 and the Inflation Reduction Act (IRA) 117 in 2022. These measures represent significant Congressional support for investment in expanding the manufacture, sale, and use of zero-emission vehicles by addressing elements critical to the advancement of clean transportation and clean electricity generation in ways that will facilitate and accelerate the development, production and adoption of zero-emission technology during the time frame of this rule. Congressional passage of the BIL and IRA represent pivotal milestones in the creation of a broad-based infrastructure instrumental to the expansion of clean transportation, including light- and medium-duty zero-emission vehicles, and we have taken these developments into account in assessing the feasibility of the standards. 115 https://www.congress.gov/117/plaws/publ58/PLAW-117publ58.pdf . 116 Also known as the Infrastructure Investment and Jobs Act (IIJA). 117 https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf . The BIL became law in November 2021 and includes a wide range of programs and significant funding for infrastructure investments, many of which are oriented toward reducing GHG emissions across the U.S. transportation network, upgrading power generation infrastructure, and making the transportation infrastructure resilient to climate impacts such as extreme weather. Notably, in support of light-duty zero-emissions transportation, the BIL included $7.5 billion in funding for installation of public charging and other alternative fueling infrastructure. This will have a major impact on feasibility of PEVs across the U.S. by improving access to charging and other infrastructure, and it will further support the Administration's goal of deploying 500,000 PEV chargers by 2030. It also includes $5 billion for electrification of school buses through the Clean School Bus Program, providing for further reductions in emissions from the heavy-duty sector. 118 119 To help ensure that clean vehicles are powered by clean energy, it also includes $65 billion to upgrade the power infrastructure to facilitate increased use of renewables and clean energy. Further, the BIL allocated an additional $10.5 billion to DOE's Grid Deployment Office (GDO) and the Grid Resilience and Innovation Partnerships program (GRIP) for investments to increase the flexibility, efficiency and reliability of the electric power system, which will further support PEV adoption. 118 https://www.epa.gov/cleanschoolbus . Accessed February 14, 2023. 119 U.S. EPA, “EPA Clean School Bus Program Second Report to Congress,” EPA 420-R-23-002, February 2023. The IRA became law in August 2022, bringing significant new momentum to clean vehicles (PEVs and fuel cell electric vehicles (FCEVs)) through measures that reduce the cost to purchase and manufacture them, incentivize the growth of manufacturing capacity and onshore sourcing of critical minerals and battery components needed for their manufacture, incentivize buildout of public charging infrastructure for PEVs, and promote modernization of the electrical grid that will power them. It includes significant consumer incentives of up to $7,500 for new clean vehicles (Clean Vehicle Credit or Internal Revenue Code (IRC) 30D, and Commercial Clean Vehicle Credit or IRC 45W) and up to $4,000 for used vehicles (Used Clean Vehicle Credit or IRC 25E). These credits will have a strong and immediate impact on the upfront affordability of these vehicles for a wide range of customers, including buyers at over 10,000 dealers that have registered to offer the 30D or 25E credits at the point of sale, 120 buyers of vehicles for commercial and fleet use under 45W, and indirectly to lessees of vehicles purchased for lease to consumers. Manufacturer production tax incentives of $35 per kWh for U.S. production of battery cells, $10 per kWh for U.S. production of modules, and 10 percent of production cost for U.S.-made critical minerals and electrode active materials (Production Tax Credit, IRC 45X), will significantly reduce the manufacturing cost of these battery components, further reducing PEV and FCEV cost for consumers. In addition, the IRA includes significant tax credits for certain charging and hydrogen infrastructure equipment (Alternative Fuel Vehicle Refueling Infrastructure Property Tax Credit, IRC 30C), and sizeable incentives for investment in and production of clean electricity. 120 U.S. Department of the Treasury, “Remarks by Assistant Secretary for Tax Policy Lily Batchelder on Phase Three of Implementation of the Inflation Reduction Act's Clean Energy Provisions,” January 31, 2024. Accessed February 4, 2024 at https://home.treasury.gov/news/press-releases/jy2070 . With respect to sourcing of critical minerals and battery components, and building a secure supply chain for clean vehicles and refueling infrastructure, the IRA also includes provisions that will greatly reduce reliance on imports by strongly supporting the continued development of a domestic and North American supply chain, as well as securing sources among Free Trade Agreement (FTA) countries and other trade partners and allies. Manufacturers who want their customers to take advantage of the Clean Vehicle Credit (30D) must assemble the vehicles in North America, must meet a gradually increasing value requirement for sourcing of critical minerals from U.S. or free-trade countries, and battery components from within North America, and cannot utilize content acquired from foreign entities of concern (FEOCs). 121 Manufacturer eligibility for the Production Tax Credit (45X) for cells and modules is conditioned on their manufacture in the U.S., as is eligibility for the 10 percent credit on the cost of producing critical minerals and electrode active materials. Manufacturers are already taking advantage of these opportunities to improve their sales and reduce their production costs by securing eligible sources of critical mineral content and siting new production facilities in the U.S. 122 123 124 125 126 127 128 129 130 Although 45W is not subject to the sourcing requirements of 30D, the latter remains highly influential in manufacturer siting decisions; for example, Hyundai has increased the leasing of vehicles to consumers while also continuing plans to site battery and vehicle manufacturing in the U.S., 131 and the Korean battery industry is renegotiating ventures to comply with FEOC restrictions that impact 30D. 132 133 According to ANL's most recent analysis of public announcements of cell manufacturing plants in North America through January 2024, cell manufacturers in the United States could supply about 10 million new light-duty electric vehicles each year by 2030, assuming an average pack size of 80 to 100 kWh. 134 There is a coordinated effort by Executive Branch agencies, including the Department of Energy and the National Laboratories, to provide guidance and resources and to administer funding to support this collective effort to further develop a robust supply chain for clean vehicles and the infrastructure that will support them. 135 136 137 138 139 140 Section IV.C.7 of this preamble and Chapters 3.1.3 and 3.1.4 of the RIA discuss these provisions and measures in more detail. 121 Foreign entities of concern include entities (individuals and businesses) “owned by, controlled by, or subject to jurisdiction or direction of” a “covered nation” (defined in 10 U.S. Code 2533(c)(d)(2) as the Democratic People's Republic of North Korea, the People's Republic of China, the Russian Federation, and the Islamic Republic of Iran). 122 Green Car Congress, “Ford sources battery capacity and raw materials for 600K EV annual run rate by late 2023, 2M by end of 2026; adding LFP,” July 22, 2022. 123 Ford Motor Company, “Ford Releases New Battery Capacity Plan, Raw Materials Details to Scale EVs; On Track to Ramp to 600K Run Rate by '23 and 2M+ by '26, Leveraging Global Relationships,” Press Release, July 21, 2022. 124 Green Car Congress, “GM signs major Li-ion supply chain agreements: CAM with LG Chem and lithium hydroxide with Livent,” July 26, 2022. 125 Grzelewski, J., “GM says it has enough EV battery raw materials to hit 2025 production target,” The Detroit News, July 26, 2022. 126 Hall, K., “GM announces new partnership for EV battery supply,” The Detroit News, April 12, 2022. 127 Hawkins, A., “General Motors makes moves to source rare earth metals for EV motors in North America,” The Verge, December 9, 2021. 128 Piedmont Lithium, “Piedmont Lithium Signs Sales Agreement With Tesla,” Press Release, September 28, 2020. 129 Subramanian, P., “Why Honda's EV battery plant likely wouldn't happen without new climate credits,” Yahoo Finance, August 29, 2022. 130 LG Chem, “LG Chem to Establish Largest Cathode Plant in US for EV Batteries,” Press Release, November 22, 2022. 131 Korea Economic Daily, “Hyundai Motor to boost EV leasing in US for tax credits from 2023,” December 30, 2022. Accessed on February 14, 2024 at https://www.kedglobal.com/electric-vehicles/newsView/ked202212300014. 132 Nikkei Asia, “U.S. rules force South Korea's EV battery makers to rethink China deals,” December 8, 2023. Accessed on February 14, 2024 at https://asia.nikkei.com/Business/Business-Spotlight/U.S.-rules-force-South-Korea-s-EV-battery-makers-to-rethink-China-deals . 133 Korea Economic Daily, “US regulations push Korean battery industry to cut reliance on China,” December 12, 2023. Accessed on February 14, 2024 at https://www.kedglobal.com/batteries/newsView/ked202312120008 . 134 Argonne National Laboratory, “Light Duty Electric Drive Vehicles Monthly Sales Updates”, January 2024. Accessed February 2, 2024 at https://www.anl.gov/esia/light-duty-electric-drive-vehicles-monthly-sales-updates . 135 Executive Order 14017, Securing America's Supply Chains, February 24, 2021. https://www.whitehouse.gov/briefing-room/presidential-actions/2021/02/24/executive-order-on-americas-supply-chains/ . 136 The White House, “FACT SHEET: Biden-Harris Administration Driving U.S. Battery Manufacturing and Good-Paying Jobs,” October 19, 2022. Available at: https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/19/fact-sheet-biden-harris-administration-driving-u-s-battery-manufacturing-and-good-paying-jobs/ . 137 Department of Energy, “Biden Administration, DOE to Invest $3 Billion to Strengthen U.S. Supply Chain for Advanced Batteries for Vehicles and Energy Storage,” February 11, 2022. Available at: https://www.energy.gov/articles/biden-administration-doe-invest-3-billion-strengthen-us-supply-chain-advanced-batteries . 138 Department of Energy, “Supply Chains Progress Report,” August 2023. https://www.energy.gov/sites/default/files/2023-08/Supply%20Chain%20Progress%20Report%20-%20August%202023.pdf . 139 Argonne National Laboratory, “Quantification of Commercially Planned Battery Component Supply in North America through 2035,” ANL-24/14, March 2024. https://publications.anl.gov/anlpubs/2024/03/187735.pdf . 140 Argonne National Laboratory, “Securing Critical Materials for the U.S. Electric Vehicle Industry: A Landscape Assessment of Domestic and International Supply Chains for Five Key EV Battery Materials,” ANL-24/06, February 2024. https://publications.anl.gov/anlpubs/2024/03/187907.pdf . Incentives provided by the IRA, along with manufacturers' strategies to meet consumer demand, are expected to result in even greater adoption of electrification technologies. Our No Action case ( i.e., without this rule) includes effects of the IRA. The third-party estimates to which we compare our No Action case are all very recent and include the IRA. Importantly, they do not include these standards, but do differ in other assumptions such as state level policies and consideration of manufacturer announced plans. We project PEV penetration of 42 percent in 2030 in the No Action case, while mid-range third-party projections we have reviewed range from 48 to 58 percent in 2030. 141 142 143 144 145 146 147 We consider our No Action case projections to be somewhat more conservative than these third-party estimates, although generally consistent given the differences in treatment of state-level policies and manufacturer announced plans. Nevertheless, the very substantial rates of PEV penetration under the No Action scenario underscore that a shift to widespread use of electrification technologies is already well underway, which contributes to the feasibility of further emissions controls under these standards. 141 Cole, Cassandra, Michael Droste, Christopher Knittel, Shanjun Li, and James H. Stock. 2023. “Policies for Electrifying the Light-Duty Fleet in the United States.” AEA Papers and Proceedings 113: 316-322. doi: https://doi.org/10.1257/pandp.20231063 . 142 IEA. 2023. “Global EV Outlook 2023: Catching up with climate ambitions.” International Energy Agency. 143 Forsythe, Connor R., Kenneth T. Gillingham, Jeremy J. Michalek, and Kate S. Whitefoot. 2023. “Technology advancement is driving electric vehicle adoption.” PNAS 120 (23). doi: https://doi.org/10.1073/pnas.2219396120. 144 Bloomberg NEF. 2023. “Electric Vehicle Outlook 2023.” 145 U.S. Department of Energy, Office of Policy. 2023. “Investing in American Energy: Significant Impacts of the Inflation Reduction Act and Bipartisan Infrastructure Law on the U.S. Energy Economy and Emissions Reductions.” 146 Slowik, Peter, Stephanie Searle, Hussein Basma, Josh Miller, Yuanrong Zhou, Felipe Rodriguez, Claire Buysse, et al. 2023. “Analyzing the Impact of the Inflation Reduction Act on Electric Vehicle Uptake in the United States.” International Council on Clean Transportation and Energy Innovation Policy & Technology LLC. 147 Mid-range third-party estimates exclude more extreme scenarios, which did not include all IRA incentives or were described as “High” or “Advanced” by respective study authors. See RIA Chapter 4.1.2. B. Summary of Light- and Medium-Duty Vehicle Emissions Programs EPA is establishing new emissions standards for both light-duty and medium-duty vehicles. The light-duty vehicle category includes passenger cars and light trucks consistent with previous EPA criteria pollutant and GHG rules. In this rule, heavy-duty Class 2b and 3 vehicles are referred to as “medium-duty vehicles” (MDVs) to distinguish them from Class 4 and higher vehicles, which remain under the heavy-duty program. EPA has not previously used the MDV nomenclature, referring to these larger vehicles in prior rules as light-heavy-duty vehicles, 148 heavy-duty Class 2b and 3 vehicles, 149 or heavy-duty pickups and vans. 150 In the context of this rule, the MDV category includes primarily large pickups and vans with a gross vehicle weight rating (GVWR) of 8,501 to 14,000 pounds and excludes vehicles used primarily as passenger vehicles (which are called medium-duty passenger vehicles, or MDPVs, and which are covered under the light-duty program). 148 66 FR 5002. 149 79 FR 23414. 150 76 FR 57106. The program consists of several key elements: more stringent emissions standards for GHGs, more stringent emissions standards for criteria pollutants, changes to certain optional credit programs, durability provisions for light-duty and medium-duty electrified vehicle batteries, warranty provisions for both electrified vehicles and diesel engine-equipped vehicles, and various improvements to several elements of the existing light-duty and medium-duty programs. For both light- and medium-duty vehicles, the levels of stringency established by this rule continue the trend over the past 50 years (for criteria pollutants) and over the past 14 years (for GHGs) of EPA establishing numerically lower performance-based emissions standards in recognition of both the continued threat to human health and welfare from pollution and continued advancements in emissions control technology that make it possible to achieve important emissions reductions at a reasonable cost. EPA has also continued its longstanding approach of allowing manufacturers flexibilities, such as averaging, banking and trading, to reduce their cost of reducing emissions while producing a diverse fleet meeting consumers' varied preferences. In addition to advanced ICE technologies, including hybrid electric vehicles, the feasibility assessment for this rule recognizes the increasing availability of zero and near-zero tailpipe emissions technologies, including PEVs, as cost-effective compliance technologies. The technological feasibility of PEVs is further supported by the economic incentives provided in the IRA and the auto manufacturers' stated plans for significantly increasing the production of zero and near-zero emission vehicles, including PEVs, independent of this rule. This increased feasibility of PEVs, in addition to ICE and advanced ICE technologies, is one of the factors EPA considered in setting the stringency of the standards. Through the public comment process, EPA heard from a wide range of stakeholders and individuals who provided a diversity of views on a broad range of issues, including stringency and pace of the standards; availability and readiness of the industry to support the needs of electrified vehicles (such as battery critical minerals, charging infrastructure, electric grid, and consumer acceptance); and specific elements of EPA's analysis (such as potential PEV adoption rates, battery costs, BIL and IRA impacts, and other areas). As part of their comments, many stakeholders, including NGOs, industry groups, and others, provided detailed technical analyses for EPA to consider. Many commenters strongly supported the proposal overall. Comments from organizations representing environmental, public health, and consumer groups, as well as numerous state and local governments and associations, emphasized the importance of air pollution emissions reductions to protect public health and welfare and combat climate change, and noted that emissions reductions are especially critical in communities overburdened by air pollution. Many of these commenters recommended adopting the strongest standards possible for both GHGs and criteria pollutants. Some of these commenters supported light-duty GHG standards even more stringent than the proposal's most stringent alternative. Similarly, automakers that produce only electric vehicles (including Tesla, Rivian, and Lucid) and commenters representing the electric vehicle industry also expressed strong support for the proposal, with some of these stakeholders also advocating standards more stringent than the proposal's most stringent alternative. Automotive suppliers largely expressed strong support for performance-based standards for GHG and criteria pollutants. Some suggested that the GHG standards should phase-in more gradually, relying on increased ICE technology in the near term. Suppliers also strongly supported the proposed particulate matter (PM) emissions standard, attested to the feasibility and readiness of gasoline particulate filter technology expected to be used to meet the standard, and urged that the standard be phased in even sooner than proposed. Several commenters provided supportive data on development of the battery supply chain, critical minerals, grid readiness, and charging infrastructure. Comments from automakers that historically have produced primarily ICE vehicles, such as comments by the Alliance for Automotive Innovation (hereafter referred to as “the Alliance”) as well as comments by several individual automakers, generally expressed the auto industry's strong commitment to the goals of the proposed rule and to the transition to zero emission vehicles, as well as their support for continued efforts to reduce emissions from ICE vehicles that will continue to be produced during the transition to electrification. Many auto companies described their significant R&D investments in clean transportation and their corporate commitments to carbon neutrality and transitioning their vehicle offerings to electrified vehicles. The Alliance and many auto companies expressed their concern that the proposed standards would be very challenging to meet. A common theme was that the proposed GHG standards “moved the goalposts” with respect to the Administration's goal of 50 percent zero emission vehicle sales by 2030, which the automakers had supported. These commenters noted that automakers' support for the Administration's goal was premised on various developments important to electrification, as well as governmental support for such developments, that they believe are unlikely to be ready in time to meet the proposed standards (for example, development of charging infrastructure, critical minerals, consumer acceptance, and readiness of the electric grid). Several auto manufacturers, including Ford, supported the MY 2032 end point for the proposed standards, but indicated that a more gradual ramp rate in early years (such as the proposal's Alternative 3) is needed to align with their anticipated scaling of the electric vehicle (EV) supply chain and manufacturing base. Another common theme from many auto manufacturers was that meeting the proposed criteria pollutant standards in addition to GHG standards could divert the auto manufacturers' investments away from electrification and toward ICE technology. The United Auto Workers (UAW) expressed support for the transition to a cleaner auto industry and believes that regulations that push the industry to adopt cleaner technologies are important to create a strong domestic manufacturing base. Both UAW and the United Steelworkers expressed concern regarding the pace of the proposed standards and its possible effects on employment. These organizations believed that the pace of technology transition under the proposed standards could lead to job disruptions and lower-quality jobs, and generally suggested that EPA pursue GHG standards that phase in more gradually over a longer time period. The United Steelworkers expressed strong support for the proposed PM standard. In contrast to the strong support expressed by many state and local governments described above, several other state and local governments and a group of state Attorneys General expressed strong concerns with the proposal. These comments included that they question EPA's authority to set standards that would promote production of electric vehicles, believe there are significant hurdles to widespread EV adoption, and otherwise raise concerns with various aspects of EPA's analysis. Commenters representing the fuels industry (petroleum and/or biofuels) expressed many concerns with the proposal, in particular the levels of increased BEV penetrations projected. Other themes included questions regarding EPA's Clean Air Act authority related to electric vehicles and fleet averaging, concerns about dependence on imports of critical minerals, concerns about grid reliability, infrastructure needs, and safety. Many of the fuel industry commenters recommended that EPA adopt a life cycle analysis approach to setting standards and give greater consideration to the role of low carbon fuels. Utility organizations generally indicated that the proposal sends appropriate signals to support continued infrastructure buildout. Investor-owned utilities believe they can accommodate localized power needs at the pace of customer demand, provided customer engagement and enabling policies are in place. Not-for-profit electric cooperatives serving rural areas and underserved communities highlighted the substantial grid upgrade investments needed to support increased transportation electrification and urged EPA to account for these costs. EPA has thoroughly considered the public comments, including the data and information submitted by commenters, as well as our updated analysis based on this public record and the best available information. This preamble, together with the accompanying Response to Comments (RTC) document, responds to the comments we received on the proposed rule. This final rule reflects the input we received through the public comment process and is also supported by updated analyses for which EPA considered the most recent and best available technical and scientific data. The following sections summarize at a high level each of the standards and program provisions finalized in this rule. Section III of this preamble includes a more detailed discussion of each of these elements and how we considered public comments and updated information in determining the final standards and program provisions. 1. GHG Emissions Standards EPA is establishing GHG standards for both light-duty vehicles and medium-duty vehicles for MYs 2027 through 2032 that are more stringent than the prior standards applicable under the 2021 rule. For light-duty vehicles, EPA is finalizing standards that increase in stringency each year over a six-year period, from MYs 2027-2032. The standards are projected to result in an industry-wide average target for the light-duty fleet of 85 grams/mile (g/mile) of CO 2 in MY 2032, representing a nearly 50 percent reduction in projected fleet average GHG emissions target levels from the existing MY 2026 standards. Table 1 presents a summary of the projected industry average targets for the light-duty GHG standards for MY 2027-2032 for cars, trucks, and the overall light-duty fleet. Table 1—Projected Targets for Final Light-Duty Vehicle GHG Standards, by Regulatory Class [CO 2 grams/mile] a 2026 (reference) 2027 2028 2029 2030 2031 2032 Cars 131 139 125 112 99 86 73 Trucks 184 184 165 146 128 109 90 Total Fleet 168 170 153 136 119 102 85 a This table does not reflect changes in credit flexibilities such as the phase-out of available off-cycle and A/C credits. Adjusted targets are shown in section III.C.2.iv.b of the preamble. In the NPRM, EPA requested comment on the proposed light-duty GHG standards as well as three alternatives: a more stringent alternative (Alternative 1), a less stringent alternative (Alternative 2), and an alternative that landed at the same stringency as the proposal in MY 2032 but provided a linear ramp rate from MY 2027 to 2032 (Alternative 3). Alternative 3's linear ramp rate had less stringent light-duty GHG standards than the proposed standards for MYs 2027-2031. As discussed in this section above, in public comments, various stakeholders had opposing views on the light-duty GHG standards stringency alternatives. Many environmental and public health NGOs, states, consumer groups, BEV-only manufacturers, and PEV industry groups supported the strongest possible standards, with many supporting standards even more stringent than Alternative 1. The major automakers, in contrast, expressed concern that the proposed standards were too ambitious, that EPA's technical analysis was overly optimistic, and that the levels of battery electric vehicles (BEVs) projected under the proposed standards would be challenging to reach, especially given uncertainties in the battery supply chain, market demand, and infrastructure buildout. Labor groups urged a slower transition to PEVs to mitigate potential adverse impacts on jobs. A few automakers, including Ford, supported the 2032 end point of the proposal, but believed that a slower ramp rate, like Alternative 3, was necessary in the early years to allow for the scale up of PEV supply chains and manufacturing. These companies recommended that in addition to Alternative 3, EPA should slow the phase-down of several credit provisions, such as the off-cycle credits and air conditioning leakage credits, which would be additional ways to address lead time in the early years. Based on our consideration of the public comments and our updated technical analysis, EPA is finalizing light-duty GHG standards that land at the same stringency level as proposed in MY 2032 but have a relatively more linear ramp rate of standards stringency, one that is more gradual in the early years from MYs 2027-2031. Specifically, the final standards are the proposal's Alternative 3 footprint CO 2 standards curves. In addition, in response to auto industry and labor group concerns about lead time, particularly for MYs 2027-2029, EPA is finalizing an extended phase-down for two optional credit flexibilities: off-cycle credits and air conditioning leakage credits. The extension of these two flexibility provisions will help to address lead time issues in the early years of the program, by providing additional paths for automakers to earn GHG credits that contribute to compliance with the footprint-based CO 2 standards. EPA also is delaying the phase-in of the revised PHEV utility factor from MY 2027 until MY 2031, to provide additional stability for the program, and to give manufacturers ample time to transition to the new compliance calculation for PHEVs. EPA discusses the light-duty GHG final standards in detail in section III.C.1 of this preamble. The off-cycle credits, air conditioning credits, and PHEV utility factor provisions are described in more detail in sections III.C.4 through III.C.6 of this preamble. For medium-duty vehicles, EPA is revising the existing standard for MY 2027 given the increased feasibility of GHG emissions reducing technologies in this sector in this time frame. EPA's standards for MDVs increase in stringency year over year from MY 2027 through MY 2032. EPA is finalizing MDV GHG standards that land at the same stringency as the proposal in MY 2032, but which have a more gradual rate of stringency in the early years compared to the proposed standards. These changes are responsive to comments from manufacturers that recommended additional lead time in early years of the program. When phased in, the MDV standards are projected to result in an average fleet target of 274 grams/mile of CO 2 by MY 2032, which represents a reduction of 44 percent compared to the current MY 2026 standards. Table 2 presents a summary of the industry average targets projected for the medium-duty GHG standards for MYs 2027-2032, for vans, MDV pickups, and the MDV fleet overall. Table 2—Projected Targets for Final Medium-Duty Vehicle GHG Standards, by Body Style [CO 2 grams/mile] 2026 (reference) 2027 2028 2029 2030 2031 2032 Vans 423 392 391 355 317 281 245 Pickups 522 497 486 437 371 331 290 Total Fleet 488 461 453 408 353 314 274 EPA emphasizes that its standards are performance-based, and manufacturers are not required to use particular technologies to meet the standards. There are many potential pathways to compliance with the final standards manufacturers may choose that involve different mixtures of vehicle technologies. The technology pathway in our central case 151 supporting the feasibility of the final rule standards includes a projected mix of improvements to internal combustion engine performance, as well as increases in use of powertrain electrification technologies (across the range from mild hybrid to BEV). In addition, to further assess the feasibility of the standards under different potential scenarios and to illustrate that there are many potential pathways to compliance with the final standards that include a wide range of potential technology mixes, we evaluated examples of other potential compliance pathways. Table 3 presents three such pathways as examples, including: Pathway A, which reflects a higher level of BEVs and a lower level of HEVs and PHEVs (and is also our central case analysis); Pathway B, which achieves compliance at a lower level of BEV production and a moderate level of HEVs and PHEVs; and Pathway C, which achieves compliance with no additional BEVs beyond those projected in the No Action case, and with a higher level of HEVs and PHEVs. 152 EPA also evaluated additional technology pathways as sensitivities which are presented fully in sections IV.F and G of this preamble and Chapter 12 of the RIA. In addition, we evaluated an illustrative scenario that does not rely on any new BEV introductions beyond those in the existing fleet (see section IV.H.1 of the preamble). 151 EPA recognizes that the pathway labeled as the central case, shown as Pathway A in Table 3, features greater BEV penetration than Pathways B and C, which feature greater use of various ICE technologies. This does not mean that EPA requires or prefers any manufacturer to adopt the pathway in this case over the other cases. EPA has conducted significant analysis for each of the cases. However, we had to identify a single case to subject to the full scope of our analysis given practical limitations on agency resources, the complexity and wide-ranging nature of the analysis, and the importance of promulgating this rule in a reasonable timeframe so as to address the significant public health and welfare impacts associated with motor vehicle emissions. Moreover, the reason Pathway A is the central case is not due to any a priori agency inclination to any specific technology, but rather because our evaluation of updated real-world information, described in this section and throughout the record, shows that the market is most likely to comply with increasing GHG emission standards through increased BEV production and that BEV technologies are the most cost-effective way to do so. 152 Specifically, Pathway B reflects a scenario in which manufacturers limit production of BEVs and consumer adoption of PHEVs is more prevalent than for BEVs, and Pathway C reflects a scenario in which manufacturers sell approximately the number of BEVs that we project to be sold under the No Action scenario for our central case projection and thus produce a greater share of PHEVs and HEVs under the standards. In our discussion of sensitivities in section IV.F.5, Pathways B and C are titled “Lower BEV Production” and “No Additional BEVs Beyond the No Action Case,” respectively. See sections IV.F and G of this preamble for additional description of these and other sensitivity scenarios. 153 In this table, the ICE category includes ICE vehicles (base ICE and advanced ICE) and mild HEVs. The Hybrids (HEVs) category represent strong hybrids only. See section III.A of this preamble for further clarification of definitions. Table 3—Projected New Vehicle Technology Penetrations for Final Light-Duty Vehicle GHG Standards for Varying Scenarios 153 Pathway Technology 2027 (percent) 2028 (percent) 2029 (percent) 2030 (percent) 2031 (percent) 2032 (percent) Pathway A—Higher BEV Pathway (central analysis case) ICE 64 58 49 43 35 29 HEV 4 5 5 4 3 3 PHEV 6 6 8 9 11 13 BEV 26 31 39 44 51 56 Pathway B—Moderate HEV and PHEV Pathway ICE 62 56 49 39 28 21 HEV 4 4 3 6 7 6 PHEV 10 12 15 18 24 29 BEV 24 29 33 37 41 43 Pathway C—Higher HEV and PHEV Pathway ICE 61 41 35 27 19 17 HEV 4 15 13 16 15 13 PHEV 10 17 22 27 32 36 BEV 24 26 30 31 34 35 EPA also sought comment on whether the standards should continue to increase in stringency for future years, such as through MY 2035. While a few commenters supported extending standards to MY 2035, many commenters raised concerns with setting standards beyond 2032, pointing to considerable uncertainty in projecting out ten or more years the state of the BEV market and supporting conditions, such as charging infrastructure buildout, given that the proposal had projected high penetrations of BEVs. Other commenters suggested that if standards were extended beyond MY 2032, that some form of mid-course review could be necessary given the increased uncertainty. In consideration of these comments and recognizing the increased uncertainty around emissions technology developments and costs in the MYs 2033-2035 timeframe, EPA is establishing standards in this action for MYs 2027 through 2032. The light-duty CO 2 standards continue to be footprint-based, with separate standards curves for cars and light trucks. EPA has updated its assessment of the footprint standards curves to reflect anticipated changes in the vehicle technologies that we project will be used to meet the standards. EPA also has assessed ways to ensure future fleet mix changes do not inadvertently provide an incentive for manufacturers to change the size or regulatory class of vehicles as a compliance strategy. EPA is finalizing the proposed approach to flatten the slope of each footprint standards curve and to narrow the numerical stringency difference between the car and truck curves. The medium-duty vehicle standards continue to be based on a work-factor metric designed for commercially-oriented vehicles, which reflects a combination of payload, towing and 4-wheel drive equipment. EPA has reassessed certain credit programs available under the existing GHG programs considering the agency's experience with the program implementation to date, trends in technology development, recent related statutory provisions, and other factors. EPA is revising the air conditioning (A/C) credits program in two ways. First, for A/C system efficiency credits under the light-duty GHG program, EPA is limiting the eligibility for these voluntary credits for tailpipe CO 2 emissions control to ICE vehicles starting in MY 2027 ( i.e., BEVs do not earn A/C efficiency credits because A/C efficiency improvements do not result in any reduction in direct vehicle emissions). Second, EPA is significantly reducing the magnitude of available refrigerant-based A/C credits for light-duty vehicles because, under a separate rulemaking, EPA has disallowed the use of high Global Warming Potential (GWP) refrigerants under the Technology Transitions Rule of October 2023, implemented under the American Innovation and Manufacturing (AIM) Act of 2020. EPA is finalizing provisions that phase-down the A/C refrigerant credits beginning in MY 2027. For MY 2031 and later, EPA is retaining small A/C refrigerant credits designed to incentivize the continued application of A/C refrigerant leakage mitigation countermeasures and the use of refrigerants with GWP lower than that required under the Technology Transitions Rule. EPA is also sunsetting the off-cycle credits program for light-duty vehicles as follows. First, EPA is phasing out menu-based credits by reducing the menu credit cap year-over-year until it is fully phased out in MY 2033. Specifically, EPA is setting a declining menu cap of 10/8/6/0 grams per mile (g/mile) for non-BEVs over MYs 2030-2033 such that MY 2032 would be the last year manufacturers could generate optional off-cycle credits. Second, EPA is eliminating the 5-cycle and public process pathways for generating off-cycle credits starting in MY 2027. Third, EPA is limiting eligibility for off-cycle credits only to vehicles with tailpipe emissions greater than zero ( i.e., vehicles equipped with IC engines) starting in MY 2027. EPA is not reopening its averaging, banking, and trading provisions, which continue to be a central part of its fleet average standards compliance program, and which help manufacturers to employ a wide range of compliance paths. EPA is also not reopening its existing regulations which sunset in MY 2024 light-duty multiplier incentives for BEVs, PHEVs and fuel cell vehicles. EPA is revising multiplier incentives previously in place for MDVs for MY 2027 (established in the heavy-duty Phase 2 rule) to end the multipliers one model year earlier, such that MY 2026 is the last year that MDV multipliers will be in effect. EPA is also finalizing regulatory text to ensure that compliance with vehicle GHG emissions standards continues to be assessed based on vehicle emissions. Under this final rule, BEVs and the electric operation of PHEVs will continue to be counted as zero g/mile in a manufacturer's compliance calculation as has been the case since the beginning of the light-duty GHG program in MY 2012. Finally, EPA is establishing provisions for small volume manufacturers ( i.e., production of less than 5,000 vehicles per year) to transition them from the prior approach of unique case-by-case alternative standards to the primary program standards by MY 2032, recognizing that this extended lead time is appropriate given the level of the existing case-by-case alternative standards. 2. Criteria Pollutant Standards EPA is finalizing more stringent emissions standards for criteria pollutants 154 for both light-duty and medium-duty vehicles that begin in MY 2027. For light-duty vehicles, EPA is finalizing non-methane organic gases (NMOG) plus nitrogen oxides (NO X ) standards 155 that would phase-down to a fleet average level of 15 milligrams per mile (mg/mile) by MY 2032, representing a 50 percent reduction from the existing 30 mg/mile standards for MY 2025 established in the Tier 3 rule in 2014. For medium-duty vehicles, EPA is finalizing NMOG+NO X standards that require a fleet average level of 75 mg/mile by MY 2031 representing a 58 percent to 70 percent reduction from the Tier 3 standards of 178 mg/mile for Class 2b vehicles and 247 mg/mile for Class 3 vehicles. EPA is also finalizing cold temperature (−7°C) NMOG+NO X standards for all light-duty vehicles and gasoline medium-duty vehicles to ensure robust emissions control over a broad range of operating conditions. 154 In this notice, EPA is using “criteria pollutants” to refer generally to criteria pollutants and their precursors, including tailpipe NMOG, NO X , PM, and CO, as well as evaporative and refueling HC. 155 Together referred to as NMOG+NO X . For all light-duty vehicles and gasoline medium-duty vehicles, EPA is finalizing a particulate matter (PM) standard of 0.5 mg/mile and a requirement that the standard be met across three test cycles, including a cold temperature (−7°C) test. This standard revises the existing PM standards established in the 2014 Tier 3 rule. Through the application of readily available emissions control technology and requiring compliance across the broad range of driving conditions represented by the three test cycles, EPA projects the standards will reduce tailpipe PM emissions from ICE vehicles by over 95 percent. In addition to reducing PM emissions, the standards will reduce emissions of mobile source air toxics. EPA is finalizing in-use standards for medium-duty vehicles with high gross combination weight rating (GCWR), changes to medium-duty vehicle refueling emissions requirements for incomplete vehicles, and several NMOG+NO X provisions aligned with the California Air Resources Board (CARB) Advanced Clean Cars II program for light-duty vehicles. EPA is finalizing changes to the carbon monoxide and formaldehyde standards for light- and medium-duty vehicles, including at −7°C. EPA is not finalizing new limitations on the application of commanded enrichment, but will revisit the issue as a follow-on to this final rule. As with the GHG program, EPA is not reopening its averaging, banking, and trading provisions for the criteria pollutant program, excepting discrete provisions regarding how credits may be transferred from the Tier 3 program. 3. Electrified Vehicle Battery Durability and Warranty Provisions EPA is establishing new requirements related to battery durability for PEVs, substantially as proposed. As described in more detail in section III.G.2 of this preamble, the importance of battery durability in the context of PEVs is well documented and has been cited by several authorities in recent years. Because electrified vehicles are playing an increasing role in automakers' compliance strategies, their durability and reliability are important to achieving the full useful life for which emissions reductions are projected under this program. To this end we are establishing battery durability monitoring and performance requirements for light-duty PEVs and battery durability monitoring requirements for medium-duty PEVs. In addition, the agency is including PEV batteries and associated electric powertrain components under existing emission warranty provisions. Relatedly, EPA is also finalizing the addition of two new grouping definitions for PEVs (monitor family and battery durability family), new reporting requirements, and a new calculation for the PHEV charge depletion test to support the battery durability requirements. The background and content of the battery durability and warranty provisions are outlined in section III.G.2 of this preamble. 4. Light-Duty Vehicle Certification and Testing Program Improvements EPA is finalizing various improvements to the current light-duty program to clarify, simplify, streamline and update the certification and testing provisions for manufacturers. These improvements include: Clarification of the certification compliance and enforcement requirements for CO 2 exhaust emission standards to more accurately reflect the intention of the 2010 light-duty vehicle GHG rule; a revision to the In Use Confirmatory Program (IUCP) threshold criteria; changes to the Part 2 application; updating the On Board Diagnostics (OBD) program to the latest version of the CARB OBD regulation and the removal of any conflicting or redundant text from EPA's OBD requirements; streamlining the test procedures for Fuel Economy Data Vehicles (FEDVs); streamlining the manufacturer conducted confirmatory testing requirements; updating the emissions warranty for diesel powered vehicles (including Class 2b and 3 vehicles) by designating major emissions components subject to the 8year/80,000 mile warranty period; making the definition of light-duty truck consistent between the GHG and criteria pollutant programs; and miscellaneous other amendments. EPA is also establishing, as proposed, that gasoline particulate filters (GPFs) qualify as specified major emission control components for purposes of applying warranty requirements. These changes are described in more detail in sections III.G and III.H of this preamble. C. Summary of Emission Reductions, Costs, and Benefits This section summarizes our analyses of the rule's estimated emission impacts, costs, and monetized benefits, which are described in more detail in sections V through VIII of this preamble. EPA notes that, consistent with CAA section 202, in evaluating potential standards we carefully weighed the statutory factors, including the emissions impacts of the standards, and the feasibility of the standards (including cost of compliance in light of available lead time). We monetize benefits of the standards and evaluate costs in part to enable a comparison of costs and benefits pursuant to E.O. 12866, but we recognize there are benefits that we are currently unable to fully quantify and monetize. EPA's practice has been to set standards to achieve improved air quality consistent with CAA section 202, and not to rely on cost-benefit calculations, with their uncertainties and limitations, as identifying the appropriate standards. Nonetheless, our conclusion that the monetized estimated benefits exceed the estimated costs of the final program reinforces our view that the standards are appropriate under section 202(a). The standards will result in substantial net reductions of emissions of GHGs and criteria air pollutants in 2055, considering the impacts from light- and medium-duty vehicles, power plants ( i.e., electric generating units (EGUs)), and refineries. Table 4 shows the GHG emission impacts in 2055 while Table 5 shows the cumulative impacts for the years 2027 through 2055. CO 2 equivalent (CO 2 e) values use 100-year global warming potential values of 28 and 265 for CH 4 and N 2 O, respectively. 156 We show cumulative impacts for GHGs because elevated concentrations of GHGs in the atmosphere are resulting in warming and other changes in the Earth's climate. Table 6 shows the criteria pollutant emissions impacts in 2055, which include the substantial reduction in criteria pollutants from vehicle and refinery emissions, and the significant reduction in net criteria pollutant impacts as a result of this final rule. As shown in Table 7, we also predict reductions in air toxic emissions from light- and medium-duty vehicles. We project that GHG and criteria pollutant emissions from EGUs will increase as a result of the increased demand for electricity associated with the final rule, although those projected impacts decrease over time because of projected increases in clean electricity in the future power generation mix. We also project that GHG and criteria pollutant emissions from refineries will decrease as a result of the lower demand for liquid fuel associated with the GHG standards. Notably, even at their highest levels, the EGU emissions increases are more than offset by the large reductions in vehicle emissions as well as reductions from the refinery sector. Sections VI and VII of this preamble and Chapter 8 of the RIA provide more information on the projected emission reductions for the standards. 156 IPCC, 2014: Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, R.K. Pachauri and L.A. Meyer (eds.)], pp 87. Available online: https://www.ipcc.ch/site/assets/uploads/2018/02/SYR_AR5_FINAL_full.pdf . Table 4—Projected GHG Emission Impacts From the Final Rule in 2055 [Million metric tons] a Pollutant Vehicle EGU Refinery Net impact Net impact (%) CO 2 −410 21 −16 −410 −37 CH 4 −0.0079 0.00083 −0.00088 −0.0079 −34 N 2 O −0.0071 0.0001 −0.00013 −0.0072 −38 CO 2 e −410 21 −16 −410 [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2024-06214. Public record. Not legal advice.