US scraps rule that granted electric vehicles higher fuel economy credits

The Trump administration said Wednesday it is rescinding a rule that incentivized automakers to produce electric vehicles to meet fuel economy requirements by overstating energy savings.

 

Environmentalists have long criticized the Energy Department rules for assigning unrealistically high fuel-economy values to electric vehicles, which are then used to calculate fleetwide averages under Federal Corporate Average Fuel Economy rules.

 

The Energy Department said following an appeals court decision in September it will remove the provision known as the fuel content factor from its calculations, and plans to propose additional revisions.

FUEL CONTENT FACTOR

The DOE said it had concluded that the fuel content factor was "unlawful" and was issuing a rule to immediately remove it from fuel economy calculations.

 

The Biden administration initially proposed eliminating the fuel content factor from the calculations, effective in 2027, which would have lowered the compliance value of electric vehicles by around 70 per cent.

 

Under pressure from automakers, the Energy Department in 2024 opted to phase it out through 2030. Automakers noted previously the fuel content factor results in an assessed fuel economy roughly seven times higher than would be calculated based on only the Energy Department's gasoline-equivalent energy content of electricity.

FUEL ECONOMY VALUES

Environmental groups during the Biden administration had urged the revision to the EV mileage calculation, arguing "excessively high imputed fuel economy values for EVs means that a relatively small number of EVs will mathematically guarantee compliance without meaningful improvements in the real-world average fuel economy of automakers' overall fleets." 

 

In December, the Trump administration proposed slashing fuel economy standards that Biden had finalized in 2024, in a push to make it easier for automakers to sell gasoline-powered cars.

 

The National Highway Traffic Safety Administration proposed significantly reducing the fuel economy requirements from model years 2022 to 2031, requiring 34.5 miles per gallon on average by 2031, down from 50.4 miles per gallon (21.4 km per liter).

 

Last year, Trump signed legislation that ended fuel economy penalties for automakers, and NHTSA said they faced no fines dating back to the 2022 model year. But automakers are worried a future administration will reinstate those penalties.

 

Trump has taken a series of steps to disincentivize EV purchases and production and make it easier to produce gas-powered models.