Is the market for electric vehicles, growing gradually but significantly over the last few years, about to boom? The Biden administration, viewing EVs as a key to a lower carbon environment, hopes new public policy will push a step change.
The administration’s Environmental Protect Agency, at the direction of the White House, on Wednesday (Apr. 12) launched an aggressive policy proposal that ratchets up the current limits on auto tailpipe emissions, combining limits for both criteria air pollutants under the Clean Air Act and greenhouse gas (CO2) emissions. Previously, the regulations set the limits separately. The result effectively boosts EVs, with zero or, in some cases, very small tailpipe emissions. The new tailpipe rules will go into effective for the 2027 model year for new cars through the 2032 model year.
The proposal consists of two rules, one for light and medium-duty vehicles (cars and conventional pickup trucks), and a second for heavy-duty vehicles (large pickups and most trucks). EPA has scheduled a virtual public hearing on the light-and-medium-duty rules for May 9 and 10, with a possibility of a further day. The agency is also holding a virtual hearing on the heavy-duty-vehicle rules for May 2 and 3, with a possibility for an extension to May 4. The agency is also proposing new rules for locomotives.
The rule does not mandate that consumers buy electricity over gasoline for their personal transportation. That would likely exceed the federal government’s authority, arming opponents of the administration in the subsequent lawsuits that are likely to follow any new rules. But the new rules will apply to the manufacturers’ fleets.
The Associated Press observed, “The EPA tailpipe pollution limits don’t actually require a specific number of electric vehicles to be sold every year, but instead mandate limits on greenhouse gas emissions. That amounts to roughly the same thing, according to agency calculations of the number of EVs that likely would be needed to comply with the stricter pollution limits.”
The EPA’s expectation is the new tailpipe rules, if adopted as proposed, will result in some 67% of new passenger cars sold in 2032 to be powered by electricity. EVs sales, led by pioneer Tesla but with more and bigger automakers now pushing EVs, are small but growing significantly on their own merits. EVs made up 5.8% of U.S. passenger car sales in 2022, and 7.2% for this year’s first quarter.
The regulatory move is significant. Transportation is the largest source of carbon dioxide emissions in the U.S. The Biden administration’s Inflation Reduction Act, (in reality climate legislation), pushes lucrative tax breaks for purchases of EV, up to $7,500 for a purchase of a qualifying car. But the breaks are hedged by “buy American” restrictions not only on the cars themselves, but on major components, including the batteries and elements used in the batteries. The Treasury Department is issuing rules implementing tax credit details, with such stringency that some have charged that the administration’s rules amount to “bait and switch” on EVs.
An interesting aside, the Electrek web site says that “all of these complications can seemingly be avoided with one simple trick! – leasing. Per an IRS note from December, EVs can avoid the foreign-assembly restriction of the law if they are leased, not purchased. This interpretation was originally pushed for by South Korean automakers who felt jilted by the domestic assembly provisions of the Inflation Reduction Act. Hyundai and Kia have been the best-selling non-American EV brands in the US with their excellent Ioniq 5 and EV6 (built on the E-GMP platform), so these changes threatened to take the wind out of their sails (and sales).” The IRS is scheduled to offer definitive guidance on the IRA subsidy rules on Tuesday (Apr. 18).
The first test for the EPA’s new fleet rules is getting them enacted. Auto manufacturers and possibly the United Auto Workers union may seek federal court review of the new rules. Some states may also challenge the rules in court. The New York Times reported, “A group of about a dozen Republican attorneys general has filed lawsuits against the Biden administration’s climate polices, and one of its leaders, Attorney General Patrick Morrisey of West Virginia, suggested the group would fight the newest proposals.”
In addition to its intended consequences of dramatically reducing transportation greenhouse gas emissions, the EPA plan could have broader, sometimes unintended, consequences, including impacts of new, widespread loads on the already troubled U.S. electric grid. Some have anticipated that California could have grid stability problems if EVs surge, given the state’s coming ban on cars with internal combustion engines. Most home charging is done at night when the state grid is short of capacity with solar out of the picture.
One analyst who has taken a deep look at the implications of moving the vehicle fleet to predominantly electric power is Robert Charette, who writes for IEEE Spectrum magazine. An engineer, he has focused on the EV transformation “at scale.”
In a February Spectrum article titled, “The Aftershocks of the EV Transition Could Be Ugly”, he wrote, “Most of these can be called ‘anticipated but not desirable’ consequences of the transition. These include raw material and skill shortages; energy transmission and distribution line shortfalls; loss of employment from fossil fuel retirement; the societal restrictions imposed by car-centricity and dependency; t difficulties of expanding EV charging, mass transit and battery recycling as well as the rampant EV and energy policy dysfunction and politicization, to name but a few. Each obstacle presents unique challenges whose solutions can be counted on the spawn yet more challenges.”
Should consumers immediately start unloading their gas guzzlers and become electric? While there are predictions that the next decade will be the “golden age” for EVs? Michael Coren, the Washington Post’s “climate advice columnist,” offers this advice:
“From a strictly financial standpoint, it’s better to wait if you can. New cars are a financial loss the moment you drive them off the lot, collectible Tesla Roadsters aside. ‘Buying a new car is never a good investment,’ says Mark Wakefield [an automotive specialist at the global consulting firm AlixPartners]it allows you to get the most out of your existing vehicle.
“But there are exceptions: Do you have a long commute? Are you still driving a 30-year-old gas guzzler? Did your old vehicle conk out? Then EVs can have a significantly lower lifetime cost and emissions. Electricity is generally cheaper and cleaner. Maintenance like brake pads and oil changes are not required. And EVs are expected to last much longer, with some manufacturers talking about million-mile batteries.
“So if you need a car right now, you’re in a better place than even a few months ago. If you can wait, your bank account will thank you.”
–Kennedy Maize
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