Corporate Average Fuel Economy Standards for Passenger Cars and Light Trucks for Model Years 2027 and Beyond and Fuel Efficiency Standards for Heavy-Duty Pickup Trucks and Vans for Model Years 2030 and Beyond

Federal RegisterJun 24, 2024

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 523, 531, 533, 535, 536, and 537

[NHTSA-2023-0022]

RIN 2127-AM55

Corporate Average Fuel Economy Standards for Passenger Cars and Light Trucks for Model Years 2027 and Beyond and Fuel Efficiency Standards for Heavy-Duty Pickup Trucks and Vans for Model Years 2030 and Beyond

AGENCY:

National Highway Traffic Safety Administration (NHTSA).

ACTION:

Final rule.

SUMMARY:

NHTSA, on behalf of the Department of Transportation (DOT), is finalizing Corporate Average Fuel Economy (CAFE) standards for passenger cars and light trucks that increase at a rate of 2 percent per year for passenger cars in model years (MYs) 2027-31, 0 percent per year for light trucks in model years 2027-28, and 2 percent per year for light trucks in model years 2029-31. NHTSA is also finalizing fuel efficiency standards for heavy-duty pickup trucks and vans (HDPUVs) for model years 2030-32 that increase at a rate of 10 percent per year and model years 2033-35 that increase at a rate of 8 percent per year.

DATES:

This rule is effective August 23, 2024.

ADDRESSES:

For access to the dockets or to read background documents or comments received, please visit

https://www.regulations.gov

, and/or Docket Management Facility, M-30, U.S. Department of Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New Jersey Avenue SE, Washington, DC 20590. The Docket Management Facility is open between 9 a.m. and 4 p.m. Eastern time, Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT:

For technical and policy issues, Joseph Bayer, CAFE Program Division Chief, Office of Rulemaking, National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE, Washington, DC 20590; email:

joseph.bayer@dot.gov.

For legal issues, Rebecca Schade, NHTSA Office of Chief Counsel, National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE, Washington, DC 20590; email:

rebecca.schade@dot.gov.

SUPPLEMENTARY INFORMATION:

Table of Acronyms and Abbreviations

Abbreviation

Term

AAA

American Automobile Association.

AALA

American Automotive Labeling Act.

AAPC

The American Automotive Policy Council.

ABT

Average, Banking, and Trading.

Air conditioning.

ACC

Advanced Clean Cars.

ACEEE

American Council for an Energy Efficient Economy.

ACF

Advanced Clean Fleets.

ACME

Adaptive Cylinder Management Engine.

ACT

Advanced Clean Trucks.

ADEAC

advanced cylinder deactivation.

ADEACD

advanced cylinder deactivation on a dual overhead camshaft engine.

ADEACS

advanced cylinder deactivation on a single overhead camshaft engine.

ADSL

Advanced diesel engine.

AEO

Annual Energy Outlook.

AER

All-Electric Range.

AERO

Aerodynamic improvements.

AFV

Alternative fuel vehicle.

AHSS

advanced high strength steel.

AIS

Abbreviated Injury Scale.

AMPC

Advanced Manufacturing Production Tax Credit.

AMTL

Advanced Mobility Technology Laboratory.

ANL

Argonne National Laboratory.

ANSI

American National Standards Institute.

APA

Administrative Procedure Act.

traditional automatic transmissions.

AVE

Alliance for Vehicle Efficiency.

AWD

All-Wheel Drive.

BEA

Bureau of Economic Analysis.

BEV

Battery electric vehicle.

BGEPA

Bald and Golden Eagle Protection Act.

BIL

Bipartisan Infrastructure Law.

BISG

Belt Mounted integrated starter/generator.

BMEP

Brake Mean Effective Pressure.

BNEF

Bloomberg New Energy Finance.

BPT

Benefit-Per-Ton.

BSFC

Brake-Specific Fuel Consumption.

BTW

Brake and Tire Wear.

CAA

Clean Air Act.

CAFE

Corporate Average Fuel Economy.

CARB

California Air Resources Board.

CBD

Center for Biological Diversity.

CBI

Confidential Business Information.

CEA

Center for Environmental Accountability.

CEGR

Cooled Exhaust Gas Recirculation.

CEQ

Council on Environmental Quality.

CFR

Code of Federal Regulations.

CH4

Methane.

Compression Ignition.

CNG

Compressed Natural Gas.

Carbon Monoxide.

CO2

Carbon Dioxide.

COVID

Coronavirus disease of 2019.

CPM

Cost Per Mile.

Compression Ratio.

CRSS

Crash Report Sampling System.

CUV

Crossover Utility Vehicle.

CVC

Clean Vehicle Credit.

CVT

Continuously Variable Transmissions.

Calendar year.

CZMA

Coastal Zone Management Act.

DCT

Dual Clutch Transmissions.

Direct Drive.

DEAC

Cylinder Deactivation.

DEIS

Draft Environmental Impact Statement.

DFS

Dynamic Fleet Share.

DMC

Direct Manufacturing Cost.

DOE

Department of Energy.

DOHC

Dual Overhead Camshaft.

DOI

Department of the Interior.

DOT

Department of Transportation.

DPM

Diesel Particulate Matter.

Discount Rate.

DSLI

Advanced diesel engine with improvements.

DSLIAD

Advanced diesel engine with improvements and advanced cylinder deactivation.

E.O.

Executive Order.

EFR

Engine Friction Reduction.

EIA

U.S. Energy Information Administration.

EIS

Environmental Impact Statement.

EISA

Energy Independence and Security Act.

Environmental Justice.

EPA

U.S. Environmental Protection Agency.

EPCA

Energy Policy and Conservation Act.

EPS

Electric Power Steering.

ERF

effective radiative forcing.

ESA

Endangered Species Act.

ESS

Energy Storage System.

ETDS

Electric Traction Drive System.

Electric Vehicle.

FCC

Fuel Consumption Credits.

FCEV

Fuel Cell Electric Vehicle.

FCIV

Fuel Consumption Improvement Value.

FCV

Fuel Cell Vehicle.

Fuel Efficiency.

FEOC

Foreign Entity of Concern.

FHWA

Federal Highway Administration.

FIP

Federal Implementation Plan.

FMVSS

Federal Motor Vehicle Safety Standards.

FMY

Final Model Year.

FRIA

Final Regulatory Impact Analysis.

FTA

Free Trade Agreement.

FTP

Federal Test Procedure.

FWCA

Fish and Wildlife Conservation Act.

FWD

Front-Wheel Drive.

FWS

U.S. Fish and Wildlife Service.

GCWR

Gross Combined Weight Rating.

GDP

Gross Domestic Product.

GES

General Estimates System.

GGE

Gasoline Gallon Equivalents.

GHG

Greenhouse Gas.

General Motors.

gpm

gallons per mile.

GREET

Greenhouse gases, Regulated Emissions, and Energy use in Transportation.

GVWR

Gross Vehicle Weight Rating.

HATCI

Hyundai America Technical Center, Inc.

HCR

High-Compression Ratio.

Heavy-Duty.

HDPUV

Heavy-Duty Pickups and Vans.

HEG

High Efficiency Gearbox.

HEV

Hybrid Electric Vehicle.

HFET

Highway Fuel Economy Test.

HVAC

Heating, Ventilation, and Air Conditioning.

IACC

improved accessories.

IAV

IAV Automotive Engineering, Inc.

ICCT

The International Council on Clean Transportation.

ICE

Internal Combustion Engine.

IIHS

Insurance Institute for Highway Safety.

IPCC

Intergovernmental Panel on Climate Change.

IQR

Interquartile Range.

IRA

Inflation Reduction Act.

IWG

Interagency Working Group.

Light-Duty.

LDB

Low Drag Brakes.

LDV

Light-Duty Vehicle.

Learning Effects.

LEV

Low-Emission Vehicle.

LFP

Lithium Iron Phosphate.

LIB

Lithium-Ion Batteries.

LIVC

Late Intake Valve Closing.

Light truck.

MAX

maximum values.

MBTA

Migratory Bird Treaty Act.

Medium-Duty.

MDHD

Medium-Duty Heavy-Duty.

MDPCS

Minimum Domestic Passenger Car Standard.

MDPV

Medium-Duty Passenger Vehicle.

MEMA

Motor & Equipment Manufacturer's Association.

MIN

minimum values.

MMTCO2

Million Metric Tons of Carbon Dioxide.

MMY

Mid-Model Year.

MOU

Memorandum of Understanding.

MOVES

Motor Vehicle Emission Simulator (including versions 3 and 4).

MPG

Miles Per Gallon.

mph

Miles Per Hour.

Mass Reduction.

MSRP

Manufacturer Suggested Retail Price.

Model Year.

NAAQS

National Ambient Air Quality Standards.

NACFE

North American Council for Freight Efficiency.

NADA

National Automotive Dealers Association.

NAICS

North American Industry Classification System.

NAS

National Academy of Sciences.

NCA

Nickel Cobalt Aluminum.

NEMS

National Energy Modeling System.

NEPA

National Environmental Policy Act.

NESCCAF

Northeast States Center for a Clean Air Future.

NEVI

National Electric Vehicle Infrastructure.

NHPA

National Historic Preservation Act.

NHTSA

National Highway Traffic Safety Administration.

NMC

Nickel Manganese Cobalt.

Nitrogen Oxide.

NPRM

Notice of Proposed Rulemaking.

NRC

National Research Council.

NRDC

Natural Resource Defense Council.

NREL

National Renewable Energy Laboratory.

NTTAA

National Technology Transfer and Advancement Act.

NVH

Noise-Vibration-Harshness.

NVO

Negative Valve Overlap.

NVPP

National Vehicle Population Profile.

OEM

Original Equipment Manufacturer.

OHV

Overhead Valve.

OMB

Office of Management and Budget.

OPEC

Organization of the Petroleum Exporting Countries.

ORNL

Oak Ridge National Laboratories.

Passenger Car.

PEF

Petroleum Equivalency Factor.

PHEV

Plug-in Hybrid Electric Vehicle.

Particulate Matter.

2.5

fine particulate matter.

PMY

Pre-Model Year.

PPC

Passive Prechamber Combustion.

PRA

Paperwork Reduction Act of 1995.

PRIA

Preliminary Regulatory Impact Analysis.

Power Split.

REMI

Regional Economic Models, Inc.

RFS

Renewable Fuel Standard.

RIN

Regulation identifier number.

ROD

Record of Decision.

ROLL

Tire rolling resistance.

RPE

Retail Price Equivalent.

RPM

Rotations Per Minute.

RRC

Rolling Resistance Coefficient.

RWD

Rear Wheel Drive.

SAE

Society of Automotive Engineers.

SAFE

Safer Affordable Fuel-Efficient.

SBREFA

Small Business Regulatory Enforcement Fairness Act.

Social Cost.

SCC

Social Cost of Carbon.

SEC

Securities and Exchange Commission.

SGDI

Stoichiometric Gasoline Direct Injection.

SHEV

Strong Hybrid Electric Vehicle.

Spark Ignition.

SIP

State Implementation Plan.

SKIP

refers to skip input in market data input file.

Sulfur Dioxide.

SOC

State of Charge.

SOHC

Single Overhead Camshaft.

SOX

Sulfur Oxide.

SPR

Strategic Petroleum Reserve.

SUV

Sport Utility Vehicle.

SwRI

Southwest Research Institute.

TAR

Technical Assessment Report.

TSD

Technical Support Document.

UAW

United Automobile, Aerospace & Agricultural Implement Workers of America.

Utility Factor.

UMRA

Unfunded Mandates Reform Act of 1995.

VCR

Variable Compression Ratio.

VMT

Vehicle Miles Traveled.

VOC

Volatile Organic Compounds.

VSL

Value of a Statistical Life.

VTG

Variable Turbo Geometry.

VTGE

Variable Turbo Geometry (Electric).

VVL

Variable Valve Lift.

VVT

Variable Valve Timing.

Work Factor.

ZEV

Zero Emission Vehicle.

Does this action apply to me?

This final rule affects companies that manufacture or sell new passenger automobiles (passenger cars), non-passenger automobiles (light trucks), and heavy-duty pickup trucks and vans (HDPUVs), as defined under NHTSA's Corporate Average Fuel Economy (CAFE) and medium and heavy duty (MD/HD) fuel efficiency (FE) regulations.

Regulated categories and entities include:

“Passenger car,” “light truck,” and “heavy-duty pickup trucks and vans” are defined in 49 CFR part 523.

Category

NAICS codes

Examples of potentially regulated entities

Industry

335111

336112

Motor Vehicle Manufacturers.

Industry

811111

811112

811198

423110

Commercial Importers of Vehicles and Vehicle Components.

Industry

335312

336312

336399

811198

Alternative Fuel Vehicle Converters.

North American Industry Classification System (NAICS).

This list is not intended to be exhaustive, but rather provides a guide regarding entities likely to be regulated 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 persons listed in

FOR FURTHER INFORMATION CONTACT

Table of Contents

I. Executive Summary

II. Overview of the Final Rule

A. Summary of the NPRM

B. Public Participation Opportunities and Summary of Comments

C. Changes to the CAFE Model in Light of Public Comments and New Information

D. Final Standards—Stringency

E. Final Standards—Impacts

1. Light Duty Effects

2. Heavy Duty Pickup Trucks and Vans Effects

F. Final Standards Are Maximum Feasible

G. Final Standards Are Feasible in the Context of EPA's Final Standards and California's Standards

III. Technical Foundation for Final Rule Analysis

A. Why is NHTSA conducting this analysis?

1. What are the key components of NHTSA's analysis?

2. How do requirements under EPCA/EISA shape NHTSA's analysis?

3. What updated assumptions does the current model reflect as compared to the 2022 final rule and the 2023 NPRM?

B. What is NHTSA analyzing?

C. What inputs does the compliance analysis require?

1. Technology Options and Pathways

2. Defining Manufacturers' Current Technology Positions in the Analysis Fleet

3. Technology Effectiveness Values

4. Technology Costs

5. Simulating Existing Incentives, Other Government Programs, and Manufacturer ZEV Deployment Plans

a. Simulating ZEV Deployment Unrelated to NHTSA's Standards

b. IRA Tax Credits

6. Technology Applicability Equations and Rules

D. Technology Pathways, Effectiveness, and Cost

1. Engine Paths

2. Transmission Paths

3. Electrification Paths

4. Road Load Reduction Paths

a. Mass Reduction

b. Aerodynamic Improvements

c. Low Rolling Resistance Tires

5. Simulating Air Conditioning Efficiency and Off-Cycle Technologies

E. Consumer Responses to Manufacturer Compliance Strategies

1. Macroeconomic and Consumer Behavior Assumptions

2. Fleet Composition

a. Sales

b. Scrappage

3. Changes in Vehicle Miles Traveled (VMT)

4. Changes to Fuel Consumption

F. Simulating Emissions Impacts of Regulatory Alternatives

G. Simulating Economic Impacts of Regulatory Alternatives

1. Private Costs and Benefits

a. Costs to Consumers

(1) Technology Costs

(2) Consumer Sales Surplus

(3) Ancillary Costs of Higher Vehicle Prices

b. Benefits to Consumers

(1) Fuel Savings

(2) Refueling Benefit

(3) Additional Mobility

2. External Costs and Benefits

a. Costs

(1) Congestion and Noise

(2) Fuel Tax Revenue

b. Benefits

(1) Climate Benefits

(a) Social Cost of Greenhouse Gases Estimates

(b) Discount Rates for Climate Related Benefits

(2) Reduced Health Damages

(3) Reduction in Petroleum Market Externalities

(4) Changes in Labor Use and Employment

3. Costs and Benefits Not Quantified

H. Simulating Safety Effects of Regulatory Alternatives

1. Mass Reduction Impacts

2. Sales/Scrappage Impacts

3. Rebound Effect Impacts

4. Value of Safety Impacts

IV. Regulatory Alternatives Considered in This Final Rule

A. General Basis for Alternatives Considered

B. Regulatory Alternatives Considered

1. Reference Baseline/No-Action Alternative

2. Alternative Baseline/No-Action Alternative

3. Action Alternatives for Model Years 2027-2032 Passenger Cars and Light Trucks

a. Alternative PC1LT3

b. Alternative PC2LT002—Final Standards

c. Alternative PC2LT4

d. Alternative PC3LT5

e. Alternative PC6LT8

f. Other Alternatives Suggested by Commenters for Passenger Car and LT CAFE Standards

4. Action Alternatives for Model Years 2030-2035 Heavy-Duty Pickups and Vans

a. Alternative HDPUV4

b. Alternative HDPUV108—Final Standards

c. Alternative HDPUV10

d. Alternative HDPUV14

V. Effects of the Regulatory Alternatives

A. Effects on Vehicle Manufacturers

1. Passenger Cars and Light Trucks

2. Heavy-Duty Pickups and Vans

B. Effects on Society

1. Passenger Cars and Light Trucks

2. Heavy-Duty Pickups and Vans

C. Physical and Environmental Effects

1. Passenger Cars and Light Trucks

2. Heavy-Duty Pickups and Vans

D. Sensitivity Analysis, Including Alternative Baseline

1. Passenger Cars and Light Trucks

2. Heavy-Duty Pickups and Vans

VI. Basis for NHTSA's Conclusion That the Standards Are Maximum Feasible

A. EPCA, as Amended by EISA

1. Lead Time

a. Passenger Cars and Light Trucks

b. Heavy-Duty Pickups and Vans

2. Separate Standards for Passenger Cars, Light Trucks, and Heavy-Duty Pickups and Vans, and Minimum Standards for Domestic Passenger Cars

3. Attribute-Based and Defined by a Mathematical Function

4. Number of Model Years for Which Standards May Be Set at a Time

5. Maximum Feasible Standards

a. Passenger Cars and Light Trucks

(1) Technological Feasibility

(2) Economic Practicability

(3) The Effect of Other Motor Vehicle Standards of the Government on Fuel Economy

(4) The Need of the U.S. To Conserve Energy

(a) Consumer Costs and Fuel Prices

(b) National Balance of Payments

(d) Foreign Policy Implications

(5) Factors That NHTSA Is Prohibited From Considering

(6) Other Considerations in Determining Maximum Feasible CAFE Standards

b. Heavy-Duty Pickups and Vans

(1) Appropriate

(2) Cost-Effective

(3) Technologically Feasible

B. Comments Regarding the Administrative Procedure Act (APA) and Related Legal Concerns

C. National Environmental Policy Act

1. Environmental Consequences

a. Energy

(1) Direct and Indirect Impacts

(2) Cumulative Impacts

b. Air Quality

(1) Direct and Indirect Impacts

(a) Criteria Pollutants

(b) Toxic Air Pollutants

(2) Cumulative Impacts

(a) Criteria Pollutants

(b) Toxic Air Pollutants

c. Greenhouse Gas Emissions and Climate Change

(1) Direct and Indirect Impacts

(a) Greenhouse Gas Emissions

(b) Climate Change Indicators (Carbon Dioxide Concentration, Global Mean Surface Temperature, Sea Level, Precipitation, and Ocean pH)

(2) Cumulative Impacts

(a) Greenhouse Gas Emissions

(b) Climate Change Indicators (Carbon Dioxide Concentration, Global Mean Surface Temperature, Sea Level, Precipitation, and Ocean pH)

(d) Qualitative Impacts Assessment

2. Conclusion

D. Evaluating the EPCA/EISA Factors and Other Considerations To Arrive at the Final Standards

1. Passenger Cars and Light Trucks

2. Heavy-Duty Pickups and Vans

3. Severability

VII. Compliance and Enforcement

A. Background

B. Overview of Enforcement

1. Light Duty CAFE Program

a. Determining Compliance

b. Flexibilities

c. Civil Penalties

2. Heavy-Duty Pickup Trucks and Vans

a. Determining Compliance

b. Flexibilities

c. Civil Penalties

C. Changes Made by This Final Rule

1. Elimination of OC and AC Efficiency FCIVs for BEVs in the CAFE Program

2. Addition of a Utility Factor for Calculating FCIVs for PHEVs

3. Phasing Out OC FCIVs by MY 2033

4. Elimination of the 5-Cycle and Alternative Approval Pathways for CAFE

5. Requirement To Respond To Requests for Information Regarding Off-Cycle Requests Within 60 Days for LDVs for MYs 2025 and 2026

6. Elimination of OC Technology Credits for Heavy-Duty Pickup Trucks and Vans Starting in Model Year 2030

7. Technical Amendments for Advanced Technology Credits

8. Technical Amendments to Part 523

a. 49 CFR 523.2 Definitions

b. 49 CFR 523.3 Automobile

c. 49 CFR 523.4 Passenger Automobile

d. 49 CFR 523.5 Non-Passenger Automobile

e. 49 CFR 523.6 Heavy-Duty Vehicle

f. 49 CFR 523.8 Heavy-Duty Vocational Vehicle

9. Technical Amendments to Part 531

a. 49 CFR 531.1 Scope

b. 49 CFR 531.4 Definitions

c. 49 CFR 531.5 Fuel Economy Standards

10. Technical Amendments to Part 533

a. 49 CFR 533.1 Scope

b. 49 CFR 533.4 Definitions

11. Technical Amendments to Part 535

a. 49 CFR 535.4 Definitions

b. 49 CFR 535.7 Average, Banking, and Trading (ABT) Credit Program

12. Technical Amendments to Part 536

13. Technical Amendments to Part 537

a. 49 CFR 537.2 Scope

b. 49 CFR 537.3 Applicability

c. 49 CFR 537.4 Definitions

d. 49 CFR 537.7 Pre-Model Year and Mid-Model Year Reports

D. Non-Fuel Saving Credits or Flexibilities

E. Additional Comments

1. AC FCIVs

2. Credit Transfer Cap AC

3. Credit Trading Between HDPUV and Light Truck Fleets

4. Adjustment for Carry Forward and Carryback Credits

5. Increasing Carryback Period

6. Flex Fuel Vehicle Incentives

7. Reporting

8. Petroleum Equivalency Factor for HDPUVs

9. Incentives for Fuel Cell Electric Vehicles

10. EV Development

11. PHEV in HDPUV

VIII. Regulatory Notices and Analyses

A. Executive Order 12866, Executive Order 13563, and Executive Order 14094

B. DOT Regulatory Policies and Procedures

C. Executive Order 14037

D. Environmental Considerations

1. National Environmental Policy Act (NEPA)

2. Clean Air Act (CAA) as Applied to NHTSA's Final Rule

3. National Historic Preservation Act (NHPA)

4. Fish and Wildlife Conservation Act (FWCA)

5. Coastal Zone Management Act (CZMA)

6. Endangered Species Act (ESA)

7. Floodplain Management (Executive Order 11988 and DOT Order 5650.2)

8. Preservation of the Nation's Wetlands (Executive Order 11990 and DOT Order 5660.1a)

9. Migratory Bird Treaty Act (MBTA), Bald and Golden Eagle Protection Act (BGEPA), Executive Order 13186

10. Department of Transportation Act (Section 4(f))

11. Executive Order 12898: “Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations”; Executive Order 14096: “Revitalizing Our Nation's Commitment to Environmental Justice for All”

12. Executive Order 13045: “Protection of Children From Environmental Health Risks and Safety Risks”

E. Regulatory Flexibility Act

F. Executive Order 13132 (Federalism)

G. Executive Order 12988 (Civil Justice Reform)

H. Executive Order 13175 (Consultation and Coordination With Indian Tribal Governments)

I. Unfunded Mandates Reform Act

J. Regulation Identifier Number

K. National Technology Transfer and Advancement Act

L. Department of Energy Review

M. Paperwork Reduction Act

N. Congressional Review Act

I. Executive Summary

NHTSA, on behalf of the Department of Transportation, is finalizing new corporate average fuel economy (CAFE) standards for passenger cars and light trucks for model years 2027-2031,

setting forth augural standards for MY 2032,

and finalizing new fuel efficiency standards for heavy-duty pickup trucks and vans

(HDPUVs) for model years 2030-2035. This final rule responds to NHTSA's statutory obligation to set CAFE and HDPUV standards at the maximum feasible level that the agency determines vehicle manufacturers can achieve in each MY, in order to improve energy conservation.

Improving energy conservation by raising CAFE and HDPUV standard stringency not only helps consumers save money on fuel, but also improves national energy security and reduces harmful emissions.

Passenger cars are generally sedans, station wagons, and two-wheel drive crossovers and sport utility vehicles (CUVs and SUVs), while light trucks are generally four-wheel drive sport utility vehicles, pickups, minivans, and passenger/cargo vans. “Passenger car” and “light truck” are defined more precisely at 49 CFR part 523.

MY 2032, is “augural,” as in the 2012 final rule that established CAFE standards for MYs 2017 and beyond. The 2012 final rule citation is 77 FR 62624 (Oct. 15, 2012).

HDPUVs are generally Class 2b/3 work trucks, fleet SUVs, work vans, and cutaway chassis-cab vehicles. “Heavy-duty pickup trucks and vans” are more precisely defined at 49 CFR part 523.

See

49 U.S.C. 32902.

Based on the information currently before us, NHTSA estimates that relative to the reference baseline

this final rule will reduce gasoline consumption by 64 billion gallons relative to reference baseline levels for passenger cars and light trucks and will reduce fuel consumption by approximately 5.6 billion gallons relative to reference baseline levels for HDPUVs through calendar year 2050. If compared to the alternative baseline, which has lower levels of electric vehicle penetration than the reference baseline, fuel savings will be greater at approximately 115 billion gallons.

Reducing gasoline consumption has multiple benefits—it improves our nation's energy security, it saves consumers money, and reduces harmful pollutant emissions that lead to adverse human and environmental health outcomes and climate change. NHTSA estimates that relative to the reference baseline, this final rule will reduce carbon dioxide (CO

) emissions by 659 million metric tons for passenger cars and light trucks, and by 55 million metric tons for HDPUVs through calendar year 2050. Again, these relative reductions are greater if the rule is compared to the alternative baseline, but demonstrating a similar level of absolute carbon dioxide emissions.

While consumers could pay more for new vehicles upfront, we estimate that they would save money on fuel costs over the lifetimes of those new vehicles—in the reference baseline analysis lifetime fuel savings exceed modeled regulatory costs by roughly $247, on average, for passenger car and light truck buyers of MY 2031 vehicles, and roughly $491, on average, for HDPUV buyers of MY 2038 vehicles. By comparison, in the No ZEV alternative baseline analysis, lifetime fuel savings exceed modeled regulatory costs by roughly $400, on average, for passenger car and light truck buyers of MY 2031 vehicles. Net benefits for the preferred

alternative for passenger cars and light trucks are estimated to be $35.2 billion at a 3 percent discount rate (DR),

and $30.8 billion at a 7 percent DR, and for HDPUVs, net benefits are estimated to be $13.6 billion at a 3 percent DR, and $11.8 billion at a 7 percent DR. Net benefits are higher if the final rules are assessed relative to the alternative baseline, estimated to be $44.9 billion at a 3 percent DR and $39.8 billion at 7 percent DR.

(For simplicity, however, all projections presented in this document use the reference baseline unless otherwise stated.)

NHTSA performed an analysis considering an alternative baseline, referenced herein as the “No ZEV alternative baseline.” The alternative baseline does not assume manufacturers will consider, or preemptively react to, or voluntarily deploy electric vehicles consistent with any of the California light-duty vehicle Zero Emission Vehicle programs (specifically, ACC I and ACC II) during any of the model years simulated in the analysis, regardless of the fact that ACC I is a legally binding program, and regardless of manufacturer commitments to deploy electric vehicles consistent with ACC II. See TSD Chapter 1.4.2, RIA 3.2, and Section IV.B.2 of this document for further discussion.

Under the CAFE standards finalized in this rule, the absolute amount of fuel use predicted through CY 2050 only differs by 1.4 percent between the reference and alternative baseline analysis.

There is a 1 percent difference between the absolute volume of carbon dioxide (measured in million metric tons, or mmt) produced through CY 2050 in the reference baseline analysis and alternative baseline analysis under the final standards.

The Social Cost of Greenhouse Gases (SC-GHG) assumed a 2 percent discount rate for the net benefit values discussed here.

While the absolute fuel consumption and carbon dioxide emissions are similar when the final standards are applied over both baselines considered, the higher net benefits for the alternative baseline are a result of a larger portion of the reduced fuel use and reduced carbon dioxide being attributed to the CAFE standards rather than to the baseline.

The record for this action is comprised of the notice of proposed rulemaking (NPRM) and this final rule, a Technical Support Document (TSD), a Final Regulatory Impact Assessment (FRIA), and a Draft and Final EIS, along with extensive analytical documentation, supporting references, and many other resources. Most of these resources are available on NHTSA's website,

and other references not available on NHTSA's website can be found in the rulemaking docket, the docket number of which is listed at the beginning of this preamble.

See NHTSA. 2023. Corporate Average Fuel Economy. Available at:

https://www.nhtsa.gov/laws-regulations/corporate-average-fuel-economy

. (Accessed: Feb. 23, 2024).

The final rule considers a range of regulatory alternatives for each fleet, consistent with NHTSA's obligations under the Administrative Procedure Act (APA), National Environmental Policy Act (NEPA), and E.O. 12866. Specifically, NHTSA considered five regulatory alternatives for passenger cars and light trucks, as well as the No-Action Alternative. Each alternative is labeled for the type of vehicle and the rate of increase in fuel economy stringency based on changes for each model year, for example, PC1LT3 represents a 1 percent increase in Passenger Car standards and a 3 percent increase in Light Truck standards. We include four regulatory alternatives for HDPUVs, each representing different possible rates of year-over-year increase in the stringency of new fuel economy and fuel efficiency standards, as well as the No-Action Alternative. For example, HDPUV4 represents a 4 percent increase in fuel efficiency standards applicable to HDPUVs. The regulatory alternatives are as follows:

In a departure from recent CAFE rulemaking trends, we have applied different rates of stringency increase to the passenger car and the light truck fleets in different model years, because the record indicated that different rates of fuel economy were possible. Rather than have both fleets increase their respective standards at the same rate, light truck standards increase at a different rate than passenger car standards in the first two years of the program. This is consistent with NHTSA's obligation to set maximum feasible CAFE standards separately for passenger cars and light trucks (

see

49 U.S.C. 32902), which gives NHTSA discretion, by law, to set CAFE standards that increase at different rates for cars and trucks. Section VI of this preamble also discusses in greater detail how this approach carries out NHTSA's responsibility under the Energy Policy and Conservation Act (EPCA) to set maximum feasible standards for both passenger cars and light trucks.

Percentages in the table represent the year over year reduction in gal/mile applied to the mpg values on the target curves. The reduction in gal/mile results in an increased mpg.

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After

assessing these alternatives against the reference baseline and the alternative baseline, and evaluating numerous sensitivity cases, NHTSA is finalizing stringency increases at 2 percent per year for passenger cars for MYs 2027 through 2031, and at 0 percent per year for light trucks for MYs 2027 and 2028, and 2 percent per year for MYs 2029-2031. NHTSA is also setting forth an augural MY 2032 standard that increases at a rate of 2 percent for both passenger cars and light trucks. NHTSA is finalizing stringency increases at 10 percent per year for HDPUVs for MYs 2030-2032, and 8 percent per year for MYs 2033-2035. The regulatory alternatives representing these final stringency increases are called “PC2LT002” for passenger cars and light trucks, and “HDPUV108” for HDPUVs. These standards are also referred to throughout the rulemaking documents as the “preferred alternative” or “final standards.” NHTSA concludes that these levels are the maximum feasible for these model years as discussed in more detail in Section VI of this preamble, and in particular given the statutory constraints that prevent NHTSA from considering the fuel economy of battery electric vehicles (BEVs) in determining maximum feasible CAFE standards.

For HDPUVs, the different regulatory alternatives are also defined in terms of percent-increases in stringency from year to year, but in terms of fuel consumption reductions rather than fuel economy increases, so that increasing stringency appears to result in standards going down (representing a direct reduction in fuel consumed) over time rather than up. Also, unlike for the passenger car and light truck standards, because HDPUV standards are measured using a fuel consumption metric, year-over-year percent changes do actually represent gallon/mile differences across the work-factor range.

49 U.S.C. 32902(h) states that when determining what levels of CAFE standards are maximum feasible, NHTSA “(1) may not consider the fuel economy of dedicated automobiles [including battery-electric vehicles]; (2) shall consider dual fueled automobiles to be operated only on gasoline or diesel fuel; and (3) may not consider, when prescribing a fuel economy standard, the trading, transferring, or availability of credits under section 32903.”

NHTSA notes that due to the statutory constraints that prevent NHTSA from considering the fuel economy of dedicated alternative fueled vehicles, the full (including electric-only operation) fuel economy of dual-fueled alternative fueled vehicles, and the availability of over-compliance credits when determining what standards are maximum feasible, many aspects of our analysis are different from what they would otherwise be without the statutory restrictions—in particular, the technologies chosen to model possible compliance options, the estimated costs, benefits, and achieved levels of fuel economy, as well as the current and projected adoption of alternative fueled vehicles. NHTSA evaluates the results of that constrained analysis by weighing the four enumerated statutory factors to determine which standards are maximum feasible, as discussed in Section VI.A.5.

For passenger cars and light trucks, NHTSA notes that the final year of standards, MY 2032, is “augural,” as in the 2012 final rule which established CAFE standards for model years 2017 and beyond. Augural standards mean that they are NHTSA's best estimate of what the agency would propose, based on the information currently before it, if the agency had authority to set CAFE standards for more than five model years in one action. The augural standards do not, and will not, have any effect in themselves and are not binding unless adopted in a subsequent rulemaking. Consistent with past practice, NHTSA is including augural standards for MY 2032 to give its best estimate of what those standards would be to provide as much predictability as possible to manufacturers and to be consistent with the time frame of the Environmental Protection Agency (EPA) standards for greenhouse gas (GHG) emissions from motor vehicles. Due to statutory lead time constraints for HDPUV standards, NHTSA's final rule for HDPUV standards must begin with MY 2030. There is no restriction on the number of model years for which NHTSA may set HDPUV standards, so none of the HDPUV standards are augural.

The CAFE standards remain vehicle-footprint-based, like the current CAFE standards in effect since MY 2011, and the HDPUV standards remain work-factor-based, like the HDPUV standards established in the 2011 “Phase 1” rulemaking used in the 2016 “Phase 2” rulemaking. The footprint of a vehicle is the area calculated by multiplying the wheelbase times the track width, essentially the rectangular area of a vehicle measured from tire to tire where the tires hit the ground. The work factor (WF) of a vehicle is a unit established to measure payload, towing capability, and whether or not a vehicle has four-wheel drive. This means that the standards are defined by mathematical equations that represent linear functions relating vehicle footprint to fuel economy targets for passenger cars and light trucks,

and relating WF to fuel consumption targets for HDPUVs.

Generally, passenger cars have more stringent targets than light trucks regardless of footprint, and smaller vehicles will have more stringent targets than larger vehicles, because smaller vehicles are generally more fuel efficient. No individual vehicle or vehicle model need meet its target exactly, but a manufacturer's compliance is determined by how its average fleet fuel economy compares to the average fuel economy of the targets of the vehicles it manufactures.

The target curves for passenger cars, light trucks, and compression-ignition and spark-ignition HDPUVs are set forth in Sections II and IV; curves for model years prior to the years of the rulemaking time frame are included in the figures for context. NHTSA

underscores that the equations and coefficients defining the curves are the CAFE and HDPUV standards, and not the mpg and gallon/100-mile estimates that the agency currently estimates could result from manufacturers complying with the curves. We provide mpg and gallon/100-mile estimates for ease of understanding after we illustrate the footprint curves, but the equations and coefficients are the actual standards. NHTSA is also finalizing new minimum domestic passenger car CAFE standards (MDPCS) for model years 2027-2031 as required by the Energy Policy and Conservation Act of 1975 (EPCA), as amended by the EISA, and applied to vehicles defined as manufactured in the United States. Section 32902(b)(4) of 49 U.S.C. requires NHTSA to project the minimum domestic standard when it promulgates passenger car standards for a MY; these standards are shown in Table I-3 below. NHTSA retains the 1.9 percent offset first used in the 2020 final rule, reflecting prior differences between passenger car footprints originally forecast by the agency and passenger car footprints as they occurred in the real world, such that the minimum domestic passenger car standard is as shown in the table below.

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Recognizing that many readers think about CAFE standards in terms of the mpg values that the standards are projected to eventually require, NHTSA currently estimates that the standards would require roughly 50.4 mpg in MY 2031, on an average industry fleet-wide basis, for passenger cars and light trucks. NHTSA notes both that real-world fuel economy is generally 20-30 percent lower than the estimated required CAFE level stated above,

and also that the actual CAFE standards are the footprint target curves for passenger cars and light trucks. This last note is important, because it means that the ultimate fleet-wide levels will vary depending on the mix of vehicles that industry produces for sale in those model years. NHTSA also calculates and presents “estimated achieved” fuel economy levels, which differ somewhat from the estimated required levels for each fleet, for each year.

NHTSA estimates that the industry-wide average fuel economy achieved in MY 2031 for passenger cars and light trucks combined could increase from about 52.1 mpg under the No-Action Alternative to 52.5 mpg under the standards.

CAFE compliance is evaluated per 49 U.S.C. 32904(c) Testing and Calculation Procedures, which states that the EPA Administrator (responsible under EPCA/EISA for measuring vehicle fuel economy) shall use the same procedures used for model year 1975 (weighted 55 percent urban cycle and 45 percent highway cycle) or comparable procedures. Colloquially, this is known as the 2-cycle test. The “real-world” or 5-cycle evaluation includes the 2-cycle tests, and three additional tests that are used to adjust the city and highway estimates to account for higher speeds, air conditioning use, and colder temperatures. In addition to calculating vehicle fuel economy, EPA is responsible for providing the fuel economy data that is used on the fuel economy label on all new cars and light trucks, which uses the “real-world” values. In 2006, EPA revised the test methods used to determine fuel economy estimates (city and highway) appearing on the fuel economy label of all new cars and light trucks sold in the U.S., effective with 2008 model year vehicles.

NHTSA's analysis reflects that manufacturers nearly universally make the technological improvements prompted by CAFE standards at times that coincide with existing product “refresh” and “redesign” cycles, rather than applying new technology every year regardless of those cycles. It is significantly more cost-effective to make fuel economy-improving technology updates when a vehicle is being updated. See TSD 2.2.1.7 for additional discussion about manfacturer refresh and redesign cycles.

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To the extent that manufacturers appear to be over-complying in our analysis with required fuel economy levels in the passenger car fleet, NHTSA notes that this is due to the inclusion of several all-electric manufacturers in the reference baseline analysis, which affects the overall average achieved levels. Manufacturers with more traditional fleets do not over-comply at such high levels in our analysis, and our analysis considers the compliance paths for both manufacturer groups. In contrast, while it looks like some manufacturers are falling short of required fuel economy levels in the light truck fleet (and choosing instead to pay civil penalties), NHTSA notes that this appears to be an economic decision by a relatively small number of companies. In response to comments from vehicle manufacturers, in particular manufacturers that commented that they cannot stop manufacturing large fuel inefficient light trucks while also transitioning to manufacturing electric vehicles, NHTSA has reconsidered light truck stringency levels and notes that manufacturers no longer face CAFE civil penalties as modeled in the NPRM. Please see Section VI.D of this preamble for more discussion on these topics and how the agency has considered them in determining maximum feasible standards for this final rule.

There is no actual legal requirement for combined passenger car and light truck fleets, but NHTSA presents information this way in recognition of the fact that many readers will be accustomed to seeing such a value.

The MY 2022 baseline fleet that was used from 2022 NHTSA Pre-Model Year (PMY) data consists of 38% passenger car and 62% light truck.

For HDPUVs, NHTSA currently projects that the standards would require, on an average industry fleet-wide basis for the HDPUV fleet, roughly 2.851 gallons per 100 miles in MY 2035.

HDPUV standards are attribute-based like passenger car and light truck standards, so here, too, ultimate fleet-wide levels will vary depending on what industry produces for sale.

The HDPUV standards measure compliance in direct fuel consumption and uses gallons consumed per 100 miles of operation as a metric.

See

49 CFR 535.6.

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For all fleets, average requirements and average achieved CAFE and HDPUV fuel efficiency levels would ultimately depend on manufacturers' and consumers' responses to standards, technology developments, economic conditions, fuel prices, and other factors.

Our technical analysis for this final rule keeps the same general framework as past CAFE and HDPUV rules, but as applied to the most up-to-date fleet available at the time of the analysis. NHTSA has updated technologies considered in our analysis (removing technologies which are already universal or nearly so and technologies which are exiting the fleet, adding certain advanced engine technologies);

updated macroeconomic input assumptions, as with each round of rulemaking analysis; improved user control of various input parameters; updated our approach to modeling manufacturers' expected compliance with states' Zero Emission Vehicle (ZEV) programs and deployment of additional electric vehicles consistent with manufacturer commitments; accounted for changes to DOE's Petroleum Equivalency Factor (PEF),

for the reference baseline assumptions; expanded accounting for Federal incentives such as Inflation Reduction Act programs; expanded procedures for estimating new vehicle sales and fleet shares; updated inputs for projecting aggregate light-duty Vehicle Miles Traveled (VMT); and added various output values and options.

See TSD Chapter 1.1 for a complete list of technologies added or removed from the analysis.

For more information on DOE's final rule, see 89 FR 22041 (Mar. 29, 2024). For more information on how DOE's revised PEF affects NHTSA's results in this final rule, please see Chapter 9 of the FRIA.

See TSD Chapter 1.1 for a detailed discussion of analysis updates.

NHTSA concludes, as we explain in more detail below, that Alternative PC2LT002 is the maximum feasible alternative that manufacturers can achieve for model years 2027-2031 passenger cars and light trucks, based on a variety of reasons. Energy conservation is still paramount, for the consumer benefits, energy security benefits, and environmental benefits that it provides. Moreover, although the vehicle fleet is undergoing a significant transformation now and in the coming years, for reasons other than the CAFE standards, NHTSA believes that a significant percentage of the on-road (and new) vehicle fleet may remain propelled by internal combustion engines (ICEs) through 2031. NHTSA believes that the final standards will encourage manufacturers producing those ICE vehicles during the standard-setting time frame to achieve significant fuel economy, improve energy security, and reduce harmful pollution by a large amount. At the same time, NHTSA is finalizing standards that our estimates project will continue to save consumers money and fuel over the lifetime of their vehicles while being economically practicable and technologically feasible for manufacturers to achieve.

Although all of the other alternatives, except for the no-action alternative, would conserve more energy and provide greater fuel savings benefits and certain pollutant emissions reductions, NHTSA's statutorily-constrained analysis currently estimates that those alternatives may not be achievable for many manufacturers in the rulemaking time frame.

Additionally, the analysis indicates compliance with those more stringent alternatives would impose significant costs (under the constrained analysis) on individual consumers without corresponding fuel savings benefits large enough to, on average, offset those costs. Within that framework, NHTSA's analysis suggests that the more stringent alternatives could push more technology application than would be economically practicable, given anticipated reference baseline activity that will already be consuming manufacturer resources and capital and the constraints of planned manufacturer redesign cycles. In contrast to all other action alternatives, except for the no-action alternative, Alternative PC2LT002 comes at a cost we believe the market can bear without creating consumer acceptance or sales issues, appears to be much more achievable, and will still result in consumer net benefits on average. The alternative also achieves large fuel savings benefits and significant reductions in emissions compared to the no-action alternative. NHTSA concludes Alternative PC2LT002 is the appropriate choice given this record.

See Section VI for a complete discussion.

For HDPUVs, NHTSA concludes, as explained in more detail below, that Alternative HDPUV108 is the maximum feasible alternative that manufacturers can achieve for model years 2030-2035 HDPUVs. It has been seven years since NHTSA revisited HDPUV standards, and our analysis suggests that there is much opportunity for cost-effective improvements in this segment, broadly speaking. At the same time, we recognize that these vehicles are primarily used to conduct work for a large number of businesses. Although Alternatives HDPUV10 and HDPUV14 would conserve more energy and provide greater fuel savings benefits and CO

emissions reductions, they are more costly than HDPUV108, and NHTSA currently estimates that Alternative HDPUV108 is the most cost-effective under a variety of metrics and at either a 3 percent or a 7 percent DR, while still being appropriate and technologically feasible. NHTSA is allowed to consider electrification in determining maximum feasible standards for HDPUVs. As a result, NHTSA concludes that HDPUV108 is the appropriate choice given the record discussed in more detail below, and we believe it balances EPCA's overarching objective of energy conservation while remaining cost-effective and technologically feasible.

For passenger cars and light trucks, NHTSA estimates that this final rule would reduce average fuel outlays over the lifetimes of MY 2031 vehicles by about $639 per vehicle relative to the reference baseline, while increasing the average cost of those vehicles by about $392 over the reference baseline, at a 3 percent discount rate; this represents a difference of $247. With climate benefits discounted at 2 percent and all other benefits and costs discounted at 3 percent, when considering the entire CAFE fleet for model years 1983-2031, NHTSA estimates $24.5 billion in monetized costs and $59.7 billion in monetized benefits attributable to the standards, such that the present value of aggregate net monetized benefits to society would be $35.2 billion.

Again, the net benefits are larger if the final rule is assessed relative to the alternative baseline.

These values are from our “model year” analysis, reflecting the entire fleet from MYs 1983-2031, consistent with past practice. Model year and calendar year perspectives are discussed in more detail below in this section.

For HDPUVs, NHTSA estimates that this final rule could reduce average fuel outlays over the lifetimes of MY 2038 vehicles by about $717 per vehicle, while increasing the average cost of those vehicles by about $226 over the reference baseline, at a 3 percent discount rate; this represents a difference of $491. With climate benefits discounted at 2 percent and all other benefits and costs discounted at 3 percent, when considering the entire on-road HDPUV fleet for calendar years 2022-2050, NHTSA estimates $3.4 billion in monetized costs and $17 billion in monetized benefits attributable to the standards, such that the present value of aggregate net monetized benefits to society would be $13.6 billion.

These values are from our “calender year” analysis, reflecting the on-the-road fleet from CYs 2022-2050. Model year and calendar year perspectives are discussed in more detail below in this section.

These assessments do not include important unquantified effects, such as energy security benefits, equity and distributional effects, and certain air quality benefits from the reduction of

toxic air pollutants and other emissions, among other things, so the net benefit estimate is a conservative one.

In addition, the power sector emissions modeling reflected in this analysis is subject to uncertainty and may be conservative to the extent that other components that influence energy markets, such as recently finalized Federal rules and additional modeled policies like Federal tax credits, are incorporated in those estimates. That said, NHTSA performed additional modeling to test the sensitivity of those estimates and found that in the context of total emissions, any changes from using different power sector forecasts are extremely small. This is discussed in more detail in FRIA Chapter 9.

These cost and benefit estimates are based on many different and uncertain inputs, and NHTSA has conducted several dozen sensitivity analyses varying individual inputs to evaluate the effect of that uncertainty. For example, while NHTSA's reference baseline analysis constrains the application of high compression ratio engines to some vehicles based on performance and other considerations, we also conducted a sensitivity analysis that removed all of those constraints. Results of this and other sensitivity analyses are discussed in Section V of this preamble, in Chapter 9 of the FRIA, and (if large or otherwise significant) in Section VI.D of this preamble.

Table I-6 presents aggregate benefits and costs for new vehicle buyers and for the average individual new vehicle buyer.

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NHTSA recognizes that EPA has recently issued a final rule to set new multi-pollutant emissions standards for model years 2027 and later light-duty (LD) and medium-duty vehicles (MDV).

EPA describes its final rule as building upon EPA's final standards for Federal GHG emissions standards for passenger cars and light trucks for model years 2023 through 2026 and leverages advances in clean car technology to unlock benefits to Americans ranging from reducing pollution, to improving public health, to saving drivers money through reduced fuel and maintenance costs.

EPA's standards phase in over model years 2027 through 2032.

Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles; Final Rule, 89 FR 27842 (Apr. 18, 2024).

Id.

NHTSA coordinated with EPA in developing our final rule to avoid inconsistencies and produce requirements that are consistent with NHTSA's statutory authority. The final rules nevertheless differ in important ways. First, NHTSA's final rule, consistent with its statutory authority and mandate under EPCA/EISA, focuses on improving vehicle fuel economy and not directly on reducing vehicle emissions—though reduced emissions are a follow-on effect of improved fuel economy. Second, the biggest difference between the two final rules is due to EPCA/EISA's statutory prohibition against NHTSA considering the fuel economy of dedicated alternative fueled vehicles, including BEVs, and including the full fuel economy of dual-fueled alternative fueled vehicles in determining the maximum feasible fuel economy level that manufacturers can achieve for passenger cars and light trucks, even though manufacturers may use BEVs and dual-fueled alternative fuel vehicles (AFV) like PHEVs to comply with CAFE standards. EPA is not prohibited from considering BEVs or PHEVs as a compliance option. EPA's final rule is informed by, among other considerations, trends in the automotive industry (including the proliferation of announced investments by automakers in electrifying their fleets), tax incentives under the Inflation Reduction Act (IRA), and other factors in the rulemaking record that are leading to a rapid transition in the automotive industry toward less-pollutant-emitting vehicle technologies. NHTSA, in contrast, may

not

consider BEVs as a compliance option for the passenger car and light truck fleets even though manufacturers may, in fact, use BEVs to comply with CAFE standards. This constraint means that not only are NHTSA's stringency rates of increase

different from EPA's but also the shapes of our standards are different based upon the different scopes.

Recognizing these statutory restrictions and their effects on NHTSA's analysis (and that EPA's analysis and decisions are not subject to such constraints) NHTSA sought to optimize the effectiveness of the final CAFE standards consistent with our statutory factors. Our statutorily constrained simulated industry response shows a reasonable path forward to compliance with CAFE standards, but we want to stress that our analysis simply shows feasibility and does not dictate a required path to compliance. Because the standards are performance-based, manufacturers are always free to apply their expertise to find the appropriate technology path that best meets all desired outcomes. Indeed, as explained in greater detail later on in this final rule, it is entirely possible and reasonable that a vehicle manufacturer will use technology options to meet NHTSA's standards that are significantly different from what NHTSA's analysis for this final rule suggests given the statutory constraints under which it operates. NHTSA has ensured that these final standards take account of statutory objectives and constraints while minimizing compliance costs.

As discussed before, NHTSA does not face the same statutory limitations in setting standards for HDPUVs as it does in setting standards for passenger cars and light trucks. This allows NHTSA to consider a broader array of technologies in setting maximum feasible standards for HDPUVs. However, we are still considerate of factors that allow these vehicles to maintain utility and do work for the consumer when we set the standards.

Additionally, NHTSA has considered and accounted for the electric vehicles that manufacturers' have indicated they intend to deploy in our analysis, as part of the analytical reference baseline.

Some of this deployment would be consistent with manufacturer compliance with California's Advanced Clean Cars (ACC) I and Advanced Clean Trucks (ACT). We find that manufacturers will comply with ZEV requirements in California and a number of other states in the absence of CAFE standards, and accounting for that expected compliance allows us to present a more realistic picture of the state of fuel economy even in the absence of changes to the CAFE standards. In the proposal, we also included the main provisions of California's Advanced Clean Cars II program (ACC II), which California has adopted but which has not been granted a Clean Air Act preemption waiver by EPA. Because ACC II has not been granted a waiver, we have not included it in our analysis as a legal requirement applying to manufacturers. However, manufacturers have indicated that they intend to deploy additional electric vehicles regardless of whether the waiver is granted, and our analysis reflects these vehicles. Reflecting this expected deployment of electric vehicles for non-CAFE compliance reasons in the analysis improves the accuracy of this reference baseline in reflecting the state of the world without the revised CAFE standards, and thus the information available to decision-makers in their decision as to what standards are maximum feasible, and to the public. However, in order to ensure that the analysis is robust to other possible futures, NHTSA also prepared an alternative baseline—one that reflected none of these electric vehicles (No ZEV Alternative Baseline). The net benefits of the standards are larger under this alternative baseline than they are under the reference baseline, and the technology deployment scenario is reasonable under the alternative baseline, further reinforcing NHTSA's conclusion that the final standards are reasonable, appropriate, and maximum feasible regardless of the deployment of electric vehicles that occurs independent of the standards.

Specifically, we include the main provisions of the ACC I and ACT programs, and additional electric vehicles automakers have indicated to NHTSA that they intend to deploy, as discussed further below in Section III.

NHTSA notes that while the current estimates of costs and benefits are important considerations and are directed by E.O. 12866, cost-benefit analysis provides only one informative data point in addition to the host of considerations that NHTSA must balance by statute when determining maximum feasible standards. Specifically, for passenger cars and light trucks, NHTSA is required to consider four statutory factors—technological feasibility, economic practicability, the effect of other motor vehicle standards of the Government on fuel economy, and the need of the United States to conserve energy. For HDPUVs, NHTSA is required to consider three statutory factors—whether standards are appropriate, cost-effective, and technologically reasonable—to determine whether the standards it adopts are maximum feasible.

As will be discussed further below, NHTSA concludes that Alternatives PC2LT002 and HDPUV108 are maximum feasible on the basis of these respective factors, and the cost-benefit analysis, while informative, is not one of the statutorily-required factors. NHTSA also considered several dozen sensitivity cases varying different inputs and concluded that even when varying inputs resulted in changes to net benefits or (on rare occasions) changed the relative order of regulatory alternatives in terms of their net benefits, those changes were not significant enough to outweigh our conclusion that Alternatives PC2LT002 and HDPUV108 are maximum feasible.

49 U.S.C. 32902(k).

NHTSA further notes that CAFE and HDPUV standards apply only to new vehicles, meaning that the costs attributable to new standards are “front-loaded” because they result primarily from the application of fuel-saving technology to new vehicles. By contrast, the impact of new CAFE and HDPUV standards on fuel consumption and energy savings, air pollution, and GHGs—and the associated benefits to society—occur over an extended time, as drivers buy, use, and eventually scrap these new vehicles. By accounting for many model years and extending well into the future to 2050, our analysis accounts for these differing patterns in impacts, benefits, and costs. Given the front-loaded costs versus longer-term benefits, it is likely that an analysis extending even further into the future would find additional net present benefits.

The bulk of our analysis for passenger cars and light trucks presents a “model year” (MY) perspective rather than a “calendar year” (CY) perspective. The MY perspective considers the lifetime impacts attributable to all passenger cars and light trucks produced prior to MY 2032, accounting for the operation of these vehicles over their entire lives (with some MY 2031 vehicles estimated to be in service as late as 2050). This approach emphasizes the role of the model years for which new standards are being finalized, while accounting for the potential that the standards could induce some changes in the operation of vehicles produced prior to MY 2027 (for passenger cars and light trucks), and that, for example, some individuals might choose to keep older vehicles in operation, rather than purchase new ones.

The calendar year perspective we present includes the annual impacts attributable to all vehicles estimated to be in service in each calendar year for which our analysis includes a representation of the entire registered passenger car, light truck, and HDPUV fleet. For this final rule, this calendar

year perspective covers each of calendar years 2022-2050, with differential impacts accruing as early as MY 2022.

Compared to the MY perspective, the calendar year perspective includes model years of vehicles produced in the longer term, beyond those model years for which standards are being finalized.

For a presentation of effects by calendar year, please see Chapter 8.2.4.6 of the FRIA.

The tables below summarize estimates of selected impacts viewed from each of these two perspectives, for each of the regulatory alternatives considered in this final rule, relative to the reference baseline.

FRIA Chapter 1, Figure 1-1 provides a graphical comparison of energy sources and their relative change over the standard setting years.

The additional electricity use during regulatory years is attributed to an increase in the number of PHEVs; PHEV fuel economy is only considered in charge-sustaining (

i.e.,

gasoline-only) mode in the compliance analysis, but electricity consumption is computed for the effects analysis.

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Climate benefits are based on changes (reductions) in CO

, CH

, and N

O emissions and are calculated using three different estimates of the SCC, SC-CH

, and SC-N

O. Each estimate assumes a different discount rate (1.5 percent, 2 percent, and 2.5 percent). For the presentational purposes of this table and other similar summary tables, we show the benefits associated with the SC-GHG at a 2 percent discount rate. See Section III.G of this preamble for more information.

For this and similar tables in this section, net benefits may differ from benefits minus costs due to rounding.

Climate benefits are based on changes (reductions) in CO

, CH

, and N

O emissions and are calculated using three different estimates of the SCC, SC-CH

, and SC-N

See

https://www.whitehouse.gov/omb/information-regulatory-affairs/reports/

for examples of how this reporting is used by the Federal Government.

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Our net benefit estimates are likely to be conservative both because (as discussed above) our analysis only extends to MY 2031 and calendar year 2050 (LD) and calendar year 2050 (HDPUV), and because there are additional important health, environmental, and energy security benefits that could not be fully quantified or monetized. Finally, for purposes of comparing the benefits and costs of CAFE and HDPUV standards to the benefits and costs of other Federal regulations, policies, and programs under the Regulatory Right-to-Know Act,

we have computed “annualized” benefits and costs relative to the reference baseline, as follows:

Climate benefits are based on changes (reductions) in CO

, CH

, and N

O emissions and are calculated using three different estimates of the SCC, SC-CH

, and SC-N

For this and similar tables in this section, net benefits may differ from benefits minus costs due to rounding.

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is also worth emphasizing that, although NHTSA is prohibited from considering the availability of certain flexibilities in making our determination about the levels of CAFE standards that would be maximum feasible, manufacturers have a variety of flexibilities available to aid their compliance. Section VII of this preamble summarizes these flexibilities and what NHTSA has finalized for this final rule. NHTSA is finalizing changes to these flexibilities as shown in Table I-13 and Table I-14.

Climate benefits are based on changes (reductions) in CO

, CH

, and N

O emissions and are calculated using three different estimates of the SCC, SC-CH

, and SC-N

BILLING CODE 4910-59-P

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BILLING CODE 4910-59-C

The following sections of this preamble discuss the technical foundation for the agency's analysis, the regulatory alternatives considered in this final rule, the estimated effects of the regulatory alternatives, the basis for NHTSA's conclusion that the standards are maximum feasible, and NHTSA's approach to compliance and enforcement. The extensive record supporting NHTSA's conclusion is documented in this preamble, in the TSD, the FRIA, the Final EIS, and the additional materials on NHTSA's website and in the rulemaking docket.

II. Overview of the Final Rule

A. Summary of the NPRM

In the NPRM, NHTSA proposed new fuel economy standards for LDVs for

model years 2027-2031 and new fuel efficiency standards for HDPUVs for model years 2030-2035. NHTSA also set forth proposed augural standards for LDVs for model year 2032. NHTSA explained that it was proposing the standards in response to the agency's statutory mandate to improve energy conservation and reduce the nation's energy dependence on foreign sources. NHTSA also explained that the proposal was also consistent with Executive Order (E.O.) 14037, “Strengthening American Leadership in Clean Cars and Trucks,” (August 5, 2021),

which directed the Secretary of Transportation (by delegation, NHTSA) to consider beginning work on rulemakings under the Energy Independence and Security Act of 2007 (EISA) to establish new fuel economy standards for LDVs beginning with model year 2027 and extending through at least model year 2030, and to establish new fuel efficiency standards for HDPUVs beginning with model year 2028 and extending through at least model year 2030,

consistent with applicable law.

E.O. 14037 of Aug 5, 2021 (86 FR 43583).

Due to statutory lead time constraints for HDPUV standards, NHTSA's proposal for HDPUV standards must begin with model year 2030.

See

49 U.S.C. Chapter 329, generally.

NHTSA discussed the fact that EPA issued a proposal to set new multi-pollutant emissions standards for model years 2027 and later for light-duty and medium-duty vehicles. NHTSA explained that we coordinated with EPA in developing our proposal to avoid inconsistencies and produce requirements that are consistent with NHTSA's statutory authority. The proposals nevertheless differed in important ways, described in detail in the NPRM. EPA has since issued a final rule associated with its proposal,

and the interaction between EPA's final standards and NHTSA's final standards is discussed in more detail below.

89 FR 27842 (Apr. 18, 2024).

NHTSA also explained that it had considered and accounted for manufacturers' expected compliance with California's Advanced Clean Cars (ACC I) program and Advanced Clean Trucks (ACT) regulations in our analysis, as part of the analytical reference baseline.

We stated that manufacturers will comply with current ZEV requirements in California and a number of other states in the absence of CAFE standards, and accounting for that expected compliance allows us to present a more realistic picture of the state of fuel economy even in the absence of changes to the CAFE standards. NHTSA also incorporated deployment of electric vehicles that would be consistent with California's ACC II program, which has not received a preemption waiver from EPA. However, automakers have indicated their intent to deploy electric vehicles consistent with the levels that would be required under ACCII if a waiver were to be granted, and as such its inclusion similarly makes the reference baseline more accurate. Reflecting expected compliance with the current ZEV programs and manufacturer deployment of EVs consistent with levels that would be required under the ACC II program in the analysis helps to improve the accuracy of the reference baseline in reflecting the state of the world without the revised CAFE standards, and thus the information available to policymakers in their decision as to what standards are maximum feasible and to the public in commenting on those standards. NHTSA also described several other improvements and updates it made to the analysis since the 2022 final rule based on NHTSA analysis, new data, and stakeholder meetings for the NPRM.

Specifically, we include the main provisions of the ACC I, ACC II, (as currently submitted to EPA), and ACT programs, as discussed further below in Section III.C.5.a.

NHTSA proposed fuel economy standards for model years 2027-2032 (model year 2032 being proposed augural standards) that increased at a rate of 2 percent per year for both passenger cars and 4 percent per year for light trucks, and fuel efficiency standards for model years 2030-2035 that increased at a rate of 10 percent per year for HDPUVs. NHTSA also took comment on a wide range of alternatives, including no-action alternatives for both light duty vehicles and HDPUVs (retaining the 2022 passenger car and light truck standards and the 2016 final rule for HDPUV standards) and updates to the compliance flexibilities. The proposal was accompanied by a Preliminary Regulatory Impact Analysis (PRIA), a Draft Environmental Impact Statement (Draft EIS), Technical Support Document (TSD) and the CAFE Model software source code and documentation, all of which were also subject to comment in their entirety and all of which received significant comments.

NHTSA tentatively concluded that Alternative PC2LT4 was maximum feasible for LDVs for model years 2027-2031 and Alternative HDPUV10 was maximum feasible for HDPUVs for model years 2030-2035. NHTSA explained that average requirements and achieved CAFE levels would ultimately depend on manufacturers' and consumers' responses to standards, technology developments, economic conditions, fuel prices, and other factors. NHTSA estimated that the proposal would reduce gasoline consumption by 88 billion gallons relative to reference baseline levels for LDVs, and by approximately 2.6 billion gallons relative to reference baseline levels for HDPUVs through calendar year 2050. NHTSA also estimated that the proposal would reduce carbon dioxide (CO

) emissions by 885 million metric tons for LDVs, and by 22 million metric tons for HDPUVs through calendar year 2050.

In terms of economic effects, NHTSA estimated that while consumers would pay more for new vehicles upfront, they would save money on fuel costs over the lifetimes of those new vehicles—lifetime fuel savings exceed modeled regulatory costs by roughly $100, on average, for model year 2032 LDVs, and by roughly $300, on average, for buyers of model year 2038 HDPUVs. NHTSA estimated that net benefits for the preferred alternative for LDVs would be $16.8 billion at a 3 percent discount rate, and $8.4 billion at a 7 percent discount rate, and for the preferred alternative for HDPUVs would be $2.2 billion at a 3 percent discount rate, and $1.4 billion at a 7 percent discount rate.

NHTSA also addressed the question of harmonization with other motor vehicle standards of the Government that affect fuel economy. Even though NHTSA and EPA issued separate rather than joint notices, NHTSA explained that it had worked closely with EPA in developing the respective proposals, and that the agencies had sought to minimize inconsistency between the programs where doing so was consistent with the agencies' respective statutory mandates. NHTSA emphasized that differences between the proposals, especially as regards programmatic flexibilities, were not new in the proposal, and that differences were often a result of the different statutory frameworks. NHTSA reminded readers that since the agencies had begun regulating concurrently in 2010, these differences have meant that manufacturers have had (and will have) to plan their compliance strategies considering both the CAFE standards and the GHG standards and assure that they are in compliance with both. NHTSA was also confident that industry would still be able to build a single fleet of vehicles to meet both the NHTSA and EPA standards. NHTSA sought comment broadly on all aspects of the proposal.

B. Public Participation Opportunities and Summary of Comments

The NPRM was published on NHTSA's website on July 28, 2023, and published in the

Federal Register

on August 17, 2023,

beginning a 60-day comment period. The agency left the docket open for considering late comments to the extent practicable. A separate

Federal Register

notice, published on August 25, 2023,

announced a virtual public hearing taking place on September 28 and 29, 2023. Approximately 155 individuals and organizations signed up to participate in the hearing. The hearing started at 9:30 a.m. EDT on September 28th and ended at approximately 5:00 p.m., completing the entire list of participants within a single day,

resulting in a 141-page transcript.

The hearing also collected many pages of comments from participants, in addition to the hearing transcript, all of which were submitted to the docket for the rule.

88 FR 56128 (Aug. 17, 2023).

88 FR 58232 (Aug. 25, 2023).

A recording of the hearing is provided on NHTSA's website. Avilable at:

https://www.nhtsa.gov/events/cafe-standards-public-hearing-september-2023.

(Acccessed: Jan. 29, 2024).

The transcript, as captured by the stenographer or captioning folks to their best of abilities, is available in the docket for this rule.

Including the 2,269 comments submitted as part of the public hearings, NHTSA's docket received a total of 63,098 comments, with tens of thousands of comments submitted by individuals and over 100 deeply substantive comments that included many attachments submitted by stakeholder organizations. NHTSA also received five comments on its Draft EIS to the separate EIS docket NHTSA-2022-0075, in addition to 17 comments on the EIS scoping notice that informed NHTSA's preparation of the Draft EIS.

Many commenters supported the proposal. Commenters supporting the proposal emphasized the importance of increased fuel economy for consumers, as well as cited concerns about climate change, which are relevant to the need of the United States to conserve energy. Commenters also expressed the need for harmonization and close coordination between NHTSA, EPA, and DOE for their respective programs. Many citizens, environmental groups, some States and localities, and some vehicle manufacturers stated strong support for NHTSA finalizing the most stringent alternative.

Many manufacturers urged NHTSA to consider the impact of EPA's standards as well as the impact of DOE's Petroleum Equivalency Factor (PEF) rule on fleet compliance (discussed in more detail below). Many manufacturers supported alignment with EPA's and DOE's standards. Manufacturers were also supportive of keeping the footprint-based standards for LD vehicles and work factor-based standards for HDPUVs. Manufacturers and others were also supportive of continuing the HD Phase 2 approach for HDPUVs by having separate standards for compression ignition (CI) and spark ignition (SI) vehicles, as well as continuing to use a zero fuel consumption value for alternative fuel vehicles such as battery electric vehicles.

In other areas, commenters expressed mixed views on the compliance and flexibilities proposed in the notice. Manufacturers were supportive of maintaining the Minimum Domestic Passenger Car Standard (MDPCS) offset relative to the standards. Most manufacturers and suppliers did not support phasing out off-cycle and AC efficiency fuel consumption improvement values (FCIVs), whereas NGOs and electric vehicle manufacturers supported removing all flexibilities. Many fuel and alternative fuel associations opposed the regulation due to lack of consideration for other types of fuels in NHTSA's analysis.

NHTSA also received several comments on subjects adjacent to the rule but beyond the agency's authority to influence. NHTSA has reviewed all comments and accounted for them where legally possible in the modeling and qualitatively, as discussed below and throughout the rest of the preamble and in the TSD.

NHTSA received a range of comments about the interaction between DOE's Petroleum Equivalency Factor (PEF) proposal and NHTSA's CAFE proposal, mainly from vehicle manufacturers. Several stakeholders commented in support of the proposed PEF,

while others commented that the PEF should remain at the pre-proposal level, or even increase.

The American Automotive Policy Council (AAPC), the policy organization that represents the “Detroit Three” or D3—Ford, General Motors, and Stellantis—commented that DOE's proposed PEF reduction inappropriately devalues electrification, and accordingly “a devalued PEF yields a dramatic deficiency in light-duty trucks, that make up 83% of the D3's product portfolio.”

The AAPC also commented that “NHTSA's inclusion of the existing PEF for EVs in 2026 creates an artificially high CAFE compliance baseline, and the proposed PEF post-2027 removes the only high-leverage compliance tool available to auto manufacturers.”

Relatedly, as part of their comments generally opposing DOE's proposed PEF level, other automakers provided alternative values for the PEF,

or supported a phase-in of the PEF to better allow manufacturers to restructure their product mix.

Other stakeholders urged NHTSA to delay the CAFE rule until DOE adopts a revised PEF,

or stated that NHTSA should reopen comments on its proposal following final DOE action on the PEF.

Finally, some commenters recommended that NHTSA apply a PEF to the HDPUV segment.

Toyota, Docket No. NHTSA-2023-0022-61131, at 9-12; Arconic, Docket No. NHTSA-2023-0022-48374, at 2.

HATCI, Docket No. NHTSA-2023-0022-48991-A1, at 2.

AAPC, Docket No. NHTSA-2023-0022-60610, at 3-5.

Id.

HATCI, Docket No. NHTSA-2023-0022-48991-A1, at 2.

HATCI, Docket No. NHTSA-2023-0022-48991-A1, at 2; Volkswagen, Docket No. NHTSA-2023-0022-58702, at 7; Porsche, Docket No. NHTSA-2023-0022-59240, at 7; GM, Docket No. NHTSA-2023-0022-60686, at 6. (

e.g.,

“In the event that the proposed lower PEF is adopted with a 3-year delay (

i.e.,

lower PEF starts in the 2030 model year), GM could support the NHTSA CAFE Preferred Alternative; however, we note that there are likely to be substantial CAFE/GHG alignment issues starting in 2030.”).

NAM, Docket No. NHTSA-2023-0022-59289, at 2.

The Alliance, Docket No. NHTSA-2023-0022-60652, at 5-6.

MECA Clean Mobility, Docket No. NHTSA-2023-0022-63053, at 4-5; The Aluminum Association, Docket No. NHTSA-2023-0022-58486, at 3; Arconic Corporation, Docket No. NHTSA-2023-0022-48374, at 2.

Regarding comments that were supportive of or opposing the new PEF, those comments are beyond the scope of this rulemaking. By statute, DOE is required to determine the PEF value and EPA is required to use DOE's value for calculation of a vehicle's CAFE value.

NHTSA has no control over the selection of the PEF value or fuel economy calculation procedures; accordingly, the PEF value is just one input among many inputs used in NHTSA's analysis. While NHTSA was in close coordination with DOE during the pendency of the PEF update process, stakeholder comments about the PEF value and whether the value should be phased in were addressed in DOE's final rule.

49 U.S.C. 32904.

89 FR 22041 (March 29, 2024).

As NHTSA does not take a position on the PEF value, the agency believes it was appropriate to use the most up-to-date input assumption at each stage of

the analysis to provide stakeholders the best information about the effects of different levels of CAFE standards. NHTSA also included sensitivity analyses in the NPRM with DOE's pre-proposal PEF value so that all stakeholders had notice of and the opportunity to comment on a scenario where the PEF did not change.

NHTSA accordingly disagrees that the agency needed to reopen comments on the proposal following final DOE action on the PEF.

PRIA, Chapter 9.

NHTSA agrees with AAPC that when a manufacturer's portfolio consists predominantly of lower fuel economy light trucks, as in the particular case of the D3, averaging the fuel economy of those vehicles with high fuel economy BEVs would help them comply with fuel economy standards more so than if BEVs had a lower fuel economy due to a lower PEF. However, this concern is somewhat ameliorated by the changes in DOE's final PEF rule, including a gradual reduction of the fuel content factor.

Furthermore NHTSA has determined that the final standards are the maximum feasible fuel economy level that manufacturers can achieve even without producing additional electric vehicles. And, NHTSA disagrees that including in the modeling the old PEF in 2026 and prior and the new PEF in 2027 and beyond “removes the

only

high-leverage compliance tool available to auto manufacturers” (emphasis added), as there are several compliance tools available to manufacturers, including increasing the fuel economy of their ICE vehicles. As discussed further in Section VI, NHTSA believes that the standards finalized in this rule explicitly contemplate the concerns expressed by and the capability of all manufacturers.

89 FR 22041, at 22050 (March 29, 2024) (“After careful consideration of the comments, DOE concludes that removing the fuel content factor will, over the long term, further the statutory goals of conserving all forms of energy while considering the relative scarcity and value to the United States of all fuels used to generate electricity. This is because, as explained in the 2023 NOPR and in more detail below, by significantly overvaluing the fuel savings effects of EVs in a mature EV market with CAFE standards in place, the fuel content factor will disincentivize both increased production of EVs and increased deployment of more efficient ICE vehicles. Hence, the fuel content factor results in higher petroleum use than would otherwise occur.”).

NHTSA will not use a PEF for HDPUV compliance at this time. NHTSA will continue to use the framework that was put in place by the HD Phase 2 rule, and in coordination with EPA's final rule, by using zero upstream energy consumption for compliance calculations (note that NHTSA does consider upstream effects of electricity use in its effects modeling). Any potential future action on developing PEF for HDPUV compliance would most likely occur in a standalone future rulemaking after NHTSA has a more thorough opportunity to consider the costs and benefits of such an approach and all stakeholders can present feedback on the issue.

NHTSA also received a range of comments about BEV infrastructure. Comments covered both the amount and quality of BEV charging infrastructure and the state of electric grid infrastructure. Some stakeholders, including groups representing charging station providers and electricity providers, commented that although additional investments will be required to support future demand for public chargers and the electricity required for BEV charging, their preparation and planning for the BEV transition is already underway.

Many stakeholders emphasized the role of a robust public charging network to facilitate the BEV transition,

and broadly urged the Administration to work amongst the agencies and with automakers, utilities, and other interested parties to ensure that BEV charging infrastructure buildout, including developing minimum standards for public charging efficiency, and BEV deployment happen hand in hand.

ZETA, Docket No. NHTSA-2023-0022-60508, at 29-70.

Climate Hawks Civic Action, Docket No. NHTSA-2023-0022-61094, at 2059; U.S. Chamber of Commerce, Docket No. NHTSA-2023-0022-61069, at 5-6.

ZETA, Docket No. NHTSA-2023-0022-60508, at 29-70; MEMA, Docket No. NHTSA-2023-0022-59204, at 10; NAM, Docket No. NHTSA-2023-0022-59203-A1, at 1.

In contrast, some stakeholders emphasized the current lack of public BEV charging infrastructure as a barrier to EV adoption.

Stakeholders also highlighted mechanical problems with existing charging stations,

which they stated contributes to dissatisfaction with public charging stations among electric vehicle owners.

Other stakeholders commented that the country's electricity transmission infrastructure is not currently in a position to support the expected electricity demand from the BEV transition and may not be in the future for several reasons,

such as the lack of materials needed to expand and upgrade the grid.

To combat those concerns, other stakeholders recommended that administration officials and congressional leaders prioritize policies that would strengthen transmission systems and infrastructure and speed up their growth.

Stakeholders also recommended that NHTSA capture some elements of charging and grid infrastructure issues in its analysis,

and outside of the analysis and this rulemaking, identify ways to assist in the realization of adequate BEV infrastructure.

U.S. Chamber of Commerce, Docket No. NHTSA-2023-0022-61069, at 5; NATSO et al., Docket No. NHTSA-2023-0022-61070, at 5-7.

ACI, Docket No. NHTSA-2023-0022-50765, at 4; CFDC et al, Docket No. NHTSA-2023-0022-62242, at 16; NADA, NHTSA-2023-0022-58200, at 10.

CFDC et al, Docket No. NHTSA-2023-0022-62242, at 16.

NAM, Docket No. NHTSA-2023-0022-59289, at 3; ACI, Docket No. NHTSA-2023-0022-50765, at 4; Missouri Corn Growers Association, Docket No. NHTSA-2023-0022-58413, at 2; NCB, Docket No. NHTSA-2023-0022-53876, at 1; AFPM, Docket No. NHTSA-2023-0022-61911-A2, at 41; NATSO et al., Docket No. NHTSA-2023-0022-61070, at 8; West Virginia Attorney General's Office, Docket No. NHTSA-2023-0022-63056, at 12-13; MOFB, Docket No. NHTSA-2023-0022-61601, at 2.

AFPM, Docket No. NHTSA-2023-0022-61911-A2, at 41.

NAM, Docket No. NHTSA-2023-0022-59203, at 3.

For example, some stakeholders stated that technologies like direct current fast chargers (DCFCs) should be prioritized in publicly funded projects and infrastructure decisions, and should be considered to varying extents in NHTSA's analysis.

See, e.g.,

MEMA, Docket No. NHTSA-2023-0022-59204, at 6-7; Alliance for Vehicle Efficiency (AVE), Docket No. NHTSA-2023-0022-60213, at 7; AFPM, Docket No. NHTSA-2023-0022-61911, at 47. Stakeholders also recommended, as an example, NHTSA account for the long lead time for critical grid infrastructure upgrades. MEMA, Docket No. NHTSA-2023-0022-59204-A1, at 3.

MEMA, Docket No. NHTSA-2023-0022-59204-A1, at 3-5.

NHTSA acknowledges and appreciates all the comments received on charging infrastructure, which include both broad comments on future grid infrastructure needs, as well as increased deployment of reliable and convenient charging stations. NHTSA agrees with commenters in that infrastructure is an important aspect of a successful transition to BEVs in the future. We also agree that infrastructure improvements are necessary and directly related to keeping pace with projected levels of BEV supply and demand as projected by other agencies and independent forecasters.

With that said, NHTSA projects that manufacturers will deploy a wide variety of technologies to meet the final CAFE standards that specifically are

not

BEVs, considering NHTSA's statutory limitations. As discussed further throughout this preamble, NHTSA does not consider adoption of BEVs in the LD fleet beyond what is already in the reference baseline. Results in Chapter 8 of the FRIA show increased technology penetrations of more efficient

conventional ICEs, increased penetration of advanced transmissions, increased mass reduction technologies, and other types of electrification such as mild and strong hybrids.

In addition, as discussed further below, NHTSA has coordinated with DOE and EPA while developing this final rule, as requested by commenters. Experts at NHTSA's partner agencies have found that the grid and associated charging infrastructure could handle the increase in BEVs related to both EPA's light- and medium-duty vehicle multi-pollutant rule and the HD Phase 3 GHG rule

—significantly more BEVs than NHTSA projects in the LD and HDPUV reference baselines examined in this rule. Thus, infrastructure beyond what is planned for buildout in the rulemaking timeframe, accounting not only for electricity generation and distribution, but considering load-balancing management measures, as well, to improve grid operations, would not be required. It should also be noted that expert projections show an order of magnitude increase in available (domestic) public charging ports between the release of the final rule and the rulemaking timeframe,

not accounting for the additional availability of numerous residential and depot chargers. Battery energy storage integration with DC fast chargers can further expedite deployment of necessary infrastructure, reducing lead time for distribution upgrades while increasing the likelihood of meeting public charging needs in the next decade.

The National Electric Vehicle Infrastructure (NEVI) program is also investing $5 billion in federal funding to deploy a national network of public EV chargers.

Additionally, federally funded charging stations are required to adhere to a set of nationally recognized standards, such as a minimum of 97% annual-uptime,

which is anticipated to greatly improve charging reliability concerns of today.

National Renewable Energy Laboratory, Lawrence Berkeley National Laboratory, Kevala Inc., and U.S. Department of Energy. 2024. Multi-State Transportation Electrification Impact Study: Preparing the Grid for Light-, Medium-, and Heavy-Duty Electric Vehicles. DOE/EE-2818, U.S. Department of Energy, (Accessed: May 1, 2024); EPA GHG final rule. RIA Chapter 5.3.

Rho Motion. EV Charging Quarterly Outlook—Quarter 1 2024. Proprietary data. Subscription information available at:

https://rhomotion.com/.

Poudel, S., et al. Innovative Charging Solutions for Deploying the National Charging Network: Technoeconomic Analysis. United States.

U.S Department of Transportation, Federal Highway Administration. March 5, 2024. National Electric Vehicle Infrastructure (NEVI) Program. Available at:

https://www.fhwa.dot.gov/environment/nevi/.

(Accessed: May 9, 2024).

U.S. Department of Transportation, Federal Highway Administration. Feb. 28, 2023. National Electric Vehicle Infrastructure Standards and Requirements. Available at:

https://www.federalregister.gov/documents/2023/02/28/2023-03500/national-electric-vehicle-infrastructure-standards-and-requirements.

(Accessed: May 1, 2024).

For the HDPUV analysis, NHTSA does consider adoption of BEVs in the standard setting years, and we do see an uptake of BEVs; however, the population of the HDPUV fleet is extremely small, consisting of fewer than 1 million vehicles, compared to the LD fleet that consists of over 14 million vehicles. This means that any potential impact of HDPUV BEV adoption on the electric grid would be similarly small. We also want to note that the adoption of these HDPUV BEVs is driven primarily by factors other than NHTSA's standards, including the market demand for increased fuel efficiency and state ZEV programs, as shown in detail in Section V of this preamble and FRIA Chapter 8.3.2. However, as with LD standards examined in this rule, most manufacturers could choose to meet the preferred standards with limited BEVs. There are still opportunities in the advanced engines, advanced transmissions, and strong hybrid technologies that could be used to meet the HDPUV preferred standards starting in model year 2030.

Although NHTSA does not consider BEVs in its analysis of CAFE stringency, and there is minimal BEV adoption driven by the HDPUV FE standards, NHTSA coordinated with both DOE and EPA on many of the challenges raised by commenters to understand how the infrastructure will be developing and improving in the future. Our review of efforts taking place under the NEVI Program and consultation with DOE and EPA leads us to conclude that (1) there will be sufficient EV infrastructure to support the vehicles included in the light-duty reference baseline and in the HDPUV analysis; and (2) it is reasonable to anticipate that the power sector can continue to manage and improve the electricity distribution system to support the increase in BEVs. DOE and EPA conducted analyses that evaluate potential grid impacts of LD and HD fleet that contain significantly more BEVs than NHTSA's light-duty reference baseline and HDPUV fleets. Their analyses conclude that the implementation of EPA's LD and HD rules can be achieved. DOE and EPA found that sufficient electric grid charging and infrastructure

can be deployed, numerous federal programs are providing funding to upgraded charging and grid infrastructure, and managed charging and innovative charging solutions can reduce needed grid updates.

The analyses conducted for this assessment of the power sector section covered multiple inputs and assumptions across EPA and DOE tools, such as PEV adoption and EVSE access and utilization, to make sure that all aspects of the grid scenarios modeled are analyzed through 2050 between the no action and action alternative in EPA's rule.

See

discussion at EPA, Regulatory Impact Analysis, Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles, Chapter 5.4.5.

Available at https://www.epa.gov/system/files/documents/2024-03/420r24004.pdf

(last accessed May 22, 2024).

See id.

NHTSA also received several comments regarding critical materials used to make EV batteries. In support of its comments that the EV supply chain is committed to supporting full electrification, ZETA provided a thorough recitation of policy drivers supporting critical minerals development, projected demand for critical minerals, and ongoing investments and support from its members for critical mineral production, refining, and processing.

Similarly, stakeholders commented about different federal and industry programs, incentives, and investments to promote the production and adoption of electric vehicles.

Similar to comments on EV infrastructure, many stakeholders commented that federal agencies should work together to ensure a reliable supply chain for critical minerals.

ZETA, Docket No. NHTSA-2023-0022-60508, at 29-39.

States and Cities, Docket No. NHTSA-2023-0022-61904, Appendix at 36-39; ICCT, Docket No. NHTSA-2023-0022-54064, at 2, 7.

NAM, Docket No. NHTSA-2023-0022-59203, at 1.

Other stakeholders commented about several critical minerals issues they perceived to be barriers to a largescale transition to EVs.

Stakeholders commented generally on a limited or unavailable supply of certain critical minerals,

and more specifically the

lack of mineral extraction and production in the United States, stating that domestic production of critical minerals is insufficient to meet projected demands.

Stakeholders also commented on the potential environmental impact of mining critical minerals,

particularly as vehicle manufacturers produce EVs with increasing battery pack sizes.

Other stakeholders commented that all of these factors (including costs and environmental impact) should be considered in NHTSA's analysis.

Finally, several stakeholders commented on how critical minerals' energy security issues interact with NHTSA's balancing factors to set maximum feasible standards and those comments are addressed in Section VI.5; other stakeholders commented on how critical minerals sourcing interacts with NHTSA's assumptions about tax credits and those comments are addressed in Section III.C.

ACI, Docket No. NHTSA-2023-0022-50765, at 4-7; RFAet al, Docket No. NHTSA-2023-0022-57625, at 2; NAM, Docket No. NHTSA-2023-0022-59203, at 3; AHUA, Docket No. NHTSA-2023-0022-58180, at 6-7; CFDC et al, Docket No. NHTSA-2023-0022-62242, at 22-23; West Virginia Attorney General's Office et al., Docket No. NHTSA-2023-0022-63056, at 13-14.; Valero, Docket No. NHTSA-2023-0022-58547; Mario Loyola and Steven G. Bradbury, Docket No. NHTSA-2023-0022-61952, at 10; MCGA, Docket No. NHTSA-2023-0022-60208; The Alliance, Docket No. NHTSA-2023-0022-60652.

Nissan, Docket No. NHTSA-2023-0022-60696, at 7; AVE, Docket No. NHTSA-2023-0022-60213, at 3-4.

ACI, Docket No. NHTSA-2023-0022-50765, at 5; API, Docket No. NHTSA-2023-0022-60234, at 4; AFPM, Docket No. NHTSA-2023-0022-61911, at 2-11.

ACE, Docket No. NHTSA-2023-0022-60683, at 2-3.

ACI, Docket No. NHTSA-2023-0022-50765.

ACE, Docket No. NHTSA-2023-0022-60683, at 3; MECA, Docket No. NHTSA-2023-0022-63053, at 8.

We appreciate the commenters' feedback in this area and believe that the comments are important to note. However, as we have discussed earlier in this section, the CAFE standards final rulemaking analysis does not include adoption of BEVs beyond what is represented in the reference baseline. We do allow adoption of BEVs in the HDPUV fleet, as EPCA/EISA does not limit consideration of HDPUV technologies in the same way as LD technologies; however, as discussed above, BEV adoption is driven primarily by reasons other than NHTSA's fuel efficiency standards and the number of vehicles that adopt BEV technology in our analysis is relatively (compared to the LD fleet) small. That said, NHTSA believes that commenters' concerns are either currently addressed or are being actively addressed by several public and private endeavors.

NHTSA, in coordination with DOE and EPA, reviewed current supply chain and updated analyses on critical materials. In particular, the DOE, through Argonne National Laboratory, conducted an updated assessment of developing and securing mineral supply for the U.S. electric vehicle industry, the Securing Critical Minerals report.

The Argonne study focuses on five materials identified in a previous assessment,

including lithium, nickel, cobalt, graphite, and manganese.

The study collects and examines potential domestic sources of materials, as well as sources outside the U.S. including Free Trade Agreement (FTA) partners, members of the Mineral Security Partnership (MSP), economic allies without FTAs (referred to as “Non-FTA countries” in the Argonne study), and Foreign Entity of Concern (FEOC) sources associated with covered nations, to support domestic critical material demand from anticipated electric vehicle penetration. The assessment considers geological resources and current international development activities that contribute to the understanding of mineral supply security as jurisdictions around the world seek to reduce emissions. The study also highlights current activities that are intended to expand a secure supply chain for critical minerals both domestically and among U.S. allies and partner nations; and considers the potential to meet U.S. demand with domestic and other secure sources. The DOE Securing Critical Minerals report concluded that the U.S. is “well-positioned to meet its lithium demand through domestic production.” In the near- and medium-term there is sufficient capacity in FTA and MSP countries to meet demand for nickel and cobalt; however, the U.S. will likely need to rely at least partly on non-FTA counties given expected competition for these minerals from other countries' decarbonization goals. In the near-term, meeting U.S. demand with natural graphite supply from domestic FTA and MSP sources is unlikely. In the medium-term, there is potential for new capacity in both FTA and non-FTA countries, and for synthetic graphite production to scale. The U.S. can rely on FTA and MSP partners, as well as other economic and defense partners, to fill supply gaps; countries with which the U.S. has good trade relations are anticipated to have the ability to assist the U.S. in securing the minerals needed to meet EV

and

ESS (energy storage system) deployment targets set by the Biden Administration.

NHTSA considers Argonne's assessment to be thorough and up to date. In addition, it should be noted that DOE's assessments consider critical minerals and battery components to support more than ten million EVs by 2035

97 98

—significantly more than we project in our reference baseline.

Barlock, T. et al. Securing Critical Materials for the U.S. Electric Vehicle Industry: A Landscape Assessment of Domestic and International Supply Chains for Five Key Battery Materials. United States. Available at:

https://doi.org/10.2172/2319240.

(Accessed: May 1, 2024).

Department of Energy, July 2023. Critical Materials Assessment. Available at:

https://www.energy.gov/sites/default/files/2023-07/doe-critical-material-assessment_07312023.pdf.

(Accessed: May 1, 2024).

The 2023 DOE Critical Minerals Assessment classifies manganese as “non critical”, as reflected in the Securing Critical Minerals report referenced.

Associated with the implementation of the BIL and IRA.

See Figure 14 in Barlock, T.A. et al. February 2024. Securing Critical Materials for the U.S. Electric Vehicle Industry. ANL-24/06. Final Report. Available at:

https://publications.anl.gov/anlpubs/2024/03/187907.pdf.

(Accessed: Apr. 5, 2024).

See in Gohlke, D. et al. March 2024. Quantification of Commercially Planned Battery Component Supply in North America through 2035. ANL-24/14. Final Report. Available at:

https://publications.anl.gov/anlpubs/2024/03/187735.pdf

(Accessed: June 3, 2024).

NHTSA also received a wide variety of comments on alternative fuels including ethanol and biofuels. A group of commenters representing ethanol and biofuel producers objected to NHTSA's handling of BEVs in the analysis, in part because of their views on NHTSA's ability to consider those vehicles under 49 U.S.C. 32902(h), raised energy security concerns with reduced demand for and reliance on U.S.-produced alternative fuels as a result of these regulations, and commented that BEVs would increase reliance on foreign supply chains.

Other commenters shared similar sentiments regarding alternative fuels. These commenters stated that NHTSA failed to consider other fuels like ethanol and biofuels as a way to improve fuel economy in the analysis as part of a holistic approach to reducing the U.S.'s gasoline consumption, and therefore the proposed rule was arbitrary.

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Commenters also stated that NHTSA did not consider the Renewable Fuel Standard (RFS) regulation in this rulemaking, and argued that NHTSA's failure to do so was arbitrary.

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Finally, commenters recommended that NHTSA consider high octane renewable fuels as a way to improve fuel economy for conventional ICEs.

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BSC, Docket No. NHTSA-2023-0022-50824 at 1; MME, Docket No. NHTSA-2023-0022-50861 at 2; WPE, Docket No. NHTSA-2023-0022-52616 at 2; POET, Docket No. NHTSA-2023-0022-61561 at 6; SIRE, Docket No. NHTSA-2023-0022-57940 at 2.

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Growth Energy, Docket No. NHTSA-2023-0022-61555 at 1; KCGA, Docket No. NHTSA-2023-0022-59007 at 5; POET, Docket No. NHTSA-2023-0022-61561 at 5; Toyota, Docket No. NHTSA-2023-0022-61131 at 2; Commenwealth Agri Energy LLC, Docket No. NHTSA-2023-0022-61599 at 3; MEMA, Docket No. NHTSA-2023-0022-59204 at 3; AFPM, Docket No. NHTSA-2023-0022-61911 at 25.

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Growth Energy, Docket No. NHTSA-2023-0022-61555 at 2.

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NCB, Docket No. NHTSA-2023-0022-53876 at 2; CFDC et al., Docket No. NHTSA-2023-0022-

62242 at 17-20; NATSO et al., Docket No. NHTSA-2023-0022-61070 at 9.

NHTSA believes that fuel producers' comments about NHTSA's purported inability to consider BEVs under 49 U.S.C. 32902(h) are somewhat misguided, considering that EPCA's definition of “alternative fuel” in 49 U.S.C. 32901 also includes ethanol, other alcohols, and fuels derived from biological materials, among other fuels.

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This means that if NHTSA were to adopt the fuel producers' interpretation of 49 U.S.C. 32902(h) to restrict BEV adoption in the reference baseline, NHTSA would have to take an analogous approach to limit the agency's consideration of vehicles fueled by other alternative fuels, for example, ethanol, in the reference baseline. This is because 49 U.S.C. 32902(h) does not just place guardrails on NHTSA's consideration of manufacturers producing BEVs in response to CAFE standards, but all dedicated alternative fueled automobiles, and fuels produced by the commenters here are, as listed above, considered alternative fuels. NHTSA does consider some alternative-fueled vehicle adoption in the reference baseline where that adoption is driven for reasons other than NHTSA's standards (see Section IV), and the commenters do mention the RFS as a driver of the increased use of renewable alternative fuels like ethanol and biofuels. However, the RFS is a regulation that increases the use of renewable fuels to replace petroleum derived fuels in motor gasoline, and to the extent that EPA has approved the use of E15 in all model year 2001 and newer gasoline vehicles produced for the U.S. market, we account for that in our analysis. NHTSA also considers flexible fuel vehicles (FFVs) that exist in the reference baseline fleet in the analysis, however FFVs are also subject to the restrictions in 49 U.S.C. 32902(h)(2).

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NHTSA applies the same CAFE Model restrictions in the standard-setting analysis to FFVs that apply to PHEVs to ensure that the agency is not improperly considering the alternative-fueled operation of dual-fueled vehicles when setting CAFE standards.

105

103

49 U.S.C. 32901(a)(1).

104

49 U.S.C. 32901(a)(9); 49 U.S.C. 32902(h)(2).

105

CAFE Model Documentation, S5.

There is also a practical consideration that while blending ethanol or biofuels with gasoline has the potential to reduce U.S. reliance on petroleum, renewable fuels like ethanol and biofuels decrease fuel economy.

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The fuel economy of FFVs operating on high-ethanol blends are worse than when operating on conventional gasoline, because although ethanol has a higher octane rating than petroleum gasoline, it is less energy dense. For example, a model year 2022 Ford F150 4WD achieves a real world combined 20 mpg rating on conventional gas versus 15 mpg on alternative E85 fuel.

107

FFVs do see a compliance boost in the CAFE program with a 0.15 multiplier,

108

however, again NHTSA's consideration of those vehicles' fuel economy values to set higher fuel economy standards is limited by 49 U.S.C. 32902(h)(2).

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Fueleconomy.gov.

New Flex-fuel Vehicles for model year 2012 to model year 2025. Available at:

https://www.fueleconomy.gov/feg/flextech.shtml.

(Accessed: Apr. 12, 2024).

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DOE Alternative Fuels Data Center. Ethanol E85 Vehicles for model year 2022-2024. Available at:

https://afdc.energy.gov/vehicles/search/data.

(Accessed: Apr. 12, 2024).

108

40 CFR 600.510-12(c)(2)(v).

Regarding comments about energy security, we discuss this further in preamble Section VI. As mentioned above, commenters suggested that consideration of BEVs also impacts NHTSA's statutory considerations of energy security. However, NHTSA does not consider BEVs in its standard-setting, and notes that this final rule is not a BEV mandate, as claimed by some commenters. Results in preamble Section V and FRIA Chapter 8 show that manufacturers have a wide variety of technology options to meet both LD and HDPUV standards, and the paths to compliance modeled in this analysis represent only a possible path, and not a required path. NHTSA does not mandate any one technology that manufacturers must use, hence why we have evaluated an array of technologies for manufacturers to use for meeting the standards. As with other technologies in the analysis, nothing prevents manufacturers from using FFVs or other dedicated alternative fueled vehicles to comply with CAFE standards.

Finally, NHTSA received a wide variety of comments on compliance aspects of the CAFE program. Although most of them have been summarized and discussed in Section VII of this preamble, we received comments regarding the fuel economy utility factor (UF) compliance calculation for plug-in hybrids. Mitsubishi commented that NHTSA failed to account for EPA's proposal to update the UF calculation for the combined fuel economy for PHEVs, stating that “[t]he result is that NHTSA overestimated the value of PHEV CAFE compliance and underestimated the costs of achieving compliance.”

109

On the other hand, ICCT and the Strong PHEV Coalition supported NHTSA using EPA's new proposed UF approach for the rulemaking analysis.

110

MECA supported NHTSA's continued use of SAE J2841 and recommended that, at a minimum, we should not reduce the UF from the current levels.

111

109

Mitsubishi, Docket No. NHTSA-2023-0022-61637 at 4.

110

ICCT, Docket No. NHTSA-2023-0022-54064 at 25; Strong PHEV Colaition, Docket No. NHTSA-2023-0022-60193 at 6.

111

MECA, Docket No. NHTSA-2023-0022-63053, at 6.

We appreciate stakeholders providing comments to NHTSA on PHEV fuel economy calculations. While in the CAFE modeling NHTSA uses SAE J2841 to calculate PHEV fuel economy, for CAFE compliance, NHTSA must use EPA's test procedures.

112

This means that EPA will report fuel economy values to NHTSA beginning in model year 2031 consistent with the new PHEV UF finalized in EPA's final rule. NHTSA chose to use SAE J841 as a simplifying assumption in the model for this analysis to reduce analytical complexity and based on a lack of readily available data from manufacturers; however, choosing to use SAE J2841 versus another PHEV UF results in functionally no difference in NHTSA's standard setting analysis because for the purpose of setting fuel economy standards, NHTSA cannot consider the electric portion of PHEV operation, per statute.

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For more detailed discussion of modeled PHEV fuel economy values, see TSD Chapter 3.3.

112

40 CFR 600.116-12: Special procedures related to electric vehicles and hybrid electric vehicles.

113

U.S.C 32902(h)(2).

Discussion and responses to other comments can be found throughout this preamble in areas applicable to the comment received.

Nearly every aspect of the NPRM analysis and discussion received some level of comment by at least one commenter. Overall, the comments received included both broad assessments and pointed analyses, and the agency appreciates the level of engagement of commenters in the public comment process and the information and opinions provided.

C. Changes to the CAFE Model in Light of Public Comments and New Information

Comments received to the NPRM were considered carefully within the statutory authority provided by the law, because they are critical for

understanding stakeholders' positions, as well as for gathering additional information that can help to inform the agency about aspects or effects of the proposal that the agency may not have considered at the time of the proposal was issued. The views, data, requests, and suggestions contained in the comments help us to form solutions and make appropriate adjustments to our proposals so that we may be better assured that the final standards we set are reasonable for the rulemaking time frame. For this final rule, the agency made substantive changes resulting directly from the suggestions and recommendations from commenters, as well as new information obtained since the time the proposal was developed, and corrections both highlighted by commenters and discovered internally. These changes reflect DOT's long-standing commitment to ongoing refinement and improvement of its approach to estimating the potential impacts of new CAFE standards. Through further consideration and deliberation, and also in response to many public comments received since then, NHTSA has made a number of changes to the CAFE Model since the 2023 NPRM, including those that are listed below and detailed in Section II and III, as well as in the TSD and FRIA that accompany this final rule.

D. Final Standards—Stringency

NHTSA is establishing new CAFE standards for passenger cars (PCs) and light trucks (LTs) produced for model years 2027-2031, setting forth augural CAFE standards for PCs and LTs for model year 2032, and establishing fuel efficiency standards for HDPUVs for model years 2030-2035. Passenger cars are generally sedans, station wagons, and two-wheel drive crossovers and sport utility vehicles (CUVs and SUVs), while light trucks are generally 4WD sport utility vehicles, pickups, minivans, and passenger/cargo vans.

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NHTSA is establishing standards (represented by alternative PC2LT002, which is the preferred alternative in our analysis) that increase in stringency at 2 percent per year for PCs produced for model years 2027-2031 (and setting forth augural standards that would increase by another 2 percent for PCs produced in model year 2032), at 0 percent per year for LTs produced in model years 2027-2028 and 2 percent per year for LTs produced in model years 2029-2031 (and setting forth augural standards that would increase by another 2 percent for LTs produced in model year 2032). Passenger car and light truck standards are all attribute-based. NHTSA is setting CAFE standards defined by a mathematical function of vehicle footprint,

115

which has an observable correlation with fuel economy. The final standards, and regulatory alternatives, take the form of fuel economy targets expressed as functions of vehicle footprint, which are separate for PCs and LTs. Section IV below discusses NHTSA's continued reliance on footprint as the relevant attribute for PCs and LTs in this final rule.

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“Passenger car” and “light truck” are defined at 49 CFR part 523.

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Vehicle footprint is roughly measured as the rectangle that is made by the four points where the vehicle's tires touch the ground. Generally, passenger cars have more stringent targets than light trucks regardless of footprint, and smaller vehicles will have more stringent targets than larger vehicles. No individual vehicle or vehicle model need meet its target exactly, but a manufacturer's compliance is determined by how its average fleet fuel economy compares to the average fuel economy of the targets of the vehicles it manufactures.

The target curves for the final passenger car and light truck standards are as follows; curves for model years 2024-2026 are included in the figures for context. NHTSA underscores that the equations and coefficients defining the curves are, in fact, the CAFE standards, and not the mpg numbers that the agency estimates could result from manufacturers complying with the curves. Because the estimated mpg numbers are an effect of the final standards, they are presented in Section II.E. To give context to what the passenger car footprint curve is showing in Figure II-1, for model year 2024, the target for the smallest footprint passenger cars is 55.4 mpg, and the target for the largest footprint passenger cars is 41.5 mpg. For model year 2031, the smallest footprint passenger cars have a target of 74.1 mpg and the largest passenger cars have a target of 55.4 mpg.

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To give context to what the light truck footprint curve is showing in Figure II-2, the smallest footprint truck fuel economy target is 44.5 mpg, and the largest truck fuel economy target is 26.7 mpg. And in model year 2031, the smallest truck footprint target is 57.1 mpg, and the largest truck footprint target is 34.3 mpg.

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NHTSA has also amended the minimum domestic passenger car standard (MDPCS) for model years 2027-2031 and set forth an augural MDPCS for model year 2032. Section 32902(b)(4) of 49 U.S.C. requires NHTSA to project the MDPCS when it promulgates passenger car standards for a model year, as a result the MDPCSs are established as specific mpg values. NHTSA retains the 1.9-percent offset to the MDPCS, first used in the 2020 final rule, to account for recent projection errors as part of estimating the total passenger car fleet fuel economy.

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The final MDPCS for model years 2027-2031 and the augural MDPCS for model year 2032 for the preferred alternative are presented in Table II-1.

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Section VI.A.2 (titled “Separate Standards for Passenger Cars, Light Trucks, and Heavy-Duty Pickups and Vans, and Minimum Standards for Domestic Passenger Cars”) discusses the basis for the offset.

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Heavy-duty pickup trucks and vans are work vehicles that have GVWR between 8,501 pounds to 14,000 pounds (known as Class 2b through 3 vehicles) manufactured as complete vehicles by a single or final stage manufacturer or manufactured as incomplete vehicles as designated by a manufacturer.

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The majority of these HDPUVs are

3/4

-ton and 1-ton pickup trucks, 12- and 15-passenger vans, and large work vans that are sold by vehicle manufacturers as complete vehicles, with no secondary manufacturer making substantial modifications prior to registration and use. The final standards, represented by alternative HDPUV108 in NHTSA's analysis, increases at a rate of 10 percent per year for model years 2030-2032 and 8 percent per year for model years 2033-2035. The final standards, like the proposed standards, are defined by a linear work factor target function with two sets of sub-configurations with one for spark ignition (SI) that represents gasoline, CNG, strong hybrids, and PHEVs and the other for compression ignition (CI) that represents diesels, BEVs and FCEVs. The target linear curves for HDPUV are still in the same units as in Phase 2 final rule in gallons per 100 miles and for context both the

SI and CI curves are shown for model years

2026-2035.

117

See

49 CFR 523.7, 40 CFR 86.1801-12, 40 CFR 86.1819-17, 40 CFR 1037.150.

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The passenger car, light truck, and HDPUV target curve function coefficients are defined in Equation IV-1, Equation IV-2, and Equation IV-3, respectively. See Final TSD Chapter 1.2.1 for a complete discussion about the footprint and work factor curve functions and how they are calculated.

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E. Final Standards—Impacts

As for past CAFE rulemakings, NHTSA has used the CAFE Model to estimate the effects of this final rule's light duty CAFE and HDPUV fuel efficiency standards and of other regulatory alternatives under consideration. Some inputs to the CAFE Model are derived from other models, such as Argonne National Laboratory's Autonomie vehicle simulation tool and Argonne's GREET fuel-cycle emissions analysis model, the U.S. Energy Information Administration's (EIA's) National Energy Modeling System (NEMS), and EPA's Motor Vehicle Emissions Simulator (MOVES) vehicle emissions model. Especially given the scope of NHTSA's analysis, these inputs involve a number of uncertainties. NHTSA underscores that all results of today's analysis simply represent the agency's best estimates based on the information currently before us and on the agency's reasonable judgment.

1. Light Duty Effects

NHTSA estimates that this final rule would increase the eventual average of manufacturers' CAFE requirements to about 50.4 mpg by 2031 rather than, under the No-Action Alternative (

i.e.,

the baseline standards issued in 2023 ending with model year 2026 standards carried forward indefinitely), about 46.9 mpg. For passenger cars, the standards in 2031 are estimated to require 65.1 mpg, and for light trucks, 45.2 mpg. This compares with 58.8 mpg and 42.6 mpg for cars and trucks, respectively, under the No-Action Alternative.

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The model year 2032 augural CAFE standard is estimated to require a fleet average fuel economy of 51.4 mpg rather than, under the No-Action Alternative, about 46.9 mpg. For passenger cars, the average in 2032 is estimated to require 66.4 mpg, and for the light trucks, 46.2 mpg.

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Because manufacturers do not comply exactly with each standard in each model year, but rather focus their compliance efforts when and where it is most cost-effective to do so, “estimated achieved” fuel economy levels differ somewhat from “estimated required” levels for each fleet, for each year. NHTSA estimates that the industry-wide average fuel economy achieved in model year 2031 could increase from about 52.1 mpg under the No-Action Alternative to 52.5 mpg under the final rule's standards.

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The augural achieved CAFE level in model year 2032 is estimated to be 53.5 mpg rather than, under the No-Action Alternative, about 53 mpg. For passenger cars, the fleet average in 2032 is estimated to achieve 72.3 mpg, and for light trucks 47.3 mpg.

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NHTSA's analysis estimates manufacturers' potential responses to the combined effect of CAFE standards and separate (reference baseline, model years 2024-2026) CO

standards, ZEV programs, and fuel prices. Together, the regulatory programs are more binding (

i.e.,

require more of manufacturers) than any single program considered in isolation, and today's analysis, like past analyses, shows some estimated overcompliance with the final CAFE standards for both the passenger car and light truck fleets.

NHTSA measures and reports benefits and costs from increasing fuel economy and efficiency standards from two different perspectives. First, the agency's “model year” perspective focuses on benefits and costs of establishing alternative CAFE standards for model years 2027 through 2031 (and fuel efficiency standards for HDPUVs for model years 2030 through 2035), and measures these over each separate model year's entire lifetime. The calendar year perspective we present includes the annual impacts attributable to all vehicles estimated to be in service in each calendar year for which our analysis includes a representation of the entire registered passenger car, light truck, and HDPUV fleet. For this final rule, this calendar year perspective covers each of calendar years 2022-2050, with differential impacts accruing as early as MY 2022.

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Compared to the model year perspective, the calendar year perspective includes model years of vehicles produced in the longer term, beyond those model years for which standards are being finalized. The strengths and limitations of each accounting perspective is discussed in detail in FRIA Chapter 5.

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For a presentation of effects by calendar year, please see Chapter 8.2.4.6 of the FRIA.

The table below summarizes estimates of selected impacts viewed from each of these two perspectives, for each of the regulatory alternatives considered in this final rule, relative to the reference baseline.

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NHTSA

estimates for the final standards are compared to levels of gasoline and electricity consumption NHTSA projects would occur under the No-Action Alternative (i.e., the reference baseline) as shown in Table II-8.

123

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FRIA Chapter 1, Figure 1-1 provides a graphical comparison of energy sources and their relative change over the standard setting years.

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The additional electricity use during regulatory years is attributed to an increase in the number of PHEVs; PHEV fuel economy is only considered in charge-sustaining (i.e., gasoline-only) mode in the compliance analysis, but electricity consumption is computed for the effects analysis.

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While NHTSA does not condider electrification in its analysis during the rulemaking time frame, the analysis still reflects application of electric vehicles in the baseline fleet and during the model years, such that electrification (and thus, electricity consumption) increases in NHTSA's is not considering it in our decision-making.

NHTSA's analysis also estimates total annual consumption of fuel by the entire on-road light-duty fleet from calendar year 2022 through calendar year 2050. On this basis, gasoline and electricity consumption by the U.S. light-duty vehicle fleet evolves as shown in Figure II-5 and Figure II-6, each of which shows projections for the No-Action Alternative, PC2LT002 (the Preferred Alternative), PC1LT3, PC2LT4, PC3LT5, and PC6LT8.

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Accounting for emissions from both vehicles and upstream energy sector processes (

e.g.,

petroleum refining and electricity generation), which are relevant to NHTSA's evaluation of the need of the United States to conserve energy, NHTSA estimates that the final rule would reduce greenhouse gas emissions by about 659 million metric tons of carbon dioxide (CO

), about 825 thousand metric tons of methane (CH

), and about 24 thousand metric tons of nitrous oxide (N

O).

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Emissions reductions accrue over time, as the example for CO

emissions shows in Figure II-7.

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For the “standard setting” analysis, the FRIA accompanying today's notice provides additional detail regarding projected criteria pollutant emissions and health effects, as well as the inclusion of these impacts in today's benefit-cost analysis. For the “unconstrained” or “EIS” analysis, the Final EIS accompanying today's notice presents much more information regarding projected criteria pollutant emissions, as well as model-based estimates of corresponding impacts on several measures of urban air quality and public health. As mentioned above, these estimates of criteria pollutant emissions are based on a complex analysis involving interacting simulation techniques and a myriad of input estimates and assumptions. Especially extending well past 2050, the analysis involves a multitude of uncertainties.

To illustrate the effectiveness of the technology added in response to today's final rule, Table II-10 presents NHTSA's estimates for increased vehicle cost and lifetime fuel expenditures. For more detailed discussion of these and other results related to LD final standards, see Section V below.

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With the SC-GHG discounted at 2.0 percent and other benefits and costs discounted at 3 percent, NHTSA estimates that monetized costs and benefits could be approximately $24.5 billion and $59.7 billion, respectively, such that the present value of aggregate monetized net benefits to society could be approximately $35.2 billion. With the SC-GHG discounted at 2.0 percent and other benefits and costs discounted at 7 percent, NHTSA estimates approximately $16.2 billion in monetized costs and $47.0 billion in monetized benefits could be attributable to vehicles produced during and prior to model year 2031 over the course of their lives, such that the present value of aggregate net monetized benefits to society could be approximately $30.8 billion.

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2. Heavy Duty Pickup Trucks and Vans Effects

NHTSA estimates that the final rule would increase HDPUV fuel efficiency standards to about 2.851 gals/100 mile by 2035 rather than, under the No-Action Alternative (

i.e.,

the baseline standards issued in 2016 final rule for Phase 2 ending with model year 2029 standards carried forward indefinitely), about 5.023 gals/100mile. Unlike the light-duty CAFE program, NHTSA may consider AFVs when setting maximum feasible standards for HDPUVs. Additionally, for purposes of calculating average fuel efficiency for HDPUVs, NHTSA considers EVs, fuel cell vehicles, and the proportion of electric operation of EVs and PHEVs that is derived from electricity that is generated from sources that are not onboard the vehicle to have a fuel efficiency value of 0 gallons/mile. NHTSA estimates that the final rule would achieve an average fuel efficiency 2.565 gals/100 mile by 2035 rather than, under the No-Action Alternative, about 2.716 gals/100 mile.

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NHTSA estimates that over the lives of vehicles subject to these final HDPUV standards, the final standards would save about 5.6 billion gallons of gasoline and increase electricity consumption (as the percentage of electric vehicles increases over time) by about 56 TWh (a 5.4 percent increase), compared to levels of gasoline and electricity consumption NHTSA projects would occur under the reference baseline standards (

i.e.,

the No-Action Alternative) as shown in Table II-15.

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NHTSA's analysis also estimates total annual consumption of fuel by the entire on-road HDPUV fleet from calendar year 2022 through calendar year 2050. On this basis, gasoline and electricity consumption by the U.S. HDPUV fleet evolves as shown in Figure II-8 and Figure II-9, each of which shows projections for the No-Action Alternative, HDPUV4, HDPUV108 (the Preferred Alternative), HDPUV10, and HDPUV14.

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Accounting for emissions from both vehicles and upstream energy sector processes (

e.g.,

petroleum refining and electricity generation), which are relevant to NHTSA's evaluation of the need of the United States to conserve energy, NHTSA estimates that the final HDPUV standards would reduce greenhouse gas emissions by about 55 million metric tons of carbon dioxide (CO

), about 65 thousand metric tons of methane (CH

), and about 3 thousand metric tons of nitrous oxide (N

O).

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NHTSA's analysis also estimates annual emissions attributable to the entire on-road HDPUV fleet from calendar year 2022 through calendar year 2050. Also accounting for both vehicles and upstream processes, NHTSA estimates that CO

emissions from the HDPUV standards could evolve over time as shown in Figure II-10.

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To illustrate the effectiveness of the technology added to HDPUVs in response to today's final rule and the overall societal effects of the HDPUV standards, Table II-17 presents NHTSA's estimates for increased vehicle cost and lifetime fuel expenditures and Table II-18 summarizes the benefit-cost analysis. For more detailed discussion of these and other results related to HDPUV final standards, see Preamble Section V and Section VI below.

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F. Final Standards Are Maximum Feasible

NHTSA's conclusion, after consideration of the factors described below and information in the administrative record for this action, is that 2 percent increases in stringency for passenger cars for model years 2027-2031, 0 percent increases in stringency for light trucks in model years 2027-2028, and 2 percent increases in stringency for model years 2029-2031 for light trucks (Alternative PC2LT002) are maximum feasible. The Department of Transportation is deeply committed to working aggressively to improve energy conservation and reduce environmental harms and economic and security risks associated with energy use. NHTSA has concluded that Alternative PC2LT002 is technologically feasible, is economically practicable (based on manageable average per-vehicle cost increases, minimal effects on sales, and estimated increases in employment, among other considerations), and is complementary to other motor vehicle standards of the Government on fuel economy that are simultaneously applicable during model years 2027-2031, as described in more detail below.

After consideration of the technical capabilities, economic practicability, statutory requirements, and the Phase 2 final standards, NHTSA has concluded that a 10 percent increase in model years 2030-2032 and an 8 percent increase in model years 2033-2035 for the HDPUV fleet (HDPUV108) is maximum feasible. NHTSA's analysis shows that current Phase 2 standards do not require significant technological improvements through model year 2029, though we expect to see additional fuel efficient technology penetration in model years 2030 through 2035, which can be viewed in more detail in FRIA Chapter 8. Considering our statutory requirements, we have reduced the stringency to 8 percent increases in model years 2033-2035.

See preamble Section VI for more discussion on how we determined that the final CAFE and HDPUV standards are maximum feasible.

G. Final Standards Are Feasible in the Context of EPA's Final Standards and California's Standards

The NHTSA and EPA final rules remain coordinated despite being issued as separate regulatory actions. NHTSA is finalizing CAFE standards that represent the maximum feasible under our program's statutory constraints, which differ to varying degrees by vehicle classification and model year from the GHG standards set forth by the EPA. Overall, EPA's GHG standards, developed under their program's authorities, place a higher degree of stringency on manufacturers in part because of their ability to consider all vehicle technologies, including alternative fueled vehicles, in setting standards. As with past rules, NHTSA's and EPA's programs also differ in other respects, such as programmatic flexibilities. Accordingly, NHTSA's coordination with EPA was limited to areas where each agency's statutory framework allowed some level of harmonization. These differences mean that manufacturers have had (and will continue to have) to plan their compliance strategies considering both the CAFE standards and the GHG standards to ensure that they maintain compliance with both. Because NHTSA and EPA are regulating the same vehicles and manufacturers will use many of the same technologies to meet each set of standards, NHTSA performed appropriate analyses to quantify the differences and their impacts. Auto manufacturers have shown a consistent historical ability to manage compliance strategies that account for the concurrent implementation of multiple regulatory programs. Past experience with these programs indicates that each manufacturer will optimize its compliance strategy around whichever standard is most binding for its fleet of vehicles. If different agencies' standards are more binding for some companies in certain years, this does not mean that manufacturers must build multiple fleets of vehicles, but rather that they will have to be more strategic about how they build their fleet. More detailed discussion of this issue can be found in Section VI.A of this preamble. Critically, NHTSA has concluded that it is feasible for manufacturers to meet the NHTSA standards in a regulatory framework that includes the EPA standards.

NHTSA has also considered and accounted for manufacturers' expected compliance with California's ZEV program (ACC I and ACT) and its adoption by other states in developing the reference baseline for this final rule. We have also accounted for the Framework Agreements between manufacturers who have committed to meeting those Agreements. Finally, we accounted for additional ZEV deployment that manufacturers have

committed to undertake, which would be consistent with the requirements of ACC II. NHTSA's assessment regarding the inclusion of ZEVs in the reference baseline is detailed in Preamble Section III.C.5 and Section IV.B.1, and well as in Chapter 3.1 of the accompanying FRIA.

NHTSA also conducted an analysis using an alternative baseline, under which NHTSA removed not only the electric vehicles that would be deployed to comply with ACC I, but also those that would be deployed consistent with manufacturer commitments to deploy additional electric vehicles regardless of legal requirements, consistent with the levels under ACC II. NHTSA describes this as the “No ZEV alternative baseline.” For further reading on this alternative baseline, see RIA Chapters 3 and 8 and Preamble Section IV.B for comparison of the baselines.

III. Technical Foundation for Final Rule Analysis

A. Why is NHTSA conducting this analysis?

NHTSA is finalizing CAFE standards that will increase at 2 percent per year for passenger cars during MYs 2027 through 2031, and for light trucks, standards that will not increase beyond the MY 2026 standards in MYs 2027 through 2028, thereafter increasing at 2 percent per year for MYs 2029 through 2031. The final HDPUV standards will increase at 10 percent per year during MYs 2030 through 2032, and then increase at 8 percent for MYs 2033 through 2035. NHTSA estimates these stringency increases in the passenger car and light truck fleets will reduce gasoline consumption through calendar year 2050 by about 64 billion gallons and increase electricity consumption by about 333 terawatt-hours (TWh). The stringency increases in the HDPUV fleet will reduce gasoline consumption by about 5.6 billion gallons and increase electricity consumption by about 56 TWh through calendar year 2050. Accounting for emissions from both vehicles and upstream energy sector processes (

e.g.,

petroleum refining and electricity generation), NHTSA estimates that the CAFE standards will reduce greenhouse gas emissions by about 659 million metric tons of carbon dioxide (CO

), about 825 thousand metric tons of methane (CH

), and about 23.5 thousand metric tons of nitrous oxide (N

0). The HDPUV standards are estimated to further reduce greenhouse gas emissions by 55 million metric tons of CO

, 65 thousand metric tons of CH

and 3 thousand metric tons of N

When NHTSA promulgates new regulations, it generally presents an analysis that estimates the impacts of those regulations, and the impacts of other regulatory alternatives. These analyses derive from statutes such as the Administrative Procedure Act (APA) and NEPA, from E.O.s (such as E.O. 12866 and 13563), and from other administrative guidance (

e.g.,

Office of Management and Budget (OMB) Circular A-4). For CAFE and HDPUV standards, EPCA, as amended by EISA, contains a variety of provisions that NHTSA seeks to account for analytically. Capturing all of these requirements analytically means that NHTSA presents an analysis that spans a meaningful range of regulatory alternatives, that quantifies a range of technological, economic, and environmental impacts, and that does so in a manner that accounts for EPCA/EISA's various express requirements for the CAFE and HDPUV programs (

e.g.,

passenger cars and light trucks must be regulated separately; the standard for each fleet must be set at the maximum feasible level in each MY; etc.).

NHTSA's standards are thus supported by, although not dictated by, extensive analysis of potential impacts of the regulatory alternatives under consideration. Together with this preamble, a TSD, a FRIA, and a Final EIS, provide a detailed enumeration of related methods, estimates, assumptions, and results. These additional analyses can be found in the rulemaking docket for this final rule

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and on NHTSA's website.

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Docket No. NHTSA-2023-0022, which can be accessed at

https://www.regulations.gov.

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See NHTSA. 2023. Corporate Average Fuel Economy. Available at:

https://www.nhtsa.gov/laws-regulations/corporate-average-fuel-economy.

(Accessed: Feb. 23, 2024).

This section provides further detail on the key features and components of NHTSA's analysis. It also describes how NHTSA's analysis has been constructed specifically to reflect governing law applicable to CAFE and HDPUV standards (which may vary between programs). Finally, the discussion reviews how NHTSA's analysis has been expanded and improved in response to comments received on the 2023 proposal,

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as well as additional work conducted over the last year. The analysis for this final rule aided NHTSA in implementing its statutory obligations, including the weighing of various considerations, by reasonably informing decision-makers about the estimated effects of choosing different regulatory alternatives.

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88 FR 56128 (Aug. 17, 2023).

1. What are the key components of NHTSA's analysis?

NHTSA's analysis makes use of a range of data (

i.e.,

observations of things that have occurred), estimates (

i.e.,

things that may occur in the future), and models (

i.e.,

methods for making estimates). Two examples of

data

include (1) records of actual odometer readings used to estimate annual mileage accumulation at different vehicle ages and (2) CAFE compliance data used as the foundation for the “analysis fleets” containing, among other things, production volumes and fuel economy/fuel efficiency levels of specific configurations of specific vehicle models produced for sale in the U.S. Two examples of

estimates

include (1) forecasts of future Gross Domestic Product (GDP) growth used, with other estimates, to forecast future vehicle sales volumes and (2) technology cost estimates, which include estimates of the technologies' “direct cost,” marked up by a “retail price equivalent” (RPE) factor used to estimate the ultimate cost to consumers of a given fuel-saving technology, and an estimate of “cost learning effects” (

i.e.,

the tendency that it will cost a manufacturer less to apply a technology as the manufacturer gains more experience doing so).

NHTSA uses the CAFE Compliance and Effects Modeling System (usually shortened to the “CAFE Model”) to estimate manufacturers' potential responses to new CAFE, HDPUV, and GHG standards and to estimate various impacts of those responses. DOT's Volpe National Transportation Systems Center (often simply referred to as the “Volpe Center”) develops, maintains, and applies the model for NHTSA. NHTSA has used the CAFE Model to perform analyses supporting every CAFE rulemaking since 2001. The 2016 rulemaking regarding HDPUV fuel efficiency standards, NHTSA's most recent HDPUV rulemaking, also used the CAFE Model for analysis.

The basic design of the CAFE Model is as follows: The system first estimates how vehicle manufacturers might respond to a given regulatory scenario, and from that potential compliance solution, the system estimates what impact that response will have on fuel consumption, emissions, safety impacts, and economic externalities. In a highly summarized form, TSD Figure 1-1 shows the basic categories of CAFE Model procedures and the sequential logical flow between different stages of the modeling.

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The diagram does not present specific model inputs or

outputs, as well as many specific procedures and model interactions. The model documentation accompanying this final rule presents these details.

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TSD Chapter 1, see Figure 1-1: CAFE Model Procedures and Logical Flow.

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CAFE Model Documentation for 2024 FRM.

More specifically, the model may be characterized as an integrated system of models. For example, one model estimates manufacturers' responses, another estimates resultant changes in total vehicle sales, and still another estimates resultant changes in fleet turnover (

i.e.,

scrappage). Additionally, and importantly, the model does not determine the form or stringency of the standards. Instead, the model applies inputs specifying the form and stringency of standards to be analyzed and produces outputs showing the impacts of manufacturers working to meet those standards, which become part of the basis for comparing different potential stringencies. A regulatory scenario, meanwhile, involves specification of the form, or shape, of the standards (

e.g.,

flat standards, or linear or logistic attribute-based standards), scope of passenger car, light truck, and HDPUV regulatory classes, and stringency of the CAFE or HDPUV standards for each MY to be analyzed. For example, a regulatory scenario may define CAFE or HDPUV standards for a particular class of vehicles that increase in stringency by a given percent per year for a given number of consecutive years.

Manufacturer compliance simulation and the ensuing effects estimation, collectively referred to as compliance modeling, encompass numerous subsidiary elements. Compliance simulation begins with a detailed user-provided initial forecast of the vehicle models offered for sale during the simulation period.

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The compliance simulation then attempts to bring each manufacturer into compliance with the standards defined by the regulatory scenario contained within an input file developed by the user.

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Because the CAFE Model is publicly available, anyone can develop their own initial forecast (or other inputs) for the model to use. The DOT-developed Market Data Input file that contains the forecast for this final rule is available on NHTSA's website at

https://www.nhtsa.gov/corporate-average-fuel-economy/cafe-compliance-and-effects-modeling-system.

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With appropriate inputs, the model can also be used to estimate impacts of manufacturers' potential responses to new CO

standards and to California's ZEV program.

Estimating impacts involves calculating resultant changes in new vehicle costs, estimating a variety of costs (

e.g.,

for fuel) and effects (

e.g.,

emissions from fuel combustion) occurring as vehicles are driven over their lifetimes before eventually being scrapped, and estimating the monetary value of these effects. Estimating impacts also involves consideration of consumer responses—

e.g.,

the impact of vehicle fuel economy/efficiency, operating costs, and vehicle price on consumer demand for passenger cars, light trucks, and HDPUVs. Both basic analytical elements involve the application of many analytical inputs. Many of these inputs are developed outside of the model and not by the model. For example, the model applies fuel prices; it does not estimate fuel prices.

NHTSA also uses EPA's Motor Vehicle Emission Simulator (MOVES) model to estimate “vehicle” or “downstream” emission factors for criteria pollutants,

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and uses four Department of Energy (DOE) and DOE-sponsored models to develop inputs to the CAFE Model, including three developed and maintained by DOE's Argonne National Laboratory (Argonne). The agency uses the DOE Energy Information Administration's (EIA's) National Energy Modeling System (NEMS) to estimate fuel prices,

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and uses Argonne's Greenhouse gases, Regulated Emissions, and Energy use in Transportation (GREET) model to estimate emissions rates from fuel production and distribution processes.

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DOT also sponsored DOE/Argonne to use Argonne's Autonomie full-vehicle modeling and simulation system to estimate the fuel economy/efficiency impacts for over a million combinations of technologies and vehicle types.

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The TSD and FRIA describe details of our use of these models. In addition, as discussed in the Final EIS accompanying this final rule, DOT relied on a range of models to estimate impacts on climate, air quality, and public health. The Final EIS discusses and describes the use of these models.

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See

https://www.epa.gov/moves.

This final rule uses version MOVES4 (the latest version at the time of analysis), available at

https://www.epa.gov/moves/latest-version-motor-vehicle-emission-simulator-moves.

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See

https://www.eia.gov/outlooks/aeo/.

This final rule uses fuel prices estimated using the Annual Energy Outlook (AEO) 2023 version of NEMS (see

https://www.eia.gov/outlooks/aeo/tables_ref.php.

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Information regarding GREET is available at

https://greet.es.anl.gov/.

This final rule uses the R&D GREET 2023 version.

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As part of the Argonne simulation effort, individual technology combinations simulated in Autonomie were paired with Argonne's BatPaC model to estimate the battery cost associated with each technology combination based on characteristics of the simulated vehicle and its level of electrification. Information regarding Argonne's BatPaC model is available at

https://www.anl.gov/cse/batpac-model-software

. In addition, the impact of engine technologies on fuel consumption, torque, and other metrics was characterized using GT-POWER simulation modeling in combination with other engine modeling that was conducted by IAV Automotive Engineering, Inc. (IAV). The engine characterization “maps” resulting from this analysis were used as inputs for the Autonomie full-vehicle simulation modeling. Information regarding GT-POWER is available at

https://www.gtisoft.com/gt-power/.

To prepare for the analysis that supports this final rule, DOT has refined and expanded the CAFE Model through ongoing development. Examples of such changes, some informed by past external comment, made since 2022 include:

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A more detailed list can be found in Chapter 1.1 of the TSD.

• Updated analysis fleet

• Addition of HDPUVs, and associated required updates across entire model

• Updated technologies considered in the analysis

○ Addition of HCRE, HCRD and updated diesel technology models

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See technologies descriptions in TSD Chapter 3.

○ Removal of EFR, DSLIAD, manual transmissions, AT6L2, EPS, IACC, LDB, SAX, and some P2 combinations

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See technologies description in 87 FR 25710 (May 2, 2022).

• User control of additional input parameters

• Updated modeling approach to manufacturers' expected compliance with states' ZEV programs

• Expanded accounting for Federal incentives, such as the IRA

• Expanded procedures for estimating new vehicle sales and fleet shares

• VMT coefficient updates

In response to feedback, interagency meetings, comments from stakeholders, as well as continued development, DOT has made additional changes to the CAFE Model for the final rule. Since the 2023 NPRM, DOT has made the following changes to the CAFE Model and inputs, including:

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A more detailed list of updates can be found in Chapter 1.1 of the TSD.

• Updated battery costs for electrified technologies

• Updated different phase-in penetration for different BEV ranges

• Updated ZEV State shares, credit values and projected ZEV requirements to inform the reference baseline

• Reclassified Rivian and Ford vehicles from HDPUV to LD based on official certification data submission

• Allow the user to directly input AC efficiency, AC leakage and off cycle credit limits for each MY, separately for conventional ICE vehicles and electric vehicles

• Addressed issues with when road load technologies are applied to the fleet

• Updated and expanded model reporting capabilities

• Updated IRA Tax Credit implementation

• Updated input factors for economic models

• Updated input factors for the safety models

• Updated emission modeling

These changes reflect DOT's long-standing commitment to ongoing refinement of its approach to estimating the potential impacts of new CAFE and HDPUV standards.

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The TSD elaborates on these changes to the CAFE Model, as well as changes to inputs to the model for this analysis.

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A list accounting of major updates since the CAFE Model was developed in 2001 can be found in Chapter 1.1 of the TSD.

NHTSA underscores that this analysis uses the CAFE Model in a manner that explicitly accounts for the fact that in producing a single fleet of vehicles for sale in the United States, manufacturers make decisions that consider the combination of CAFE/HDPUV standards, EPA GHG standards, and various policies set at sub-national levels (

e.g.,

ZEV regulatory programs, set by California and adopted by many other states). These regulations have important structural and other differences that affect the strategy a manufacturer could pursue in designing a fleet that complies with each of the above. As explained, NHTSA's analysis reflects a number of statutory and regulatory requirements applicable to CAFE/HDPUV and EPA GHG standard-setting. As stated previously, NHTSA coordinated with EPA and DOE to optimize the effectiveness of NHTSA's standards while minimizing compliance costs, informed by public comments from all stakeholders and consistent with the statutory factors.

2. How do requirements under EPCA/EISA shape NHTSA's analysis?

EPCA contains multiple requirements governing the scope and nature of CAFE standard setting. Some of these have been in place since EPCA was first signed into law in 1975, and some were added in 2007, when Congress passed EISA and amended EPCA. EISA also gave NHTSA authority to set standards for HDPUVs, and that authority was generally less constrained than for CAFE standards. NHTSA's modeling and analysis to inform standard setting is guided and shaped by these statutory requirements. EPCA/EISA requirements regarding the technical characteristics of CAFE and HDPUV standards and the analysis thereof include, but are not limited to, the following:

Corporate Average Standards:

Section 32902 of 49 U.S.C. requires standards for passenger cars, light trucks, and HDPUVs to be corporate average standards, applying to the average fuel economy/efficiency levels achieved by each corporation's fleets of vehicles produced for sale in the U.S.

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The CAFE Model calculates the CAFE and CO

levels of each manufacturer's fleets based on estimated production volumes and characteristics, including fuel economy/efficiency levels, of distinct vehicle models that could be produced for sale in the U.S.

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This differs from certain other types of vehicle standards, such as safety standards. For example, every vehicle produced for sale in the U.S. must, on its own, meet all applicable Federal motor vehicle safety standards (FMVSS), but no vehicle produced for sale must, on its own, meet Federal fuel economy or efficiency standards. Rather, each manufacturer is required to produce a mix of vehicles that, taken together, achieve an average fuel economy/efficiency level no less than the applicable minimum level.

Separate Standards for Passenger Cars, L

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