EPA’s De Facto Electric Vehicle Mandate: Too Far, Too Fast

ISSUE

The Biden Administration finalized new emissions standards that could effectively require 56% of U.S. vehicle sales to be electric by 2032. While dealers are making significant electric vehicle (EV) investments, the charging infrastructure is not ready, the current incentives are not sufficient, and high EV prices price out millions of consumers, particularly low-income Americans, from the new-car market. Our experience working with consumers every day makes us highly skeptical that consumers will adopt EVs anywhere near the levels required in EPA’s rule. NADA supports legislation to stop EPA’s de facto EV mandate which goes too far, too fast (H.R. 8998 and H.J.Res.136/S.J.Res.75).

BACKGROUND

In April, the EPA finalized its “Multi-Pollutant Emissions Standards for Light-Duty and Medium-Duty Vehicles for MY 2027 and Later” rule that could effectively call for 44% of new vehicles in 2030 and 56% of new vehicles sold in 2032 to be EVs. This rule greatly exceeds the current real-world consumer demand for EVs. Also, the rule projects that gas-powered vehicles (including hybrids and plug-in hybrids), now currently 92.9% of the market, could be reduced to 29% by 2032.

Franchised car and truck dealers, with a nationwide network already in place, are essential to sell and service EVs. Dealers have promoted, and will continue to promote, electrification of America’s fleet with billions of dollars of their own capital already committed to investments in facilities, training and inventory. Despite the dealers’ efforts and investments, however, the EPA’s final rule remains far ahead of consumer demand. As a result, this rule is not achievable in the time frame provided and would severely limit the ability of consumers to choose a new vehicle that meets their budget and transportation needs.

While dealers are ready to sell and service EVs, this type of vehicle is currently only 7.1% of the new car market, as many Americans cannot afford or conveniently charge an EV. According to Cox Automotive, in Nov. 2022, the average transaction price for EVs was above $65,000. EV prices have since declined, due primarily to an oversupply of EVs on dealer lots, to an average of $56,371 in June vs. $48,644 for an average gas-powered vehicle. This $7,727 price difference, coupled with inadequate charging infrastructure (to meet demand an estimated 1.2 million public chargers and 20 million private chargers are needed by 2030) and long charging times (most public chargers take 8-30 hours to charge), create market impediments that must be addressed.

NADA supports legislation that would disapprove of or stop funding the Administration’s light-duty de facto EV mandate. NADA supports the House Interior, Environment appropriations bill (H.R. 8998) which includes language
(Sec. 474) that would temporarily stop EPA’s de facto light EV mandate. NADA additionally supports H.J. Res. 136/
S.J. Res. 75, joint resolutions which would overturn EPA’s light-duty de facto EV mandate rule.

KEY POINTS

• The EPA’s rule ignores real world consumer demand and goes too far, too fast. EPA’s de facto EV mandate is flawed because other market conditions to make EVs broadly attractive to consumers must be present for customers to purchase EVs in the volume required by EPA. Those conditions (i.e., vehicle affordability, a sufficient and reliable charging infrastructure, and acceptable charging speeds) simply do not yet exist. 
• EPA’s rule limits consumer choice by significantly limiting gas-powered vehicles. The demand for EVs varies dramatically market-by-market. This massive policy shift will have major implications for rural America and lower-income Americans who cannot afford or have access to charge EVs.
• The Administration’s overly aggressive emissions rule, which was not set by Congress, will result in a new vehicle market that is unaffordable and does not meet the transportation needs of the average American consumer.

STATUS

On July 24 the House passed H.R. 8998, the FY25 Interior-Environment appropriations bill by a vote of 210-205. On Sept. 20 the House passed H.J.Res.136 by a vote of 215-191.

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