Under the National Program, consumers continue to have a full range of vehicle choices that meet their needs, and, through coordination with the California standards, automakers can build a single fleet of vehicles across the U.S. that satisfies all GHG/CAFE requirements. In the agencies’ 2012 final rules establishing the MY2017-2025 standards for EPA and 2017-2021 final and 2022-2025 augural standards for NHTSA, the National Program standards were projected by MY2025 to double fuel economy and cut GHG emissions in half, save 6 billion metric tons of carbon dioxide (CO2) pollution and 12 billion barrels of oil over the lifetime of MY2012-2025 vehicles, and deliver significant savings for consumers at the gas pump.
In this Draft TAR, EPA provides its initial technical assessment of the technologies available to meet the MY2022-2025 GHG standards and one reasonable compliance pathway, and NHTSA provides its initial assessment of technologies available to meet the augural MY2022-2025 CAFE standards and a different reasonable compliance pathway. Given that there are multiple possible ways that new technologies can be added to the fleet, examining two compliance pathways provides valuable additional information about how compliance may occur. NHTSA and EPA also performed multiple sensitivity analyses which show additional possible compliance pathways. The agencies’ independent analyses complement one another and reach similar conclusions:
- A wider range of technologies exist for manufacturers to use to meet the MY2022-2025 standards, and at costs that are similar or lower, than those projected in the 2012 rule; - Advanced gasoline vehicle technologies will continue to be the predominant technologies, with modest levels of strong hybridization and very low levels of full electrification (plugin vehicles) needed to meet the standards;
- The car/truck mix reflects updated consumer trends that are informed by a range of factors including economic growth, gasoline prices, and other macro-economic trends. However, as the standards were designed to yield improvements across the light duty vehicle fleet, irrespective of consumer choice, updated trends are fully accommodated by the footprint based standards.
Additionally, while the Draft TAR analysis focuses on the MY2022-2025 standards, the agencies note that the auto industry, on average, is over-complying with the first several years of the National Program. This has occurred concurrently with a period during which the automotive industry successfully rebounded after a period of economic distress. The industry has now seen six consecutive years of increases and a new all-time sales record in 2015, reflecting positive consumer response to vehicles complying with the standards.
Technologies considered in this Draft TAR include more efficient engines and transmissions, aerodynamics, light-weighting, improved accessories, low rolling resistance tires, improved air conditioning systems, and others. Beyond the technologies the agencies considered in the 2012 final rule, manufacturers are now employing several technologies, such as higher compression ratio, naturally aspirated gasoline engines, and greater penetration of continuously variable transmissions (CVTs); other new technologies are under active development and are expected to be in the fleet well before MY2025, such as 48-volt mild hybrid systems.
In this Draft TAR, the EPA GHG and NHTSA CAFE assessments both show that the MY2022-2025 standards can be achieved largely through the use of advanced gasoline vehicle technologies with modest penetrations of lower cost electrification (like 48 volt mild hybrids which include stop/start) and low penetrations of higher cost electrification (like strong hybrids, plug-in hybrid electric vehicles, and all electric vehicles). Given the rapid pace of automotive industry innovation, the agencies may consider effectiveness and cost of additional technologies as new information, including comments on this Draft TAR, becomes available for further steps of the Midterm Evaluation.
Based on various assumptions including the Annual Energy Outlook 2015 (AEO 2015) reference case projections of the car/truck mix out to 2025, the footprint-based GHG standards curves for MY2022-2025 are projected to achieve an industry-wide fleet average CO2 target of 175 grams/mile (g/mi) in MY2025, and the augural CAFE standards are projected to result in average CAFE requirements increasing from 38.3 mpg in MY2021 to 46.3 mpg in MY2025. The projected fleet average CO2 target represents a GHG emissions level equivalent to 50.8 mpg (if all reductions were achieved exclusively through fuel economy improvements).
EPA’s analysis indicates that, compared to the MY2021 standards, the MY2025 standards will result in a net lifetime consumer savings of $1,460 - $1,620 and a payback of about 5 to 5 ½ years. NHTSA’s primary analysis indicates that net lifetime consumer savings could average $680 per vehicle, such that increased vehicle purchase costs are paid back within about 6 ½ years, and $800 with payback within about 6 years in a sensitivity case analysis using ICMs.