[Federal Register Volume 90, Number 232 (Friday, December 5, 2025)]
[Proposed Rules]
[Pages 56438-56656]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-22014]
[[Page 56437]]
Vol. 90
Friday,
No. 232
December 5, 2025
Part IV
Department of Transportation
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National Highway Traffic Safety Administration
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49 CFR Parts 523, 531, 533, et al.
The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule III for Model
Years 2022 to 2031 Passenger Cars and Light Trucks; Proposed Rule
Federal Register / Vol. 90, No. 232 / Friday, December 5, 2025 /
Proposed Rules
[[Page 56438]]
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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
49 CFR Parts 523, 531, 533, 536, and 537
[NHTSA-2025-0491]
RIN 2127-AM76
The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule III for
Model Years 2022 to 2031 Passenger Cars and Light Trucks
AGENCY: National Highway Traffic Safety Administration (NHTSA).
ACTION: Notice of proposed rulemaking (NPRM).
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SUMMARY: NHTSA, on behalf of the Department of Transportation (DOT),
proposes to substantially recalibrate the Corporate Average Fuel
Economy (CAFE) program to realign this program with Congressional
intent. That recalibration includes proposing to amend DOT's fuel
economy standards for light-duty vehicles for model years (MYs) 2022-
2026 and MYs 2027-2031. Consistent with statutory requirements, the
fuel economy standards proposed in this rule are founded on light-duty
vehicles powered by gasoline and diesel fuels, a category that includes
non-plug-in hybrid vehicles. In formulating the proposed standards,
NHTSA has not considered, consistent with law, the imputed fuel-economy
performance of battery-powered electric vehicles (EVs) or the electric
operation of vehicles that use plug-in hybrid electric powertrains, nor
compliance credits or adjustments to the two-cycle fuel economy test
procedures to account for air conditioning and off-cycle technologies.
NHTSA also is proposing to eliminate the inter-manufacturer credit
trading system and to amend the light-duty vehicle fleet classification
system to allocate vehicles into passenger and non-passenger automobile
fleets appropriately, based on their attributes and capabilities,
starting in MY 2028. Elimination of unlawful considerations, combined
with several of the proposed changes, would significantly improve the
capabilities of manufacturers to meet fuel economy standards, better
align the program with Congressional intent, and reduce manufacturer
incentives to design vehicles and add features that are not desired by
American consumers and that have questionable real-world fuel economy
benefits. NHTSA is therefore proposing to set fuel economy standards
that increase from newly proposed MY 2022 standards at a rate of 0.5
percent per year through MY 2026, followed by 0.25 percent per year
through MY 2031, with MY 2027 stringency established as a bridge
between the two sets of standards. The reduced stringency increases in
later years, coupled with a reevaluation of the coefficients that
define the functions governing fuel economy standards, are intended to
establish maximum feasible standards in a manner that gains real-world
fuel-economy-benefits, while enabling the industry to adapt to the
proposed substantial recalibration of the CAFE program. NHTSA projects
that the amended standards would correspond to the industry fleetwide
average for all light-duty vehicles of roughly 34.5 miles per gallon
(mpg) in MY 2031.
DATES:
Comments: Comments are requested on or before January 20, 2026. See
the SUPPLEMENTARY INFORMATION section on ``Public Participation,''
below, for more information about written comments. In compliance with
the Paperwork Reduction Act, NHTSA is also seeking comments on a
modification of an existing information collection. For additional
information, see the Paperwork Reduction Act section under Section VIII
below. All comments relating to the information collection requirements
should be submitted to NHTSA and to the Office of Management and Budget
(OMB) at the address listed in the ADDRESSES section on or before 45
days from date of publication.
Public Hearings: NHTSA will hold one virtual public hearing during
the public comment period. The agency will announce the specific date
and web address for the hearing in a supplemental Federal Register
notice. The agency will accept oral and written comments on the
rulemaking documents and will also accept comments on the Draft
Supplemental Environmental Impact Statement (Draft SEIS) at this
hearing. The hearing will start at 9 a.m. Eastern time and continue
until everyone has had a chance to speak. See the SUPPLEMENTARY
INFORMATION section on ``Public Participation,'' below, for more
information about the public hearing.
ADDRESSES: For access to the dockets or to read background documents or
comments received, please visit https://www.regulations.gov, 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.
Comments on the proposed information collection requirements should
be submitted to: Office of Management and Budget at www.reginfo.gov/public/do/PRAMain. To find this information collection, select
``Currently under Review--Open for Public Comment'' or use the search
function. It is requested that comments sent to the OMB also be sent to
the NHTSA rulemaking docket identified in the heading of this document.
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: [email protected]. For legal issues,
Hannah Fish, NHTSA Office of Chief Counsel, National Highway Traffic
Safety Administration, 1200 New Jersey Avenue SE, Washington, DC 20590;
email: [email protected].
SUPPLEMENTARY INFORMATION:
Table of Acronyms and Abbreviations
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Abbreviation Term
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4WD............................... Four Wheel Drive.
AC................................ Air conditioning.
ACME.............................. Adaptive Cylinder Management Engine.
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.
AEB............................... Automatic Emergency Braking.
AEO............................... Annual Energy Outlook.
[[Page 56439]]
AER............................... All-Electric Range.
AERO.............................. Aerodynamic Drag Technology.
AERO0............................. Base Level Aerodynamic Drag
Technology.
AERO5............................. Aerodynamic Drag, 5% Drag
Coefficient Reduction.
AERO10............................ Aerodynamic Drag, 10% Drag
Coefficient Reduction.
AERO15............................ Aerodynamic Drag, 15% Drag
Coefficient Reduction.
AERO20............................ Aerodynamic Drag, 20% Drag
Coefficient Reduction.
AFV............................... Alternative Fuel Vehicle.
AHSS.............................. Advanced High Strength Steel.
AIS............................... Abbreviated Injury Scale.
AMFA.............................. Alternative Motor Fuels Act of 1988.
AMPC.............................. Advanced Manufacturing Production
Tax Credit.
AMTL.............................. Advanced Mobility Technology
Laboratory.
Argonne........................... Argonne National Laboratory.
ANSI.............................. American National Standards
Institute.
APA............................... Administrative Procedure Act.
AT................................ Automatic Transmission.
AWD............................... All-Wheel Drive.
BEV............................... Battery Electric Vehicle.
BGEPA............................. Bald and Golden Eagle Protection
Act.
BISG.............................. Belt Integrated Starter Generator.
BLS............................... Bureau of Labor Statistics.
BMEP.............................. Brake Mean Effective Pressure.
BSD............................... Blind Spot Detection.
BSFC.............................. Brake-Specific Fuel Consumption.
BTW............................... Brake and Tire Wear.
CAA............................... Clean Air Act.
CAFE.............................. Corporate Average Fuel Economy.
CARB.............................. California Air Resources Board.
CBI............................... Confidential Business Information.
CEGR.............................. Cooled Exhaust Gas Recirculation.
CFR............................... Code of Federal Regulations.
CH4............................... Methane.
CNG............................... Compressed Natural Gas.
CO2............................... Carbon Dioxide.
COVID-19.......................... Coronavirus disease of 2019.
CPM............................... Cost Per Mile.
CR................................ Compression Ratio.
CVC............................... Clean Vehicle Credits.
CVT............................... Continuously Variable Transmission.
CW................................ Curb Weight.
CY................................ Calendar Year.
CZMA.............................. Coastal Zone Management Act.
DCT............................... Dual-Clutch Transmission.
DEAC.............................. Dynamic Cylinder Deactivation.
DMC............................... Direct Manufacturing Costs.
DOE............................... U.S. Department of Energy.
DOI............................... U.S. Department of the Interior.
DOHC.............................. Dual-Overhead Camshaft.
DOT............................... U.S. Department of Transportation.
DSLI.............................. Advanced Diesel Engine With
Improvements.
eCVT.............................. Electronic Continuously Variable
Transmissions.
EGR............................... Exhaust Gas Recirculation.
EIA............................... U.S. Energy Information
Administration.
EISA.............................. Energy Independence and Security Act
of 2007
E.O............................... Executive Order.
EPA............................... U.S. Environmental Protection
Agency.
EPCA.............................. Energy Policy and Conservation Act
of 1975.
ESA............................... Endangered Species Act.
ETDS.............................. Electric Traction Drive System.
EV................................ Electric Vehicle.
FCEV.............................. Fuel Cell Electric Vehicle.
FCIV.............................. Fuel Consumption Improvement Value.
FCW............................... Forward Collision Warning.
FEOC.............................. Foreign entity of concern.
FHWA.............................. Federal Highway Administration.
FIP............................... Federal Implementation Plan.
FRIA.............................. Final Regulatory Impact Analysis.
FTP............................... Federal Test Procedure.
FWD............................... Front-wheel Drive.
FWS............................... U.S. Fish and Wildlife Service.
GCWR.............................. Gross Combined Weight Rating.
[[Page 56440]]
GDP............................... Gross Domestic Product.
GES............................... General Estimates System.
GM................................ General Motors.
GREET............................. Greenhouse gases, Regulated
Emissions, and Energy use in
Transportation.
GVWR.............................. Gross Vehicle Weight Rating.
HCR............................... High Compression Ratio.
HCRD.............................. High Compression Ratio Engine with
Cylinder Deactivation.
HCRE.............................. High Compression Ratio Engine with
Cooled Exhaust Gas Recirculation.
HEG............................... High Efficiency Gearbox.
HEV............................... Hybrid Electric Vehicle.
HFET.............................. Highway Fuel Economy Test.
HP................................ Horsepower.
HVAC.............................. Heating, Ventilation, and Air
Conditioning.
IAV............................... Ingenieurgesellschaft Auto und
Verkehr.
ICCT.............................. International Council on Clean
Transportation.
ICE............................... Internal Combustion Engine.
ICR............................... Information Collection Request.
IIHS.............................. Insurance Institute for Highway
Safety.
IRA............................... Inflation Reduction Act.
LCA............................... Lane Change Assist.
LD................................ Light-Duty.
LDW............................... Lane Departure Warning.
LDWF.............................. Light-Duty Work Factor.
LFP............................... Lithium Iron Phosphate.
LIVC.............................. Late Intake Valve Closing.
LKA............................... Lane Keep Assist.
MAD............................... Minimum Absolute Deviation.
MAGICC............................ Model for the Assessment of
Greenhouse Gas Induced Climate
Change.
MBTA.............................. Migratory Bird Treaty Act.
MDPCS............................. Minimum Domestic Passenger Car
Standard.
MDPV.............................. Medium-Duty Passenger Vehicle.
MOVES............................. Motor Vehicle Emission Simulator.
mpg............................... Miles Per Gallon.
mph............................... Miles Per Hour.
MR................................ Mass Reduction.
MR0............................... Base Level Mass Reduction
Technology.
MSRP.............................. Manufacturer Suggested Retail Price.
MY................................ Model Year.
NAAQS............................. National Ambient Air Quality
Standards.
NADA.............................. National Automotive Dealers
Association.
NAICS............................. North American Industry
Classification System.
NAS............................... National Academy of Sciences.
NCE............................... Non-Criteria Emission.
NEMS.............................. National Energy Modeling System.
NEPA.............................. National Environmental Policy Act.
NHPA.............................. National Historic Preservation Act.
NHTSA............................. National Highway Traffic Safety
Administration.
NMC............................... Nickel Manganese Cobalt.
NOX............................... Nitrogen Oxide.
NPRM.............................. Notice of Proposed Rulemaking.
NRC............................... National Research Council.
NTTAA............................. National Technology Transfer and
Advancement Act.
NVO............................... Negative Valve Overlaps.
gpm............................... gallons per mile.
OC................................ Off-Cycle.
OCR............................... Optical Character Recognition.
OEM............................... Original Equipment Manufacturer.
OHV............................... Overhead Valve.
OLS............................... Ordinary Least Square.
OMB............................... Office of Management and Budget.
OPEC.............................. Organization of the Petroleum
Exporting Countries.
ORNL.............................. Oak Ridge National Laboratory.
PAEB.............................. Pedestrian Automatic Emergency
Braking.
PC................................ Passenger Car.
PEF............................... Petroleum Equivalency Factor.
PHEV.............................. Plug-in Hybrid Electric Vehicle.
PM2.5............................. Particulate matter 2.5 microns or
less in diameter.
PPC............................... Passive Prechamber Combustion.
ppm............................... parts per million.
PRA............................... Paperwork Reduction Act of 1995.
PRIA.............................. Preliminary Regulatory Impact
Analysis.
ROLL.............................. Tire Rolling Resistance.
[[Page 56441]]
ROLL0............................. Base Level Tire Rolling Resistance.
ROLL10............................ Tire Rolling Resistance, 10%
Improvement.
ROLL20............................ Tire Rolling Resistance, 20%
Improvement.
ROLL30............................ Tire Rolling Resistance, 30%
Improvement.
RPE............................... Retail Price Equivalent.
RPM............................... Revolutions Per Minute.
RRC............................... Rolling Resistance Coefficient.
RWD............................... Rear-Wheel Drive.
SAE............................... Society of Automotive Engineers.
SEC............................... Securities and Exchange Commission.
SEIS.............................. Supplemental Environmental Impact
Statement.
SGDI.............................. Stoichiometric Gasoline Direct
Injection.
SHEV.............................. Strong Hybrid Electric Vehicle.
SHEVPS............................ Power-Split Strong Hybrid Electric
Vehicle.
SI................................ Spark Ignition.
SIP............................... State Implementation Plan.
SKIP.............................. Refers to skip input in Market Data
Input File.
SOC............................... State of Charge.
SOHC.............................. Single Overhead Camshaft.
SOX............................... Sulfur Oxide.
SS12V............................. 12V Micro Hybrid Start-Stop System.
SUV............................... Sport Utility Vehicle.
SwRI.............................. Southwest Research Institute.
TAR............................... Technical Assessment Report.
TS&D.............................. Fuel Transportation, Storage, and
Distribution.
TSD............................... Technical Support Document.
TURBO0............................ Reference baseline turbocharged
downsized technology.
TURBO1............................ Turbocharged downsized technology.
TURBO2............................ Advanced turbocharged downsized
technology.
TURBOAD........................... Turbocharged engine with advanced
cylinder deactivation.
TURBOD............................ Turbocharged engine with cylinder
deactivation.
TURBOE............................ Turbocharged engine with cooled
exhausted recirculation.
UMRA.............................. Unfunded Mandates Reform Act.
U.S............................... United States.
U.S.C............................. Unites States Code.
VCR............................... Variable Compression Ratio.
Volpe or Volpe Center............. Volpe National Transportation
Systems Center.
VMT............................... Vehicle Miles Traveled.
VSL............................... Value of a Statistical Life.
VTG............................... Variable Turbo Geometry.
VTGE.............................. Variable Turbo Geometry (Electric).
VVL............................... Variable Valve Lift.
VVT............................... Variable Valve Timing.
VWA............................... Volkswagen Group of America.
ZEV............................... Zero Emission Vehicle.
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Does this action apply to me?
This proposal affects companies that manufacture or sell new
passenger automobiles (passenger cars) and non-passenger automobiles
(light trucks), as defined under NHTSA's CAFE regulations.\1\ Regulated
categories and entities include:
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\1\ See 49 CFR part 523.
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[[Page 56442]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.007
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. Technical Foundation for the NPRM Analysis
A. Why is NHTSA conducting this analysis?
1. What are the key components of NHTSA's analysis?
2. How do statutory requirements shape NHTSA's analysis?
3. What updated capabilities and assumptions does the current
model reflect as compared to the version used in the analysis of the
2024 final rule?
B. What is NHTSA analyzing?
C. What inputs does the compliance analysis require?
1. What inputs does the analysis require for 2022-2026?
2. What inputs does the compliance analysis require for 2027-
2031?
a. Technology Options and Pathways
b. Defining Manufacturers' Current Technology Positions in the
Analysis Fleet
c. Technology Effectiveness Values
d. Technology Costs
e. Simulating Tax Credits
f. Technology Applicability Equations and Rules
D. Technology Pathways, Effectiveness, and Cost
1. Engine Paths
2. Transmission Paths
3. Hybridization Paths
4. Road Load Reduction Paths
5. Mass Reduction
6. Aerodynamic Improvements
7. Low Rolling Resistance Tires
8. Simulating Air-Conditioning Efficiency and Off-Cycle
Technologies
E. Consumer Responses to Manufacturer Compliance Strategies
1. Consumer Responses to Manufacturer Compliance Strategies for
2027-2031
a. Macroeconomic and Consumer Behavior Assumptions
b. Fleet Composition
(1) Sales
(2) Scrappage
c. Changes in Vehicle-Miles Traveled
d. Changes to Fuel Consumption
F. Simulating Emissions Impacts of Regulatory Alternatives
G. Simulating Economic Impacts of Regulatory Alternatives
1. Private Costs and Benefits
2. External Costs and Benefits
H. Simulating Safety Effects of Regulatory Alternatives
1. Mass Reduction Impacts
2. Sales/Scrappage Impacts
3. Rebound Effect Impacts
4. Value of Safety Impacts
III. Regulatory Alternatives Considered in This NPRM
A. General Basis for Alternatives Considered
1. MYs 2022-2026
2. MYs 2027-2031
3. Minimum Domestic Passenger Car Standard Analysis Update
B. Regulatory Alternatives Considered
1. No-Action Alternatives for Passenger Cars and Light Trucks
a. No-Action Alternative for MYs 2022-2026 Amendment
b. No-Action Alternative for MYs 2027-2031 Amendment
2. Action Alternatives for Passenger Cars and Light Trucks
a. Action Alternatives for MYs 2022-2026 Amendment
(1) Alternative 1
(2) Alternative 2--Preferred Alternative
(3) Alternative 3
b. Action Alternatives for MYs 2027-2031 Amendment
(1) Alternative 1
(2) Alternative 2--Preferred Alternative
(3) Alternative 3
IV. Effects of the Regulatory Alternatives
A. Effects of the Regulatory Alternatives for MYs 2022-2026
B. Effects of the Regulatory Alternatives for 2027-2031
1. Effects on Vehicle Manufacturers
2. Effects on Society
3. Physical and Environmental Effects
4. Sensitivity Analysis
V. Basis for NHTSA's Tentative Conclusion That the Proposed
Standards Are Maximum Feasible
A. EPCA, as Amended by EISA
1. Administrative Provisions Governing CAFE Standard Setting
a. Lead Time, Amendatory Authority, and Number of Model Years
for Which Standards May Be Set at a Time
b. Separate Standards for Passenger Automobiles and Non-
Passenger Automobiles
c. Minimum Standards for Domestic Passenger Automobiles
d. Attribute-Based Standards Defined by a Mathematical Function
2. Maximum Feasible Standards
a. Technological Feasibility
b. Economic Practicability
c. The Effect of Other Motor Vehicle Standards of the Government
on Fuel Economy
d. The Need of the United States to Conserve Energy
(1) Consumer Costs and Fuel Prices
(2) National Balance of Payments
(3) Environmental Effects
(4) Foreign Policy Implications
e. Factors That NHTSA Is Prohibited From Considering
f. Additional Considerations Relevant to NHTSA's Statutory
Determination of Maximum Feasibility
B. Other Statutory Requirements
1. Administrative Procedure Act
2. National Environmental Policy Act
C. Evaluating the Statutory Factors and Other Considerations to
Arrive at the Proposed Standards
1. Why is NHTSA's tentative conclusion different from the 2020,
2022, and 2024 final rules?
2. Considerations Justifying the Proposed Standards
a. Technological Feasibility and the Effect of Other Motor
Vehicle Standards of the Government on Fuel Economy
[[Page 56443]]
b. Economic Practicability and Safety (Both Independently and as
a Subset of Economic Practicability)
c. The Need of the United States To Conserve Energy
3. Draft Supplemental Environmental Impact Statement Analysis
Results
D. Severability
VI. Compliance and Enforcement
A. Background and Overview of Compliance and Enforcement
B. Proposed Changes to the CAFE Program
1. Modification of Vehicle Classification in the CAFE Program
a. Non-Passenger Automobile Definition
b. Proposed Changes to Criteria for Off-Highway Capability
c. Proposed Changes to Criteria for Functional Performance
(1) Automobiles With Three or More Rows of Seating
(2) Light-Duty Work Factor
2. Removal of Credit Trading in the CAFE Program
3. Technical Amendments To Remove References to EPA's
Regulations for AC Efficiency and Off-Cycle Fuel Consumption
Improvement Values
4. Modification of Manufacturer Reporting Requirements
C. Technical Amendments
1. Technical Amendments To Remove Residual Mention of Fuel
Efficiency Standards for Trailers in NHTSA's Vehicle Classification
Regulations
2. Technical Amendment To Remove Heavy-Duty Trailers From the
List of Heavy-Duty Vehicle Regulatory Categories
3. Technical Amendments To Remove Civil Penalties for Non-
Compliance With Fuel Economy Standards From the CAFE Program
4. Additional Technical Amendments
a. Technical Amendments to Part 523
b. Technical Amendments to Part 531
c. Technical Amendments to Part 533
d. Technical Amendments to Part 536
e. Technical Amendments to Part 537
VII. Public Participation
VIII. Regulatory Notices and Analyses
A. Executive Order 12866, ``Regulatory Planning and Review'';
Executive Order 13563, ``Improving Regulation and Regulatory
Review''; Executive Order 14192, ``Unleashing Prosperity Through
Deregulation''; and Executive Order 14219, ``Ensuring Lawful
Governance and Implementing the President's `Department of
Government Efficiency' Deregulatory Initiative''
B. Environmental Considerations
1. National Environmental Policy Act
2. Clean Air Act as Applied to NHTSA's Proposed Rule
3. Endangered Species Act (ESA)
4. Other Regulatory Analyses Discussed in the Draft SEIS
5. Executive Order 13045: ``Protection of Children From
Environmental Health Risks and Safety Risks''
6. Executive Order 14154: ``Unleashing American Energy''
7. Executive Order 14173: ``Ending Illegal Discrimination and
Restoring Merit-Based Opportunity''
C. Regulatory Flexibility Act
D. Executive Order 13132 (``Federalism'')
E. Executive Order 12988 (``Civil Justice Reform'')
F. Executive Order 13175 (``Consultation and Coordination With
Indian Tribal Governments'')
G. Unfunded Mandates Reform Act
H. Regulation Identifier Number
I. National Technology Transfer and Advancement Act
J. Department of Energy Review
K. Paperwork Reduction Act
L. Rulemaking Summary, 5 U.S.C. 553(b)(4)
IX. Regulatory Text
I. Executive Summary
The relationship between the light-duty vehicle market and the CAFE
program has gone through several cycles over its almost 50-year
history. First created to require conservation of petroleum in response
to price shocks caused by the Arab oil embargoes of the 1970s, the CAFE
program has led not only to the desired improvements in fuel economy
but also created unintended responses from vehicle manufacturers--often
to the detriment of consumers.
Over the CAFE program's history, separate standards for the
passenger car and light truck fleets (referred to by law as passenger
automobiles and non-passenger automobiles) have led manufacturers to
reshape the market in unanticipated ways--such as by almost eliminating
the production of station wagons (passenger cars that generally have
more robust cargo capacity, adding mass and reducing fuel economy) in
favor of vehicles like minivans and crossover utility vehicles
(considered light trucks, and subject to less stringent standards).
Strict mile-per-gallon-based standards in the program's early years
also led manufacturers to seek significant reductions in vehicle size
and mass, leading to increased injury or fatality risk for occupants of
smaller vehicles involved in a crash.\2\ NHTSA sought to mitigate these
responses by creating attribute-based standards that relate the
``footprint'' size of vehicles to fuel economy, to some positive
effect.
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\2\ Transportation Research Board and National Research Council,
Effectiveness and Impact of Corporate Average Fuel Economy (CAFE)
Standards, National Academies Press: Washington, DC (2002),
available at: https://nap.nationalacademies.org/catalog/10172/effectiveness-and-impact-of-corporate-average-fuel-economy-cafe-standards (accessed: Feb. 7, 2024). This report describes at length
and quantifies the potential safety problem with average fuel
economy standards that specify a single numerical requirement for
the entire industry, noting that smaller and lighter vehicles
incentivized by those standards could be less safe for their
occupants.
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Meanwhile, the U.S. Environmental Protection Agency (EPA) started
providing special fuel economy adjustments for technologies that had
potential for fuel economy improvements but were not measurable using
the laboratory test procedures (i.e., the ``two-cycle'' tests) for
vehicle fuel economy. This included accommodating adjustments to
efficiency values if manufacturers implemented preferred air
conditioning (AC) technologies, and if manufacturers installed special
technologies with purported fuel-saving benefits that could not be
captured on the aforementioned two-cycle tests, accordingly known as
``off-cycle'' (OC) technologies (e.g., vehicle stop/start functions
that shut off the engine when the vehicle has stopped). These
regulatory adjustments have led to widespread adoption of technologies
with uncertain real-world benefits, added costs, and, in many cases,
consumer backlash.
The creation of a system for inter-manufacturer credit trading--
intended to improve the cost-effectiveness of the CAFE program by
allowing manufacturers that could improve the fuel economy of their
fleets more cost-effectively to earn credits for exceeding fuel economy
standards and sell those credits to manufacturers that would need to
incur higher costs to meet fuel economy standards--has also resulted in
a windfall for EV-exclusive manufacturers that sell credits to other
non-EV manufacturers, which in turn pay for those credits with capital
that could be invested toward improving the fuel economy performance or
other desirable attributes of their traditional fleets. The enormous
fuel economy values assigned to EVs have, heretofore, been included in
the baseline fleet fuel economy for subsequent CAFE rulemakings upon
which stringency increases are applied--thereby significantly
increasing the fuel economy requirements for traditional gasoline- or
diesel-fueled fleets.\3\
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\3\ In a hypothetical and simplified example, if the baseline
passenger car fleet of vehicles with an identical footprint
consisted of nine gasoline-powered vehicles achieving 30 mpg and one
EV achieving 150 mpg, the baseline fleet to which stringency
increases would apply would be measured at 42 mpg. When CAFE
standards are set unlawfully considering EV fuel economy,
manufacturers of gasoline-powered vehicles would face a challenge in
catching up to the overall fleet fuel economy, requiring
disproportionate investment in fuel-saving technologies, and
incentivizing the purchase of regulatory credits from the EV
manufacturer.
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At the same time, the classification system that has long divided
the fleet between passenger cars (intended to
[[Page 56444]]
move passengers) and light trucks (intended to move cargo or operate
off road) no longer lives up to its anticipated use. Indeed, while 68
percent of the light-duty fleet meets the current light truck
regulatory definition, the majority of these vehicles (e.g., all-wheel
drive (AWD) crossover utility vehicles, vehicles with three or more
rows of seating, and vehicles that do not have an approach angle high
enough to handle an off-highway obstacle) cannot realistically operate
off road and have little value moving cargo. Instead, most of these
vehicles are designed and intended primarily to move passengers but
have additional features solely to meet regulatory definitions \4\--
resulting in little added functionality, reduced fuel economy
performance, added cost, and a fairly homogenous design language
lacking in creativity.
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\4\ Section VI discusses NHTSA's proposal to amend regulatory
definitions for passenger and non-passenger automobiles in detail
and includes examples of manufacturers excluding or including
specific features solely to meet regulatory definitions. Two
examples discussed in more detail in Section VI include
manufacturers discontinuing FWD versions of vehicles after NHTSA
properly reclassified over 1 million FWD automobiles as passenger
automobiles in line with EPCA and opting to instead manufacture only
AWD or 4WD versions to keep more of their products in the non-
passenger automobile fleets (74 FR 14196, Mar. 30, 2009), and
manufacturers including aerodynamic technologies to increase on-
highway functionality instead of opting to meet approach angle
requirements, which would make the vehicle more capable of
approaching off-highway obstacles and, thus, more off-highway
capable.
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While the CAFE program was intended to push manufacturers to
improve fuel economy while preserving their ability to design and
produce vehicles that meet market demands, the system has spun off its
axis and requires recalibration. Instead of allowing manufacturers to
design and produce vehicles they believe their customers will want and
need, while spreading real-world fuel economy improvements across their
fleets, the system has increasingly led manufacturers to try to fit
square vehicle pegs in round classification holes to force the adoption
of technologies that do not meet the demands of American families
simply to obtain on-paper fuel economy improvements that may have
little basis in reality. All of this adds inefficiency and cost--
pushing even more consumers out of an already unaffordable new car
market.
By delegation of authority from the Secretary of Transportation
(the Secretary), NHTSA is proposing to amend the previously promulgated
CAFE standards applicable to passenger and non-passenger automobiles
(colloquially referred to as passenger cars and light trucks, and
together known as light-duty vehicles) produced for MYs 2022-2026 and
MYs 2027-2031. Proposing amended standards beginning with MY 2022 is
consistent with the Secretary's direction in the January 28, 2025,
memorandum titled ``Fixing the CAFE Program'' and is also the earliest
model year for which NHTSA has not concluded CAFE compliance
proceedings; additional discussion regarding NHTSA's proposal to amend
standards beginning in MY 2022 can be found in Section V.
Consistent with the terms of the CAFE program mandated in the
Energy Policy and Conservation Act (EPCA), as amended by the Energy
Independence and Security Act (EISA) and other laws (codified in
chapter 329 of title 49, United States Code), the fuel economy
standards proposed herein are founded on light-duty vehicles powered by
gasoline and diesel fuels, a category that includes non-plug-in hybrid
vehicles.\5\ In formulating the proposed standards, NHTSA has not
considered the imputed fuel-economy performance of EVs or the electric
operation of plug-in hybrid electric vehicles (PHEVs). This approach
marks a change from previous rulemakings, as described above, but
brings the CAFE program into compliance with statutory restrictions.
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\5\ Non-plug-in hybrid vehicles are not dual-fueled vehicles
under Chapter 329 because any electricity generated by the electric
motors or other electric components are generated solely by the
petroleum-fueled engine and the batteries are incapable of charging
from an external source: ``a vehicle which is entirely dependent on
a petroleum fuel for its motive power, regardless of whether
electricity is used in the powertrain, is powered by petroleum.'' 63
FR 66066 (Dec. 1, 1998).
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This proposed rule fulfills NHTSA's statutory obligation to set
CAFE standards at the maximum feasible level that the agency determines
vehicle manufacturers can achieve in each model year, balancing four
key factors: technological feasibility, economic practicability, the
need of the Nation to conserve energy, and the effect of other Federal
regulations on fuel economy.\6\ This balancing must take into account
current and projected circumstances and cannot consider the
availability of alternative fuel technologies (e.g., EVs or PHEV
electric operation), or compliance credits.\7\ This action is also
consistent with Executive Order (E.O.) 14148, ``Initial Rescissions of
Harmful Executive Orders and Actions,'' \8\ and E.O. 14154,
``Unleashing American Energy,'' \9\ as well as the Secretarial
memorandum titled ``Fixing the CAFE Program.'' \10\
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\6\ 49 U.S.C. 32902(a) and (f).
\7\ 49 U.S.C. 32902(h).
\8\ 90 FR 8237 (Jan. 28, 2025).
\9\ 90 FR 8353 (Jan. 29, 2025).
\10\ See DOT, Memorandum: Fixing the CAFE Program (2025),
available at: https://www.transportation.gov/briefing-room/memorandum-fixing-cafe-program (accessed: Sept. 10, 2025).
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The standards presented in this proposal significantly differ from
those finalized in the 2020, 2022, and 2024 rules because, in
formulating those prior standards, NHTSA considered both the fuel
economy of EVs and PHEVs and compliance credits that could be earned
when a manufacturer over-complied with an applicable fuel economy
standard impermissibly. As a result, the fuel economy standards
previously established by NHTSA for passenger cars and light trucks for
MYs 2022-2031 failed to satisfy substantive statutory requirements.
NHTSA is proposing in this NPRM the ``maximum feasible'' amended fuel
economy requirements for the model years in question that best reflect
and balance the various practical considerations and limitations
mandated for the CAFE program.
This rulemaking is intended to establish maximum feasible fuel
economy standards while restoring the functionality intended by
Congress. It marks a significant reset. As an initial matter, NHTSA
proposes to remove consideration of prohibited technologies and credits
from every aspect of the standards development process to bring the
program back within its statutory constraints. NHTSA discussed
extensively its prior unlawful consideration of prohibited technologies
and credits in the standards development process in the final rule,
Resetting the Corporate Average Fuel Economy Program,\11\ and includes
a more detailed discussion in Section V, below.
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\11\ 90 FR 24518 (June 11, 2025).
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NHTSA is proposing to remove consideration of AC efficiency and OC
fuel consumption improvement values (FCIVs) from its standard-setting
analysis starting with MY 2028, which is the first year in which a
removal of FCIVs could go into effect.\12\ This change will ensure that
NHTSA's CAFE standards are achievable without the implementation of
technologies not demanded by consumers and with questionable fuel
economy benefits.
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\12\ 49 U.S.C. 32904(d).
---------------------------------------------------------------------------
The agency also proposes to eliminate the inter-manufacturer credit
trading program (which is authorized, but not required, by 49 U.S.C.
32903(f)) beginning with MY 2028. This change in the program is long
overdue. While NHTSA does not consider the availability of credits or
credit trading in
[[Page 56445]]
establishing standards, the agency believes that eliminating inter-
manufacturer credit trading will encourage manufacturers to provide for
steady improvement in fuel economy across their fleets over time, as
opposed to relying upon credits acquired from third-party EV
manufacturers. NHTSA recognizes that manufacturers have made
investments in particular compliance pathways--pathways that may
include purchasing credits from other manufacturers even though the
availability of those credits is uncertain--and is proposing this
change beginning with MY 2028 to provide manufacturers with adequate
transition time, in recognition of any particular reliance interests in
the trading program to achieve compliance, before the program ends.
However, NHTSA is proposing standards in this notice at levels that do
not consider the use of compliance credits, thus minimizing any impacts
that this change may have on manufacturers' decisions about compliance
pathways. Moreover, this change will not impact automakers' ability to
transfer earned credits between different categories of vehicles in
their own fleets or carry their own credits forwards and backwards
across model years, as prescribed by statute.
The agency also proposes a substantial reclassification of the
light-duty fleet in a manner intended by Congress in creating the CAFE
program--with the passenger car fleet consisting of vehicles primarily
designed to move people, and the light truck fleet consisting of
vehicles primarily designed to operate off road or move cargo. NHTSA
believes these proposed changes are necessary to restore the CAFE
program to its intended orbit but recognizes the changes will introduce
significant design consideration for manufacturers. Moving a large
fraction of vehicles previously classified as light trucks into a
manufacturer's passenger vehicle fleet will have a significant effect
on the overall fuel economy performance of the manufacturer's passenger
fleet--after all, even if based upon the same platform as a passenger
car, the additional vehicle height adds significant mass and decreases
fuel economy. Meanwhile, removal of vehicles from a manufacturer's
light truck fleet will leave that fleet consisting of even heavier and
less aerodynamic vehicles, such as large sports utility vehicles and
pickup trucks, thereby decreasing the overall average fuel economy of
the light truck fleet. Accordingly, while a manufacturer's combined
overall fleet fuel economy may remain the same, both its passenger car
and light truck fleets will necessarily achieve lower measured fuel
economy. NHTSA is also proposing to update the classification criteria
from technology-based to performance-based standards where applicable,
consistent with best practices for regulation. This proposal intends to
take these changes into account through amendments to both the
footprint curves and standards applicable to various points within the
curves. NHTSA intends that, as a result of this proposed update,
automobiles classified as non-passenger will exhibit true non-passenger
capabilities that display relevant off-highway vehicle attributes such
as approach angle and running clearance or include design features that
provide higher payload and towing abilities for transporting property.
By surveying the measured fuel economy performance of gasoline- and
diesel-powered passenger cars and light trucks produced for the U.S.
market in MY 2022, NHTSA has created a maximum feasible foundation from
which to establish standards for subsequent model years. NHTSA is
proposing to set fuel economy standards that increase from the newly
proposed MY 2022 standards at a rate of 0.5 percent per year through MY
2026 followed by 0.25 percent per year through MY 2031, with MY 2027
stringency as a bridge between the two sets of standards.
In addition to the proposed standards (also referred to as the
``Preferred Alternative'') NHTSA considers a range of regulatory
alternatives for each fleet, consistent with the agency's obligations
under the Administrative Procedure Act (APA), National Environmental
Policy Act (NEPA), and E.O. 12866. The regulatory alternatives are as
follows:
[[Page 56446]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.008
NHTSA \13\ has concluded tentatively that the levels of standards
represented by Alternative 2 are the maximum feasible level for these
model years, as discussed in more detail in Section V of this preamble.
NHTSA has determined that the proposed standards satisfy the statutory
requirements of maximum feasibility across the full range of gasoline-
and diesel-powered vehicles currently on the market. These standards
will be appropriately stringent in promoting fuel efficiency in the
Nation's light-duty vehicle fleet while remaining technologically
feasible and economically practicable to achieve without regard to EV
dedicated fuel economy or PHEV electric operation. The proposed
standards also consider the effect of other Federal regulatory mandates
on the fuel economy performance of new motor vehicles, as well as the
need of the Nation to conserve energy. NHTSA has tentatively determined
that it is both reasonable and congruent with EPCA's energy
conservation goals to weigh the need of the United States to conserve
energy such that vehicle fuel economy standards require continuous
improvements over time, but at sustainable levels for manufacturers,
consumers, and society at large. In particular, the diminishing effects
attributable to fuel economy improvements from higher standards
moderates against weighing the need of the United States to conserve
energy too heavily compared to the other statutory factors.\14\
Manufacturers have limited supplies of capital for technological
advancement and are constrained in recovering those investments by what
consumers can afford to pay for technological innovations in new
vehicles. Maximum feasible fuel economy standards, when set
appropriately weighing economic practicability, should never
incentivize manufacturers to add technology that consumers reject at
the cost of investments in, or application of, for instance, vehicle
safety technologies. Instead, when truly maximum feasible standards
apply, manufacturers should be able continually to develop, and apply,
both proven fuel-saving and safety-enhancing technologies in such a
manner that allows consumers both to desire and to afford the new
vehicle.
---------------------------------------------------------------------------
\13\ 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.
\14\ As an example, a vehicle owner who drives a light vehicle
15,000 miles per year and trades in a vehicle with fuel economy of
15 mpg for one with fuel economy of 20 mpg, will reduce their annual
fuel consumption from 1,000 gallons to 750 gallons--saving 250
gallons annually. If, however, that owner trades in a vehicle with
fuel economy of 30 mpg for one with fuel economy of 40 mpg, then the
owner's annual gasoline consumption would drop from 500 gallons/year
to 375 gallons/year--a fuel savings of only 125 gallons even though
the mpg improvement is twice as large. Going from 40 to 50 mpg would
save only 75 gallons/year. Yet each additional fuel economy
improvement becomes much more expensive as the easiest to achieve
low-cost technological improvement options are exhausted.
---------------------------------------------------------------------------
NHTSA's preliminary conclusion is that this decision best comports
with statutory requirements and is justified to reset standards set in
final rules issued in 2020, 2022, and 2024, respectively, which were
established improperly above the maximum feasible level because NHTSA
considered statutorily prohibited factors in establishing those
[[Page 56447]]
standards.\15\ Those rules resulted in distortions in the marketplace,
which this proposed rule would minimize. These distortions include
major non-market-based changes in automobile designs and the
introduction of fundamental alterations in their production processes
not primarily driven by market demand.
---------------------------------------------------------------------------
\15\ 85 FR 24174 (Apr. 30, 2020); 87 FR 25710 (May 2, 2022); 89
FR 52540 (June 24, 2024).
---------------------------------------------------------------------------
Increasing the stringency of standards at modest annual rates,
following a reset to eliminate the consideration of impermissible
factors that were applied in setting the current standards, and coupled
with a re-examination of the shape of the fuel economy target functions
and the vehicle classification definitions, best comports with
statutory requirements. Moreover, the level, shape, and applicability
of the standards to the proposed passenger and non-passenger automobile
fleets are justified by the inappropriate distortions the existing
regulations have caused in the marketplace. Those regulations resulted
in unnecessary regulatory burdens that did not further statutory
purposes because the standards were not attainable for the gasoline-
and diesel-powered vehicle fleet.
The proposed CAFE standards remain vehicle-footprint-based, like
the current CAFE standards in effect since MY 2011. 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. This means that the
standards are defined by mathematical equations that represent
constrained linear functions relating vehicle footprint to fuel economy
targets for passenger cars and light trucks.\16\ For this proposal,
NHTSA has updated the mathematical functions (i.e., the target curves
relating footprint to fuel economy) for passenger cars and light trucks
based on the latest available data. NHTSA has concluded preliminarily,
based on this data, that the relationship between footprint and fuel
economy has shifted from MY 2008 (the model year on which the current
curves are based) and it is thus appropriate to modify the mathematical
functions accordingly. NHTSA has also updated the functions that would
be applied beginning in MY 2028 to reflect changes based on the
proposed reclassified fleet.
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\16\ 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.
---------------------------------------------------------------------------
NHTSA estimates that the proposed standards would correspond to a
combined industry fleetwide average of roughly 34.5 mpg in MY 2031 for
passenger cars and light trucks.\17\ NHTSA notes that this is a
projection, since the actual CAFE standards are the footprint target
curves for passenger cars and light trucks. This is important because
it means that the ultimate fleetwide levels will vary depending on the
mix of vehicles that manufacturers produce 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.\18\ Note that the industry-
average required and achieved values presented below reflect the end of
manufacturers' ability to claim AC and FCIV adjustments, beginning in
MY 2028, and updated vehicle classification regulatory definitions,
which are also applicable beginning in MY 2028.
---------------------------------------------------------------------------
\17\ NHTSA notes both that real-world fuel economy is generally
20-30 percent lower than the estimated required CAFE level stated
above, since 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) must use the same procedures used for MY 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, AC 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 United States, effective with MY 2008 vehicles.
\18\ NHTSA's analysis reflects that almost all manufacturers
make the technological improvements prompted by CAFE standards at
times that coincide with existing product ``refresh'' and
``redesign'' cycles, rather than unrealistically 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 the Draft
TSD and preamble Section II for additional discussion about
manufacturer refresh and redesign cycles.
---------------------------------------------------------------------------
For simplification, NHTSA provides industry-wide mpg estimates
corresponding to the proposed standards in the table below but
reiterates that the coefficients that define the mathematical functions
comprise the actual standards.
[[Page 56448]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.009
To the extent that manufacturers appear to be over-complying with
required fuel economy levels in MY 2027, NHTSA notes that this is due
to factors including previous application of fuel economy technologies
required by standards set improperly for prior model years that
unlawfully considered prohibited alternative fuel (e.g., EV) technology
applications. Once the program is restored to its intended strictures
and standards are established that consider all statutory factors and
limitations appropriately, manufacturers that previously applied
technologies to meet exaggerated requirements will have relief, while
manufacturers that faced certain penalties can continue to improve
efficiency to meet maximum feasible standards. NHTSA's review of
achieved compliance at the manufacturer level also shows that, while
some manufacturers manage to achieve greater over-compliance, other
manufacturers are expected to achieve compliance values that will track
the levels of the new standards more closely. In addition, NHTSA
believes that the proposed standards established for model years prior
to the significant MY 2028 fleet reclassification will allow
manufacturers to plan strategically with sufficient lead time to manage
that transition within their projected model year sales cycles. For all
fleets, average requirements and average achieved CAFE levels will
depend ultimately on manufacturer and consumer response to standards,
technology developments, economic conditions, fuel prices, and other
factors.
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\19\ There is no 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.
---------------------------------------------------------------------------
NHTSA is also proposing new minimum domestic passenger car CAFE
standards (MDPCS) for MYs 2022-2026 and MYs 2027-2031 as required by
EISA, which are applied to passenger cars that are deemed to be
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 model year; these standards
are shown in Table I-3 below. NHTSA continues to apply an offset
(albeit a far smaller one than was first used in the 2020 final rule
and applied to the 2022 and 2024 final rules) when calculating the
MDPCSs for MYs 2027-2031, reflecting prior differences between
passenger car footprints forecast originally by the agency and
passenger car footprints as they occurred in the real world. The
proposed minimum domestic passenger car standards (MDPCS) for each
model year are as shown in the table below.
[GRAPHIC] [TIFF OMITTED] TP05DE25.010
[[Page 56449]]
NHTSA uses the CAFE Compliance and Effects Modeling System (the
CAFE Model) developed and maintained by the Volpe National
Transportation Systems Center (Volpe Center or Volpe) as a tool for
assessing the likely regulatory effects of the proposal and various
regulatory alternatives. The Model does not determine which standards
satisfy the requirements of EPCA, and no model can predict precisely
the engineering configurations automakers are likely to introduce in
response to evolving trends in market demand. However, the analysis
developed using the CAFE Model provides further support for NHTSA's
preliminary judgment that the standards proposed in this rule are the
maximum standards that are technologically feasible and economically
practicable for the gasoline- and diesel-powered vehicles covered by
the proposed rule, considering the effect of other motor vehicle
standards of the Government on fuel economy, and the need of the United
States to conserve energy.
One significant modification from previous standard-setting
proceedings and previous applications of the CAFE Model is that NHTSA
did not include EVs in the base fleet for analysis purposes and did not
consider or model the potential production of EVs as a CAFE compliance
strategy for automakers. Section 32902 of chapter 49 directs NHTSA to
establish fuel economy standards that are feasible and practicable for
gasoline- and diesel-powered vehicles without regard to any reliance on
non-gasoline- or diesel-powered alternatives. Automakers, of course,
are free to produce EVs in response to market demand, and their
production and sale of EVs will earn credit toward compliance with the
CAFE standards in accordance with the ``petroleum equivalency factor,''
or ``PEF,'' prescribed by the Department of Energy (DOE).\20\
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\20\ 49 U.S.C. 32904(a)(2)(B); Public Law 96-185, 93 Stat. 1324
(1980). https://www.congress.gov/96/statute/STATUTE-93/STATUTE-93-Pg1324.pdf; 10 CFR part 474.
---------------------------------------------------------------------------
Additional updates to the CAFE Model and its inputs since the 2024
final rule include updating the Market Data Input File to reflect the
change in analysis fleet from MYs 2022-2024, updating the modeling
capability to allow for vehicle reclassification, updating the
Scenarios Input File to set the value of civil penalties at zero,\21\
updating the Parameters Input File to set the monetary value of changes
in non-criteria emissions at zero, updating other economic values, such
as rebound elasticity and the payback periods, and updating fuel price
projections using the 2025 Annual Energy Outlook's (AEO) Alternative
Transportation Case. These and other updates are described in more
detail in Section II and the Draft TSD.
---------------------------------------------------------------------------
\21\ See Public Law 119-21, 139 Stat. 72 (July 4, 2025). https://www.congress.gov/119/plaws/publ21/PLAW-119publ21.pdf.
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NHTSA estimates that this proposed rule would reduce the average
up-front vehicle costs due to CAFE standards by approximately $900,
cutting in half what consumers might expect to pay as a result of
increased requirements under the No-Action Alternative. NHTSA also
estimates that this rule will be net beneficial economically for
society. The tables below summarize estimates of selected impacts
viewed from both the MY and calendar year (CY) perspectives,\22\ for
each of the regulatory alternatives, relative to the No-Action
Alternative.
---------------------------------------------------------------------------
\22\ The bulk of the analysis for passenger cars and light
trucks presents a ``model year'' perspective rather than a
``calendar year'' perspective. The model year perspective considers
the lifetime impacts attributable to all passenger cars and light
trucks produced through MY 2031, 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 proposed. The calendar year perspective, on the other hand,
includes the annual impacts attributable to all vehicles estimated
to be in service in each calendar year for which the analysis
includes a representation of the entire registered light-duty fleet.
For this proposed rule, this calendar year perspective covers each
of CYs 2024-2050. 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 proposed.
\23\ For this and similar tables in this section, net benefits
may differ from benefits minus costs due to rounding.
[GRAPHIC] [TIFF OMITTED] TP05DE25.011
[[Page 56450]]
The current estimates of costs and benefits are important
considerations, performed as directed by E.O. 12866, and also serve as
an informative data point in NHTSA's consideration of the factors that
NHTSA is required to balance by statute when determining maximum
feasible standards. NHTSA concludes, for the purposes of this proposal,
that Alternative 2 is maximum feasible on the basis of these respective
factors. NHTSA also considered several sensitivity cases by varying
different inputs and concluded that, even when varying inputs resulted
in changes to net benefits, those changes were not significant enough
to alter the tentative conclusion that Alternative 2 is maximum
feasible.
Finally, NHTSA has computed ``annualized'' benefits and costs
relative to the No-Action Alternative, as follows:
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\24\ For this and similar tables in this section, net benefits
may differ from benefits minus costs due to rounding.
[GRAPHIC] [TIFF OMITTED] TP05DE25.012
Though NHTSA is prohibited from considering the availability of
certain flexibilities in making its determination about the levels of
CAFE standards that would be maximum feasible, manufacturers have a
variety of flexibilities available to aid their compliance. NHTSA is
proposing certain changes to these flexibilities and other features of
the CAFE program as shown in Table I-6, and as described further in
Section VI of this preamble.
BILLING CODE 4910-59-P
[[Page 56451]]
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[[Page 56452]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.014
[[Page 56453]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.015
BILLING CODE 4910-59-C
The following sections of this preamble discuss the technical
foundation for NHTSA's analysis, the regulatory alternatives considered
in this proposed rule, the estimated effects of the regulatory
alternatives, the basis for NHTSA's tentative conclusion that the
proposed standards are maximum feasible, and NHTSA's approach to
compliance and enforcement. The extensive record for this action
consists of this proposed rule, a Draft Technical Support Document
(Draft TSD), a Preliminary Regulatory Impact Analysis (PRIA), and a
Draft SEIS, along with extensive analytical documentation, supporting
references, and many other resources. Most of these resources are
available on NHTSA's website,\26\ 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. NHTSA
seeks comment on all aspects of this proposal and seeks comment on
particular topics where indicated in each Section.
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\25\ DOT will update the CAFE civil penalties regulations in 49
CFR 578.6(h) to reflect the statutory amendment in section 40006 of
Public Law 119-21 in the next DOT-wide annual civil penalties update
rulemaking.
\26\ See NHTSA, Corporate Average Fuel Economy, Last revised:
2023, https://www.nhtsa.gov/laws-regulations/corporate-average-fuel-economy (accessed: Sept. 10, 2025).
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II. Technical Foundation for the NPRM Analysis
A. Why is NHTSA conducting this analysis?
When NHTSA promulgates new regulations or amends its existing
regulations, it generally presents an analysis that estimates the
impacts of those regulations, including the impacts of other regulatory
alternatives it considered during the rulemaking. These analyses derive
from statutes such as the APA \27\ and the National Environmental
Policy Act (NEPA),\28\ from Executive orders (such as E.O. 12866),\29\
and from other administrative guidance (e.g., Office of Management and
Budget (OMB) Circular A-4).\30\ For this analysis in particular, EPCA
contains several requirements governing the scope and nature of fuel
economy standard setting.\31\ Among these, some have been in place
since EPCA was first signed into law in 1975, some were added in the
Alternative Motor Fuels Act of 1988 (AMFA) \32\ and in the Energy
Policy Act of 1992,\33\ and others were added in 2007 when Congress
[[Page 56454]]
passed the EISA.\34\ Most recently, One Big Beautiful Bill Act (OB3)
amended EPCA's civil penalty provisions.\35\
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\27\ Codified in 5 U.S.C. 551-559.
\28\ Codified in 42 U.S.C. 4321-4347.
\29\ Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993).
\30\ Office of Management and Budget, Circular A-4 (Sept. 17,
2003), available at: https://www.whitehouse.gov/wp-content/uploads/2025/08/CircularA-4.pdf (accessed Sept. 10, 2025).
\31\ Public Law 94-163, 89 Stat. 871 (Dec. 22, 1975). https://www.govinfo.gov/content/pkg/STATUTE-89/pdf/STATUTE-89-Pg871.pdf.
\32\ Public Law 100-494, 102 Stat. 2441 (Oct. 14, 1988). https://www.govinfo.gov/content/pkg/STATUTE-102/pdf/STATUTE-102-Pg2441.pdf.
\33\ Public Law 102-486, 106 Stat. 2776 (Oct. 24, 1992). https://www.govinfo.gov/content/pkg/STATUTE-106/pdf/STATUTE-106-Pg2776.pdf.
\34\ Public Law 110-140, 121 Stat. 1492 (Dec. 19, 2007). https://www.govinfo.gov/content/pkg/STATUTE-121/pdf/STATUTE-121-Pg1492.pdf.
\35\ Public Law 119-21, 139 Stat. 72 (July 4, 2025). https://www.congress.gov/119/plaws/publ21/PLAW-119publ21.pdf.
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These statutes contain a variety of requirements for which NHTSA
seeks to account in its analysis. NHTSA captures all of these
requirements by presenting 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 various express statutory requirements for the CAFE
program (e.g., passenger cars and light trucks must be regulated
separately; and the standard for each fleet must be set at the maximum
feasible level in each model year). NHTSA's standards are thus
supported by, though not dictated by, extensive analysis of potential
impacts of the regulatory alternatives under consideration. Together
with this preamble, a Draft TSD, a PRIA, and a Draft SEIS provide a
detailed enumeration of related analysis methods, estimates,
assumptions, and results. These additional analyses can be found in the
rulemaking docket for this proposed rule and on NHTSA's website.\36\
\37\
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\36\ Docket Nos. NHTSA-2025-0491; NHTSA-2025-0490.
\37\ See NHTSA, Corporate Average Fuel Economy, Last revised:
2023, available at: https://www.nhtsa.gov/laws-regulations/corporate-average-fuel-economy (accessed: Sept. 10, 2025).
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This section provides further detail on the key features and
components of NHTSA's standard-setting (also known as ``constrained'')
analysis. NHTSA's standard-setting analysis reflects statutory
limitations on what NHTSA can consider when determining maximum
feasible CAFE standards. In determining maximum feasible fuel economy
levels, ``the Secretary of Transportation--(1) may not consider the
fuel economy of dedicated automobiles; (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.'' \38\ NHTSA also conducts an
``unconstrained'' CAFE Model analysis to evaluate, as required by NEPA,
the reasonably foreseeable environmental effects of its proposed action
and a reasonable range of alternatives that meet the purpose and need
for the proposed action.\39\ The technical assumptions for EIS
simulations are discussed in the Draft EIS Appendix C.
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\38\ 49 U.S.C. 32902(h).
\39\ 42 U.S.C. 4332.
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This section also describes how NHTSA's analysis has been
constructed specifically to reflect other governing law applicable to
CAFE standards, reviews how NHTSA's analysis has been updated to
represent relevant statutory provisions more closely, and describes
additional technical work recently conducted by the agency. The
analysis for this proposed rule aids NHTSA in implementing its
statutory obligations, including the weighing of various
considerations, by informing decision-makers about the estimated
effects of different regulatory alternatives.
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 are unknown
or 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 ``reference fleet'' containing, among other things, production
volumes and fuel economy levels of specific configurations of specific
vehicle models produced for sale in the United States. 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'' factor, 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).
In coordination with the DOT Volpe National Transportation Systems
Center (Volpe or the Volpe Center), NHTSA uses the CAFE Compliance and
Effects Modeling System (CAFE Model or the Model) to simulate and
analyze manufacturers' potential responses to new CAFE standards and to
estimate various impacts of those responses. NHTSA has used the CAFE
Model to perform analyses supporting every CAFE rulemaking since 2001.
Working together, NHTSA and Volpe ensure that the CAFE Model's
operation reflects the statutory directives discussed in more detail in
Section II below.
The CAFE Model first estimates how vehicle manufacturers might
respond to a given regulatory scenario; from that potential compliance
solution, the system estimates what impact that response will have on
fuel consumption, emissions, safety impacts, and economic
externalities. The following section summarizes information necessary
to understand the analysis, while Draft TSD Chapter 2 and the CAFE
Model Documentation present additional details on the Model's
operation.
The CAFE Model may be characterized as an integrated system of
models that estimate the impact of various policy options. 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). Importantly, the
modeling system does not determine the form or stringency of the
standards, which must be developed in consideration of statutory
factors that must be balanced by policy-makers. Instead, the CAFE 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 and light truck regulatory classes,
and stringency of the standards for each model year to be analyzed. For
example, a regulatory scenario may define 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.\40\ The compliance simulation
then attempts to bring each
[[Page 56455]]
manufacturer into compliance with the standards defined by the
regulatory scenario contained within an input file developed by the
user.
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\40\ 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 proposed 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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Estimating impacts involves calculating resulting changes in new
vehicle costs, estimating a variety of costs (e.g., for fuel
expenditures or reduced or increased technology costs) and effects
(e.g., gallons of fuel used by the fleet) 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, operating costs, and vehicle price on consumer
demand for light-duty vehicles). Both basic analytical elements involve
the application of many inputs. Many of these inputs are developed
outside of the Model and not by the Model. For example, the Model
applies fuel price projections from DOE; 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 \41\ and uses four 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 National Energy Modeling System (NEMS) of DOE's Energy
Information Administration (EIA) to estimate fuel prices \42\ 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.\43\ DOT also sponsors Argonne to
run its Autonomie full-vehicle modeling and simulation system to
estimate the fuel economy impacts for over a million combinations of
technologies and vehicle types.\44\ The Draft TSD and PRIA describe
details of the agency's use of these models. In addition, as discussed
in the Draft SEIS accompanying this proposed rule, NHTSA relied on a
range of models to estimate various environmental impacts.
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\41\ See https://www.epa.gov/moves. This proposed rule uses
version MOVES5 (the latest version at the time of analysis),
available at https://www.epa.gov/moves/latest-version-motor-vehicle-emission-simulator-moves.
\42\ See https://www.eia.gov/outlooks/aeo/. This proposed rule
uses fuel prices estimated using the Annual Energy Outlook (AEO)
2025 version of NEMS. See https://www.eia.gov/outlooks/aeo/tables_ref.php.
\43\ Information regarding GREET is available at https://greet.anl.gov/. This proposed rule uses the R&D GREET 2023 version.
\44\ 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/electrochemical-chemical-TEA. 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/.
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To prepare for the analysis that supports this proposed rule, DOT
has continued to refine and expand the capabilities of the CAFE Model.
As examples, and as discussed in more detail below, the reference fleet
uses mid-MY 2024 compliance data (the most recent available data at the
time of the analysis) and includes the capability (in addition to
capabilities integrated into the modeling system) to account for
proposed changes to the regulatory vehicle classification definitions.
The analysis also employs separate input files for the modeling runs
that NHTSA uses for its standard-setting analysis, which excludes the
49 U.S.C. 32902(h) factors that NHTSA cannot consider (constrained
analysis), and the modeling runs that NHTSA uses for its analysis of
impacts under the National Environmental Policy Act, which does not
exclude the 49 U.S.C. 32902(h) factors (unconstrained analysis), and
those input files have been updated accordingly. Common to both
analyses are routine updates to dollar year values (e.g., 2021$ to
2024$) or routine updates to gas price projections. Some other updates,
like updates to manufacturer credit banks, are confined to the
unconstrained analysis only and are discussed further in the Draft SEIS
Appendix C. The values of many inputs remain uncertain, and NHTSA has
conducted sensitivity analyses around selected inputs to attempt to
capture some of that uncertainty. These changes reflect DOT's long-
standing commitment to ongoing refinement of its approach to estimating
the potential impacts of new CAFE standards. These and other updated
analytical inputs are outlined in Section II below and discussed in
detail in the Draft TSD and PRIA.
2. How do statutory requirements shape NHTSA's analysis?
Multiple requirements govern the scope and nature of CAFE standard
setting; the specific requirements regarding the technical
characteristics of CAFE standards and the analysis thereof include, but
are not limited to, the following:
Corporate Average Standards: 49 U.S.C. 32902 requires that
standards apply to the average fuel economy levels achieved by each
manufacturer's fleet of vehicles produced for sale in the United
States. The CAFE Model calculates the average fuel economy of each
manufacturer's fleet based on estimated production volumes and
characteristics, including fuel economy levels of distinct vehicle
models that could be produced for sale in the United States.
Separate Standards for Passenger and Non-Passenger Automobiles: 49
U.S.C. 32902 requires DOT to set CAFE standards separately for
passenger and non-passenger automobiles. The CAFE Model accounts
separately for passenger and non-passenger automobiles, including
differentiated standards and compliance.
Attribute-Based Standards: 49 U.S.C. 32902 requires DOT to define
CAFE standards for passenger and non-passenger automobiles as
mathematical functions expressed in terms of one or more attributes
related to fuel economy. This means that, for a given manufacturer's
fleet of vehicles produced for sale in the United States in a given
regulatory class and model year, the applicable minimum CAFE
requirement (i.e., the numerical value of the requirement) is computed
based on the applicable mathematical function as well as the mix and
attributes of vehicles in the manufacturer's fleet. The CAFE Model
accounts for such functions and vehicle attributes explicitly.
Separately Defined Standards for Each Model Year: 49 U.S.C. 32902
requires DOT to set CAFE standards (separately for passenger and non-
passenger automobiles) at the maximum feasible levels in each model
year. The CAFE Model represents each model year explicitly and accounts
for the production relationships between model years. For example, a
new engine first applied to a given vehicle model/configuration in MY
2030 most likely will be retained in MY 2031 for that same vehicle
model to reflect the fact that manufacturers do not apply brand-new
engines to a given vehicle model every single year. The CAFE Model is
designed to account for this reality, while still respecting applicable
statutory constraints.
Separate Compliance for Domestic and Imported Passenger Car Fleets:
49 U.S.C. 32904 requires EPA to determine average fuel economy
separately for each manufacturer's fleet of domestic passenger cars and
imported passenger
[[Page 56456]]
cars. A passenger car is considered to be domestic or imported based on
the definitions provided in 49 U.S.C. 32904. The CAFE Model accounts
explicitly for this requirement when simulating manufacturers'
potential responses to CAFE standards.
Minimum CAFE Standards for Domestic Passenger Car Fleets: 49 U.S.C.
32902 requires that domestic passenger car fleets also meet a minimum
CAFE standard, which is calculated as 92 percent of the average fuel
economy projected by the Secretary for the combined passenger car fleet
manufactured for sale in the United States by all manufacturers in the
model year. This projection is published at the time the standard is
promulgated. The CAFE Model accounts explicitly for this requirement.
Statutory Basis for Stringency: 49 U.S.C. 32902 requires DOT to set
CAFE standards for passenger and non-passenger automobiles at the
maximum feasible levels, considering technological feasibility,
economic practicability, the need of the U.S. to conserve energy, and
the impact of other motor vehicle standards of the Government on fuel
economy. The analysis and balancing of these factors necessarily
changes in light of current and projected economic and market
conditions. Accordingly, NHTSA has continued to expand and refine its
qualitative and quantitative analysis to account for these statutory
factors in light of such conditions. For example, the simulations of
technology effectiveness reflect the agency's judgment that it would
not be economically practicable, appropriate, or cost effective for a
manufacturer to ``split'' an engine shared among many vehicle models/
configurations into myriad versions each optimized to a single vehicle
model/configuration.
Civil Penalties for Noncompliance: 49 U.S.C. 32912 (and
implementing regulations) prescribe a rate (in dollars per tenth of a
mile per gallon (mpg)) at which the Secretary is to levy civil
penalties if a manufacturer fails to comply with a CAFE standard for a
given fleet in a given model year. When civil penalties are applicable
(i.e., when they are not set by statute to a value of $0, as they have
been at the time of this analysis of the proposed rule), the CAFE Model
will calculate civil penalties for CAFE shortfalls (if directed to do
so by the user). However, as stated, civil penalty values are currently
set by statute to a value of $0; therefore, the CAFE Model's
calculations will always result in zero civil penalties.
Dual-Fueled and Dedicated Alternative Fuel Vehicles: For purposes
of calculating CAFE standards used to determine passenger and non-
passenger automobile fleet compliance, 49 U.S.C. 32905 and 32906
specify methods for calculating the fuel economy levels of vehicles
operating on alternatives to gasoline or diesel fuels. The CAFE Model
can account for these requirements explicitly for each relevant vehicle
model. However, 49 U.S.C. 32902 also prohibits consideration of the
fuel economy of dedicated alternative fuel vehicle (AFV) models (or the
non-gasoline or non-diesel calculated fuel economy of dual-fueled AFVs)
when NHTSA determines what levels of passenger and non-passenger
automobile CAFE standards are maximum feasible. Therefore, the CAFE
Model is run in a manner that excludes dedicated AFV technologies and
limits the consideration of a dual-fueled AFV's fuel economy to only
its gasoline or diesel operation. NHTSA operates the Model with this
limitation when performing the analysis that is used to inform the
setting of standards. The CAFE Model can also be run without this
analytical constraint, and the agency does so in the NEPA analysis
described below.
Creation and Use of Compliance Credits: 49 U.S.C. 32903 provides
that manufacturers may earn CAFE ``credits'' by achieving an average
fuel economy level beyond that required of a given fleet in a given
model year and specifies how these credits may be used to offset the
amount by which a different fleet falls short of its corresponding
requirement. These provisions allow credits to be ``carried forward'' a
maximum of five model years, ``carried back'' a minimum of three model
years, transferred between regulated classes, and traded between
manufacturers. However, credit use is also subject to specific limits:
the statute caps the amount of credit that can be transferred between a
manufacturer's fleets and prohibits manufacturers from applying traded
or transferred credits to offset a failure to achieve the minimum
standard for domestic passenger automobiles. The CAFE Model has the
capability to simulate manufacturers' potential use of credits carried
forward from prior model years or transferred from other fleets; \45\
however, this capability is not used in the standard-setting analysis
because 49 U.S.C. 32902 prohibits consideration of manufacturers'
potential application of CAFE compliance credits when setting maximum
feasible CAFE standards for passenger and non-passenger automobiles.
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\45\ Note that the CAFE Model does not simulate the potential
for manufacturers to carry CAFE credits back (i.e., borrow) from
future model years or acquire and use CAFE compliance credits from
other manufacturers. NHTSA believes that there is significant
uncertainty in how manufacturers may choose to use these particular
flexibilities in the future: for example, while it is reasonably
foreseeable that a manufacturer who over-complies in 1 year may
``coast'' through several subsequent years relying on that prior
improvement rather than continuing to make technology improvements
year after year, it is harder to assume with confidence that
manufacturers will rely on future technology investments to offset
prior-year shortfalls, or whether and how manufacturers will trade
credits with market competitors rather than make their own
technology investments.
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National Environmental Policy Act (NEPA): The Draft SEIS
accompanying this proposed rule documents changes in fuel use and
emissions as estimated using the CAFE Model and also documents
corresponding estimates--based on the application of other models
documented in the Draft SEIS--of environmental impacts of the
regulatory alternatives under consideration.
3. What updated capabilities and assumptions does the current Model
reflect as compared to the version used in the analysis of the 2024
final rule?
DOT has continued its ongoing effort to refine and expand the
capabilities of the CAFE Model for use in analyzing regulatory
alternatives as considered in this proposal. Any analysis of regulatory
actions that will be implemented several years in the future, and whose
benefits and costs accrue over decades, requires many assumptions. Over
such time horizons, many, perhaps even most, of the relevant
assumptions in such an analysis are inevitably uncertain. To help
address this, NHTSA updates the assumptions used in each successive
CAFE analysis to reflect the current state of the world more accurately
and to apply the best current estimates of future conditions.
Accordingly, since the 2024 final rule, DOT has made the following
changes to the CAFE Model and its inputs:
Updating the Market Data Input File to reflect the change
in analysis fleet from MYs 2022-2024;
Updating algorithms and settings to remove statutorily
prohibited inputs from the standard-setting analysis and to select
between different types of analyses (i.e., constrained and
unconstrained);
Updating the base dollar year from 2021$ to 2024$;
Updating the capability to exclude plug-in hybrid electric
vehicle (PHEV) electricity usage when PHEV fuel economy operation is in
gasoline-only mode for standard setting;
[[Page 56457]]
Updating the modeling capability to allow for vehicle
reclassification;
Updating the Market Data Input File to include vehicle
reclassification;
Updating the Model to use a bracketed costing approach to
determine prices for the five levels of mass reduction (MR);
Updating the Scenarios Input File to remove AC and OC
FCIVs;
Updating the Market Data Input File to include advanced
truck credits for MY 2024 vehicles, noting that those credits sunset
after MY 2024 and are therefore only applicable to that one year;
Updating the Parameters Input File to set the social cost
of carbon at zero;
Updating the Parameters Input File for changes in other
economic variables;
Updating the Scenarios Input File with an adjusted tax
credit phase-out timeframe;
Updating the Scenarios Input File to set civil penalties
to zero;
Updating selected economic assumptions:
[cir] Rebound elasticity;
[cir] Payback period;
[cir] Value of travel time per vehicle; and
[cir] Numerous other updates based on the 2025 AEO; and
Updating emission rates based on EPA's ``MOVES5'' model.
These and other updated analytical inputs are discussed in the
remainder of this section and in detail in the Draft TSD.
B. What is NHTSA analyzing?
NHTSA is analyzing the effects of different potential CAFE
standards on industry, consumers, and society at large. These different
potential standards are described as ``regulatory alternatives,'' and,
amongst the regulatory alternatives, NHTSA identifies which ones the
agency is proposing to select. EPCA, as amended by EISA, expressly
requires that CAFE standards for passenger cars and light trucks be
based on one or more vehicle attributes related to fuel economy and be
expressed in the form of a mathematical function.\46\ Thus, the
standards (and the regulatory alternatives) for passenger cars and
light trucks take the form of fuel economy targets expressed as
functions of vehicle footprint (the product of vehicle wheelbase and
average track width) that are separate for passenger cars and light
trucks.
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\46\ 49 U.S.C. 32902(a)(3)(A).
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Under the footprint-based standards, the function defines a fuel
economy performance target for each unique footprint combination within
a car or truck model type. Using the functions, each manufacturer thus
will have an average fuel economy standard for each year that is unique
to each of its regulatory fleets (i.e., passenger automobiles and non-
passenger automobiles, consistent with 49 U.S.C. 32902(b)), based on
the footprint and production volumes of the vehicle models produced by
that manufacturer. The functions are negatively sloped, so that larger
vehicles (i.e., vehicles with larger footprints) will generally be
subject to lower mpg targets than smaller vehicles. This is because
smaller vehicles are typically more capable of achieving higher levels
of fuel economy, because they tend not to require as much energy to
propel the mass necessary to perform their driving task. Although a
manufacturer's fleet average standard could be estimated throughout the
model year based on the projected production volume of its vehicle
fleet (and is estimated as part of EPA's certification process), the
standards with which the manufacturer must comply are determined by its
final model year production figures. A manufacturer's calculation of
its fleet average standards, as well as its fleets' average performance
at the end of the model year, will thus be based on the production-
weighted average target and performance of each model in its fleet.\47\
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\47\ As discussed in prior rulemakings, a manufacturer may have
some vehicle models that exceed their target and some that are below
their target. Compliance with a fleet average standard is determined
by comparing the fleet average standard (based on the production-
weighted average of the target levels for each model) with fleet
average performance (based on the production-weighted average of the
performance of each model). This is inherent in the statutory
structure of CAFE, which requires NHTSA to set corporate average
standards.
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For passenger cars, consistent with prior rulemakings, NHTSA is
defining fuel economy targets as shown in Equation II-1.
Equation II-1: Passenger Car Fuel Economy Footprint Target Curve
[GRAPHIC] [TIFF OMITTED] TP05DE25.016
Where:
TARGETFE is the fuel economy target (in mpg) applicable to a
specific vehicle model type with a unique footprint combination,
a is a minimum fuel economy target (in mpg),
b is a maximum fuel economy target (in mpg),
c is the slope (in gallons per mile (or gpm) per square foot) of a
line relating fuel consumption (the inverse of fuel economy) to
footprint, and
d is an intercept (in gpm) of the same line.
Here, MIN and MAX are functions that take the minimum and maximum
values, respectively, of the set of included values. For example,
MIN[40, 35] = 35 and MAX(40, 25) = 40, such that MIN[MAX(40, 25), 35] =
35.
For light trucks, also consistent with prior rulemakings, NHTSA is
defining fuel economy targets as shown in Equation II-2.
Equation II-2: Light Truck Fuel Economy Footprint Target Curve
[GRAPHIC] [TIFF OMITTED] TP05DE25.017
Where:
TARGETFE is the fuel economy target (in mpg) applicable to a
specific vehicle model type with a unique footprint combination, and
a, b, c, and d are as for passenger cars, but take values specific
to light trucks.
Though the general model of the target function equation is the
same for passenger cars and light trucks, and the
[[Page 56458]]
same for each model year, the parameters of the function equation
differ for cars and trucks.
The parameters defining the general curve shapes have remained the
same since the 2012 final rule. NHTSA periodically reconsiders whether
to update the mathematical functions but in each prior instance
concluded that the existing curves continued to represent the
relationship between footprint and fuel economy reasonably. Consistent
with the agency's past practice of reviewing the mathematical functions
prior to each rulemaking, NHTSA re-examined the curve shapes for this
proposal.
More specifically, NHTSA performed descriptive statistical analyses
using manufacturer-reported data for the MY 2022 and MY 2024 fleets.
NHTSA used the MY 2022 fleet for analysis of curve shapes relevant to
the MYs 2022-2027 standards and used the MY 2024 ``reclassified'' fleet
for analysis of curve shapes relevant to the MYs 2028-2031 standards.
As discussed in more detail in Draft TSD Chapter 1, the proposed
updates to NHTSA's vehicle classification regulations beginning in MY
2028 have material impacts on the relationship between fuel economy and
footprint for each regulatory class, as expressed by the standards-
defining functions.
To estimate the relationship between fuel economy and footprint and
to maintain general consistency with analyses of past rules (and the
conformance to statutory prohibitions), the agency excluded all diesel
engine vehicles and all plug-in electric vehicles, which include plug-
in hybrid electric vehicles, battery electric vehicles (BEV), and fuel
cell electric vehicles (FCEV), and applied weighting and other
adjustments to the fuel consumption and footprint data. Table II-1
summarizes the methodological approaches that NHTSA considered for
reassessing the footprint curves.
[[Page 56459]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.018
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\48\ The maximum technology fleet was simulated with the CAFE
Model, assuming a MY 2024 fleet and maximum allowable technology
application.
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[[Page 56460]]
NHTSA believes that the ordinary least-squares (OLS) regression
framework continues to be an appropriate method for estimating the
relationship of footprint to fuel economy. While the agency relied on
the minimum absolute deviation (MAD) regression framework in the 2010
final rule to address the effects of ``outlier'' vehicles in the fleet,
the agency addresses outlier vehicles in this reconsideration through
technology-based exclusions (i.e., by excluding diesels, PHEVs, BEVs,
and FCEVs, as mentioned above) and data normalization through the
application of controls, including curb weight (CW) to footprint,
horsepower (HP) to CW, and both together, depending on the regulatory
fleet under consideration, as it has in each of its CAFE rulemaking
actions since 2012. The curves also reflect updated fleet data to reset
the ``cutpoints,'' or the places at the lowermost and uppermost bounds
of vehicle footprint distributions where the standards remain flat
(i.e., the mpg target does not continue to increase as footprint
decreases, and vice versa). The resulting footprint curves are shown in
Section III's discussion of the regulatory alternatives.
As discussed in Draft TSD Chapter 1, NHTSA considers a variety of
technical and policy issues when determining the footprint curve shape
in any CAFE rulemaking action. For example, standards that decrease
sharply with increasing footprint could create incentives for
manufacturers to upsize vehicles, since small changes in vehicle
footprint would result in a significant change in the vehicle's fuel
economy target; conversely, flatter standards could create a
significant amount of additional technology burden for larger vehicles
to meet fuel economy targets like those of smaller vehicles. That said,
NHTSA performed an analysis for the 2024 final rule showing that
vehicle footprints, within vehicle types, have been stable on a sales-
weighted basis since MY 2012.\49\ The biggest increase to within-type
footprints was for the sedan/wagon category, which increased by 3.4
percent (or about 2 square feet) from 2012 (for reference, a 1.5-square
foot increase would equate to about a 2-inch increase in the track
width of a MY 2022 Toyota Corolla). NHTSA concluded that the disconnect
between vehicle class-level characteristics and what was being
perceived at the fleet level (i.e., vehicles seemingly getting larger)
was traceable to the increase in the share of fleet vehicles classified
as light trucks relative to the share of passenger cars. Available data
indicate that the use of footprint as an attribute did not appear to
lead to manufacturers significantly altering the size of their vehicles
within vehicle classes and that the major shift in fleet share was not
a result of the shape of the footprint curves.
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\49\ NHTSA, Technical Support Document: 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, NHTSA:
Washington, DC, pp. 1-20 (2024).
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The footprint curve updates for this proposal are intended to
ensure that the agency appropriately captures the footprint-to-fuel
economy relationship using the most current data. As discussed in Draft
TSD Chapter 1, the observed relationship between footprint and fuel
economy for both the passenger car and light truck fleets is on average
``flatter'' (i.e., on average, the fuel economy did not vary as much
across footprint levels) than the MY 2008 fleet used to create the
footprint curves for the past several rules. While the technical
concerns and policy trade-offs associated with the curve shapes still
hold to some extent, NHTSA believes it is more likely, as shown from
the agency's 2024 analysis and the updated analysis presented in
Section VI, that any shift in vehicle attributes present in the market
over time has not been due to the shapes of curves or the use of
footprint as the relevant attribute. NHTSA seeks comments on this
belief, as well as the updated footprint curve shape analysis,
discussed in more detail in Draft TSD Chapter 1.
Finally, the required CAFE level applicable to a passenger car
(either domestic or import) or light truck fleet in a given model year
is determined by calculating the production-weighted harmonic average
of fuel economy targets applicable to specific vehicle model
configurations in the fleet, as shown in Equation II-3.
Equation II-3: Calculation for Required CAFE Level
[GRAPHIC] [TIFF OMITTED] TP05DE25.019
Where:
CAFErequired is the CAFE level the fleet is required to achieve,
i refers to specific vehicle model configurations in the fleet,
PRODUCTIONi is the number of model configuration i produced for sale
in the United States, and
TARGETFE, i is the fuel economy target (as defined above) for model
configuration i.
Additional details about the specific values defining the
mathematical functions and visual representations of the fuel economy
target curves are presented in Section III, below.
C. What inputs does the compliance analysis require?
The first step in the agency's analysis of the effects of different
levels of fuel economy standards is the compliance simulation. As used
throughout this rulemaking, ``compliance simulation'' means the
simulation of how manufacturers could comply with different levels of
CAFE standards by adding fuel economy-improving technology to an
existing fleet of vehicles, using the CAFE Model. The CAFE Model uses a
variety of data, including data provided by manufacturers, to simulate
final fleet sales and performance.\50\
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\50\ When NHTSA uses the phase ``the Model'' throughout this
section, NHTSA is referring to the CAFE Model. Any other model is
specifically named.
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At the most basic level, a model is a set of equations,
algorithms,\51\ or other calculations used to make predictions about a
complex system. A model may consider various inputs, such as technology
costs or other relevant factors, and use those inputs to generate
output predictions. NHTSA used two separate approaches for which it is
proposing to amend the existing CAFE standards, one for MYs 2022-2026
and one for MYs 2027-2031. The sections
[[Page 56461]]
below discuss the inputs each of those analyses used.
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\51\ See Merriam-Webster ``algorithm.'' Broadly, an algorithm is
a step-by-step procedure for solving a problem or accomplishing some
end. More specifically, an algorithm is a procedure for solving a
mathematical problem (as of finding the greatest common divisor) in
a finite number of steps that frequently involves repetition of an
operation.
---------------------------------------------------------------------------
1. What inputs does the analysis require for 2022-2026?
For the MYs 2022-2026 analysis, NHTSA has performed two exercises:
first, it has re-evaluated the statistical model used to determine the
shape (i.e., slope, intercept, and cutpoints) of the target functions
for passenger cars and light trucks. Based on its preferred choice of
shape, NHTSA has evaluated the compliance position of manufacturers in
MYs 2022-2024 under alternative stringencies and compared results to
the manufacturers' achieved average fuel economy in these years. For
both exercises, NHTSA relies on compliance data from manufacturer mid-
year compliance reports. For its curve fitting analysis, NHTSA uses
vehicle model level data on vehicle attributes, including footprint,
HP, CW, and 2-cycle fuel economy. NHTSA also uses mid-year estimates of
model sales from manufacturer compliance data for this exercise.
NHTSA's curve fitting analysis is described in greater detail in Draft
TSD Chapter 1. For NHTSA's comparison of achieved fuel economy and
proposed standards levels, the agency uses compliance data at the model
level for vehicle footprint, 2-cycle fuel economy, and mid-year
estimates of vehicle sales.
For MYs 2022-2024, NHTSA uses each proposed standard to calculate
vehicle model target function values for each vehicle model in the
standard-setting fleet.\52\ Consistent with past rulemakings, the
agency uses piecewise linear functions of vehicle footprint, which map
to a target value of fuel consumption rate in gallons-per-mile.\53\
NHTSA determines a vehicle's target fuel economy level in miles per
gallon for a given set of standards, and then takes the reciprocal of
this value. NHTSA determines the CAFE standards for each manufacturer
at the regulatory class level under each alternative by taking the
sales-weighted harmonic mean of the relevant models produced by the
manufacturer in each regulatory class in each model year. The agency
repeats these calculations for each model year under consideration to
determine a single value for each regulatory class in which the
manufacturer produced vehicles.
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\52\ Per 49 U.S.C. 32902(h), dedicated alternative fueled
vehicles, such as EVs, are excluded from this analysis. For duel-
fueled vehicles, the analysis uses a fuel economy value for the
vehicles operating only on gasoline or diesel fuel. Id.
\53\ See Chapter 1.2 of the Draft TSD discussing footprint
functions.
---------------------------------------------------------------------------
NHTSA also computes the MDPCS for each model year by taking the
sales-weighted harmonic mean of the model-level target function values
for all vehicles in the passenger car fleet in that model year and
multiplying the value by 92 percent.\54\
---------------------------------------------------------------------------
\54\ 49 U.S.C. 32902(b)(4).
---------------------------------------------------------------------------
NHTSA determines each manufacturer's achieved fuel economy in miles
per gallon separately for each regulatory class using the sales-
weighted average of the 2-cycle fuel economy values of all models
produced by the manufacturer in the relevant regulatory class. NHTSA
then compares this achieved value to the corresponding manufacturer
regulatory class standard in each model year to determine whether the
fleet of vehicles to which it corresponds would comply with each
proposed standard in that model year. To determine the total number of
vehicles out of compliance, NHTSA determines compliance for each
manufacturer's regulatory fleet in each model year under each proposed
alternative, and if a fleet is determined to be out of compliance, the
agency sums the total number of vehicles sold in the non-compliant
fleet.
As discussed in more detail in Section IV, NHTSA analyzes the
difference between each manufacturer's fleet CAFE compliance value and
the proposed standard. NHTSA has considered using the CAFE Model to
simulate behavior for the MYs 2022-2026 compliance period to estimate
how manufacturers and consumers could have responded to different CAFE
standards. However, for MYs 2022-2025, production is already closed or
is in process, and MY 2026 production plans likely are solidified and
underway by the time of this NPRM's publishing. This type of analysis
overestimates the ability of manufacturers to optimize in response to
the proposed standards for these years and likely leads to different
results from the actual outcomes. Thus, simulating a response and any
monetized costs or benefits deriving from that do not represent real
economic effects from the proposed change in policy.
2. What inputs does the compliance analysis require for 2027-2031?
For the MYs 2027-2031 amendment analysis, NHTSA used the CAFE Model
to simulate manufacturers' potential responses to new CAFE standards
and to estimate the various impacts of those responses on manufacturers
and society. The Model considers various inputs, such as technology
effectiveness data, technology costs, and other relevant factors, and
uses those inputs to generate output predictions.
NHTSA attempts to ensure that the technology inputs and assumptions
that go into the CAFE Model are based on sound science and reliable
data and that NHTSA's reasons for using those inputs and assumptions
are transparent and understandable to stakeholders. This section and
the following section discuss at a high level how the agency generates
the technology inputs and assumptions that the CAFE Model uses for the
compliance simulation.\55\ The Draft TSD, CAFE Model Documentation,
CAFE Analysis Autonomie Documentation,\56\ and other technical reports
supporting this proposed rule discuss the agency's technology inputs
and assumptions in more detail.
---------------------------------------------------------------------------
\55\ As explained throughout this section, a NHTSA input is a
specific number or datapoint used by the Model, and NHTSA's
assumptions are based on judgment after careful consideration of
available evidence. An assumption can be an underlying reason for
the use of a specific datapoint, function, or modeling process. For
example, an input might be the fuel economy value of the Ford
Mustang, whereas the assumption is that the Ford Mustang's fuel
economy value reported in Ford's CAFE compliance data should be used
in NHTSA's modeling.
\56\ The Argonne report is titled ``Vehicle Simulation Process
to Support the Analysis for MY 2027 and Beyond CAFE and MY 2030 and
Beyond HDPUV FE Standards.'' However, for ease of use and
consistency with the Draft TSD it is referred to as ``CAFE Analysis
Autonomie Documentation.''
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NHTSA incorporates technology inputs and assumptions either
directly in the CAFE Model or in the CAFE Model's various input files.
The compliance simulation algorithm is at the heart of the CAFE Model's
decisions about how to apply technologies to a manufacturer's vehicles
to project how the manufacturer could meet CAFE standards. The
compliance simulation algorithm consists of several equations that
direct the Model to apply fuel economy-improving technologies to
vehicles in a way that simulates how manufacturers might apply those
technologies to their vehicles in the real world. The compliance
simulation algorithm projects a cost-effective pathway for
manufacturers to comply with different levels of CAFE standards,
considering the technology present on manufacturers' vehicles now and
what technology could be applied to their vehicles in the future.
Embedded in the CAFE Model is the universe of technology options that
the Model can consider and rules about the order in which it can
consider those options, as well as estimates of how effective fuel
economy-improving technology is on different types of vehicles (e.g.,
sedan or pickup truck).
[[Page 56462]]
Technology inputs and assumptions are also located in all four of
the CAFE Model Input Files. The Market Data Input File is a spreadsheet
file that characterizes the fleet of vehicles used as the starting
point for the CAFE Model. There is one row describing each vehicle
model and model configuration manufactured for the United States market
in a model year (or years) and input and assumption data that links
those vehicles to technology and economic, environmental, and safety
inputs and assumptions. The Technologies Input File identifies 71
technologies the agency uses in the analysis, along with information
used to inform the compliance simulation and effects estimates,
including phase-in caps to identify when and how widely each technology
can be applied to specific types of vehicles, most of the technology
costs (hybrid vehicle battery costs are provided in a separate file),
and the fuel share percentage for PHEV to capture the charge sustaining
operation. The Scenarios Input File provides the coefficient values
defining the standards for each regulatory alternative \57\ and other
relevant information applicable to modeling each regulatory
scenario.\58\ Finally, the Parameters Input File contains mainly
economic and environmental data.\59\
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\57\ The coefficient values are defined in PRIA Chapter 3 for
the CAFE standard.
\58\ This file also includes information about the amount of
fuel consumption improvement values a manufacturer may generate for
compliance purposes for model years in which a manufacturer may
generate them.
\59\ See CAFE Model Documentation for a detailed discussion of
what inputs are held in each of the input data files.
---------------------------------------------------------------------------
NHTSA generates these technology inputs and assumptions in several
ways, including using data submitted by vehicle manufacturers pursuant
to their CAFE reporting obligations; public data on vehicle models from
manufacturer websites, press materials, marketing brochures, and other
publicly available information; collaborative research, testing, and
modeling with other Federal agencies, like Argonne; and research,
testing, and modeling with independent organizations, like IAV GmbH
Ingenieurgesellschaft Auto und Verkehr (IAV), Southwest Research
Institute (SwRI), National Academy of Sciences (NAS), and FEV North
America. NHTSA also considers the work done to develop inputs and
assumptions for prior rules to the extent it is still relevant and
applicable; feedback from stakeholders on prior rules and from meetings
conducted before the commencement of this proposed rule; and NHTSA's
own engineering judgment. NHTSA uses the term ``engineering judgment''
throughout this rulemaking to refer to decisions made by a team of
NHTSA engineers and analysts. This judgment is based on their
experience working in the automotive industry and other relevant fields
and assessment of all the data sources described above. Most
importantly, the agency uses engineering judgment to assess how best to
represent vehicle manufacturers' potential responses to different
levels of CAFE standards within the boundaries of the agency's modeling
tools, as ``a model is meant to simplify reality in order to make it
tractable.'' \60\ In other words, NHTSA uses engineering judgment to
concentrate potential technology inputs and assumptions from millions
of discrete data points from hundreds of sources into four external
input files and three datasets integrated into the CAFE Model. How the
CAFE Model decides to apply technology (i.e., the compliance simulation
algorithm), has been developed using engineering judgment, considering
factors that manufacturers consider when they add technology to
vehicles in the real world. The specific technology inputs and
assumptions are discussed in more detail in the following sections and
in the associated technical documentation.
---------------------------------------------------------------------------
\60\ Chem. Mfrs. Ass'n v. EPA, 28 F.3d 1259, 1264-65 (D.C. Cir.
1994) (citing Milton Friedman, in Friedman, M., The Methodology of
Positive Economics, in Essays in Positive Economics 3, University of
Chicago Press: Chicago, IL, pp. 14-15 (1953), available at: https://www.wiwiss.fu-berlin.de/fachbereich/bwl/pruefungs-steuerlehre/loeffler/Lehre/bachelor/investition/Friedman_the_methology_of_positive_economics.pdf (accessed: Sept.
10, 2025)).
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a. Technology Options and Pathways
NHTSA begins the compliance analysis by defining the range of fuel
economy-improving technologies that the CAFE Model could add to a
manufacturer's vehicles in the U.S. market.\61\ These are technologies
that the agency believes are representative of what vehicle
manufacturers currently use on their vehicles, and that vehicle
manufacturers could use on their vehicles in the timeframe for the
proposed standards (MYs 2027-2031). The technology options include
engines, transmissions, hybridization, and road load technologies,
which include MR, aerodynamic improvement (aerodynamic drag technology
(AERO)), and tire rolling resistance (ROLL) reduction technologies.\62\
---------------------------------------------------------------------------
\61\ 40 CFR 86.1806-17, Onboard diagnostics; 40 CFR 86.1818-12,
Greenhouse gas emission standards for light-duty vehicles, light-
duty trucks, and medium-duty passenger vehicles; Commission
Directive 2001/116/EC--European Union emission regulations for new
LDVs--including passenger cars and light commercial vehicles (LCV).
\62\ Draft TSD Chapter 3 contains discussion on the technology
tree and technologies available.
---------------------------------------------------------------------------
Adding a technology to the range of options that the CAFE Model can
consider requires several data elements, including a broadly applicable
technology definition, estimates of how effective that technology is at
improving fuel economy on different vehicle types (e.g., sedan or
pickup truck), and the cost to apply that technology to each. Each
technology the agency selects is designed to be representative of a
wide range of specific technology applications used in the automotive
industry. Some manufacturers' systems may perform better or worse than
NHTSA's modeled systems, and some may cost more or less than NHTSA's
modeled systems. However, selecting representative technology
definitions for the agency's analysis ensures the agency captures a
reasonable level of costs and benefits that would result from any
manufacturer applying the technology.
NHTSA has been refining the technology options it considers since
first developing the CAFE Model in 2002. In this context, ``refining''
means both adding and removing technology options depending on current
technology availability and projected future availability in the U.S.
market, while balancing a reasonable amount of modeling and analytical
complexity. In recent years, the agency has refined the internal
combustion engine (ICE) technology options, particularly the TURBO and
HCR pathways, to reflect better the diversity of engines in the current
fleet. Consistent with NHTSA's interpretation of EPCA/EISA, discussed
further in Section II.0 and V, the agency includes several hybrid
technologies to represent appropriately the diversity of current and
anticipated future technology options while ensuring NHTSA's analysis
remains consistent with statutory limitations prohibiting the
consideration of EVs in establishing standards and considering only the
gas or diesel operation of dual fueled automobiles.
The technology options do not include technologies NHTSA has
determined will not be available in the rulemaking timeframe. As with
past analyses, the agency does not include technologies unlikely to be
feasible in the rulemaking timeframe, engine technologies designed for
markets other than the United States market required to use unique
gasoline,\63\ or technologies
[[Page 56463]]
for which appropriate data are not available for the range of vehicles
that the agency models in the analysis (i.e., technologies that are
still in the research and development phase and not ready for mass-
market production). Each technology section below and Chapter 3 of the
Draft TSD discuss these modeling decisions in detail.
---------------------------------------------------------------------------
\63\ In general, most vehicles produced for sale in the United
States have been designed to use ``regular'' gasoline, or 87 octane.
See EIA, Gasoline Explained: What is octane?, Last revised: Nov. 17,
2022, available at: https://www.eia.gov/energyexplained/gasoline/octane-in-depth.php (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
In this analysis, the CAFE Model does not dictate or predict the
technologies manufacturers must use to comply; rather, the CAFE Model
outlines a technology pathway that manufacturers could use to meet the
standards cost effectively. While NHTSA estimates the costs and
benefits for different levels of CAFE standards based on a simulation
of the technology manufacturers could apply in the rulemaking
timeframe, it is entirely possible and reasonable that manufacturers
may use different technology options to meet the agency's standards in
the real world and may even use technologies that NHTSA does not
include in the analysis. This is because NHTSA's standards do not
mandate the application of any particular technology. Rather, NHTSA's
standards are performance-based: manufacturers in the real world can
and do use a range of compliance solutions that include technology
application and encouraging sales shifts from one vehicle model or trim
level to another.\64\ The agency has determined that the 71 technology
options included in the analysis strike a reasonable balance between
representing the diversity of technology used by the entire industry
and simplifying reality to make modeling workable.\65\
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\64\ Manufacturers could increase their production of one type
of vehicle with higher fuel economy, like the hybrid version of a
conventional vehicle model, to meet the standards. For example, Ford
has conventional and hybrid versions of its F-150 pickup truck, and
Toyota has conventional, hybrid, and plug-in hybrid versions of its
RAV4 sport utility vehicle.
\65\ For each technology option, the analysis includes distinct
technology cost and effectiveness values for 10 different types of
vehicles, resulting in nearly half a million different technology
effectiveness and cost data points.
---------------------------------------------------------------------------
Chapter 3 of the Draft TSD and Section II.0 below describe the
technologies that NHTSA uses for the analysis. Each technology has a
name that loosely corresponds to its real-world technology equivalent.
NHTSA abbreviates the name to a short signifier for the CAFE Model to
read. The agency organizes those technologies into groups based on
technology type: basic and advanced engines, transmissions,
hybridization, and road load technologies, which include MR,
aerodynamic improvement, and low rolling resistance tire technologies.
NHTSA then organizes the groups into pathways. The pathways
instruct the CAFE Model how and in what order to apply technology. In
other words, the pathways define mutually exclusive technologies (i.e.,
those that cannot be applied at the same time) and define the direction
in which vehicles can advance as the Model evaluates which technologies
to apply. The respective technology chapters in the Draft TSD and
Section 4 of the CAFE Model Documentation include a visual of each
technology pathway. In general, the paths are tied to ease of
implementation of additional technology and how closely related the
technologies are.
As an example, NHTSA's ``Turbo Engine Path'' consists of five
different engine technologies that employ different levels of
turbocharging technology. A turbocharger is essentially a small turbine
driven by exhaust gases produced by the engine. As these gases flow
through the turbocharger, they spin the turbine, which in turn spins a
compressor that pushes more air into an engine's cylinders. Having more
air in the engine's cylinders allows the engine to burn more fuel,
which then creates more power, without needing a physically larger
engine. In the agency's analysis, an engine that is turbocharged
``downsizes,'' or becomes smaller. Choosing to turbocharge an engine
allows a manufacturer to maintain similar levels of performance to a
larger, non-turbocharged engine with a smaller engine that uses less
fuel to do the same amount of work. Allowing basic engines to be
downsized and turbocharged instead of just turbocharged keeps the
vehicle's utility and performance constant so that NHTSA can measure
the costs and benefits of different levels of fuel economy
improvements, rather than the change in different vehicle attributes.
This concept of performance neutrality is discussed further, below.
The Model only allows forward movement along the technology
pathways, adding more advanced technology as the Model moves through
the technology tree. This ensures that a vehicle that uses a more
advanced technology cannot downgrade to a less advanced version of the
technology or ensures that a vehicle does not switch to technology that
is significantly technically different. This progressive order also
realistically represents how manufacturers often start with the lowest
and most cost-effective technologies and generally advance along
particular technology pathways. As an example, if a vehicle in the
compliance simulation begins with a TURBOD engine--a turbocharged
engine with cylinder deactivation--it cannot adopt a TURBO0 engine.\66\
Similarly, this vehicle with a TURBOD engine cannot adopt an advanced
cylinder deactivation on a dual-overhead camshaft engine (ADEACD)
engine.\67\ As an example of NHTSA's rationale for ordering
technologies on the technology tree, an engine could potentially be
changed from TURBO0 to TURBO2 without redesigning the engine block or
requiring significantly different expertise to design and implement. A
change to ADEACD likely would require a different engine block that
might not fit in the engine bay of the vehicle without a complete
redesign and different technical expertise requiring years of research
and development. This change, which would strand capital and impact
parts sharing, is why the advanced engine paths restrict most movement
between them. The concept of stranded capital is discussed further in
Section II.C.2.f.
---------------------------------------------------------------------------
\66\ TURBO0 is the baseline turbocharged engine and TURBOD is
TURBO0 with the addition of cylinder deactivation (DEAC). Chapter 3
of the Draft TSD provides more discussion on engine technologies.
\67\ ADEACD is a dual-overhead camshaft engine with advanced
cylinder deactivation. Chapter 3 of the Draft TSD provides more
discussion on engine technologies.
---------------------------------------------------------------------------
NHTSA also considers two categories of technology, for model years
in which the technology categories are applicable, that the agency
could not simulate as part of the CAFE Model's technology pathways.
``Off-cycle'' and AC efficiency are two types of technologies that
improve vehicle fuel economy but are not accounted for using 2-cycle
testing. To account for the benefits of these technologies, EPA has
allowed manufacturers to generate FCIVs when they add these
technologies, which are used to improve a manufacturers' certified fuel
economy. As an example, manufacturers can generate FCIVs for technology
like active seat ventilation and solar reflective surface coatings that
make the cabin of a vehicle more comfortable for the occupants without
using less efficient accessories like heat or AC. Instead of including
OC and AC efficiency technologies in the technology pathways, NHTSA
includes the improvement as a defined benefit that gets applied to a
manufacturer's entire fleet in applicable model years instead of to
individual vehicles. The defined benefit that each manufacturer
receives in the analysis for using OC and AC efficiency technology on
their vehicles is located in the Market Data
[[Page 56464]]
Input File. Chapter 3.7 of the Draft TSD provides more discussion on
how OC and AC efficiency technologies are developed and modeled.
Preamble Section VI contains discussion of this program's updates in
this rule.
To illustrate how NHTSA simulates technology application,
throughout this section NHTSA follows the hypothetical vehicle
mentioned above that begins the compliance simulation with a TURBOD
engine. The agency's hypothetical vehicle, Generic Motors' Ravine
Runner F Series, is a roomy, top-of-the-line sport utility vehicle
(SUV). The Ravine Runner F Series starts the compliance simulation with
technologies from most technology pathways; specifically, after looking
at Generic Motors' website and marketing materials, the agency
determines that it has technology that loosely fits within the
following technologies that the agency considers in the CAFE Model: it
has a turbocharged engine with cylinder deactivation, a fairly advanced
10-speed automatic transmission, a 12V start-stop system, the least
advanced tire technology, a fairly aerodynamic vehicle body, and it
employs a fairly advanced level of MR. NHTSA tracks the technologies on
each vehicle using a ``technology key,'' which is the string of
technology abbreviations for each vehicle. The vehicle technologies and
their abbreviations that the agency considers in this analysis are
shown in Draft TSD Chapter 2. The technology key for the Ravine Runner
F Series is ``TURBOD; AT10L2; SS12V; ROLL0; AERO5; MR3.''
b. Defining Manufacturers' Current Technology Positions in the Analysis
Fleet
The Market Data Input File is one of four Excel input files that
the CAFE Model uses for compliance and effects simulation. The Market
Data Input File's ``Vehicles'' tab (or worksheet) houses one of the
most significant compilations of technology inputs and assumptions in
the analysis, which is a characterization of the fleet of vehicle
models each manufacturer produced for sale in the United States for MY
2024. This provides the starting point from which the CAFE Model adds
fuel economy-improving technology. NHTSA calls this fleet the
``analysis fleet.'' The analysis fleet includes a number of inputs
necessary for the Model to add fuel economy-improving technology to
each vehicle for the compliance analysis and to calculate the resulting
impacts for the effects analysis.
The ``Vehicles'' tab contains a separate row for each vehicle
model. Vehicle models are vehicles that share the same fuel economy
value and vehicle footprint. This means that vehicle models with
different configurations that affect the vehicle's certification fuel
economy value are distinguished in separate rows in the Vehicles tab.
For example, the agency's Ravine Runner example vehicle comes in three
different configurations--the Ravine Runner FWD, Ravine Runner AWD, and
Ravine Runner F Series--which would result in three separate rows.
In each row, NHTSA also designates a vehicle's engine,
transmission, and platform codes.\68\ Vehicles that have the same
engine, transmission, or platform code are deemed to ``share'' that
component in the CAFE Model. Parts sharing helps manufacturers achieve
economies of scale, deploy capital efficiently, and make the most of
shared research and development expenses, while still presenting a wide
array of consumer choices to the market. The CAFE Model has been
developed to treat vehicles, platforms, engines, and transmissions as
separate entities, which allows the modeling system to evaluate
technology improvements on multiple vehicles that may share a common
component concurrently. Sharing also enables realistic propagation, or
``inheriting,'' of previously applied technologies from an upgraded
component down to the vehicle ``users'' of that component that have not
yet realized the benefits of the upgrade. Section 2.1 and Section 4.4
of the CAFE Model Documentation contain additional information about
the initial state of the fleet, as well as technology evaluation and
inheriting within the CAFE Model.
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\68\ Each numeric engine, transmission, or platform code
designates important information about that vehicle's technology;
for example, a vehicle's 6-digit transmission code includes
information about the manufacturer, the vehicle's drive
configuration (e.g., front-wheel drive, all-wheel drive, 4WD, or
rear-wheel drive), transmission type, number of gears (i.e., a 6-
speed transmission has 6 gears), and the transmission variant.
---------------------------------------------------------------------------
Figure II-1 below shows how NHTSA separates the different
configurations of the hypothetical Ravine Runner. NHTSA sees by the
Platform Codes that these Ravine Runners all share the same platform,
but only the Ravine Runner FWD and Ravine Runner AWD share an engine.
Even so, all three certification fuel economy values are different,
which is common for vehicles that differ in drive type (drive type
meaning whether the vehicle has AWD, 4-wheel drive (4WD), front-wheel
drive (FWD), or rear-wheel drive (RWD). While it is simpler to
aggregate vehicles by model, ensuring that NHTSA captures model
variants with different fuel economy values improves the accuracy of
the analysis and the potential that estimated costs and benefits from
different levels of standards are appropriate. NHTSA includes
information about other vehicle technologies at the farthest right side
of the Vehicles tab, and in the ``Engines,'' ``Transmissions,'' and
``Platforms'' worksheets, as discussed further below.
[[Page 56465]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.020
Moving from left to right on the Vehicles tab, after including
general information about vehicles and their compliance fuel economy
value, NHTSA includes sales and manufacturer's suggested retail price
(MSRP) data, regulatory class information (e.g., domestic passenger
automobile, import passenger automobile, or non-passenger automobile),
and information about how NHTSA classifies vehicles for the
effectiveness and safety analyses. Each of these data points is
important to different parts of the compliance and effects analysis, so
that the CAFE Model can accurately average the technologies required
across a manufacturer's regulatory fleet to meet its CAFE standard or
estimate the impacts of higher fuel economy standards on vehicle sales.
---------------------------------------------------------------------------
\69\ Note that not all data columns are shown in this example
for brevity.
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Next, NHTSA includes vehicle information necessary for applying
different types of technology; for example, designating a vehicle's
body style allows NHTSA to apply aerodynamic technology appropriately,
and designating starting CW values allows the agency to apply MR
technology more accurately. Importantly, this section also includes
vehicle footprint data, which is needed because NHTSA sets footprint-
based standards.
NHTSA also sets product design cycles, which are the years in which
the CAFE Model can apply technologies to vehicles. Manufacturers often
introduce fuel-saving technologies at a ``redesign'' of their product
or adopt technologies at ``refreshes'' in between product redesigns. As
an example, the redesigned third generation Chevrolet Silverado was
released for MY 2019 and featured a new platform, updated drivetrain,
increased towing capacity, reduced weight, improved safety, and
expanded trim levels, to name a few improvements. For MY 2022, the
Chevrolet Silverado received a refresh (or facelift as it is commonly
called), with an updated interior, infotainment, and front-end
appearance.\70\ Setting these product design cycles provides realistic
durations of product stability and ensures that the CAFE Model
simulates the opportunities manufacturers have to apply technologies in
line with refresh and redesign cycles.
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\70\ GM Authority, 2022 Chevy Silverado, Last revised: 2022,
available at: https://gmauthority.com/blog/gm/chevrolet/silverado/2022-chevrolet-silverado/ (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
During modeling, all improvements from technology application are
initially realized on a component and then propagated (or inherited)
down to the vehicles that share that component. As such, new component-
level technologies are initially evaluated and applied to a platform,
engine, or transmission during their respective redesign or refresh
years. Any vehicles that share the same redesign or refresh schedule as
the component apply these technology improvements during the same model
year. The rest of the vehicles inherit technologies from the component
during their refresh or redesign year (for engine- and transmission-
level technologies) or during a redesign year only (for platform-level
technologies). Section 4.4 of the CAFE Model Documentation contains
additional information about technology evaluation and inheriting
within the CAFE Model.
The CAFE Model also considers the potential safety effect of MR
technologies and crash compatibility of
[[Page 56466]]
different vehicle types. MR technologies lower the vehicle's CW, which
may change crash compatibility and safety, depending on the type of
vehicle. NHTSA assigns each vehicle in the Market Data Input File a
``safety class'' that best aligns with the CAFE Model's analysis of
vehicle mass, size, and safety, and include the vehicle's starting
CW.71 72
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\71\ Vehicle curb weight is the weight of the vehicle with all
fluids and components but without the drivers, passengers, or cargo.
\72\ NPRM preamble Section II.H.1 and Draft TSD Chapter 7.3
provides more in depth discussion on the impacts of mass reduction
on safety.
---------------------------------------------------------------------------
The CAFE Model includes procedures to consider the direct labor
impacts of manufacturers' responses to CAFE regulations, considering
the assembly location of vehicles, engines, and transmissions; the
percent U.S. content (based on the percent U.S. and Canadian content,
as reported by manufacturers to NHTSA); and the dealership employment
associated with new vehicle sales. Estimated labor information, by
vehicle, is included in the Market Data Input File. Sales volumes
included in and adapted from the market data also influence total
estimated direct labor projected in the analysis. Chapter 6.2.5 of the
Draft TSD contains additional discussion of the labor utilization
analysis.
NHTSA then assigns the technologies to individual vehicles. This
initial linkage of vehicle technologies is how the CAFE Model knows how
to advance a vehicle down each technology pathway. Assigning CAFE Model
technologies to individual vehicles is dependent on the mix of
information the agency has about any particular vehicle and trends
about how a manufacturer has added technology to that vehicle in the
past, equations and models that translate real-world technologies to
their counterparts in NHTSA's analysis (e.g., drag coefficients and
body styles can be used to determine a vehicle's AERO level), and the
agency's engineering judgment.
As discussed further below, the agency uses information directly
from manufacturers to populate some fields in the Market Data Input
File, like vehicle HP ratings and vehicle weight. NHTSA also uses
manufacturer data as an input to various other models that calculate
how a manufacturer's real-world technology equates to a technology
level in the agency's model. For example, the agency calculates initial
MR, aerodynamic drag reduction, and ROLL levels by looking at industry-
wide trends and calculating--through models or equations--levels of
improvement for each technology. The models and algorithms that the
agency uses are described further below and in detail in Chapter 3 of
the Draft TSD. Other fields, like vehicle refresh and redesign years,
are projected forward based on historic trends.
Recall the Ravine Runner F Series example with the technology key
``TURBOD; AT10L2, SS12V; ROLL0; AERO5; MR3.'' For this example, Generic
Motor's publicly available spec sheet for the Ravine Runner F Series
says that it uses Generic Motor's Turbo V6 engine with proprietary
Adaptive Cylinder Management Engine (ACME) technology. Generic Motor's
ACME improves fuel economy and lowers emissions by operating the engine
using only three of the engine's cylinders in most conditions and using
all six engine cylinders when more power is required. Based on this
information, NHTSA would conclude that this engine is turbocharged and
uses a form of cylinder deactivation, meaning it would be appropriately
classified as TURBOD. Generic Motors uses this engine in several of
their vehicles, and the specifications of the engine can be found in
the Engines Tab of the Market Data Input File, under a six-digit engine
code.\73\
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\73\ Like the transmission codes discussed above, the engine
codes include information identifying the manufacturer, engine
displacement (how many liters the engine is), whether the engine is
naturally aspirated or force-inducted (turbocharged), and other
unique engine attributes.
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This is a relatively easy engine to assign based on publicly
available specification sheets, but some technologies are more
difficult to assign. Manufacturers use different trade names or terms
for different technology, and the way that the agency assigns the
technology in the agency's analysis may not necessarily line up with
how a manufacturer describes the technology. NHTSA must use some
engineering judgment to determine how discrete technologies in the
market best fit the technology options that the agency considers in the
agency's analysis. The agency discusses factors used to assign each
vehicle technology in the individual technology subsections below.
In addition to the Vehicles Tab that houses the analysis fleet, the
Market Data Input File includes information that affects how the CAFE
Model might apply technology to vehicles in the compliance simulation.
Specifically, the Market Data Input File's ``Manufacturers'' tab
includes a list of vehicle manufacturers considered in the analysis and
several pieces of information about their economic and compliance
behaviors. For this analysis, the compliance simulation assumes that
manufacturers continue to apply technology to the extent practicable to
reach compliance. This modeling change is made by indicating in the
``Manufacturers'' tab that all manufacturers will comply with NHTSA's
standards and is consistent with the recent amendment to EPCA that set
civil penalties (i.e., fines) to $0 effective for MY 2022 vehicles and
beyond.\74\ The CAFE Model's compliance simulation algorithm is
discussed in Section II.C.2.f.
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\74\ See Public Law 119-21, 139 Stat. 72, sec. 40006 (July 4,
2025), https://www.congress.gov/119/plaws/publ21/PLAW-119publ21.pdf.
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Finally, NHTSA designates a ``payback period'' for each
manufacturer. The payback period represents an assumption that
consumers are willing to buy vehicles with more fuel economy technology
because the fuel economy technology saves them money on gas in the long
run. For the past several rulemaking analyses using the CAFE Model the
agency has assumed that in the absence of CAFE or other regulatory
standards, manufacturers apply technology that ``pays for itself''--by
saving the consumer money on fuel--in 30-months, or 2.5 years. NHTSA
has updated the agency's payback period for this proposed rule to
assume a full 3-year payback period based on an examination of
empirical economics literature. This is discussed in detail in Section
II.E.1.a below, and in the Draft TSD and PRIA.
Before the agency begins building the Market Data Input File for
any analysis, NHTSA must consider what model year vehicles comprise the
analysis fleet. There is an inherent time delay in the data the agency
can use for any particular analysis because NHTSA receives compliance
data after a model year has been completed.
Using recent data for the analysis fleet is more likely to reflect
the current vehicle fleet than older data. Recent data reflects (1)
manufacturers' realized decisions on what fuel economy-improving
technology to apply; (2) mix shifts in response to consumer
preferences; (e.g., more recent data reflects manufacturer and consumer
preference towards larger vehicles),\75\ and (3) industry sales volumes
that incorporate substantive macroeconomic events. Using an analysis
fleet year that
[[Page 56467]]
has been impacted by these transitory shocks may not represent trends
in future years; however, on balance, updating to using the most
complete set of available fleet data provides the most accurate
analysis fleet for the CAFE Model to calculate compliance and effects
of different levels of future fuel economy standards. Also, using
recent data decreases the likelihood that the CAFE Model selects
compliance pathways for future standards that affect vehicles already
built in previous model years.\76\
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\75\ See EPA, The 2024 EPA Automotive Trends Report, Greenhouse
Gas Emissions, Fuel Economy, and Technology since 1975, EPA-420-R-
24-022, pp. 17--21 (2024), available at: https://nepis.epa.gov/Exe/ZyPURL.cgi?Dockey=P101CUU6.TXT (accessed: Sept. 10, 2025)
(hereinafter, ``2024 EPA Automotive Trends Report'').
\76\ For example, in this analysis, the CAFE Model must apply
technology to the MY 2024 fleet from MYs 2025-2026 for the
compliance simulation that begins in MY 2027. While manufacturers
have already built MY 2024 and beyond vehicles, the most current,
complete dataset with regulatory fuel economy test results to build
the analysis fleet at the time of writing remains MY 2024 data for
the light-duty fleet.
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At the time NHTSA starts building the analysis fleet, data received
from vehicle manufacturers \77\ offers the best snapshot of vehicles
for sale in the United States in a model year. The mid-model year
reports include information about individual vehicles at the vehicle
configuration level. NHTSA uses the vehicle configuration,
certification fuel economy, sales, regulatory class, and additional
technology data from these reports as the starting point to build a
``row'' (i.e., a vehicle configuration, with all necessary information
about the vehicle) in the Market Data Input File's Vehicles Tab.
Additional technology data comes from publicly available information,
including vehicle specification sheets, manufacturer press releases,
owner's manuals, and websites. NHTSA also generates some assumptions in
the Market Data Input File for data fields where there is limited data,
like refresh and redesign cycles for future model years, and technology
levels for certain road load reduction technologies like MR and
aerodynamic drag reduction.
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\77\ 49 U.S.C. 32907(a)(2) and 49 CFR part 537.
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For this analysis, the light-duty analysis fleet consists of every
vehicle model in MY 2024 in nearly every configuration that has a
different compliance fuel economy value. This results in nearly 4,000
individual rows in the Vehicles Tab of the Market Data Input File.
The next section discusses how the agency's analysis evaluates how
effectively adding technology to a vehicle in the analysis fleet
improves that vehicle's fuel economy value.
c. Technology Effectiveness Values
The CAFE Model uses technology effectiveness values to allow it to
know which technologies to apply. Without these values, it does not
know how effective any particular technology is at improving a
vehicle's fuel economy value. Accurate technology effectiveness
estimates require information about (1) the vehicle type and size; (2)
other technologies on the vehicle or being added to the vehicle at the
same time; and (3) and how the vehicle is driven. Any
oversimplification of these complex factors could make the
effectiveness estimates less accurate.
To build a database of technology effectiveness estimates that
includes these factors, NHTSA partners with Argonne. Argonne has
developed and maintains a modeling and simulation tool called Autonomie
that generates technology effectiveness estimates for the CAFE Model.
The Autonomie Model is a mathematical representation of an entire
vehicle, including its individual technologies (such as the engine and
transmission), overall vehicle characteristics (such as mass and
aerodynamic drag), and environmental conditions (such as ambient
temperature and barometric pressure). The Autonomie Model simulates
vehicle behavior over time.
NHTSA simulates a vehicle model's behavior over the two-cycle tests
used to measure vehicle fuel economy.\78\ The two-cycle test is carried
out by operating a vehicle on a dynamometer. Using a dynamometer is
like running a car on a treadmill following a program--or more
specifically, two programs. The programs are the Federal Test Procedure
(FTP) and the Highway Fuel Economy Test (HFET). The FTP and HFET are
also commonly referred to as the urban cycle and highway cycle,
respectively. For the FTP drive cycle, the vehicle meets certain speeds
at certain times during the test, or in technical terms, the vehicle
must follow a designated speed trace.\79\ The FTP is meant to simulate
stop-and-go city driving, and the HFET is meant to simulate steady
flowing highway driving at about 50 miles per hour (mph). The agency
also uses Society of Automotive Engineers (SAE) recommended practices
to simulate hybridized drive cycles,\80\ which involves the test cycles
mentioned above as well as additional test cycles to measure battery
energy consumption and range. For PHEVs, this analysis utilizes only
the gasoline (charge-sustaining) mode for the drive cycles.
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\78\ NHTSA is statutorily required to use the two-cycle tests to
measure vehicle fuel economy in the CAFE program. See 49 U.S.C.
32904(c) (``Testing and calculation procedures. . . . [T]he
Administrator shall use the same procedures for passenger
automobiles the Administrator used for model year 1975 (weighted 55
percent urban cycle and 45 percent highway cycle), or procedures
that give comparable results.'').
\79\ EPA, Emissions Standards Reference Guide: EPA Federal Test
Procedure (FTP), Last revised: Mar. 13, 2025, available at: https://www.epa.gov/emission-standards-reference-guide/epa-federal-test-procedure-ftp (accessed: Sept. 10, 2025).
\80\ SAE, Recommended Practice for Measuring the Exhaust
Emissions and Fuel Economy of Hybrid-Electric Vehicles, Including
Plug-in Hybrid Vehicles, SAE Standard J1711_202302 (2023), SAE
International: Warrendale, PA, available at: https://www.sae.org/standards/content/j1711_202302/ (accessed: Sept. 10, 2025); SAE,
Battery Electric Vehicle Energy Consumption and Range Test
Procedure, SAE Standard J1634_202104 (2021), SAE International:
Warrendale, PA, available at: https://www.sae.org/standards/content/j1634_202104/ (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
Measuring every vehicle's fuel economy value by using the same test
cycles ensures that the fuel economy certification results are
repeatable for each vehicle model and comparable across all of the
different vehicle models. When performing physical vehicle cycle
testing, sophisticated test and measurement equipment is calibrated
according to strict industry standards, which ensures repeatability and
comparability of the results. Testing variables can include
dynamometers, environmental conditions, types and locations of
measurement equipment, and precise testing procedures. These physical
tests provide the benchmarking empirical data used to develop and
verify Autonomie's vehicle control algorithms and simulation results.
Autonomie's inputs are discussed in more detail later in this section.
Full-vehicle modeling and simulation are also essential to
measuring how all technologies on a vehicle interact. For example, if
technology A improves a particular vehicle's fuel economy by 5 percent
and technology B improves a particular vehicle's fuel economy by 10
percent, an analysis using single or limited point estimates may
erroneously assume that applying both of these technologies together
would achieve a simple additive fuel economy improvement of 15 percent.
Single point estimates generally do not provide accurate effectiveness
values because they do not capture complex relationships among
technologies. Technology effectiveness often differs significantly
depending on the vehicle type (e.g., sedan or pickup truck) and the way
in which the technology interacts with other technologies on the
vehicle, as different technologies may provide different incremental
levels of fuel economy improvement if implemented alone or in
combination with other technologies. Any oversimplification of these
complex factors could lead to less accurate technology effectiveness
estimates.
[[Page 56468]]
In addition, because manufacturers often add several fuel-saving
technologies simultaneously when redesigning a vehicle, it is difficult
to isolate the effect of adding any one individual technology to the
full-vehicle system. Modeling and simulation offer the opportunity to
isolate the effects of individual technologies by using a single or
small number of initial vehicle configurations and incrementally adding
technologies to those configurations. This provides a consistent
reference point for the incremental effectiveness estimates for each
technology and for combinations of technologies for each vehicle type.
Vehicle modeling also reduces the potential for overcounting or
undercounting technology effectiveness.
Argonne does not build an individual vehicle model for every
single-vehicle configuration in NHTSA's light-duty Market Data Input
File. This would be nearly impossible, because Autonomie requires very
detailed data on hundreds of different vehicle attributes (e.g., the
weight of the vehicle's fuel tank, the weight of the vehicle's
transmission housing, the weight of the engine, or the vehicle's 0-60
mph time) to build a vehicle model. For practical reasons, NHTSA cannot
acquire 4,000 vehicles and obtain these measurements every time the
agency promulgates a new rule, and the agency cannot acquire vehicles
that have not yet been built. Rather, Argonne builds a discrete number
of vehicle models representative of the most popular vehicles on sale
today. The agency refers to the vehicle model's type and performance
level as the vehicle's ``technology class.'' By assigning each vehicle
in the Market Data Input File a ``technology class,'' NHTSA can connect
it to the Autonomie effectiveness estimate that best represents how
effective the technology would be on the vehicle, accounting for
vehicle characteristics like body style (e.g., sedan or pickup truck)
and performance metrics. Because each vehicle technology class has
unique characteristics, the effectiveness of technologies and
combinations of technologies is different for each technology class.
There are 10 technology classes for this analysis: small car
(SmallCar), small performance car (SmallCarPerf), medium car (MedCar),
medium performance car (MedCarPerf), small SUV (SmallSUV), small
performance SUV (SmallSUVPerf), medium SUV (MedSUV), medium performance
SUV (MedSUVPerf), pickup truck (Pickup), and high towing pickup truck
(PickupHT).
NHTSA uses a two-step process that involves two algorithms to give
vehicles a ``fit score'' that determines which vehicles best fit into
each technology class. At the first step, the agency determines the
vehicle's size. At the second step, NHTSA determines the vehicle's
performance level. Both algorithms consider several metrics about the
individual vehicle and compare that vehicle to other vehicles in the
analysis fleet. This process is discussed in detail in Draft TSD
Chapter 2.2.
Consider NHTSA's example Ravine Runner F Series, which is a medium-
sized performance SUV. The exact same combination of technologies on
the Ravine Runner F Series operate differently in a compact car or
pickup truck because they are different vehicle sizes. The example
Ravine Runner F Series also achieves slightly better performance
metrics than other medium-sized SUVs in the analysis fleet. By
``performance metrics,'' the agency means power, acceleration,
handling, braking, and so on. For the performance versus standard
technology classification, the agency considers the vehicle's estimated
0-60 mph time compared to an average 0-60 mph time for the vehicle's
technology class. Accordingly, the ``technology class'' for the Ravine
Runner F Series in the agency's analysis is ``MedSUVPerf,'' because it
meets the criteria of a ``performance'' 0-60 mph acceleration time.
Table II-2 shows how vehicles in different technology classes that
use the exact same fuel economy technology have very different absolute
fuel economy values. Note that the Autonomie absolute fuel economy
values are not used directly in the CAFE Model; NTHSA calculates the
ratio between two Autonomie absolute fuel economy values (one for each
technology key for a specific technology class) and applies that ratio
to an analysis fleet vehicle's starting fuel economy value.
[GRAPHIC] [TIFF OMITTED] TP05DE25.021
Depending on the technology, when two technologies are added to the
vehicle together, they may not result in an additive fuel economy
improvement. This is an important concept to understand because in
Section II.D, NHTSA presents technology effectiveness estimates for
every single combination of technology that could be applied to a
vehicle. In some cases, technology effectiveness estimates show that a
combined technology has a different effectiveness estimate than if the
individual technologies were added together individually. However, this
is expected and not an error. Continuing NHTSA's example from above,
turbocharging technology and dynamic cylinder deactivation (DEAC)
technology both improve fuel economy by reducing the engine
displacement and accordingly burning less fuel. Turbocharging allows a
manufacturer to use a smaller engine that can offer performance
equivalent to a larger naturally aspirated engine, and its fuel
efficiency improvements are, in part, due to the reduced displacement.
DEAC effectively makes an engine with a particular displacement
intermittently offer some of the fuel economy benefits of a smaller
displacement engine by deactivating cylinders when the work demand does
not require the full engine displacement and reactivating them as-
needed to meet higher work demands;
[[Page 56469]]
the greater the displacement of the deactivated cylinders, the greater
the fuel economy benefit. Therefore, a manufacturer upgrading to an
engine that uses both a turbocharger and DEAC technology, like the
TURBOD engine in the example above, would not see the full combined
fuel economy improvement from that specific combination of
technologies. Table II-3 shows a vehicle's fuel economy value when
using the first-level DEAC technology and when using the first-level
turbocharging technology, compared to the agency's example vehicle that
uses both of those technologies combined with a TURBOD engine.
[GRAPHIC] [TIFF OMITTED] TP05DE25.022
As expected, the percent improvement in Table II-3 between the
first and second rows is 1.7 percent and between the third and fourth
rows is 0.3 percent, even though the only difference within the two
sets of technology keys is the DEAC technology (note that the agency
only compares technology keys within the same technology class). This
is because there are complex interactions between all fuel economy-
improving technologies. The agency models these individual technologies
and groups of technologies to reduce the uncertainty and improve the
accuracy of the CAFE Model outputs.
Some technology synergies that NHTSA discusses in Section II.D
include advanced engine and hybrid powertrain technology synergies. As
an example, NHTSA does not see a particularly high effectiveness
improvement from applying advanced engines to existing parallel strong
hybrid (e.g., P2) architectures.\81\ In this instance, the P2
powertrain improves fuel economy, in part, by allowing the engine to
spend more time operating at efficient engine speed and load
conditions. This reduces the advantage of adding advanced engine
technologies, which also improve fuel economy, by broadening the range
of speed and load conditions for the engine to operate at high
efficiency. This redundancy in fuel-saving mechanisms results in a
lower effectiveness when the technologies are added to each other.
Again, NHTSA expects that different combinations of technologies will
provide different effectiveness improvements on different vehicle
types. These examples all illustrate relationships observed using only
full-vehicle modeling and simulation.
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\81\ A parallel strong hybrid powertrain is fundamentally
similar to a conventional powertrain but adds one electric motor to
improve efficiency. Draft TSD Chapter 3 shows all of the parallel
strong hybrid powertrain options that NHTSA has modeled in this
analysis.
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Just as NHTSA's CAFE Model analysis requires a large set of
technology inputs and assumptions, the Autonomie modeling uses a large
set of technology inputs and assumptions. Figure II-2 below shows the
suite of fuel consumption input data used in the Autonomie modeling to
generate the fuel consumption input data NHTSA uses in the CAFE Model.
[[Page 56470]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.023
As shown in Figure II-2 above, full-vehicle benchmarking is a major
source of data for the Autonomie model. For full-vehicle benchmarking,
vehicles are instrumented with sensors and tested on both the road and
chassis dynamometers (i.e., the full-vehicle treadmills used to
exercise the vehicle to provide means to calculate vehicle's fuel
economy values) under different conditions and duty-cycles. Vehicles
are selected for benchmarking with the goal of selecting a mix of
vehicles most representative of vehicle fleet and available
technologies, taking into account sales volume, cost, and availability.
Some examples of full-vehicle benchmark testing performed in
conjunction with the agency's partners at Argonne include a 2019
Chevrolet Silverado, a 2021 Toyota Rav4 Prime, and a 2022 Hyundai
Sonata Hybrid.\82\ NHTSA has produced a report for each vehicle
benchmarked, which can be found in the docket. As discussed further
below, full-vehicle benchmarking data are used as inputs to the engine
modeling and Autonomie full-vehicle simulation modeling. Component
benchmarking is like full-vehicle benchmarking, but instead of testing
a full vehicle, the agency instruments a single production component or
prototype component with sensors and tests it on a similar duty-cycle
as a full vehicle. Examples of components NHTSA benchmarks include
engines, transmissions, axles, electric motors, and batteries.
Component benchmarking data are used as an input to component modeling,
where a production or prototype component is changed in fit, form, or
function and modeled in the same scenario. As an example, NHTSA might
model a decrease in the size of holes in fuel injectors to see the fuel
atomization impact or see how it affects the fuel spray angle.
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\82\ For all Argonne full-vehicle benchmarking reports, see
Docket No. NHTSA-2023-0022-0010.
---------------------------------------------------------------------------
NHTSA uses a range of models to do the component modeling. As shown
in Figure II-2, battery pack modeling using Argonne's BatPaC Model and
engine modeling are two of the most significant component models used
to generate data for the Autonomie modeling. NHTSA discusses BatPaC in
detail in Section II.D, but briefly, BatPaC is the battery pack
modeling tool used to estimate the cost of vehicle battery packs for
all hybridized vehicles, which is based on the materials chemistry,
battery design, and manufacturing design of the plants manufacturing
the battery packs.
Engine modeling is used to generate engine fuel map models that
define the fuel consumption rate for an engine equipped with specific
technologies when operating over a variety of engine load and engine
speed conditions. Some performance metrics captured in engine modeling
include power, torque, airflow, volumetric efficiency, fuel
consumption, turbocharger performance and matching, pumping losses, and
more. Each engine map model has been developed ensuring the engine will
still operate under real-world constraints using a suite of other
models. Some examples of these models that ensure the engine map models
capture real-world operating constraints include simulating heat
release through a predictive combustion model, simulating knock
characteristics through a kinetic fit knock model,\83\ and using
physics-based heat flow and friction models, among others. NHTSA
simulates these constraints using data gathered from component
benchmarking as well as engineering and physics calculations.
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\83\ Engine knock occurs when combustion of some of the air/fuel
mixture in the cylinder does not result from propagation of the
flame front ignited by the spark plug; rather one or more pockets of
air/fuel mixture explode outside of the envelope of the normal
combustion front. Engine knock can result in unsteady operation and
damage to the engine.
---------------------------------------------------------------------------
IAV develops the engine map models, using their GT-POWER modeling
tool, by creating a base, or root, engine map and then modifying that
root map, incrementally, to isolate the effects of the added
technologies. The engine maps are based on real-world engine
[[Page 56471]]
designs. An important feature of the engine maps is that they use a
knock model. As noted above, a knock model ensures that any engine size
or specification that the agency models in the analysis does not result
in engine knock, which could damage engine components in a real-world
vehicle. Though the same engine map models are used for all vehicle
technology classes, the effectiveness varies based on the
characteristics of each class. For example, as discussed above, a
compact car with a turbocharged engine has a different effectiveness
value than a pickup truck with the same engine technology type. The
engine map model development and specifications are discussed further
in Chapter 3 of the Draft TSD.
Argonne also compiles a database of vehicle attributes and
characteristics reasonably representative of the vehicles in that
technology class used to build the vehicle models. Relevant vehicle
attributes may include a vehicle's fuel efficiency, HP, 0-60 mph
acceleration time, and stopping distance, among others, while vehicle
characteristics may include whether the vehicle has all-wheel-drive,
18-inch wheels, summer tires, and so on. Argonne has identified
representative vehicle attributes and characteristics for the light-
duty fleet from publicly available information and automotive
benchmarking databases, such as A2Mac1,\84\ Argonne's Downloadable
Dynamometer Database (D\3\),\85\ EPA compliance and fuel economy
data,\86\ EPA guidance on 2-cycle tests,\87\ and industry
partnerships.\88\ The resulting vehicle technology class baseline
assumptions and characteristics database consists of over 100 different
attributes like vehicle height and width and weights for individual
vehicle parts.
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\84\ A2Mac1: Automotive Benchmarking (proprietary data),
available at: https://www.a2mac1.com (accessed: Sept. 10, 2025).
A2Mac1 is subscription-based benchmarking service that conducts
vehicle and component teardown analyses. Annually, A2Mac1 removes
individual components from production vehicles, such as oil pans,
electric machines, engines, and transmissions, among many other
components. These components are weighed and documented for key
specifications, which are then available to subscribers.
\85\ Argonne National Laboratory, Downloadable Dynamometer
Database, Last revised: 2025, available at: https://www.anl.gov/taps/downloadable-dynamometer-database (accessed: Sept. 10, 2025).
\86\ EPA, Compliance and Fuel Economy Data: Data on Cars Used
for Testing Fuel Economy, Last revised: May 19, 2025, available at:
https://www.epa.gov/compliance-and-fuel-economy-data/data-cars-used-testing-fuel-economy (accessed: Sept. 10, 2025).
\87\ EPA PD TSD, at pp. 2-265--2-266.
\88\ North American Council for Freight Efficiency, Research &
Analysis Are Fundamental (2025), available at: https://www.nacfe.org/research/overview (accessed: Sept. 10, 2025).
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Argonne then assigns ``reference'' technologies to each vehicle
model. The reference technologies are the technologies on the first
step of each CAFE Model technology pathway, and they closely (but not
exactly) correlate to the technology abbreviations that NHTSA uses in
the CAFE Model. As an example, the first Autonomie vehicle model in the
MedSUVPerf technology class starts out with the least advanced engine,
which is DOHC (a dual-overhead cam engine) in the CAFE Model, or eng01
in the Autonomie modeling. The vehicle has the least advanced
transmission (AT5), the least advanced MR level (MR0), the least
advanced aerodynamic body style (AERO0), and the least advanced ROLL
level (ROLL0). The first vehicle model is also defined by initial
vehicle attributes and characteristics that consist of data from the
suite of sources mentioned above. Again, these attributes are meant to
represent the average of vehicle attributes found on vehicles in a
certain technology class.
Then, just as a vehicle manufacturer tests its vehicles to ensure
they meet specific performance metrics, Autonomie ensures that the
built vehicle model meets its performance metrics. NHTSA includes
quantitative performance metrics in the agency's Autonomie modeling to
ensure that the vehicle models can meet real-world performance metrics
that consumers observe and that are important for vehicle utility and
customer satisfaction. The four performance metrics that NHTSA uses in
the Autonomie modeling for light-duty vehicles are low-speed
acceleration (the time required to accelerate from 0 to 60 mph), high-
speed passing acceleration (the time required to accelerate from 50 to
80 mph), gradeability (the ability of the vehicle to maintain constant
65 mph speed on a 6-percent upgrade), and towing capacity for light-
duty pickup trucks. The agency has been using these performance metrics
for the last several CAFE Model analyses, and vehicle manufacturers
have agreed that these performance metrics are representative of the
metrics considered in the automotive industry.\89\ Argonne simulates
the vehicle model driving the two-cycle tests (i.e., running its
treadmill ``programs'') to ensure that it meets its applicable
performance metrics (i.e., NHTSA's MedSUVPerf does not have to meet the
towing capacity performance metric because it is not a pickup truck).
These metrics are based on commonly used metrics in the automotive
industry, including SAE J2807 tow requirements.\90\ Additional details
about how NHTSA sizes light-duty powertrains in Autonomie to meet
defined performance metrics can be found in the CAFE Analysis Autonomie
Documentation.
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\89\ See NHTSA-2021-0053-1492, at 134 (``Vehicle design
parameters are never static. With each new generation of a vehicle,
manufacturers seek to improve vehicle utility, performance, and
other characteristics based on research of customer expectations and
desires, and to add innovative features that improve the customer
experience. [NHTSA and EPA] have historically sought to maintain the
performance characteristics of vehicles modeled with fuel economy-
improving technologies. Auto Innovators encourages the Agencies to
maintain a performance-neutral approach to the analysis, to the
extent possible. Auto Innovators appreciates that the Agencies
continue to consider high-speed acceleration, gradeability, towing,
range, traction, and interior room (including headroom) in the
analysis when sizing powertrains and evaluating pathways for road-
load reductions. All of these parameters should be considered
separately, not just in combination. (For example, we do not support
an approach where various acceleration times are added together to
create a single `performance' statistic. Manufacturers must provide
all types of performance, not just one or two to the detriment of
others.)'').
\90\ SAE, Performance Requirements for Determining Tow-Vehicle
Gross Combination Weight Rating and Trailer Weight Rating, SAE
Standard J2807_202411, SAE International: Warrendale, PA, available
at: https://doi.org/10.4271/J2807_202411 (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
If the vehicle model does not initially meet one of the performance
metrics, then Autonomie's powertrain sizing algorithm increases the
vehicle's engine power. The increase in power is achieved by increasing
engine displacement (which is the measure of the volume of all
cylinders in an engine), which might involve an increase in the number
of engine cylinders, which may lead to an increase in the engine
weight. This iterative process then determines if the baseline vehicle
with increased engine power and corresponding updated engine weight
meets the required performance metrics. The powertrain sizing algorithm
stops once all the baseline vehicle's performance requirements are met.
Some technologies require extra steps for performance optimization
before the vehicle models are ready for simulation. Specifically, the
sizing and optimization process is more complex for hybridized
vehicles, which include hybrid electric vehicle (HEVs) and PHEVs,
compared to vehicles with only ICE engines, as discussed further in the
Draft TSD Chapter 3.3.4. As an example, a PHEV powertrain that can
travel a certain number of miles on its battery energy alone (referred
to as all-electric range (AER)), or as performing in electric-only
mode) is also sized to ensure that it can
[[Page 56472]]
meet the performance requirements of the SAE standardized drive cycles
mentioned above in electric-only mode. Autonomie follows EPA's
regulatory guidance and uses the SAE J1711 test procedure to model the
incremental effectiveness of adding PHEV technology to a vehicle. The
procedure from this guidance is divided into several phases that model
``charge sustaining,'' ``charge depleting,'' and ``cold operation''
\91\ calculations for different test cycles. This is described in
detail in the CAFE Analysis Autonomie Documentation.\92\ Draft TSD
Chapter 3.3.4 and the CAFE Analysis Autonomie Documentation contain
more information on PHEV effectiveness.
---------------------------------------------------------------------------
\91\ SAE J1711 cold test operation occurs in both Charge
Sustaining and Charge Depleting modes.
\92\ Chapter ``Vehicle Sizing Process'' of the CAFE Analysis
Autonomie Documentation.
---------------------------------------------------------------------------
Every time a vehicle model in Autonomie adopts a new technology,
the vehicle weight is updated to reflect the weight of the new
technology. For some technologies, the direct weight change is easy to
assess. For example, when a vehicle is updated to a higher geared
transmission, the weight of the original transmission is replaced with
the corresponding transmission weight (e.g., the weight of a vehicle
moving from a 6-speed automatic (AT6) to an 8-speed automatic (AT8)
transmission is updated based on the 8-speed transmission weight). For
other technologies, like engine technologies, calculating the updated
vehicle weight is more complex. As discussed earlier, modeling a change
in engine technology involves both the new technology adoption and a
change in power (because the reduction in vehicle weight leads to lower
engine loads and a resized engine). When a vehicle adopts new engine
technology, the associated weight change to the vehicle is accounted
for based on a regression analysis of engine weight versus power.\93\
---------------------------------------------------------------------------
\93\ Merriam-Webster, Definition: Regression analysis, available
at: https://www.merriam-webster.com/dictionary/regression%20analysis
(accessed: Sept. 10, 2025) (``the use of mathematical and
statistical techniques to estimate one variable from another
especially by the application of regression coefficients, regression
curves, regression equations, or regression lines to empirical
data''). In this case, NHTSA is estimating engine weight by looking
at the relationship between engine weight and engine power.
---------------------------------------------------------------------------
In addition to using performance metrics commonly used by
automotive manufacturers, NHTSA instructs Autonomie to mimic real-world
manufacturer decisions by resizing engines only at specific intervals
in the analysis and in specific ways. When a vehicle manufacturer is
making decisions about how to change a vehicle model to add fuel
economy-improving technology, the manufacturer could entirely redesign
the vehicle, or the manufacturer could refresh the vehicle with
relatively more minor technology changes. NHTSA discusses how the
agency's modeling captures vehicle refreshes and redesigns in more
detail below, but the details are easier to understand if the agency
starts by discussing some straightforward yet important concepts.
First, most changes to a vehicle's engine happen when the vehicle is
redesigned and not refreshed, as incorporating a new engine in a
vehicle is a 10- to 15-year endeavor at a cost of $750 million to $1
billion.\94\ However, manufacturers will use that same basic engine,
with only minor changes, across multiple vehicle models. NHTSA models
engine ``inheriting'' from one vehicle to another in both the Autonomie
modeling and the CAFE Model. During a vehicle refresh, one vehicle may
inherit an already redesigned engine from another vehicle that shares
the same platform. In the Autonomie modeling, when a new vehicle adopts
fuel-saving technologies that are inherited, the engine is not resized
(i.e., the properties from the reference vehicle are used directly).
While this may result in a small change in vehicle performance,
manufacturers have consistently told NHTSA that the high costs for
redesign and the increased manufacturing complexity that would result
from resizing engines for small technology changes preclude them from
doing so. In addition, when a manufacturer applies MR technology (i.e.,
makes the vehicle lighter), the vehicle can use a less powerful engine
because there is less weight to move. However, Autonomie will use a
resized engine only at certain MR application levels, as a
representation of how manufacturers update their engine technologies.
Again, this is intended to reflect manufacturers' comments that it
would be unreasonable and unaffordable to resize powertrains for every
unique combination of technologies. NHTSA has determined that the
agency's rules about performance neutrality and technology inheritance
result in a fleet that is essentially performance neutral.
---------------------------------------------------------------------------
\94\ 2015 NAS Report, at p. 256. It is likely that manufacturers
have made improvements in the product lifetime and development
cycles for engines since this NAS report and the report that NAS
relied on, but NHTSA does not have data on how much. NHTSA believes
that it is still reasonable to conclude that generating an all-new
engine or transmission design with little to no carryover from the
previous generation would be a notable investment.
---------------------------------------------------------------------------
NHTSA's analysis ensures that vehicle models maintain consistent
performance levels to allow NHTSA to estimate the costs and benefits of
different levels of fuel economy standards more accurately. For its
analysis, NHTSA wants to capture only the costs and benefits that
result from NHTSA changing its CAFE standards. For example, a
manufacturer may add a turbocharger to its engine without downsizing
the engine and then direct all the additional engine work to additional
vehicle HP instead of vehicle fuel economy improvements. If NHTSA
modeled increases or decreases in performance because of fuel economy-
improving technology, then that increase in performance has a monetized
benefit attached to it that is not specifically due to the agency's
fuel economy standards. By ensuring that the agency's vehicle modeling
remains performance neutral, NHTSA can better ensure that the agency is
reasonably capturing the costs and benefits due only to potential
changes in the fuel economy standards.
Autonomie then adopts one single fuel-saving technology to the
initial vehicle model, keeping everything else the same except for that
one technology and the attributes associated with it. Once one
technology is assigned to the vehicle model and the new vehicle model
meets its performance metrics, the vehicle model is used as an input to
the full-vehicle simulation. This means that Autonomie simulates
driving the optimized vehicle models for each technology class on the
test cycles NHTSA described above. As an example, the Autonomie
modeling could start with 10 initial vehicle models (one for each
technology class in the analysis). Those 10 initial vehicle models use
a 5-speed automatic transmission (AT5). Argonne then builds 10 new
vehicle models; the only difference between the 10 new vehicle models
and the first set of vehicle models is that the new vehicle models have
a 6-speed automatic transmission (AT6). Replacing the AT5 with an AT6
would lead either to an increase or decrease in the total weight of the
vehicle because each technology class includes different assumptions
about transmission weight. Argonne then ensures that the new vehicle
models with the 6-speed automatic transmission meet their performance
metrics. Argonne has 20 different vehicle models that can be simulated
on the two-cycle tests. This process is repeated for each technology
option and for each technology class. This results in 10 separate
datasets, each with over
[[Page 56473]]
100,000 results, which include information about a vehicle model made
of specific fuel economy-improving technology and the fuel economy
value that the vehicle model achieved by driving its simulated test
cycles.
NHTSA condenses the million-or-so datapoints from Autonomie into
three datasets used in the CAFE Model. These three datasets include (1)
the fuel economy value that each modeled vehicle achieved while driving
the test cycles, for every technology combination in every technology
class (converted into ``fuel consumption,'' which is the inverse of
fuel economy; fuel economy is mpg and fuel consumption is gallons per
mile); (2) the fuel economy value for PHEVs driving those test cycles,
when those vehicles drive on gasoline only; and (3) optimized battery
costs for each vehicle that adopts some sort of hybridized powertrain
(discussed in more detail below). NHTSA then uses these datapoints to
produce the technology effectiveness values in the CAFE Model.
Technology effectiveness values allow the CAFE Model to simulate
how manufacturers can improve fuel economy relative to a consistent
reference point by adding technology and combinations of technologies.
The effectiveness values represent the simulated relative improvement
of fuel economy that can be applied to a vehicle when new technology is
added. These values are calculated based on comparing the achieved fuel
economies simulated using the Autonomie full-vehicle models.
NHTSA adds the technology effectiveness values to the CAFE Model as
inputs. When the CAFE Model runs a simulation, the effectiveness values
for that vehicle's class determine how much the vehicle's fuel economy
improves with the application of each technology. The CAFE Model's
compliance simulation begins with actual fuel economy values derived
from compliance data. As the CAFE Model adds technology, the technology
effectiveness values are applied to estimate the new fuel economy value
for the vehicle, and the CAFE Model runs millions of combinations of
technologies on different vehicles to find the most cost-effective
means of compliance for each manufacturer and fleet.
Return to the Ravine Runner F Series example, which has a starting
fuel economy value of just over 26 mpg and a starting technology key
``TURBOD; AT10L2; SS12V; ROLL0; AERO5; MR3.'' The equivalent Autonomie
vehicle model has a starting fuel economy value of just over 30.8 mpg
and is represented by the technology descriptors Midsize SUV, Perfo,
Micro Hybrid, eng38, AUp 10, MR3, AERO1, or ROLL0. In MY 2028, the CAFE
Model determines that Generic Motors needs to redesign the Ravine
Runner F Series to reach Generic Motors' new CAFE standard. The Ravine
Runner F Series now has new fuel economy-improving technology, a
parallel strong HEV with a TURBOE engine, an integrated 8-speed
automatic transmission, 30-percent improvement in ROLL, 20-percent
aerodynamic drag reduction, and 10-percent lighter glider (i.e., MR).
Its new technology key is now P2TRBE, ROLL30, AERO20, MR3. Table II-4
shows how the incremental fuel economy improvement from the Autonomie
simulations is applied to the Ravine Runner F Series' starting fuel
economy value.
[GRAPHIC] [TIFF OMITTED] TP05DE25.024
Note that the fuel economy values NHTSA obtains from the Autonomie
modeling are based on the city and highway test cycles (i.e., the two-
cycle test) described above. This is because NHTSA's analysis is based
on the EPA procedures used for calculating fuel economy for CAFE
compliance, which uses two-cycle testing.\95\ In 2008, EPA introduced
three additional test cycles to bring fuel economy ``label'' values
from two-cycle testing in line with the efficiency values consumers
were experiencing in the real world, particularly for hybrids. This is
known as 5-cycle testing. Generally, the revised 5-cycle testing values
have proven to be a good approximation of what consumers will
experience while driving and are significantly more representative than
the previous two-cycle test values at representing real-world fuel
economy. Though the compliance modeling uses two-cycle fuel economy
values, the agency uses the ``on-road'' fuel economy values, which are
the ratio of 5-cycle to 2-cycle testing values (i.e., the CAFE
compliance values to the ``label'' values) \96\ to calculate the value
of fuel savings to the consumer in the effects analysis. This is
because the 5-cycle test fuel economy values better represent
[[Page 56474]]
fuel savings that consumers will experience from real-world driving.
PRIA Chapter 4.3.1 and Section 5.3.2 of the CAFE Model Documentation
contain more information about these calculations. NHTSA's discussion
of the effects analysis is presented later in this section.
---------------------------------------------------------------------------
\95\ 49 U.S.C. 32904(c) (EPA ``shall measure fuel economy for
each model and calculate average fuel economy for a manufacturer
under testing and calculation procedures prescribed by the
Administrator. However, except under section 32908 of this title,
the Administrator shall use the same procedures for passenger
automobiles the Administrator used for model year 1975 (weighted 55
percent urban cycle and 45 percent highway cycle), or procedures
that give comparable results.'').
\96\ NHTSA applied a certain percentage difference between the
2-cycle test value and 5-cycle test value to represent the gap in
compliance fuel economy and real-world fuel economy.
---------------------------------------------------------------------------
In sum, NHTSA uses Autonomie to generate modeling and simulation
technology effectiveness estimates. These estimates ensure that the
modeling captures differences in technology effectiveness due to (1)
vehicle size and performance relative to other vehicles in the analysis
fleet; (2) other technologies on the vehicle or being added to the
vehicle at the same time; and (3) how the vehicle is driven. The
modeling approach allows the isolation of technology effects in the
analysis supporting an accurate assessment and comports with the NAS
2015 recommendation to use full-vehicle modeling supported by the
application of lumped improvements at the sub-model level.\97\
---------------------------------------------------------------------------
\97\ 2015 NAS Report, at p. 292.
---------------------------------------------------------------------------
In NHTSA's analysis, ``technology effectiveness values'' are the
relative difference between the fuel economy value for one Autonomie
vehicle model driving the two-cycle tests and a second Autonomie
vehicle model that uses new technology driving the two-cycle tests.
NHTSA adds the difference between two Autonomie-generated fuel economy
values to a vehicle in the Market Data Input File's CAFE compliance
fuel economy value. NHTSA then calculates the costs and benefits of
different levels of fuel economy standards using the incremental
improvement required to bring an analysis fleet vehicle model's fuel
economy value to a level that contributes to a manufacturer's fleet
meeting its CAFE standard.
In the next section, Technology Costs, NHTSA describes the process
of generating costs for the Technologies Input File.
d. Technology Costs
NHTSA estimates present and future costs for fuel-saving
technologies by taking into consideration the type of vehicle or type
of engine when technology costs vary by application. These cost
estimates are based on three main inputs. First, direct manufacturing
costs (DMCs), or the component and labor costs of producing and
assembling the physical parts and systems, are estimated assuming high-
volume production. Second, NHTSA estimates indirect costs. DMCs
generally do not include the indirect costs of tools, capital
equipment, financing, engineering, sales, administrative support, or
return on investment. NHTSA accounts for these indirect costs via a
scalar markup of DMCs, which is termed the retail price equivalent
(RPE). Finally, the costs for technologies may change over time as
industry streamlines design and manufacturing processes. To model this,
the agency estimates potential cost improvements with cost learning.
The retail cost of equipment in any future year is estimated to be
equal to the product of the DMC, RPE, and cost learning. Considering
the retail cost of equipment, instead of merely DMCs, allows NHTSA to
account for the real-world price effects of a technology as well as
market realities. Each of these technology cost components is described
briefly below and in the following individual technology sections as
well as in detail in Chapters 2 and 3 of the Draft TSD.
DMCs are the component and assembly costs of the physical parts and
systems that make up a complete vehicle. NHTSA uses agency-sponsored
tear-down studies of vehicles and parts to estimate the DMCs of
individual technologies, in addition to independent tear-down studies,
other publications, and confidential business information (CBI). In the
simplest cases, NHTSA sponsors studies to produce results that confirm
or refute third-party industry estimates and determine alignment with
confidential information provided by manufacturers and suppliers. In
cases where the tear-down study results differ significantly from
credible independent sources, the agency scrutinizes the study
assumptions and sometimes revises or updates the analysis accordingly.
Due to the variety of technologies and their applications and the
cost and time required to conduct detailed tear-down analyses, NHTSA
did not sponsor teardown studies for every technology. In addition, the
analysis includes some fuel-saving technologies that are pre-production
or sold in very small pilot volumes, but for whom appropriate data are
available for the range of vehicles the agency models. For those
technologies, NHTSA could not conduct a tear-down study to assess costs
because the product is not yet in the marketplace for evaluation. In
these cases, the agency relies upon third-party estimates and
confidential information from suppliers and manufacturers; however,
there are some concerns with relying on CBI to estimate costs. The
agency and the source may have had incongruent or incompatible
definitions of the reference point from which to measure costs. The
source may have provided DMCs at a date many years in the future and
assumed very high production volumes, important caveats to consider for
agency analysis. In addition, a source may provide incomplete
information. In other cases, intellectual property considerations and
strategic business partnerships may have contributed to a
manufacturer's cost information and could be difficult to account for
in the CAFE Model, as not all manufacturers may have access to
proprietary technologies at stated costs. In light of these concerns,
NHTSA carefully evaluates new information, especially regarding
emerging technologies.
While costs for fuel-saving technologies reflect the best estimates
available today, technology cost estimates likely will change in the
future as technologies are deployed, production is expanded, and
nascent technologies mature. For emerging technologies, NHTSA uses the
best information available at the time of the analysis and continues to
update cost assumptions for any future analysis. Chapter 3 of the Draft
TSD discusses each category of technologies (e.g., engines,
transmissions, or hybridization) and the cost estimates the agency uses
for this analysis.
As discussed above, direct costs represent the cost associated with
acquiring raw materials, fabricating parts, and assembling vehicles
with the various technologies that manufacturers are expected to use to
improve the fuel economy of their fleets. They include materials,
labor, and variable energy costs required to produce and assemble the
vehicle. However, they do not include overhead costs required to
develop and produce the vehicle, costs incurred by manufacturers or
dealers to sell vehicles, or the profit manufacturers and dealers make
from their investments. These items together contribute to the price
consumers ultimately pay for the vehicle. Table II-5 illustrates how
these components can affect retail prices.
[[Page 56475]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.025
To estimate total consumer costs (i.e., both direct and indirect
costs), NHTSA multiplies a technology's DMCs by an indirect cost factor
(the RPE) to represent the average price for fuel-saving technologies
at retail. The RPE markup factor is based on an examination of
historical financial data contained in 10-K reports filed by
manufacturers with the Securities and Exchange Commission (SEC). It
represents the ratio between the retail price of motor vehicles and the
direct costs of all activities in which manufacturers engage.
---------------------------------------------------------------------------
\98\ Rogozhin, A. et al., Automobile Industry Retail Price
Equivalent and Indirect Cost Multipliers, Finale, EPA-420-R-09-003,
EPA: Ann Arbor, MI (2009), available at: https://nepis.epa.gov/Exe/ZyPDF.cgi/P100AGJ1.PDF?Dockey=P100AGJ1.PDF (accessed: Sept. 10,
2025); Spinney, B.C. et al., Advanced Air Bag Systems Cost, Weight,
and Lead Time Analysis Summary Report, National Highway Traffic
Safety Administration: Washington, DC (1999).
\99\ Data is not available for intervening years, but results
for 2007 seem to indicate no significant change in the historical
trend.
\100\ See Comment of the Alliance of Automobile Manufacturers,
Docket No. EPA-HQ-OAR-2018-0283-6186 at 143 (Oct. 26, 2018),
available at: https://www.regulations.gov/comment/EPA-HQ-OAR-2018-0283-6186 (accessed: Sept. 10, 2025) (``The Alliance supports the
use of retail price equivalents in the compliance cost modeling . .
. .'').
---------------------------------------------------------------------------
For more than three decades, the retail price of motor vehicles has
been, on average, roughly 50 percent above the direct cost expenditures
of manufacturers. That is, the retail price is approximately 1.5 times
the direct cost expenditures.\98\ This ratio has been consistent,
averaging roughly 1.5 with minor variations from year to year over this
period. At no point has the RPE markup based on 10-K reports exceeded
1.6 or fallen below 1.4, based on data from 1972-1997 and 2007.\99\
During this timeframe, the average annual increase in real direct costs
was 2.5 percent, and the average annual increase in real indirect costs
was also 2.5 percent. The RPE averages 1.5 across the lifetime of
technologies of all ages, with a lower average in earlier years of a
technology's life, and, because of learning effects on direct costs, a
higher average in later years. Many automotive industry stakeholders
have either endorsed the 1.5 markup or have estimated alternative RPE
values. As seen in Table II-6, all estimates range between 1.4 and 2.0,
and most are in the 1.4 to 1.7 range.\100\
[[Page 56476]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.026
An RPE of 1.5 does not mean that manufacturers automatically mark
up each vehicle by exactly 50 percent. Rather, it means that, over
time, the competitive marketplace has resulted in pricing structures
that average out to this relationship across the entire industry.
Prices for any individual model may be marked up at a higher or lower
rate depending on market demand. On average, over time and across the
vehicle fleet, consumers spend about $1.50 for each dollar of direct
costs incurred by manufacturers. Based on NHTSA's own evaluation and
the widespread use and acceptance of the RPE by automotive industry
stakeholders, the agency has determined that the RPE provides a
reasonable indirect cost markup for use in the analysis. A detailed
discussion of indirect cost methods and the basis for the agency's use
of the RPE to reflect these costs, rather than other indirect cost
markup methods, is available in the Final Regulatory Impact Analysis
(FRIA) for the 2020 final rule.\102\
---------------------------------------------------------------------------
\101\ Duleep, K.G., Analysis of Technology Cost and Retail
Price, Presentation to Committee on Assessment of Technologies for
Improving LDV Fuel Economy, Detroit, MI (2008); Jack Faucett
Associates, Update of EPA's Motor Vehicle Emission Control Equipment
Retail Price Equivalent (RPE) Calculation Formula, Report, No. 68-
03-3244, EPA: Ann Arbor, MI (1985), available at: https://nepis.epa.gov/Exe/ZyPURL.cgi?Dockey=940047LI.txt (accessed: Sept.
10, 2025); McKinsey & Company, Preface to the Auto Sector Cases, New
Horizons Multinational Company Investment in Developing Economies
(2023); Transportation Research Board and National Research Council,
Effectiveness and Impact of Corporate Average Fuel Economy (CAFE)
Standards, National Academies Press: Washington, DC, pp. 5, 12
(2002), available at: https://nap.nationalacademies.org/catalog/10172/effectiveness-and-impact-of-corporate-average-fuel-economy-cafe-standards; National Research Council, Assessment of Fuel
Economy Technologies for Light-Duty Vehicles, National Academies
Press: Washington, DC (2011), available at: https://nap.nationalacademies.org/catalog/12924/assessment-of-fuel-economy-technologies-for-light-duty-vehicles (accessed: Sept 10, 2025); NRC,
Cost, Effectiveness, and Deployment of Fuel Economy Technologies in
LDVs, National Academies Press (2015); Sierra Research, Inc, Study
of Industry-Average Mark-Up Factors Used to Estimate Changes in
Retail Price Equivalent (RPE) for Automotive Fuel Economy and
Emissions Control Systems, Sierra Research, Inc.: Sacramento, CA
(2007); Vyas, A. et al., Comparison of Indirect Cost Multipliers for
Vehicle Manufacturing, Center for Transportation Research: Argonne,
IL (2000), available at: https://publications.anl.gov/anlpubs/2000/05/36074.pdf (accessed: Sept. 10, 2025).
\102\ NHTSA and EPA, FRIA: The Safer Affordable Fuel-Efficient
(SAFE) Vehicles Rule for Model Year 2021-2026 Passenger Cars and
Light Trucks (2020), available at: https://www.nhtsa.gov/sites/nhtsa.gov/files/documents/final_safe_fria_web_version_200701.pdf
(accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
Finally, manufacturers make improvements to production processes
over time, which often result in lower costs. ``Cost learning''
reflects the effect of experience and volume on the cost of production,
which generally results in better utilization of resources, leading to
higher and more efficient production. As manufacturers gain experience
through production, they refine production techniques, raw material and
component sources, and assembly methods to maximize efficiency and
reduce production costs.
NHTSA estimates cost learning by considering methods established by
T.P. Wright and later expanded upon by J.R. Crawford. Wright, examining
aircraft production, found that every doubling of cumulative production
of airplanes resulted in decreasing labor hours at a fixed percentage.
This fixed percentage is commonly referred to as the progress rate or
progress ratio, where a lower rate implies faster learning as
cumulative production increases. J.R. Crawford expanded upon Wright's
learning curve theory to develop a single unit cost model, which
estimates the cost of the nth unit produced where the following
information is known: (1) cost to produce the first unit; (2)
cumulative production of n units; and (3) the progress ratio.
Consistent with Wright's learning curve, most technologies in the
CAFE Model use the basic approach by Wright, where NHTSA estimates
technology cost reductions by applying a fixed percentage to the
projected cumulative production of a given fuel economy technology in a
given model year.\103\ The agency estimates the cost to produce the
first unit of any given technology by identifying the DMC for a
technology in a specific model year. As discussed in detail below, and
in Chapter 3 of the Draft TSD, NHTSA's technology DMCs come from
studies, teardown reports, other publicly available data, and feedback
from manufacturers and suppliers. Because different studies or cost
estimates are based on costs in specific model years, the agency
identifies the ``base'' model years for each technology where the
learning factor is equal to 1.00. Then, the agency applies a progress
ratio to back-calculate the cost of the first unit produced. The
majority of technologies in the CAFE Model use a progress ratio (i.e.,
the slope of the learning curve, or the rate at which cost reductions
occur with respect to cumulative production) of approximately 0.89,
which is derived from average progress ratios researched in studies
funded or identified by NHTSA.\104\ Many fuel economy
[[Page 56477]]
technologies that have existed in vehicles for some time will have a
gradual sloping learning curve implying that cost reductions from
learning is moderate and eventually becomes less steep toward MY 2050.
Conversely, newer technologies have an initial steep learning curve
where cost reduction occurs at a high rate. Mature technologies
generally have a flatter curve and may not incur much cost reduction,
if at all, from learning. Draft TSD Chapter 2.4.4 provides an
illustration showing various slopes of learning curves.
---------------------------------------------------------------------------
\103\ NHTSA uses statically projected cumulative volume
production estimates because the CAFE Model does not support dynamic
projections of cumulative volume at this time.
\104\ Simons, J.F., Cost and Weight Added by the Federal Motor
Vehicle Safety Standards for MY 1968-2012 Passenger Cars and LTVs,
Report No. DOT HS 812 354, NHTSA: Washington DC, pp. 30-33 (2017),
available at: https://downloads.regulations.gov/NHTSA-2021-0053-1643/attachment_44.pdf (accessed: Oct. 2, 2025); Argote, L. et al.,
The Acquisition and Depreciation of Knowledge in a Manufacturing
Organization--Turnover and Plant Productivity, Working Paper,
Graduate School of Industrial Administration, Carnegie Mellon
University (1997); Benkard, C.L., Learning and Forgetting: The
Dynamics of Aircraft Production, The American Economic Review. Vol.
90(4): pp. 1034-54 (2000), available at: https://www.aeaweb.org/articles?id=10.1257/aer.90.4.1034 (accessed: Oct. 2, 2025); Epple,
D. et al., Organizational Learning Curves: A Method for
Investigating Intra-Plant Transfer of Knowledge Acquired through
Learning by Doing, Organization Science. Vol. 2(1): pp. 58-70
(1991), available at: https://www.jstor.org/stable/2634939
(accessed: Oct. 2, 2025); Epple, D. et al., An Empirical
Investigation of the Microstructure of Knowledge Acquisition and
Transfer Through Learning by Doing, Operations Research, Vol. 44(1):
pp. 77-86 (1996), available at: https://ideas.repec.org/a/inm/oropre/v44y1996i1p77-86.html (accessed: Oct. 2, 2025); Levitt, S.D.
et al., Toward an Understanding of Learning by Doing: Evidence From
an Automobile Assembly Plant, Journal of Political Economy, Vol.
121(4): pp. 643-81 (2013), available at: https://www.nber.org/papers/w18017 (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
The agency assigns groups of similar technologies or technologies
of similar complexity to each learning curve. While the grouped
technologies differ in operating characteristics and design, NHTSA
chooses to group them based on market availability, complexity of
technology integration, and production volume of the technologies that
can be implemented by manufacturers and suppliers. In general, the
agency considers most basic engine and transmission technologies to be
mature technologies that do not experience any additional improvements
in design or manufacturing. Other basic engine technologies, like VVL,
SGDI, and DEAC, decrease in costs through around MY 2036, because those
were introduced into the market more recently. All advanced engine
technologies follow the same general pattern of a gradual reduction in
costs until MY 2036, when they plateau and remain flat. NHTSA expects
the cost to decrease as production volumes increase, manufacturing
processes are improved, and economies of scale are achieved. The agency
has assigned advanced engine technologies based on a singular preceding
technology to the same learning curve as that preceding technology.
Similarly, the more advanced transmission technologies experience a
gradual reduction in costs through MY 2031, when they plateau and
remain flat. Lastly, the agency estimates that the learning curves for
road load technologies, with the exception of the most advanced MR
level (which decreases at a fairly steep rate through MY 2040, as
discussed further below and in Chapter 3.4 of the Draft TSD), will
decrease through MY 2036 and then remain flat.
For technologies that have been in production for many years, like
some engine and transmission technologies, this approach produces
reasonable estimates that NHTSA can compare against other studies and
publicly available data. Generating the learning curve for battery
packs for hybrid vehicles in future model years is significantly more
complicated, and NHTSA discusses how the agency generated those
learning curves in detail in Chapter 3.3 of the Draft TSD. NHTSA's
battery pack learning curves recognize that there are many factors that
could potentially lower battery pack costs over time outside of cost
reductions from improvements in manufacturing processes due to
knowledge gained through experience in production.
Table II-7 shows how some of the technologies on the MY 2024 Ravine
Runner F Series decrease in cost over several years. Note that these
costs are specifically applicable to the MedSUVPerf class, and other
technology classes may have different costs for the same technologies.
These costs are pulled directly from the Technology Costs Input File,
meaning that they include the DMC, RPE, and learning.
[GRAPHIC] [TIFF OMITTED] TP05DE25.027
e. Simulating Tax Credits
The Inflation Reduction Act (IRA) included several tax credits
intended to encourage the adoption of clean vehicles.\105\ OB3 amended
these credits and removed many of the clean vehicle credits.\106\
Consistent with prior rulemakings, NHTSA also assumes that hybrids do
not qualify for the IRA tax credits because their battery size is below
the minimum thresholds set within the IRA. As noted throughout this
preamble, NHTSA is statutorily prohibited from considering the fuel
economy of dedicated automobiles and therefore has excluded dedicated
vehicles from the analysis. The agency considers the fuel-based
efficiency of dual-fueled vehicles, such as PHEVs, which are the only
vehicles the agency models that are eligible for tax credits.
---------------------------------------------------------------------------
\105\ Public Law 117-169, 136 Stat. 1818 (Aug. 16, 2025).
https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf.
\106\ Enacted as Public Law 119-21, 139 Stat. 72 (July 4, 2025)
https://www.congress.gov/119/plaws/publ21/PLAW-119publ21.pdf.
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NHTSA models three provisions of the IRA only through MY 2025 and
does not model any of these provisions from MY 2026 forward. The first
is the advanced manufacturing production tax credit (AMPC), which
provides a $35 per kWh tax credit for manufacturers of battery cells
and an additional $10 per kWh for manufacturers of battery modules (all
applicable to manufacture in the United States).\107\
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\107\ 26 U.S.C. 45X. If a manufacturer produces a battery module
without battery cells, it is eligible to claim up to $45 per kWh for
the battery module. Two other provisions of the AMPC are not modeled
at this time; (1) a credit equal to 10 percent of the manufacturing
cost of electrode active materials and (2) a credit equal to 10
percent of the manufacturing cost of critical minerals for battery
production. NHTSA is not modeling these credits directly because of
how battery costs are estimated, and to avoid the potential to
double-count the tax credits if they are included into other
analyses that feed into NHTSA's inputs. For a full account of the
credit and any limitations, please refer to the statutory text.
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[[Page 56478]]
NHTSA also models two credits available to new vehicle buyers, the
clean vehicle credit (30D) \108\ and the credit for qualified
commercial clean vehicles (45W) \109\ (collectively, the Clean Vehicle
Credits or ``CVCs''). The30D credit provides up to $7,500 toward the
purchase of clean vehicles with critical minerals either extracted or
processed in the United States or a country with which the United
States has a free trade agreement or recycled in North America and
battery components manufactured or assembled in North America.\110\ In
contrast to 30D, the 45W credit does not have the same critical
minerals and production restraints, but instead the credit value is the
lesser of the incremental cost to purchase a comparable ICE vehicle or
15 percent of the cost basis for PHEVs up to $7,500 for vehicles with
GVWR less than 14,000. To date, the Department of the Treasury has
allowed all eligible vehicles to qualify for the maximum value provided
by statute based on DOE's Incremental Purchase Cost Methodology and
Results for Clean Vehicles report.\111\ The 45W credit is also
available only to commercial purchasers; however, the Department of the
Treasury determined that leased vehicles qualify given that the
``purchaser'' is the financing company.
---------------------------------------------------------------------------
\108\ 26 U.S.C. 30D. For a full account of the credit and any
limitations, please refer to the statutory text.
\109\ 26 U.S.C. 45W. For a full account of the credit and any
limitations, please refer to the statutory text.
\110\ Vehicle price and consumer income limitations apply to
Sec. 30D credits, as well. See Congressional Research Service, Tax
Provisions in the Inflation Reduction Act of 2022 (H.R. 5376)
(2022), available at: https://www.congress.gov/crs-product/R47202
(accessed: Sept. 10, 2025).
\111\ See Internal Revenue Service, Frequently Asked Questions
Related to New, Previously-Owned and Qualified Commercial Clean
Vehicle Credits, Q4 and Q8 (2022), available at: https://www.irs.gov/pub/taxpros/fs-2022-42.pdf (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
NHTSA assumes, based on the updated constraints in OB3 that the
impact of the credits would be de minimis, particularly for the
vehicles and model years considered in this analysis. Thus, the agency
removes the availability of CVCs consistent with the AMPC tax credit
discussed below. NHTSA includes a sensitivity case related to the AMPC,
which is discussed in detail in PRIA Chapter 9, and monitors this area
to develop assumptions related to the updated AMPC provisions to
include for the final rule. NHTSA also does not model individual state
tax credits or rebate programs. State clean vehicle tax credits and
rebates vary from jurisdiction to jurisdiction and are subject to more
uncertainty than their Federal counterparts.\112\ Tracking sales by
jurisdiction and modeling each program's individual compliance program
would require significant revisions to the CAFE Model and likely
provide minimal changes in the net outputs of the analysis.
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\112\ States have additional mechanisms to amend or remove tax
incentives or rebates. Sometimes, even after these programs are
enacted, uncertainty persists. See Farah, N., The Untimely Death of
America's ``Most Equitable'' EV Rebate, Last revised: Jan. 30, 2023,
available at: https://www.eenews.net/articles/the-untimely-death-of-americas-most-equitable-ev-rebate/ (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
NHTSA jointly models the CVCs. Both credits are available at the
time of sale and provide up to $7,500 towards the purchase of light-
duty vehicles placed in service before the end of 2025. Since only one
of the CVCs may be claimed for purchasing a given vehicle, NHTSA models
them jointly.
As mentioned above, NHTSA is including the tax credits in its
analysis through MY 2025. This was a natural terminal point for the
CVCs, which are set to expire this year. The agency elected not to
model the AMPC in future model years because of the more stringent
foreign entity of concern (FEOC) constraints (i.e., constrained
eligibility for the tax credit based on materials sources) and American
component threshold percentages. NHTSA conducts a sensitivity analysis
in which the tax credits are included in the analysis for taking effect
through the standard-setting years.
The agency assumes that manufacturers and consumers will each
capture half of the dollar value of the AMPC and CVCs. The agency
assumes that manufacturers' shares of both credits will offset part of
the cost to supply models eligible for the credits--PHEVs,
specifically. The subsidies reduce the costs of eligible vehicles and
increase their attractiveness to buyers. Because the AMPC credit scales
with battery capacity, NHTSA determines average battery energy capacity
for passenger cars, and light trucks based on Argonne simulation
outputs. Draft TSD Chapter 2.3.2 contains a detailed discussion of
these assumptions. NHTSA accounts for all the eligibility requirements
of 30D, and the AMPC, such as the location of final assembly and
battery production, the origin of critical minerals, and the income
restrictions of 30D through the credit schedules constructed in part
based off of these factors and allows all PHEVs produced and sold
during the timeframe that tax credits are offered to be eligible for
those credits subject to the MSRP restrictions discussed above.\113\
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\113\ See 88 FR 56179 (Aug. 17, 2023) for a more detailed
explanation of the process used for the previous proposal.
---------------------------------------------------------------------------
To account for the agency's inability dynamically to model sourcing
requirements and income limits for 30D, NHTSA uses projected values of
the average value of 30D and the AMPC for the proposal. The projections
increase throughout the analysis due to the expectation that gradual
improvements in supply chains over time would allow more vehicles to
qualify for the credits.
NHTSA uses a DOE report that provides combined values of the
CVCs.\114\ These values consider the latest information of PHEV
penetration rates, PHEV retail prices, the share of United States PHEV
sales that meet the critical minerals and battery component
requirements, the share of vehicles that exclude suppliers that are
``Foreign Entities of Concern,'' and lease rates for vehicles that
qualify for the 45W CVC. The DOE projections are the most detailed and
rigorous projections of credit availability that NHTSA is aware of at
this time. If DOE releases projections that reflect the passing of OB3
into law, NHTSA will consider using those projections for the final
rule. According to DOE's analysis, the average credit value for the
CVCs across all PHEV sales in a given year never reaches its full
$7,500 value for all vehicles. DOE, therefore, projects a maximum
average credit value of $6,000. Draft TSD Chapter 2.5.3 includes more
information on the average AMPC credit per kWh that NHTSA uses in this
proposal.
---------------------------------------------------------------------------
\114\ U.S. Department of Energy, Estimating Federal Tax
Incentives for Heavy Duty Electric Vehicle Infrastructure and for
Acquiring Electric Vehicles Weighing Less Than 14,000 Pounds,
Memorandum (Mar. 11, 2024).
---------------------------------------------------------------------------
The CAFE Model accounts for the statutory MSRP restrictions of 30D
by assuming that the CVCs cannot be applied to cars with an MSRP above
$55,000 or other vehicles with an MSRP above $80,000, which are
ineligible for 30D. 45W does not have the same MSRP restrictions;
however, because NHTSA is unable to model the CVCs separately at this
time, the agency has to choose whether to model the restriction for
both CVCs or not to model the restriction at all. NHTSA chooses to
include the restriction for both CVCs to be conservative.\115\ Chapter
2.5.2 of the Draft TSD contains additional details on
[[Page 56479]]
how NHTSA implements the IRA and OB3 tax credits.
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\115\ Bureau of Transportation Statistics, New and Used
Passenger Car and Light Truck Sales and Leases, available at:
https://www.bts.gov/content/new-and-used-passenger-car-sales-and-leases-thousands-vehicles (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
NHTSA uses real dollars for future costs and benefits, such as
technology costs in future model years. Including the tax credits as
nominal dollars instead of real dollars artificially raises the value
of the credits in respect to other costs, so NHTSA converts the DOE
projections to real dollars.
The CAFE Model projects vehicles in model year cohorts rather than
on a calendar year basis. Given that model years and calendar years can
be misaligned (e.g., a MY 2024 vehicle could be sold in CYs 2023, 2024,
or even 2025), choosing which calendar year a model year falls into is
important for assigning tax credits that are phased out during the
analytical period. NHTSA analyzes the timing of new vehicle sales and
new vehicle registrations and determines that, for this proposed rule,
it is appropriate to assume that credits available in a given calendar
year are available to all vehicles sold in the following model year. By
contract, NHTSA models vehicles in a given model year as eligible for
credits available in the same calendar year. As a result, NHTSA applies
the credits to MYs 2024-2025 in this analysis.
f. Technology Applicability Equations and Rules
As NHTSA describes above, the CAFE Model simulates cost-effective
ways that vehicle manufacturers could comply with CAFE standards,
subject to limits that ensure that the Model reasonably replicates
manufacturers' decisions in the real world. This section describes the
equations the CAFE Model uses to determine how to apply technology to
vehicles, including whether technologies are cost effective, and why
the agency believes the CAFE Model's calculation of potential
compliance pathways reasonably represents manufacturers' decision-
making. This section also gives a high-level overview of real-world
limitations that vehicle manufacturers face when designing and
manufacturing vehicles and how the agency includes those in the
technology inputs and assumptions in the analysis.
For each manufacturer's fleet, the CAFE Model first determines
whether any technology should be ``inherited'' from an engine,
transmission, or platform that currently uses the technology and should
be applied to a vehicle that is due for a refresh or redesign. NHTSA
describes above how vehicle manufacturers use the same or similar
engines, transmissions, and platforms across multiple vehicle models,
and the agency tracks vehicle models that share technology by assigning
Engine, Transmission, and Platform Codes to vehicles in the analysis
fleet. As an example, variants of the Ford 10R80 10-speed transmission
are currently used in the following Ford Motor Company vehicles: 2017-
present Ford F-150, 2018-present Ford Mustang, 2018-present Ford
Expedition/Lincoln Navigator, 2019-present Ford Ranger, and the 2020-
present Ford Explorer/Lincoln Aviator. The 2WD variant of the 10R80, as
applied to the CAFE Model, is shared by the 2WD Expedition models, 2WD
F-150 models, and the Mustang, thus linking these models by the same
Transmission Code. If one of these three vehicle model types receives a
transmission upgrade, the other two would automatically receive the
same upgrade at their next redesign or refresh.
After applying inherited technologies, the Model begins the process
of evaluating what technologies could be applied to the manufacturer's
vehicles. The CAFE Model applies the most cost-effective technology out
of the universe of technology options that the Model could potentially
apply. To determine whether a particular technology is cost effective,
the Model calculates the ``effective cost'' of multiple technology
options and chooses the option that results in the lowest ``effective
cost.'' A technology that has an effective cost less than zero
(Equation II-4 results in a negative number) is considered cost
effective, as a negative effective cost implies that the technology
``pays for itself.'' The ``effective cost'' calculation is actually
multiple calculations, but this section describes only the highest
levels of that logic; interested readers can consult the CAFE Model
Documentation for additional information on the calculation of
effective cost. Equation II-4 shows the CAFE Model's effective cost
calculation for this analysis.
Equation II[dash]4: CAFE Model Effective Cost Calculation
[GRAPHIC] [TIFF OMITTED] TP05DE25.028
Where:
TechCostTotal:
the total cost of a candidate technology evaluated on a group of
selected vehicles;
TaxCreditsTotal:
the cumulative value, if any, of additional vehicle and battery tax
credits (or Federal incentives) resulting from application of a
candidate technology evaluated on a group of selected vehicles;
FuelSavingsTotal:
the value of the reduction in fuel consumption (or fuel savings)
resulting from application of a candidate technology evaluated on a
group of selected vehicles;
[Delta]Fines:
the change in manufacturer's fines in the analysis year, if
applicable;
[Delta]ComplianceCredits:
the change in manufacturer's CAFE compliance credits in the analysis
year (denominated in thousands of gallons);
EffCost:
the calculated effective cost attributed to application of a
candidate technology evaluated on a group of selected vehicles.
The components of this ``cost per credit'' effective cost
calculation are described further here. The CAFE Model considers the
total cost of a technology (TechCost) that could be applied to a group
of connected vehicles, just as a vehicle manufacturer might consider
what new technologies it has ready for the market and which vehicles
should and could receive the upgrade. Next, like the technology costs,
the CAFE Model calculates the total value of Federal incentives
(TaxCredits) available for a technology that could be applied to a
group of vehicles and subtracts that total incentive from the total
technology costs. The total fuel cost savings (FuelSavings) are the
savings in fuel expense resulting from switching from one technology to
another. For this, the CAFE Model must calculate the total fuel cost
for the vehicle before application of a technology and subtract the
total fuel cost for the vehicle after calculation of that technology.
The total fuel cost for a given vehicle depends on both the price of
gas (or gasoline equivalent fuel) and the number of miles that a
vehicle is driven, among other factors.\116\ As
[[Page 56480]]
technology is applied to vehicles in groups, the total fuel cost for
the vehicle is then multiplied by the sales volume of a vehicle in a
model year to equal total fuel cost savings, which is then subtracted
in the numerator of the effective cost equation. Finally, in the
numerator, the agency subtracts the change in a manufacturer's expected
fines ([Delta]Fines), which are set at $0 for this analysis as a result
of Public Law 119-21, before and after application of a specific
technology, if any.\117\ This approach can be thought of as subtraction
of the fines avoided by upgrading to a certain technology. Then, the
result from the sequence above is divided by the change in compliance
credits ([Delta]ComplianceCredits), which means a manufacturer's
credits earned in a compliance category before and after the
application of a technology to a group of vehicles. This approach can
be thought of as dividing the result by the gain in credits resulting
from upgrading to a certain technology.
---------------------------------------------------------------------------
\116\ This fuel cost savings is calculated using the miles
driven over 3 years, based on the assumption that consumers are
likely to buy vehicles with fuel economy-improving technology that
pays for itself within 3 years.
\117\ See Section VI noting the value of civil penalties are set
to $0 in this analysis.
---------------------------------------------------------------------------
After inherited technologies and cost-effective technologies are
applied, the CAFE Model determines whether the manufacturer's fleet
meets its CAFE standard. If the manufacturer is still not in
compliance, the Model applies non-cost-effective technologies (which
have an effective cost greater than zero) until it runs out of
technology options.
The Model runs the compliance simulation successively and accounts
for technology added during each previous model year by carrying
forward technologies between model years once they are applied. The
CAFE Model does this by mirroring real-world decisions of manufacturers
to carry forward most technologies between model years, concentrating
the application of new technology to vehicle redesigns or mid-cycle
``freshenings,'' and design cycles vary widely among manufacturers and
specific products. Comments from manufacturers and Model peer reviewers
for past CAFE rules have strongly supported explicit year-by-year
simulation. The multi-year planning capability increases the Model's
ability to simulate manufacturers' real-world behavior, accounting for
the fact that manufacturers will seek out compliance paths for several
model years at a time, while accommodating the year-by-year
requirement.
In addition to the Model's technology application decisions
pursuant to the compliance simulation algorithm, several technology
inputs and assumptions work together to determine which technologies
the CAFE Model can apply. The technology pathways, discussed in detail
above, are one significant way that the agency instructs the CAFE Model
to apply technology. Again, the pathways define mutually exclusive
technologies (i.e., those that cannot be applied at the same time) and
define the direction in which vehicles can advance as the modeling
system evaluates specific technologies for application. Then, the
arrows between technologies instruct the Model on the order in which to
evaluate technologies on a pathway, to ensure that a vehicle that uses
a more fuel-efficient technology cannot downgrade to a less efficient
option.
In addition to technology pathway logic, NHTSA uses several
technology applicability rules to replicate better manufacturers'
decision-making. The ``skip'' input--represented in the Market Data
Input File as ``SKIP'' in the appropriate technology column
corresponding to a specific vehicle model--is particularly important
for accurately representing how a manufacturer applies technologies to
their vehicles in the real world. This tells the Model not to apply a
specific technology to a specific vehicle model. SKIP inputs are used
to simulate manufacturer decisions, including: (1) parts and process
sharing; (2) stranded capital; and (3) performance neutrality.
First, parts sharing includes the concepts of platform, engine, and
transmission sharing, which are discussed in detail in Section II.C.2
and Section II.C.3, above. A ``platform'' refers to engineered
underpinnings shared on several differentiated vehicle models and
configurations. Manufacturers share and standardize components,
systems, tooling, and assembly processes within their products (and
occasionally with the products of another manufacturer) to manage
complexity and costs for development, manufacturing, and assembly.
Detailed discussion for this type of SKIP is provided in the ``adoption
features'' section for different technologies, if applicable, in
Chapter 3 of the Draft TSD.
Similar to vehicle platforms, manufacturers create engines that
share parts. For instance, manufacturers may use different piston
strokes on a common engine block or bore out common engine block
castings with different diameters to create engines with an array of
displacements. Head assemblies for different displacement engines may
share many components and manufacturing processes across the engine
family. Manufacturers may finish crankshafts with the same tools to
similar tolerances. Engines on the same architecture may share pistons
and connecting rods, and the same engine architecture may include both
6- and 8-cylinder engines. One engine family may appear on many
vehicles on a platform, and changes to that engine may or may not carry
through to all the vehicles. Some engines are shared across a range of
different vehicle platforms. Vehicle model/configurations in the
analysis fleet that share engines belonging to the same platform are
identified as such, and the agency also may apply a SKIP to a
particular engine technology where it is known that a manufacturer
shares an engine throughout several of their vehicle models and the
engine technology is not appropriate for any of the platforms that
share the same engine.
It is important to note that manufacturers can define a ``common''
engine platform in different ways. Some manufacturers consider engines
as ``common'' if the engines share an architecture, components, or
manufacturing processes. Other manufacturers take a narrower approach
and consider engines ``common'' only if the parts in the engine
assembly are the same. In some cases, manufacturers designate each
engine in each application as a unique powertrain. For example, a
manufacturer may have listed two engines separately for a pair that
share designs for the engine block, the crankshaft, and the head
because the accessory drive components, oil pans, and engine
calibrations differ between the two. In practice, many engines share
parts, tooling, and assembly resources, and manufacturers often
coordinate design updates between two similar engines. NHTSA considers
engines to be on a common platform (for purposes of coding, discussed
in Section II.C.2 above, and for SKIP application) if the engines share
a common cylinder count and configuration, displacement, valvetrain,
and fuel type, or if the engines only differ slightly in compression
ratio (CR), HP, and displacement.
Parts sharing also includes the concept of sharing manufacturing
lines (the systems, tooling, and assembly processes discussed above),
because manufacturers are unlikely to build a new manufacturing line to
build a completely new engine. A new engine designed to be mass
manufactured on an existing production line has limits in number of
parts used, type of parts used, weight, and packaging size due to the
weight limits of the pallets, material handling interaction points, and
[[Page 56481]]
conveyance line design to produce one unit of a product. The
restrictions are reflected in the usage of a SKIP of engine technology
that the manufacturing line would not accommodate.
SKIPs also relate to instances of stranded capital when
manufacturers amortize research, development, and tooling expenses over
many years, especially for engines and transmissions. The traditional
production life cycles for transmissions and engines have been a decade
or longer. If a manufacturer launches or updates a product with fuel-
saving technology, and then later replaces that technology with an
unrelated or different fuel-saving technology before the equipment and
research and development investments have been fully paid off, there
will be unrecouped, or stranded, capital costs. Quantifying stranded
capital costs accounts for such lost investments. One design where
manufacturers take an iterative redesign approach, as described in a
recent SAE paper,\118\ is the MacPherson strut suspension. It is a
popular low-cost suspension design, and manufacturers use it across
their fleets. As the agency observed previously, manufacturers may be
shifting their investment strategies in ways that may alter how
stranded capital could be considered. For example, some suppliers sell
similar transmissions to multiple manufacturers. Such arrangements
allow manufacturers to share in capital expenditures or amortize
expenses more quickly. Manufacturers share parts on vehicles around the
globe, achieving greater scale and greatly affecting tooling strategies
and costs.
---------------------------------------------------------------------------
\118\ Pilla, S. et al., Parametric Design Study of McPherson
Strut to Stabilizer Bar Link Bracket Weld Fatigue Using Design for
Six Sigma and Taguchi Approach, SAE Technical Paper 2021-01-0235,
SAE International: (2021), available at: https://doi.org/10.4271/2021-01-0235 (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
As a proxy for stranded capital, the CAFE Model accounts for
platform and engine sharing and includes redesign and refresh cycles
for significant and less significant vehicle updates. This analysis
continues to rely on the CAFE Model's explicit year-by-year accounting
for estimated refresh and redesign cycles, and shared vehicle platforms
and engines, to moderate the cadence of technology adoption and thereby
limit the implied occurrence of stranded capital and the need to
account for it explicitly. In addition, confining some manufacturers to
specific advanced technology pathways through technology adoption
features acts as a proxy to account for stranded capital indirectly.
Adoption features specific to each technology, if applied on a
manufacturer-by-manufacturer basis, are discussed in each technology
section.
D. Technology Pathways, Effectiveness, and Cost
The previous section has discussed, at a high level, how NHTSA
generates the technology inputs and assumptions used in the CAFE Model.
The process for generating these inputs and assumptions involves NHTSA
using engineering judgment to evaluate and synthesize data from a
variety of sources, including data submitted by vehicle manufacturers;
consolidated publicly available data, such as press materials,
marketing brochures, and other information; data from collaborative
research, testing, and modeling with other Federal agencies and
laboratories; data from research, testing, and modeling with
independent organizations; data and assumptions from work done for
prior rules; and feedback from stakeholders on prior rules and meetings
conducted prior to the commencement of this rulemaking, to the extent
it is still relevant and applicable.
This section discusses the specific technology pathways,
effectiveness, and cost inputs and assumptions used in the compliance
analysis. As an example, NHTSA has explained in the previous section
that the starting point for estimating technology costs is an estimate
of the DMC--the component and assembly costs of the physical parts and
systems that make up a complete vehicle--for any particular technology.
This section then explains how NHTSA bases the transmission technology
DMCs on estimates from NAS.
After spending over a decade refining the technology pathways,
effectiveness, and cost inputs and assumptions used in successive CAFE
Model analyses, NHTSA has developed guiding principles to ensure that
the CAFE Model's compliance analysis reflects impacts reasonably
expected in the real world. These guiding principles are as follows:
Technologies have complementary or non-complementary interactions
with the full-vehicle technology system. The fuel economy improvement
from any individual technology must be considered in conjunction with
the other fuel economy-improving technologies applied to the vehicle,
because technologies added to a vehicle do not result in a simple
additive fuel economy improvement from each individual technology. In
particular, NHTSA expects this result from engine and other powertrain
technologies that improve fuel economy by allowing the ICE to spend
more time operating at efficient engine speed and load conditions or
from combinations of engine technologies that work to reduce the
effective displacement of the engine.
The effectiveness of a technology depends on the type of vehicle to
which the technology is being applied. When discussing ``vehicle type''
in the analysis, NHTSA is referring to the vehicle technology classes
(e.g., a small car, a medium performance SUV, or a pickup truck), among
other classes. A small car and a medium performance SUV that use the
exact same technology start with very different fuel economy values;
so, when the exact same technology is added to both of those vehicles,
the technology provides a different effectiveness improvement for each
of those vehicles.
The cost and effectiveness values for each technology are
reasonably representative of what can be achieved across the entire
industry. Each technology model employed in the analysis is designed to
be representative of a wide range of specific technology applications
used in industry. Some manufacturers' systems may perform better or
worse than the modeled systems and some may cost more or less than the
modeled systems; however, employing this approach ensures that, on
balance, the analysis captures a reasonable level of costs and benefits
that would result from any manufacturer applying the technology.
A consistent reference point for cost and effectiveness values must
be identified before assuming that a cost or effectiveness value could
be employed for any individual technology. For example, this analysis
uses a set of engine map models developed by starting with a small
number of engine configurations, and then, in a systematic and
controlled process, adding specific well-defined technologies to create
a new map for each unique technology combination. Again, providing a
consistent reference point to measure incremental technology
effectiveness values ensures that NHTSA is capturing accurate
effectiveness values for each technology combination.
The following sections discuss the engine, transmission,
hybridization, MR, aerodynamic, tire rolling resistance, and other
vehicle technologies considered in this analysis. The following
sections discuss:
How NHTSA defines technology in the CAFE Model; \119\
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\119\ Note: Due to the diversity of definitions industry employs
for technology terms, or in describing the specific application of
technology, the terms defined here may differ from how the
technology is defined in some parts of the industry.
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[[Page 56482]]
How NHTSA assigns technology to vehicles in the analysis
fleet used as a starting point for this analysis;
Any adoption features applied to the technology, so the
analysis better represents manufacturers' real-world decisions;
Technology effectiveness values; and
Technology cost.
Note that the following technology effectiveness sections provide
examples of the range of effectiveness values that a technology could
achieve when applied to the entire vehicle system, in conjunction with
the other fuel economy-improving technologies already in use on the
vehicle. To see the incremental effectiveness values for any particular
vehicle moving from one technology key to a more advanced technology
key, see the CAFE Model Fuel Economy Adjustment Files that are
installed as part of the CAFE Model Executable File, and not in the
input/output folders. Similarly, the technology costs provided in each
section are examples of absolute costs seen in specific model years,
for specific vehicle classes. The Technologies Input File contains all
absolute technology costs used in the analysis across all model years.
1. Engine Paths
ICE vehicles convert chemical energy in fuel to useful mechanical
power. The chemical energy in the fuel is released and converted to
mechanical power by being oxidized, or burned, inside the engine. The
air/fuel mixture entering the engine and the burned fuel/exhaust by-
products leaving the engine are the working fluids in the engine. The
engine power output is a direct result of the work interaction between
these fluids and the mechanical components of the engine.\120\ The
generated mechanical power is used to perform useful work, such as
vehicle propulsion.\121\
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\120\ Heywood, J. B., Internal Combustion Engine Fundamentals,
McGraw-Hill Education (2018), Chapter 1 (hereinafter, Heywood
(2018)).
\121\ Ibid, containing a complete discussion on fundamentals of
engine characteristics, such as torque, torque maps, engine load,
power density, brake mean effective pressure (BMEP), combustion
cycles, and components.
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NHTSA classifies the extensive variety of light-duty vehicle ICE
technologies into discrete Engine Paths. These paths are used to model
the most representative characteristics, costs, and performance of the
fuel economy-improving engine technologies most likely available during
the rulemaking timeframe. The paths are intended to be representative
of the range of potential performance levels for each engine
technology. In general, the paths are tied to ease of implementation of
additional technology and how closely related the technologies are. The
technology paths are presented in Chapter 3.1.1 of the Draft TSD.
The Engine Paths have been selected and refined over a period of
more than 10 years, based on engines in the market, stakeholder
comments, and engineering judgment, subject to the following factors:
the included technologies are those most likely available during the
rulemaking timeframe and within the range of potential performance
levels for each technology, and excluded technologies are those
unlikely to be feasible in the rulemaking timeframe, unlikely to be
compatible with U.S. fuels, or for which there was not appropriate data
available to allow the simulation of effectiveness across all vehicle
technology classes in this analysis.
The Engine Paths begin with one of the three base engine
configurations: dual-overhead camshaft (DOHC) engines have two
camshafts per cylinder head (one operating the intake valves and one
operating the exhaust valves), single overhead camshaft (SOHC) engines
have a single camshaft, and overhead valve (OHV) engines also have a
single camshaft located inside of the engine block (beneath the valves
rather than overhead) connected to a rocker arm through a pushrod that
actuates the valves. DOHC and SOHC engine configurations are common in
the light-duty fleet.
The next step along an Engine Path is the Basic Engine Path
technologies. These include variable valve lift (VVL), stoichiometric
gasoline direct injection (SGDI), and a basic level of cylinder
deactivation (DEAC). VVL dynamically adjusts how far the valve opens
and reduces fuel consumption by reducing pumping losses and optimizing
airflow over a broader range of engine operating conditions. Instead of
injecting fuel at lower pressures and before the intake valve, SGDI
injects fuel directly into the cylinder at high pressures allowing for
more precise fuel delivery while providing a cooling effect and
allowing for an increase in the CR, more optimal spark timing for
improved efficiency, or both. DEAC disables the intake and exhaust
valves and turns off fuel injection and spark ignition on select
cylinders, which effectively allows the engine to operate temporarily
as if it were smaller while also reducing pumping losses to improve
efficiency. For this proposal, NHTSA has integrated variable valve
timing (VVT) technology in all non-diesel engines, so there is not a
separate box for it on the Basic Engine Path. VVL, SGDI, and DEAC can
be applied to an engine individually or in combination with each other.
Moving beyond the Basic Engine Path technologies are the
``advanced'' engine technologies, which means that applying the
technology--both in NHTSA's analysis and in the real world--requires
significant changes to the structure of the engine or an entirely new
engine architecture. The advanced engine technologies represent the
application of alternate combustion cycles, various applications of
forced induction technologies, or advances in cylinder deactivation.
Advanced cylinder deactivation (ADEAC) systems, also known as
rolling or dynamic cylinder deactivation systems, allow the engine to
vary the percentage of cylinders deactivated and the sequence in which
cylinders are deactivated. Depending on the engine's speed and
associated torque requirements, an engine might have most cylinders
deactivated (e.g., low torque conditions, as with slower speed driving)
or it might have all cylinders activated (e.g., high torque conditions,
as with merging onto a highway).\122\ An engine operating at low-speed/
low-torque conditions can save fuel by operating at a fraction of its
total displacement. NHTSA models two ADEAC technologies, advanced
cylinder deactivation on a single overhead camshaft engine (ADEACS),
and ADEACD.
---------------------------------------------------------------------------
\122\ See Tula Technology, Inc. Dynamic Skip Fire, available at:
https://www.tulatech.com/combustion-engine/ (accessed: Sept. 10,
2025), discussing how the company's proprietary cylinder
deactivation technology operates in real-world situations. NHTSA's
modeled ADEAC system is not based on this specific system, and
therefore the effectiveness improvement is different in NHTSA's
analysis than with this system; however, the theory still applies.
---------------------------------------------------------------------------
Forced induction gasoline engines include both supercharged and
turbocharged downsized engines, which can pressurize or force more air
into an engine's intake manifold when higher power output is needed.
The raised pressure results in an increased amount of airflow into the
cylinder to support combustion, increasing the specific power of the
engine. The first-level turbocharged downsized technology (TURBO0)
engine represents a basic level of forced air induction technology
being applied to a DOHC engine. A cooled exhaust gas recirculation
(CEGR) system takes engine exhaust gases, passes them through a heat
exchanger to reduce their temperature, then mixes them with incoming
air in the intake
[[Page 56483]]
manifold to reduce peak combustion temperature, thereby improving fuel
efficiency and emissions. NHTSA models the base TURBO0 turbocharged
engine with the addition of cooled exhausted recirculation (TURBOE),
basic cylinder deactivation (TURBOD), variable valve lift (TURBO1), and
advanced cylinder deactivation (TURBOAD). Advancing further into the
Turbo Engine Path leads to an engine with a higher BMEP, which is a
function of displacement and power. In other words, the higher the
BMEP, the higher the power density of the engine. NHTSA models an
advanced turbocharging technology (TURBO2) that runs increasingly
higher turbocharger boost levels, burning more fuel and making more
power for a given displacement. This analysis pairs turbocharging with
engine downsizing, meaning that the turbocharged downsized engines
improve vehicle fuel economy by using less fuel to power the smaller
engine while maintaining vehicle performance.
The technology pathways represent an increase in the level or
combinations of technologies being applied, with lower levels at the
top and higher levels at the bottom of the path. Chapter 3.1.1 of the
Draft TSD shows the technology pathways for visualization purposes;
however, the CAFE Model could apply any cost-effective combinations of
technologies from those given pathways. Levels of improvement are
dependent upon the vehicle class and the technology combinations.
Again, in general, the paths are tied to ease of implementation of
additional technology and how closely related the technologies are. An
example of how this applies to the TURBO family of technologies is
described below. The pathways are not aligned from ``least effective''
to ``most effective'' because assuming so would ignore several
important considerations, including how technologies interact on a
vehicle, how technologies interact on vehicles of different sizes that
have different power requirements, and how hardware changes may be
required for a particular technology For example, the scenario below
describes how, once a manufacturer downsizes an engine accompanying the
application of a turbocharger, it would most likely not re-upsize the
engine to add a less advanced turbocharger. The interaction of these
technology combinations is discussed in more detail in Draft TSD
Chapter 2.
While TURBO0 is modeled with cooled EGR (TURBOE) and with DEAC
(TURBOD), these technologies do not apply to TURBO1 or TURBO2; this
decision is intentional. NHTSA defines TURBO1 in the analysis by adding
VVL to the TURBO0 engine, and TURBO2 is the highest turbo downsized
engine with a high BMEP. The benefits of cooled EGR and DEAC on TURBO1
and TURBO2 technologies would occur at high engine speeds and loads,
which do not occur on the two-cycle tests. Because NHTSA measured
technology effectiveness in this analysis based on the delta in
improvements in vehicles' two-cycle test fuel consumption values,
adding cooled EGR and DEAC to TURBO1 and TURBO2 would provide little
effectiveness improvement for the corresponding increase in cost, a
technology decision that the agency does not believe manufacturers
would adopt in the real world. NHTSA's modeling effectively captured
these complex interactions among technologies--an example of why
effectiveness values from different technologies cannot simply be added
together.\123\ This potential for added costs with limited efficiency
benefit is also an example of why the CAFE Model technology tree is not
ordered from least to most effective technology and why particular
technologies are included on the technology tree while others are not.
Draft TSD Chapter 2 provides more discussion on interactions among
individual technologies in the full-vehicle simulations.
---------------------------------------------------------------------------
\123\ NHTSA-2021-0053-0007-A3 at 15; NHTSA-2021-0053-0002-A9, at
pp. 21-23.
---------------------------------------------------------------------------
Consistent with the approach of preventing moving backward in the
technology tree, the Model does not allow a vehicle assigned a TURBO2
technology to adopt a TURBOE technology. A vehicle in the analysis
fleet that is assigned the TURBO2 technology indicates a manufacturer
made the decision to either skip over or move on from lower levels of
force induction technology. Moving backwards in the technology tree
from TURBO2 to any of the lower turbo technologies would require the
engine to be upsized to meet the same performance metrics as the
analysis fleet vehicle. As discussed further in Section II.C.2.c, NHTSA
ensures the vehicles in this analysis meet similar performance levels
after the application of fuel economy-improving technology, because the
agency's objective is to measure the costs and benefits of
manufacturers responding to CAFE standards in this analysis, and not
the costs or benefits related to changing performance metrics in the
fleet. Moving from a higher to a lower turbo technology works counter
to saving fuel as the engine would grow in displacement, requiring more
fuel, adding frictional losses, and increasing weight and cost.
Accordingly, the agency believes that the Turbo engine pathway
appropriately captures the ways manufacturers might apply increasing
levels of turbocharging technology to their vehicles.
In this analysis, high compression ratio (HCR) engines represent a
class of engines that achieve a higher level of fuel efficiency by
implementing a high geometric CR with varying degrees of late intake
valve closing (LIVC) (i.e., closing the intake valve later than usual)
using VVT, and without the use of an electric drive motor.\124\ These
engines operate on a modified Atkinson cycle, allowing for improved
fuel efficiency under certain engine load conditions while still
offering enough power not to require an electric motor; however, there
are limitations on how HCR engines can apply LIVC and the types of
vehicles that can use this technology. The way that each individual
manufacturer implements a modified Atkinson cycle is unique, as each
manufacturer must balance not only fuel efficiency considerations, but
also emissions, on-board diagnostics, and safety considerations, which
include the vehicle being able to operate responsively to the driver's
demand.
---------------------------------------------------------------------------
\124\ LIVC is a method manufacturers use to reduce the effective
compression ratio and allow the expansion ratio to be greater than
the compression ratio resulting in improved fuel economy but reduced
power density. Further technical discussion on HCR and Atkinson
engines are discussed in Draft TSD Chapter 3.1.1.2.3. The 2015 NAS
Report, Appendix D, includes a short discussion on thermodynamic
engine cycles.
---------------------------------------------------------------------------
NHTSA defines HCR engines as being naturally aspirated, gasoline,
spark ignition (SI), using a geometric CR of 12.5:1 or greater,\125\
and able dynamically to apply various levels of LIVC based on load
demand. An HCR engine uses less fuel for each engine cycle, which
increases fuel economy but decreases power density (or torque).
Generally, during high loads--when more power is needed--the engine
will use variable valve actuation to reduce the level of LIVC by
closing the intake valve earlier in the compression stroke (leaving
more air/fuel mixture in the combustion chamber), increasing the
effective CR, reducing over-expansion, and sacrificing efficiency for
increased power density.\126\ However, there is a
[[Page 56484]]
limit to how much the air-fuel mixture can be compressed before
ignition in the HCR engine due to the potential for engine knock.\127\
Engine knock can be mitigated in HCR engines with higher octane fuel;
however, the fuel specified for use in most vehicles is not higher
octane fuel. Conversely, at low loads, the engine will typically
increase the level of LIVC by closing the intake valve later in the
compression stroke, reducing the effective CR, increasing the over-
expansion, and sacrificing power density for improved efficiency. By
closing the intake valve later in the compression stroke (i.e.,
applying more LIVC), the engine's displacement is effectively reduced,
which results in less air and fuel for combustion and a lower power
output.\128\ Varying LIVC can be used to mitigate, but not eliminate,
the low power density issues that can constrain the application of an
Atkinson-only engine.
---------------------------------------------------------------------------
\125\ Note that even if an engine has a compression ratio of
12.5:1 or greater, it does not necessarily mean it is an HCR engine
in NHTSA's analysis, as discussed below. NHTSA looks at a number of
factors to perform baseline engine assignments.
\126\ Variable valve actuation is a general term used to
describe any single or combination of VVT, VVL, and variable valve
duration used to dynamically alter an engine's valvetrain during
operation.
\127\ Engine knock in spark ignition engines occurs when
combustion of some of the air/fuel mixture in the cylinder does not
result from propagation of the flame front ignited by the spark plug
rather, one or more pockets of air/fuel mixture explode outside of
the envelope of the normal combustion front.
\128\ Power = (force x displacement)/time.
---------------------------------------------------------------------------
The phrase ``low power density issues'' translates to a low torque
density,\129\ meaning that the engine cannot create the torque required
at necessary engine speeds to meet load demands. To the extent that a
vehicle requires more power in a given condition than an engine with
low power density can provide, that engine would experience issues like
engine knock for the reasons discussed above; more importantly, an
engine designer would not allow a particular engine design to be used
in conditions where the engine has the potential to operate in unsafe
conditions in the first place. Instead, a manufacturer could
significantly increase an engine's displacement (i.e., size) to
overcome those low power density issues,\130\ or could add an electric
motor and battery pack to provide the engine with more power; however,
a far more effective pathway would be to apply a different type of
engine technology, like a downsized, turbocharged engine.\131\ Because
of these limitations with HCR engines, NHTSA restricts the Model from
applying this technology to vehicles that would be negatively impacted
by the technology, like pickup trucks.\132\
---------------------------------------------------------------------------
\129\ Torque = radius x force.
\130\ 2024 EPA Trends Report at 54 (``As vehicles have moved
towards engines with a lower number of cylinders, the total engine
size, or displacement, is also at an all-time low.''). The
discussion below describes why NHTSA does not believe manufacturers
will increase the displacement of HCR engines to make the necessary
power because of the negative impacts it has on fuel efficiency.
\131\ See Toyota, 2024 Toyota Tacoma Makes Debut on the Big
Island, Hawaii (2023), available at: https://pressroom.toyota.com/2024-toyota-tacoma-makes-debut-on-the-big-island-hawaii/ (accessed:
Sept. 10, 2025). The 2024 Toyota Tacoma comes in eight ``grades,''
all of which use a turbocharged engine.
\132\ Draft TSD Chapter 3.1.1.2.3 includes more discussion on
HCR and HCR restrictions.
---------------------------------------------------------------------------
Vehicle manufacturers' intended performance attributes for a
vehicle--like payload and towing capability, features for off-road use,
and other attributes that affect aerodynamic drag and rolling
resistance--dictate whether an HCR engine can be a suitable technology
choice for that vehicle.\133\ As vehicles require higher payloads and
towing capacities,\134\ experience road load increases from larger all-
terrain tires or less aerodynamic designs, or experience driveline
losses for AWD and 4WD configurations, more engine torque is required
at all engine speeds. When more engine torque is required, the
application of HCR technology becomes less effective and more
limited.\135\ For these reasons, and to maintain a performance-neutral
analysis, NHTSA limits non-hybrid and non-plug-in-hybrid HCR engine
application to certain categories of vehicles.\136\
---------------------------------------------------------------------------
\133\ Supplemental Comments of Toyota Motor North America, Inc.,
Notice of Proposed Rulemaking: Safer Affordable Fuel-Efficient
Vehicles Rule, Docket ID Numbers: NHTSA-2018-0067 and EPA-HQ-OAR-
2018-0283, at 6; Feng, R. et al. Investigations of Atkinson Cycle
Converted from Conventional Otto Cycle Gasoline Engine, SAE
Technical Paper 2016-01-0680, (2016), available at: https://www.sae.org/publications/technical-papers/content/2016-01-0680/
(accessed: Sept. 10, 2025).
\134\ See Tucker, S., What Is Payload: A Complete Guide. Kelly
Blue Book, (last revised: Feb. 2, 2023), available at: https://www.kbb.com/car-advice/payload-guide/#link3 (accessed: Sept. 10,
2025). (``Roughly speaking, payload capacity is the amount of weight
a vehicle can carry, and towing capacity is the amount of weight it
can pull. Automakers often refer to carrying weight in the bed of a
truck as hauling to distinguish it from carrying weight in a trailer
or towing.'').
\135\ See Supplemental Comments of Toyota Motor North America,
Inc., Docket Nos: NHTSA-2018-0067 and EPA-HQ-OAR-2018-0283 at 6, 8
(March 25, 2019), available at: https://www.regulations.gov/comment/NHTSA-2018-0067-12376 (accessed: Sept. 10, 2025) (Supplemental
Toyota Comments) (``Tacoma has a greater coefficient of drag from a
larger frontal area, greater tire rolling resistance from larger
tires with a more aggressive tread, and higher driveline losses from
4WD. Similarly, the towing, payload, and off-road capability of
pick-up trucks necessitate greater emphasis on engine torque and
horsepower over fuel economy. This translates into engine
specifications such as a larger displacement and a higher stroke-to-
bore ratio. . . . Tacoma's higher road load and more severe utility
requirements push engine operation more frequently to the less
efficient regions of the engine map and limit the level of Atkinson
operation. . . . This endeavor is not a simple substitution where
the performance of a shared technology is universal. Consideration
of specific vehicle requirements during the vehicle design and
engineering process determine the best applicable powertrain.'').
\136\ To maintain performance neutrality when sizing powertrains
and selecting technologies, NHTSA performs a series of simulations
in Autonomie, which are further discussed in the Draft TSD Chapter
2.3.4 and in the CAFE Analysis Autonomie Documentation. The concept
of performance neutrality is discussed in detail above in Section
II.C.2.c, Technology Effectiveness Values, and additional reasons
why NHTSA maintains a performance neutral analysis are discussed in
Section II.C.2.f, Technology Applicability Equations and Rules.
---------------------------------------------------------------------------
NHTSA includes three HCR Engine Path technology options in this
analysis: (1) a first-level Atkinson-enabled engine (HCR) with VVT and
SGDI; (2) an Atkinson-enabled engine with cooled exhaust gas
recirculation (HCRE); and, (3) an Atkinson-enabled engine with DEAC
(HCRD). This updated family of HCR engine map models also reflects the
statement in NHTSA's May 2, 2022, final rule that a single engine that
employs an HCR, CEGR, and DEAC ``is unlikely to be utilized in the
rulemaking timeframe based on comments received from the industry
leaders in HCR technology application.'' \137\
---------------------------------------------------------------------------
\137\ 87 FR 25796 (May 2, 2022).
---------------------------------------------------------------------------
These three HCR Engine Path technology options (HCR, HCRE, HCRD)
should not be confused with the hybrid and plug-in hybrid electric
pathway options that also utilize HCR engines in combination with a P2
hybrid powertrain (e.g., P2HCR, P2HCRE, PHEV20H, and PHEV50H); those
hybridization path options are discussed in Section II.D.3 below. In
contrast, Atkinson engines in NHTSA's power-split hybrid powertrains
(SHEVPS, PHEV20PS, and PHEV50PS) run the Atkinson Cycle full time but
are connected to an electric motor. The full-time Atkinson engines are
also discussed in Section II.D.3.
The Miller cycle is another alternative combustion cycle that
effectively uses an extended expansion stroke, similar to the Atkinson
cycle but with the application of forced induction to improve fuel
efficiency. Miller cycle-enabled engines have a similar trade-off in
power density as Atkinson engines; the lower power density requires a
larger volume engine in comparison to an Otto cycle-based turbocharged
system for similar applications.\138\ To address the impacts of the
extended expansion stroke on power density during high load operating
conditions, the Miller cycle operates in combination
[[Page 56485]]
with a forced induction system. In NHTSA's analysis, the first-level
Miller cycle-enabled engine includes the application of variable turbo
geometry technology (VTG), or what is also known as a variable-geometry
turbocharger. VTG technology allows for the adjustment of key geometric
characteristics of the turbocharging system, thus allowing adjustment
of boost profiles and response based on the engine's operating needs.
The adjustment of boost profile during operation increases the engine's
power density over a broader range of operating conditions and
increases the functionality of a Miller cycle-based engine. The use of
a variable geometry turbocharger also supports the use of CEGR. NHTSA's
second level of VTG engine technology (VTGE) is an advanced Miller
cycle-enabled system that includes the application of at least a 40V-
based electronic boost system. An electronic boost system has an
electric motor added to assist the turbocharger; the motor assist
mitigates turbocharger lag and low boost pressure by providing the
extra boost needed to overcome the torque deficit at low engine speeds.
---------------------------------------------------------------------------
\138\ National Research Council, Assessment of Technologies for
Improving Fuel Economy of Light-Duty Vehicles--2025-2035, National
Academies Press: Washington, DC (2021), available at: https://doi.org/10.17226/26092 (accessed: Sept. 10, 2025) (hereinafter,
``2021 NAS report'').
---------------------------------------------------------------------------
Variable compression ratio (VCR) engines work by changing the
length of the piston stroke of the engine to optimize the CR and
improve thermal efficiency over the full range of engine operating
conditions. Engines that use VCR technology are currently in production
as small-displacement, turbocharged, in-line four-cylinder, high BMEP
applications.
Diesel engines have several characteristics that result in better
fuel efficiency over traditional gasoline engines, including reduced
pumping losses due to lack of (or greatly reduced) throttling, high-
pressure direct injection of fuel, a combustion cycle that operates at
a higher CR, and a very lean air/fuel mixture relative to an
equivalent-performance gasoline engine. However, diesel technologies
require additional systems to control NOX emissions, such as
a NOX adsorption catalyst system or a urea/ammonia selective
catalytic reduction system. NHTSA included two levels of diesel engine
technology in the analysis: the first-level diesel engine technology
(Advanced Diesel Engine (ADSL)) is a turbocharged diesel engine, and
the more advanced diesel engine (DSLI) adds DEAC to the ADSL engine
technology. The diesel engine maps are new for this analysis. The
light-duty diesel engine maps are based on a modern 3.0L turbo-diesel
engine.
Finally, compressed natural gas (CNG) systems are ICE vehicles that
run on natural gas as a fuel source. The fuel storage and supply
systems for these engines differ tremendously from gasoline, diesel,
and flexible-fuel vehicles.\139\ The CNG engine option has been
included in past analyses; however, the light-duty analysis fleet does
not include any dedicated CNG vehicles. As with the last analyses, CNG
engines are included as an analysis fleet-only technology and are not
applied to any vehicle that did not already include a CNG engine.
---------------------------------------------------------------------------
\139\ Flexible-fuel vehicles (FLEX) are designed to run on
gasoline or gasoline-ethanol blends of up to 85 percent ethanol.
---------------------------------------------------------------------------
There are other vehicle technologies that work in various ways to
improve fuel efficiency, such as turbo compounding, negative valve
overlaps in-cylinder fuel reforming (NVO), passive prechamber
combustion (PPC), and high energy ignition; however, NHTSA's analysis
did not include these technologies. While suitable explanations for
their exclusion could be that these technologies are in various stages
of development and some, like PPC, are in very limited production, the
primary reason NHTSA opted not to include them in the analysis is that
the agency believes these technologies will not gain enough adoption
during the rulemaking timeframe. This topic was discussed in detail in
the 2022 final rule,\140\ and the agency has not found evidence of
significant development since then that would indicate manufacturers
are now pursuing these costly technologies within the same standard-
setting years.
---------------------------------------------------------------------------
\140\ 87 FR 25784 (May 2, 2022).
---------------------------------------------------------------------------
The first step in assigning engine technologies to vehicles in the
analysis fleet is to use data for each manufacturer to determine which
vehicle platforms share engines. Within each manufacturer's fleet,
NHTSA develops and assigns unique engine codes based on configuration,
technologies applied, displacement, CR, and power output. NHTSA also
assigns engine technology classes, which are codes that identify engine
architecture (i.e., how many cylinders the engine has, whether it is a
DOHC or SOHC, and so on) to account accurately for engine costs in the
analysis.
When assigning engine technologies to vehicles in the analysis
fleets, it is important to consider the actual technologies on a
manufacturer's engine and compare them to the engine technologies in
the analysis. NHTSA has over 250 unique engine codes in the light-duty
analysis fleet, meaning that the technologies present on those engines
in the real world must be identified and matched to the 29 engine map
models (and therefore engine technology on the technology tree) \141\
that best represents those real-world engines. When considering how
best to fit each of those 250 engines to the 29 engine technologies and
engine map models, NHTSA uses specific technical elements contained in
manufacturer publications, press releases, vehicle benchmarking
studies, technical publications, manufacturer's specification sheets,
occasionally CBI (for specific technologies, displacement, CR, and
power mentioned above), and engineering judgment. For example, an
engine having a 13.0:1 CR is a good indication that the engine would be
considered an HCR engine. Some engines that achieve a slightly lower CR
(e.g., 12.5), may also be considered an HCR engine depending on other
technology on the engine, such as the inclusion of SGDI, increased
engine displacement compared to other competitors, reduction of engine
parasitic losses through variable or electric oil and water pumps, or
the combination of these technologies. Importantly, engine technologies
are never assigned based on one factor alone but rather using data and
engineering judgment to assign complex real-world engines to their
corresponding engine technologies in the analysis. NHTSA believes that
the initial characterization of the fleet's engine technologies
reasonably captures the current state of the market while maintaining a
reasonable amount of analytical complexity. Also, in addition to the 29
engine map models used in the Engine Paths Collection, there are 16
additional potential powertrain technology assignments available in the
Hybridization Paths Collection.
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\141\ NHTSA assigns each engine code technology that most
closely corresponds to an engine map; for most technologies, one box
on the technology tree corresponds to one engine map that
corresponds to one engine code.
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Engine technology adoption in the Model is defined through a
combination of technology path logic, refresh and redesign cycles,
phase-in capacity limits,\142\ and SKIP logic. Path logic defines
technology adoption by preventing an engine design from moving from one
advanced engine tree to another. Once in an advanced engine tree, it
must stay there. For example, any light-duty basic engine can adopt one
of the TURBO engine technologies, but vehicles that have turbocharged
engines in the analysis fleet stay on the
[[Page 56486]]
Turbo Engine Path to prevent unrealistic engine technology change in
the short timeframe considered in the rulemaking analysis. This
represents the concept of stranded capital, which is when manufacturers
amortize research, development, and tooling expenses over many years.
Besides technology path logic, which applies to all manufacturers and
technologies, NHTSA places additional constraints on the adoption of
VCR and HCR technologies.
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\142\ Though NHTSA applies phase-in caps for this analysis, as
discussed in Chapter 3.1.1 of the Draft TSD, those phase-in caps are
not binding because the Model has several other less advanced
technologies available to apply first at a lower cost, as well as
the redesign schedules. The Draft TSD contains more information on
engine phase-in caps.
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VCR technology requires a complete redesign of the engine and, in
the analysis fleet, Nissan is the only manufacturer (including the
Infiniti brand) to incorporate this technology. VCR engines are
complex, costly by design, and address many of the same efficiency
losses as mainstream technologies like turbocharged downsized engines.
This makes it unlikely that a manufacturer that has already started
down an incongruent technology path would adopt VCR technology. Because
of these issues, VCR engine technology adoption is limited to original
equipment manufacturers (OEMs) that have already employed the
technology and their partners. NHTSA does not believe any other
manufacturers will invest in developing and market this technology in
their fleet in the rulemaking timeframe.
As recognized in past analyses,\143\ HCR engines excel in lower
power applications for lower load conditions, such as driving around a
city or steady state highway driving without large payloads. Thus,
their adoption is more limited than some other technologies.
Accordingly, HCR engines are subject to three limitations.
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\143\ The discussions at 83 FR 43038 (Aug. 24, 2018), 85 FR
24383 (Apr. 30, 2020), 86 FR 49658 and 49661 (Sept. 3, 2021), and 87
FR 25786 and 25790 (May 2, 2022) are incorporated here by reference.
---------------------------------------------------------------------------
First, vehicles with 405 or more HP, and (to simulate parts
sharing) vehicles that share engines with vehicles with 405 or more HP,
are not allowed to adopt HCR engines due to their prescribed power
needs being more demanding and likely not supported by the lower power
density found in HCR-based engines.\144\ Because LIVC essentially
reduces the engine's displacement, to make more power and keep the same
levels of LIVC, manufacturers would need to increase the displacement
of the engine to make the necessary power. NHTSA does not believe
manufacturers will increase the displacement of their engines to
accommodate HCR technology adoption, because as displacement increases,
so do friction, pumping losses, and fuel consumption. This bears out in
industry trends: total engine size (or displacement) is at an all-time
low, and trends show that industry focus on turbocharged downsized
engine packages are leading to their much higher market
penetration.\145\ Separately, as seen in the analysis fleet,
manufacturers generally use HCR engines in applications where the
vehicle's power requirements fall significantly below the agency's HCR
HP threshold. In fact, the average HP for the sales-weighted average of
vehicles in the analysis fleet that use HCR Engine Path technologies is
194 hp, demonstrating that HCR engine use has indeed been limited to
lower hp applications, and well below the 405 hp threshold. In fringe
cases where a vehicle classified as having higher load requirements
does have an HCR engine, it is coupled to a hybrid system.\146\
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\144\ Heywood (2018) at Chapter 5.
\145\ See 2024 EPA Trends Report at 54, 85.
\146\ See the Market Data Input File. As an example, the
reported total system horsepower for the Ford Maverick HEV is also
191 hp, well below the 405 hp threshold. See also the Lexus LC/LS
500h: the Lexus LC/LS 500h also uses premium fuel to reach this
performance level.
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Second, to maintain a performance-neutral analysis,\147\ pickup
trucks and (to simulate parts sharing) \148\ vehicles that share
engines with pickup trucks are excluded from receiving HCR engines that
are not accompanied by a hybrid powertrain. In other words, pickup
trucks and vehicles that share engines with pickup trucks can receive
HCR-based engine technologies only in the Hybridization Paths
Collection of technologies. Pickup trucks and vehicles that share
engines with pickup trucks are excluded from receiving HCR engines not
accompanied by a hybrid powertrain because these often-heavier vehicles
have higher low-speed torque needs, higher base road loads, increased
payload and towing requirements,\149\ and have powertrains sized and
tuned to perform this additional work beyond what passenger cars are
required to conduct. Again, vehicle manufacturers' intended performance
attributes for a vehicle--like payload and towing capability, intention
for off-road use, and other attributes that affect aerodynamic drag and
rolling resistance--dictate whether an HCR engine can provide a
reasonable fuel economy improvement for that vehicle.\150\ For example,
road loads are composed of aerodynamic loads, which include vehicle
frontal area and its drag coefficient, along with tire rolling
resistance, all of which contribute to higher engine loads as vehicle
speed increases.\151\ NHTSA assumes that a manufacturer intending to
apply HCR technology to their pickup truck or vehicle that shares an
engine with a pickup truck would do so in combination with an electric
system to assist with the vehicle's load needs.
---------------------------------------------------------------------------
\147\ As discussed in detail in Section II.C.2.c and II.C.2.f
above, NHTSA maintains a performance-neutral analysis to capture
only the costs and benefits of manufacturers adding fuel economy-
improving technology to their vehicles in response to CAFE
standards.
\148\ See Section II.C.2.f.
\149\ See SAE, Performance Requirements for Determining Tow-
Vehicle Gross Combination Weight Rating and Trailer Weight Rating,
SAE Standard J2807_202411, SAE International: Warrendale, PA,
available at: https://doi.org/10.4271/J2807_202411 (accessed: Sept.
10, 2025).; Reed, T, SAE J207 Tow Tests--The Standard, Motortrend
(2015), available at: https://www.motortrend.com/how-to/1502-sae-j2807-tow-tests-the-standard/ (accessed: Sept. 10, 2025). When
stating ``increased payload and towing requirements,'' NHTSA is
referring to a literal defined set of requirements that
manufacturers follow to ensure the manufacturer's vehicle can meet a
set of performance measurements when building a tow vehicle to give
consumers the ability to ``cross-shop'' between different
manufacturers' vehicles. As discussed in detail above in Section
II.C.2.c and II.C.2.f, NHTSA maintains a performance-neutral
analysis to ensure that the analysis is only accounting for the
costs and benefits of manufacturers adding technology in response to
CAFE standards. This means that adoption features, like the HCR
application restriction, are applied to a vehicle that begins the
analysis with specific performance measurements, like a pickup
truck, where application of the specific technology would likely not
allow the vehicle to meet the manufacturer's baseline performance
measurements.
\150\ ICCT asked NHTSA to stop quoting a 2019 Toyota comment
explaining why NHTSA does not allow HCR engines in pickup trucks,
stating that Toyota's purpose in explaining that the Tacoma and
Camry achieve different effectiveness improvements using their HCR
engines is being misinterpreted. See NHTSA-2018-0067-12387 NHTSA
disagrees. Toyota's comment is still relevant for this proposed rule
as the limitations of the technology have not changed, which Toyota
describes in the context of comparing why the technology provides a
benefit in the Camry that one should not expect to see in the
Tacoma. See Supplemental Toyota Comments at 6, 8. Note that Toyota
also submitted a second set of supplemental comments (NHTSA-2018-
0067-12431) that confirms NHTSA's understanding of the most
important concept to support NHTSA's decision to limit HCR adoption
on pickup trucks, which is that Atkinson operation is limited on
pickup trucks. See Supplemental Comments of Toyota Motor North
America, Inc., in the NHTSA Docket No. NHTSA-2018-0067-12376-A1 at
8-9 in Regulations.gov. See Supplemental Comments of Toyota Motor
North America, Inc., Docket Nos. NHTSA-2018-0067 and EPA-HQ-OAR-
2018-0283 at 2-3 (July 15, 2019), available at: https://www.regulations.gov/comment/NHTSA-2018-0067-12431 (accessed: Sept.
10, 2025).
\151\ 2015 NAS Report, at pp. 207-242.
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Finally, HCR engine application is restricted for some heavily
performance-focused manufacturers that have demonstrated a significant
commitment to power-dense technologies such as
[[Page 56487]]
turbocharged downsizing,\152\ such that their fleets use nearly 100
percent turbocharged downsized engines. This means that no vehicle
manufactured by these manufacturers can receive an HCR engine. Again,
this adoption feature is implemented to avoid an unquantified amount of
stranded capital that would be realized if these manufacturers switched
from one technology to another.
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\152\ Three manufacturers that meet the criteria (near 100
percent turbo downsized fleet, and future hybrid systems are based
on turbo downsized engines) described and are excluded: BMW,
Mercedes-Benz, and Jaguar Land Rover.
---------------------------------------------------------------------------
Note that these adoption features apply only to vehicles that
receive HCR engines that are not accompanied by a hybrid powertrain. A
P2 hybrid system that uses an HCR engine overcomes the low-speed torque
needs using the electric motor and thus has no restrictions or SKIPs
applied.
NHTSA realizes that engine technology, vehicle type, and their
applications are always evolving. The Hyundai Santa Cruz, a unibody
pickup truck with a 4-cylinder HCR engine, is one example of a pickup
truck with a non-hybrid HCR engine. However, the Santa Cruz is not
comparable in capability to other pickup models like the Tacoma,
Colorado, and Canyon, and it therefore cannot be assumed that those
pickup models should be able to adopt non-hybrid HCR technology as
well. Small unibody pickup trucks like the Santa Cruz and the Ford
Maverick do not have the same capabilities and functionality as a mid-
size body-on-frame pickup like the Toyota Tacoma.\153\ NHTSA believes
that its current restrictions for HCR are reasonable and appropriate,
and the agency has not been presented with any new information that
would suggest otherwise. NHTSA's stance on this issue has also borne
out in real-world trends. Manufacturers who currently offer HCR engines
in their fleets and therefore had the potential to introduce HCR
technologies on recently redesigned vehicles that previously used high-
displacement NA engines (such as Toyota Tacoma or Chevrolet Colorado)
or TURBO technologies (such as the Mazda CX-90 replacing CX-9) have
instead opted to introduce or continue to pursue turbocharged or hybrid
engines. NHTSA does not believe HCR in its current state can provide
enough fuel efficiency benefit for us to remove the current HCR
restrictions; however, this by no means precludes manufacturers from
developing and deploying HCR technology for future iterations of their
pickup trucks.
---------------------------------------------------------------------------
\153\ The specification of 2024 Ford Maverick, Toyota Tacoma,
and Hyundai Santa Cruz are in the docket accompanying this proposed
rule.
---------------------------------------------------------------------------
NHTSA also emphasizes that, in the real world, manufacturers are
not required to follow the technology pathways to compliance that the
agency models in the standard-setting analysis but can instead take
their own pathway based on their respective business models, technology
availability, market share, and others. The CAFE Model simulates an
example of a low-cost compliance pathway, and no manufacturer has to
comply with the pathway as it has been modeled. Instead, manufacturers
are free to choose their own path to compliance. NHTSA has added
features and restrictions into the CAFE Model to make the compliance
simulation more representative of how manufacturers make decisions
about technology adoption in the real world. This is to ensure that the
CAFE Model does not simulate unrealistic compliance pathways. For
example, if the CAFE Model simulated manufacturers abandoning one
technology in favor for another, particularly with respect to HCR
technology for pickup trucks and high HP vehicles, the results and
corresponding costs and benefits would be unrealistic and could lead to
NHTSA setting standards that are more stringent than maximum feasible.
For this and other reasons, the agency endeavors to model the most
realistic and low-cost pathway to compliance. NHTSA's standard-setting
analysis is also restricted in ways that manufacturers are not,
increasing the likelihood that manufacturers will not follow the
technology pathways projected in the standard-setting analysis.\154\
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\154\ 49 U.S.C. 32902(h).
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How effective an engine technology is at improving a vehicle's fuel
economy depends on several factors, such as the vehicle's technology
class and any additional technology added or removed from the vehicle
in conjunction with the new engine technology, as discussed in Section
II.C above. The Autonomie model's full-vehicle simulation results
provide most of the effectiveness values that are used as inputs to the
CAFE Model. Chapter 2.4 of the Draft TSD and the CAFE Analysis
Autonomie Documentation provide a full discussion of the Autonomie
modeling. The Autonomie modeling uses engine map models as the primary
inputs for simulating the effects of different engine technologies.
Engine maps provide a three-dimensional representation of engine
performance characteristics at each engine speed and load point across
the operating range of the engine. Engine maps have the appearance of
topographical maps, typically with engine speed on the horizontal axis
and engine torque, power, or BMEP on the vertical axis. A third engine
characteristic, such as brake-specific fuel consumption (BSFC), is
displayed using contours overlaid across the speed and load map. The
contours provide the values for the third characteristic in the regions
of operation covered on the map. Other characteristics typically
overlaid on an engine map include engine emissions, engine efficiency,
and engine power. The engine maps developed to model the behavior of
the engines in this analysis are referred to as engine map models.
The engine map models used in this analysis are representative of
technologies currently in production or expected to be available in the
rulemaking timeframe. The engine map models are developed to be
representative of the performance achievable across the industry for a
given technology, and they are not intended to represent the
performance of a single manufacturer's specific engine. NHTSA targets a
broadly representative performance level because the same combination
of technologies produced by different manufacturers will differ in
performance, due to manufacturer-specific designs for engine hardware,
control software, and emissions calibration. Accordingly, the agency
expects that the engine maps developed for this analysis will differ
from engine maps for manufacturers' specific engines. However, it is
intended and expected that the incremental changes in performance
modeled for this analysis, due to changes in technologies or technology
combinations, will be similar to the incremental changes in performance
observed in manufacturers' engines for the same changes in technologies
or technology combinations.
IAV developed most of the engine map models used in this analysis.
IAV is one of the world's leading automotive industry engineering
service partners with an over 35-year history of performing research
and development for powertrain components, electronics, and vehicle
design.\155\ SwRI developed the light-duty diesel engine maps for this
analysis. SwRI has been providing automotive science, technology, and
engineering services for over 70
[[Page 56488]]
years.\156\ Both IAV and SwRI developed these engine maps using the GT-
POWER(copyright) Modeling tool (GT-POWER). GT-POWER is a
commercially available industry-standard engine performance simulation
tool. GT-POWER can be used to predict detailed engine performance
characteristics, such as power, torque, airflow, volumetric efficiency,
fuel consumption, turbocharger performance and matching, and pumping
losses.\157\
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\155\ IAV Automotive Engineering, available at: https://www.iav.com/ (accessed: Sept. 10, 2025).
\156\ Southwest Research Institute, available at: https://www.swri.org (accessed: Sept. 10, 2025).
\157\ This weblink has additional information on the GT-POWER
tool: https://www.gtisoft.com/gt-power/.
---------------------------------------------------------------------------
Just like Argonne optimizes a single vehicle model in Autonomie
following the addition of a singular technology to the vehicle model,
these engine map models were built in GT-POWER by incrementally adding
engine technology to an initial engine--built using engine test data,
component test data, and manufacturers' and suppliers' technical
publications--and then optimizing the engine to consider real-world
constraints like heat, friction, and knock. One of the basic
assumptions the agency makes when developing these engine maps is using
87 octane Tier 3 gasoline because it is the most common octane rating
on which engines are designed to operate, and it is the test fuel
manufacturers will have to use for EPA fuel economy
testing.158 159 160 A small number of initial engine
configurations with well-defined BSFC maps are used, and then, in a
systematic and controlled process, specific well-defined technologies
are added to optimize a BSFC map for each unique technology
combination. This could theoretically be done through engine or vehicle
testing, but such an approach would require conducting tests on a
single engine, and each configuration would require physical parts and
associated engine calibrations to assess the impact of each technology
configuration. This is impractical for the rulemaking analysis because
of the extensive design, prototype part fabrication, development, and
laboratory resources that are required to evaluate each unique
configuration. Both NHTSA and the automotive industry use modeling as
an approach to assess an array of technologies with more limited
physical testing. Modeling offers the opportunity to isolate the
effects of individual technologies by using a single or small number of
initial engine configurations and incrementally adding technologies to
those initial configurations. This provides a consistent reference
point for the BSFC maps for each technology and for combinations of
technologies that enable us to identify and quantify carefully the
differences in effectiveness among technologies.
---------------------------------------------------------------------------
\158\ 79 FR 23414 (Apr. 28, 2014).
\159\ DOE, Selecting the Right Octane Fuel, available at:
https://www.fueleconomy.gov/feg/
octane.shtml#:~:text=You%20should%20use%20the%20octane%20rating%20req
uired%20for,others%20are%20designed%20to%20use%20higher%20octane%20fu
el (accessed: Sept. 10, 2025).
\160\ It is also important to note that regulation of fuels used
for determining CAFE compliance is outside the scope of NHTSA's
authority. 49 U.S.C. 32904(c).
---------------------------------------------------------------------------
Before its use in the Autonomie analysis, both IAV and SwRI
validated the generated engine maps against a global database of
benchmarked data, engine test data, single-cylinder test data, prior
modeling studies, technical studies, and information presented at
conferences.\161\ IAV and SwRI also validated the effectiveness values
from the simulation results against detailed engine maps produced from
the Argonne engine benchmarking programs, as well as published
information from industry and academia.\162\ This ensures reasonable
representation of simulated engine technologies. Additional details and
assumptions that are used in the engine map modeling are described in
detail in Chapter 3.1 of the Draft TSD and the CAFE Analysis Autonomie
Model Documentation chapter titled ``Autonomie--Engine Model.''
---------------------------------------------------------------------------
\161\ Friedrich, I. et al., Automatic Model Calibration for
Engine-Process Simulation with Heat-Release Prediction, SAE
Technical Paper 2006-01-0655, Warrendale, VA: SAE International
(2006), available at: https://doi.org/10.4271/2006-01-0655
(accessed: Sept. 10, 2025); Rezaei, R. et al., Zero-Dimensional
Modeling of Combustion and Heat Release Rate in DI Diesel Engines,
SAE International Journal Of Engines. Vol. 5(3) at 874-85 (2012),
available at: https://doi.org/10.4271/2012-01-1065 (accessed: Sept.
10, 2025); Berndt, R. et al., Multistage Supercharging for
Downsizing with Reduced Compression Ratio, MTZ Worldwide. Vol. 76 at
10-11 (2015), available at: https://doi.org/10.1007/s38313-015-0036-4 (accessed: Sept. 10, 2025); Neukirchner, H. et al., Symbiosis of
Energy Recovery and Downsizing, MTZ Worldwide, Vol. 75 at 4-9
(2014), available at: https://doi.org/10.1007/s38313-014-0219-4
(accessed: Sept. 10, 2025).
\162\ Bottcher, L., Grigoriadis, P., ANL--BSFC map prediction
Engines 22-26, Washington, DC: National Highway Traffic Safety
Association (2019), available at: https://lindseyresearch.com/wp-content/uploads/2021/09/NHTSA-2021-0053-0002-20190430_ANL_Eng-22-26-Updated_Docket.pdf (accessed: Sept. 10, 2025); Reinhart, T., Engine
Efficiency Technology Study, Final Report, SwRI Project No.
03.26457, San Antonio, TX: Southwest Research Institute (2022),
available at: https://downloads.regulations.gov/EPA-HQ-OAR-2022-0829-0230/attachment_17.pdf (accessed: Aug. 18, 2025).
---------------------------------------------------------------------------
Note that absolute BSFC levels are never applied from the engine
maps to any vehicle model or configuration for the rulemaking analysis;
only the absolute fuel economy values from the full-vehicle Autonomie
simulations are used to determine incremental effectiveness for
switching from one technology to another technology. The incremental
effectiveness is then applied to the absolute fuel economy or fuel
consumption value of vehicles in the analysis fleet, which are based on
CAFE or FE compliance data. For subsequent technology changes, NHTSA
applies incremental effectiveness changes to the absolute fuel economy
level of the previous technology configuration. Therefore, for a
technically sound analysis, it is most important that the differences
in BSFC among the engine maps be accurate and not the absolute values
of the individual engine maps.
While the fuel economy improvements for most engine technologies in
the analysis are derived from the database of Autonomie full-vehicle
simulation results, the analysis incorporates a handful of what the
agency refers to as ``analogous effectiveness values.'' These are used
when an engine map model is not available for a particular technology
combination. To generate an analogous effectiveness value, data from
analogous technology combinations for available engine map models are
used by conducting a pairwise comparison to generate a data set of
emulated performance values for adding technology to an initial
application. Analogous effectiveness values are used only for four SOHC
technologies. NHTSA has determined that the effectiveness results using
these analogous effectiveness values provided reasonable results. This
process is discussed further in Chapter 3.1.4.2 of the Draft TSD.
The engine technology effectiveness values for all vehicle
technology classes can be found in Chapter 3.1.4 of the Draft TSD.
These values show the calculated improvement for upgrading the listed
engine technology for a given combination of other technologies. The
range of effectiveness values listed for each specific technology
(e.g., TURBO1) represents the addition of the TURBO1 technology to
every technology combination that could select the addition of TURBO1.
These values are derived from the Argonne Autonomie simulation dataset
and the righthand side Y-axis shows the number of Autonomie simulations
that achieve each percentage effectiveness improvement point. The
dashed line and gray shading indicate the median and 1.5X interquartile
range (IQR), which is a helpful metric to identify outliers. After
comparing these histograms to the box and whisker plots
[[Page 56489]]
presented in prior CAFE program rule documents, the number of
effectiveness outliers is extremely small.
The engine costs in NHTSA's analysis are the product of engine
DMCs, RPE, and the LE, updated to a consistent dollar year. Engine DMCs
are obtained from multiple sources but primarily from the 2015 NAS
report.\163\ For VTG and VTGE technologies (e.g., Miller Cycle), NHTSA
uses cost data from a FEV technology cost assessment performed for
International Council on Clean Transportation (ICCT),\164\ which is
aggregated using individual component and system costs from the 2015
NAS report. Costs from the 2015 NAS report that have referenced a
Northeast States Center for a Clean Air Future (NESCCAF) 2004 report
\165\ are considered, but NHTSA believes the reference material from
the FEV report provides more updated cost estimates for the VTG
technology.
---------------------------------------------------------------------------
\163\ Table S.2, at pp. 7-8 of National Research Council, Cost,
Effectiveness, and Deployment of Fuel Economy Technologies for
Light-Duty Vehicles, National Academies Press: Washington, DC
(2015), available at: https://doi.org/10.17226/21744 (accessed:
Sept. 10, 2025) (hereinafter, ``2015 NAS report'').
\164\ Isenstadt A. et al., Downsized, Boosted Gasoline Engines,
Draft, International Council on Clean Transportation (2016),
available at: https://theicct.org/publication/downsized-boosted-gasoline-engines-2/ (accessed: Sept. 10, 2025).
\165\ NESCCAF, Reducing Greenhouse Gas Emissions from Light-Duty
Motor Vehicles, Final Report (2004), available at: https://www.nesccaf.org/documents/rpt040923ghglightduty.pdf (accessed: Sept.
10, 2025).
---------------------------------------------------------------------------
All engine technology costs start with a base engine cost, and then
additional technology costs are based on cylinder and bank count and
configuration; the DMC for each engine technology is a function of unit
cost times either the number of cylinders or number of banks, based on
how the technology is applied to the system. The total costs for all
engine technologies in all model years across all vehicle classes can
be found in the Technologies Input File.
2. Transmission Paths
Transmissions transmit torque generated by the engine from the
engine to the wheels. Transmissions primarily use two mechanisms to
improve fuel efficiency: (1) a wider gear range, which allows the
engine to operate longer at higher efficiency speed-load points and (2)
improvements in friction or shifting efficiency (e.g., improved gears,
bearings, seals, pumps, and other components), which reduce parasitic
losses.
NHTSA models only automatic transmissions in the light-duty
analysis. The three subcategories of automatic transmissions that are
modeled in this analysis include traditional automatic transmissions
(AT), dual-clutch transmissions (DCT), and continuously variable
transmissions (CVT and eCVT).\166\ The agency also includes high
efficiency gearbox (HEG) technology improvements as options to the
transmission technologies (designated as L2 or L3 in the analysis to
indicate level of technology improvement).\167\ There has been a
significant reduction in manual transmissions over the years, and they
make up less than 1 percent of the vehicles produced in MY 2024.\168\
Due to the declining trend of manual transmissions and their current
low production volumes, NHTSA has removed manual transmissions from
this analysis and assigned vehicles using manual transmissions as DCTs
in the analysis fleet.
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\166\ Note that eCVT transmissions are only coupled with hybrid
electric drivetrains and are therefore not included as a standalone
transmission option on the CAFE Model's technology pathways.
\167\ See 2015 NAS Report at 191. HEG improvements for
transmissions represent incremental advancements in technology that
improve efficiency, such as reduced friction seals, bearings and
clutches, super finishing of gearbox parts, and improved
lubrication. These advancements are all aimed at reducing frictional
and other parasitic loads in transmissions to improve efficiency.
NHTSA considers three levels of HEG improvements in this analysis
based on the NAS 2015 recommendations and CBI data.
\168\ 2024 EPA Automotive Trends Report.
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To assign transmission technologies to vehicles in the analysis
fleets, NHTSA identifies which Autonomie transmission model is most
like a vehicle's real-world transmission, considering the
transmission's configuration, costs, and effectiveness. As with
engines, data from manufacturers' CAFE reports and publicly available
information are used to assign transmissions to vehicles and determine
which platforms share transmissions. Transmission codes that include
information about the manufacturer, drive configuration, transmission
type, and number of gears are used to link shared transmissions in a
manufacturer's fleet. Just as manufacturers share transmissions in
multiple vehicles, the CAFE Model treats transmissions as ``shared'' if
they share a transmission code and transmission technologies will be
adopted together.
While identifying an AT's gear count is fairly easy, identifying
HEG levels for ATs and CVTs is more difficult. NHTSA reviews the age of
the transmission design, relative performance versus previous designs,
and technologies incorporated to assign an HEG level. There are no HEG
Level 3 automatic transmissions in the analysis fleet. NHTSA finds all
7-speed, all 9-speed, all 10-speed, and some 8-speed automatic
transmissions to be advanced transmissions operating at HEG Level 2
equivalence. The agency assigns eight-speed automatic transmissions and
CVTs newly introduced for the light-duty market in MY 2016 and later as
HEG Level 2. All other automatic transmissions are assigned to their
respective transmission's initial technology level (e.g., AT6, AT8, and
CVT). For DCTs, the number of gears in the assignments usually match
the number of gears listed by the data sources, with some exceptions
(dual-clutch transmissions with seven and nine gears are assigned to
DCT6 and DCT8, respectively). NHTSA assigns any vehicle in the light-
duty analysis fleet with a power-split hybrid (SHEVPS) powertrain an
electronic continuously variable transmission (eCVT). Finally, the
limited number of manual transmissions in the light-duty fleet are
assigned as DCTs, as manual transmissions are not modeled in Autonomie
for this analysis.
Most transmission adoption features are instituted through
technology path logic (i.e., decisions about how less advanced
transmissions of the same type can advance to more advanced
transmissions of the same type). Technology pathways are designed to
prevent ``branch hopping''--changes in transmission type that would
correspond to significant changes in transmission architecture--for
vehicles that are relatively advanced on a given pathway. For example,
any automatic transmission with more than five gears cannot move to a
DCT. NHTSA also prevents ``branch hopping'' as a proxy for stranded
capital, which is discussed in more detail in Section II.C and Chapter
2.6 of the Draft TSD.
The automatic transmission path precludes adoption of other
transmission types once a platform progresses past an AT8. This
restriction is used to avoid the significant level of stranded capital
loss that could result from adopting a completely different
transmission type shortly after adopting an advanced transmission,
which would occur if a different transmission type has been adopted
after AT8 in the rulemaking timeframe. Vehicles that did not start out
with AT7L2 transmissions cannot adopt that technology in the Model. It
is likely that other vehicles will not adopt the AT7L2 technology, as
vehicles that have moved to more advanced automatic transmissions have
[[Page 56490]]
overwhelmingly moved to 8-speed and 10-speed transmissions.\169\
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\169\ 2024 EPA Automotive Trends Report, at p. 79, Figure 4.24.
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Vehicles that do not originate with a CVT or vehicles with
multispeed transmissions beyond AT8 in the analysis fleet cannot adopt
CVTs. Vehicles with multispeed transmissions greater than AT8
demonstrate increased ability to operate the engine at a highly
efficient speed and load. Once on the CVT path, the platform is allowed
to apply only improved CVT technologies. Due to the limitations of
current CVTs, discussed in Draft TSD Chapter 3.2, this analysis
restricts the application of CVT technology on light-duty vehicles with
greater than 300 lb.-ft of engine torque. This is because of the higher
torque (load) demands of those vehicles and CVT torque limitations
based on durability constraints. NHTSA believes the 300 lb.-ft
restriction represents an increase over current levels of torque
capacity that is likely to be achieved during the rulemaking timeframe.
This restriction aligns with CVT application in the analysis fleet, in
that CVTs are seen only on vehicles with under 280 lb.-ft of
torque.\170\ In addition, this restriction is used to avoid stranded
capital. Finally, the analysis allows vehicles in the analysis fleet
that have DCTs to apply an improved DCT and allows vehicles with an AT5
to consider DCTs. Drivability and durability issues with some DCTs have
resulted in a low relative adoption rate over the last decade. This is
also broadly consistent with manufacturers' technology choices.\171\
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\170\ Market Data Input File.
\171\ 2024 EPA Automotive Trends Report, at p. 79, Figure 4.24.
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Autonomie models transmissions as a sequence of mechanical torque
gains. The torque and speed are multiplied and divided, respectively,
by the current ratio for the selected operating condition. Furthermore,
torque losses corresponding to the torque/speed operating point are
subtracted from the torque input. Torque losses are defined based on a
three-dimensional efficiency lookup table that has the following
inputs: input shaft rotational speed, input shaft torque, and operating
condition. NHTSA populates transmission template models in Autonomie
with characteristics data to model specific transmissions.\172\
Characteristics data are typically tabulated data for transmission gear
ratios, maps for transmission efficiency, and maps for torque converter
performance, as applicable. Different transmission types require
different quantities of data. The characteristics data for these models
come from peer-reviewed sources, transmission and vehicle testing
programs, results from simulating current and future transmission
configurations, and confidential data obtained from OEMs and
suppliers.\173\ HEG improvements are modeled via improvements to the
efficiency map of the transmission. As an example, the AT8 model data
comes from a transmission characterization study.\174\ The AT8L2 has
the same gear ratios as the AT8; however, gear efficiency map values
are increased to represent application of the HEG level 2 technologies.
The AT8L3 models the application of HEG level 3 technologies using the
same principle, further improving the gear efficiency map over the
AT8L2 improvements. There are 15 transmissions in the light-duty
analysis, and each transmission is modeled in Autonomie with defined
gear ratios, gear efficiencies, gear spans, and unique shift logic for
the technology configuration to which the transmission is applied.
These transmission maps are developed to represent the gear counts and
span, shift and torque converter lockup logic, and efficiencies that
can be seen in the fleet, along with upcoming technology improvements,
all while balancing key attributes, such as drivability, fuel economy,
and performance neutrality. This modeling is discussed in detail in
Chapter 3.2 of the Draft TSD and the CAFE Analysis Autonomie
Documentation chapter titled ``Autonomie--Transmission Model.''
---------------------------------------------------------------------------
\172\ Autonomie Input and Assumptions Description Files.
\173\ Argonne National Laboratory, Downloadable Dynamometer
Database, Last revised: 2025, available at: https://www.anl.gov/taps/downloadable-dynamometer-database; Kim, N. et al., Advanced
Automatic Transmission Model Validation Using Dynamometer Test Data,
SAE 2014-01-1778, presented at the SAE World Congress: Detroit, MI
(2014); Kim, N. et al., Development of a Model of the Dual Clutch
Transmission in Autonomie and Validation With Dynamometer Test Data,
International Journal of Automotive Technologies, Vol. 15(2): pp.
263-71 (2014), available at: https://www.sae.org/publications/technical-papers/content/2014-01-1778/ (accessed: Sept. 10, 2025).
\174\ CAFE Analysis Autonomie Documentation chapter titled
``Autonomie--Transmission Model.''
---------------------------------------------------------------------------
The effectiveness values for the transmission technologies, for all
light-duty technology classes, are shown in Chapter 3.2.4 of the Draft
TSD. Note that the effectiveness for the AT5 and eCVT technologies is
not shown. The eCVT transmissions do not have standalone effectiveness
values because those technologies are implemented only as part of
hybrid-electric powertrains. The AT5 has no effectiveness values
because it is a reference-point technology against which all other
transmission technologies are compared.
NHTSA's transmission DMCs come from the 2015 NAS report and studies
cited therein. The costs are taken almost directly from the 2015 NAS
report adjusted to the current dollar year or for the appropriate
number of gears. Chapter 3.2 of the Draft TSD discusses the specific
2015 NAS report costs used to generate these transmission cost
estimates, and all transmission costs across all model years can be
found in the CAFE Model's Technologies Input File. NHTSA has used the
2015 NAS report transmission costs for the last several light-duty CAFE
Model analyses (since re-evaluating all transmission costs for the 2020
final rule) and has not received comments or feedback on these costs.
3. Hybridization Paths
The hybridization paths each include a set of technologies that
share common hybrid powertrain components, like batteries and electric
motors, for certain vehicle functions that were powered solely by ICEs
traditionally. While all vehicles (including conventional ICE vehicles)
use batteries and electric motors in some form, some component designs
and powertrain architectures contribute to greater levels of
hybridization than others, allowing the vehicle to use less gasoline or
other fuel.
As explained elsewhere, NHTSA endeavors to model how manufacturers
could apply technology to respond to CAFE standards. Hybrid
technologies can improve fuel economy, and NHTSA believes that the
inputs and assumptions selected to represent hybrid technologies are
reasonable to use in NHTSA's CAFE Model. NHTSA provides details of the
inputs and assumptions in the Draft TSD accompanying this proposed rule
and provides more information regarding the agency's rationale and
approach throughout Section II and III of this preamble.
Unlike with other technologies in the analysis, Congress placed
specific limitations on how NHTSA considers the fuel economy of
alternative fueled vehicles, which includes not only BEVs and FCEVs but
also PHEVs.\175\ For PHEVs, which are discussed in this section in
addition to other hybrid technologies, NHTSA restricts its analysis by
using fuel economy values that assume ``charge sustaining''
[[Page 56491]]
(gasoline-only) operation only.\176\ The fuel economies of BEVs and
FCEV technologies are excluded entirely from NHTSA's standard-setting
analysis.\177\ Draft TSD Chapter 2.2 contains discussion of NHTSA's
consideration of PHEVs, BEVs, and FCEVs in the EIS analysis.
---------------------------------------------------------------------------
\175\ 49 U.S.C. 32902(h)(1) and (2). In determining maximum
feasible fuel economy levels, ``the Secretary of Transportation--(1)
may not consider the fuel economy of dedicated automobiles; [and]
(2) shall consider dual fueled automobiles to be operated only on
gasoline or diesel fuel.''
\176\ NHTSA has estimated two sets of technology effectiveness
values using the Argonne full-vehicle simulations: one set does not
include the electrification portion of PHEVs, and one set includes
the combined fuel economy for both ICE operation and electric
operation. Draft TSD Chapter 3.3 has more information.
\177\ CAFE Model Documentation at S4.6 Technology Fuel Economy
Improvements.
---------------------------------------------------------------------------
Among the simpler configurations with the fewest hybrid components
is micro HEV technology (SS12V), which uses a 12-volt system that
simply restarts the engine from a stop. Mild HEVs use a 48-volt belt
integrated starter generator (BISG) system that restarts the engine
from a stop and provides some regenerative braking functionality.\178\
Mild HEVs are often also capable of minimal electric assist to the
engine on take-off.
---------------------------------------------------------------------------
\178\ See 2015 NAS Report, at p. 130 (``During braking, the
kinetic energy of a conventional vehicle is converted into heat in
the brakes and is thus lost. An electric motor/generator connected
to the drivetrain can act as a generator and return a portion of the
braking energy to the battery for reuse. This is called regenerative
braking. Regenerative braking is most effective in urban driving and
in the urban dynamometer driving schedule (UDDS) cycle, in which
about 50 percent of the propulsion energy ends up in the brakes (NRC
2011, 18).'').
---------------------------------------------------------------------------
Strong hybrid-electric vehicles (SHEVs) have higher system voltages
compared to mild hybrids with BISG systems and are capable of engine
stop/start, regenerative braking, electric motor assist of the engine
at higher speeds and power demands with the ability to provide limited
all-electric propulsion. Common SHEV powertrain architectures,
classified by the interconnectivity of common hybrid vehicle
components, include both a series-parallel architecture by power-split
device (SHEVPS) as well as a parallel architecture (SHEVP2). SHEVP2s--
though enhanced by the electric components, including just one electric
motor--remains fundamentally similar to a conventional powertrain.\179\
In contrast, SHEVPS powertrains are considerably different than a
conventional powertrain, as they use two electric motor/generators,
which allows the use of a lower power-density engine. This results in a
higher potential for fuel economy improvement compared to a SHEVP2,
though the SHEVPS engine power density is lower.\180\ Put another way,
``[a] disadvantage of the power split architecture is that when towing
or driving under other real-world conditions, performance is not
optimum.'' \181\ In contrast, ``[o]ne of the main reasons for using
parallel hybrid architecture is to enable towing and meet maximum
vehicle speed targets.'' \182\ This is an important distinction to
understand why NHTSA allows certain types of vehicles to adopt SHEVP2
powertrains and not SHEVPS powertrains.
---------------------------------------------------------------------------
\179\ Kapadia, J. et al., Powersplit or Parallel--Selecting the
Right Hybrid Architecture, SAE International Journal of Alternative
Power, Vol. 6(1): pp. 68--76 (2017), available at: https://doi.org/10.4271/2017-01-1154 (accessed: Sept. 10, 2025) (hereinafter,
``Kapadia et al. (2017)''). Parallel hybrids architecture typically
adds the electrical system components to an existing conventional
powertrain.
\180\ Id.
\181\ 2015 NAS Report, at p. 134.
\182\ Kapadia et al. (2017).
---------------------------------------------------------------------------
PHEVs utilize a combination gasoline-electric powertrain, like that
of a SHEV, but have the ability to plug into the electric grid to
recharge the battery, like that of a BEV; this contributes to all-
electric mode capability in both blended and non-blended PHEVs.\183\
The analysis includes PHEVs with an AER of 20 and 50 miles to encompass
the range of PHEV AER in the market today. Draft TSD Chapter 3.3
contains more information on every hybrid technology considered in the
analysis, including common acronyms and a brief description of each
hybrid technology. For brevity, NHTSA refers to technologies by their
acronyms in this section.
---------------------------------------------------------------------------
\183\ Some PHEVs operate in charge-depleting mode (i.e.,
``electric-only'' operation--depleting the high-voltage battery's
charge) before operating in charge-sustaining mode (similar to
strong hybrid operation, the gasoline and electric powertrains work
together), while other (blended) PHEVs switch between charge-
depleting mode and charge-sustaining mode during operation.
---------------------------------------------------------------------------
As with previous CAFE analyses, there are a number of engine
options available for SHEVs and PHEVs. These engines better represent
the variety of different hybrid architectures and engine options
available in the real world for SHEVs and PHEVs while still maintaining
a reasonable level of analytical complexity.
NHTSA did not include additional mild hybrid technology such as
more capable, higher output 48-volt mild hybrid systems beyond P0 mild
hybrids, such as ``P2, P3, or P4 configurations'' \184\ which offer
additional benefits of ``electric power take-offs'' \185\ (i.e., launch
assist) or ``slow-speed electric driving'' \186\ on the vehicle's drive
axle(s). NHTSA will consider mild hybrid advancements in future
analysis if they become more prevalent in the U.S. market.
---------------------------------------------------------------------------
\184\ John German, Docket No. NHTSA-2023-0022-53274-A1 at 6-7.
\185\ MECA, Docket No. NHTSA-2023-0022-63053-A1 at 13.
\186\ ICCT, Docket No. NHTSA-2023-0022-54064-A1 at 20.
---------------------------------------------------------------------------
As described in Draft TSD Chapter 3.3, NHTSA assigns hybrid
technologies to vehicles in the analysis fleet \187\ using
manufacturer-submitted CAFE compliance information, publicly available
technical specifications, marketing brochures, articles from reputable
media outlets, and data subscriptions.\188\ Draft TSD Chapter 3.3.2
shows the penetration rates of hybrid technologies in the standard-
setting analysis fleets. Over half the analysis fleet has some level of
hybridization, with the vast majority--over 50 percent of the fleet--
being micro hybrids. Like the other technology pathways, as the CAFE
Model adopts hybrid technologies for vehicles, more advanced levels of
hybrid technologies will supersede all prior levels, while certain
technologies within each level are mutually exclusive. The only
adoption feature applicable to micro (SS12V) and mild (BISG) hybrid
technology is path logic; vehicles may adopt micro and mild hybrid
technology only if the vehicle did not already have a more advanced
level of hybridization.
---------------------------------------------------------------------------
\187\ The standard-setting analysis fleet does NOT contain BEVs
or FCEVs; the EIS fleet considers all technologies, including BEVs
and FCEVs.
\188\ Wards Intelligence, U.S. Car and Light Truck
Specifications and Prices, 22 Model Year (2022), available at:
https://omdia.tech.informa.com/welcome (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
The adoption features that NHTSA applies to strong hybrid
technologies include path logic, powertrain substitution, and vehicle
class restrictions. Per the technology pathways, SHEVPS, P2x, P2TRBx,
and the P2HCRx technologies are considered mutually exclusive. When the
Model applies one of these technologies, the others are immediately
disabled from future application. However, all vehicles on the strong
hybrid pathways can still advance to one or more of the plug-in
technologies, when applicable in the modeling scenario (i.e., allowed
in the Model).
When the Model applies any strong hybrid technology to a vehicle,
the transmission technology on the vehicle is superseded; regardless of
the transmission originally present, P2 hybrids adopt an advanced 8-
speed automatic transmission (AT8L2), and PS hybrids adopt a
continuously variable transmission via power-split device (eCVT). When
the Model applies the P2
[[Page 56492]]
technology, the Model can consider various engine options to pair with
the P2 architecture according to existing engine path constraints--
taking into account relative cost effectiveness. For SHEVPS technology,
the existing engine is replaced with a full-time Atkinson cycle
engine.\189\ For P2s, NHTSA picks the 8-speed automatic transmission to
supersede the vehicle's incoming transmission technology. This is
because most P2s in the market use an 8-speed automatic
transmission,\190\ therefore it is representative of the fleet now.
NHTSA also thinks that 8-speed transmissions are representative of the
transmissions that will continue to be used in these hybrid vehicles,
as NHTSA anticipates manufacturers will continue to use these ``off-
the-shelf'' transmissions based on availability and ease of
incorporation in the powertrain. The eCVT (power-split device) is the
transmission for SHEVPSs and is therefore the technology NHTSA has
picked to supersede the vehicle's prior transmission when adopting the
SHEVPS powertrain.
---------------------------------------------------------------------------
\189\ This engine type is designated as Eng26 in the list of
engine map models used in the analysis. Draft TSD Chapter 3.1.1.2.3
provides more information.
\190\ NHTSA is aware that some Hyundai vehicles use six-speed
transmissions, and some Ford vehicles use 10-speed transmissions,
but NHTSA has observed that the majority of P2s use eight-speed
transmissions.
---------------------------------------------------------------------------
SKIP logic is also used to constrain adoption of SHEVPS and
PHEVx0PS technologies. These technologies are ``skipped'' for vehicles
with engines \191\ that meet one of the following conditions: the
engine belongs to an excluded manufacturer; \192\ the engine belongs to
a pickup truck (i.e., the engine is on a vehicle assigned the
``pickup'' body style); the engine's peak HP is more than 405 hp; or
the engine is on a non-pickup vehicle but is shared with a pickup. The
reasons for these conditions are similar to those for the SKIP logic
that NHTSA applies to HCR engine technologies, discussed in more detail
in Section II.D.1. In the real world, performance vehicles with certain
powertrain configurations cannot adopt the technologies listed above
and maintain vehicle performance without redesigning the entire
powertrain.
---------------------------------------------------------------------------
\191\ This refers to the engine assigned to the vehicle in the
2022 analysis fleet.
\192\ Excluded manufacturers include BMW, Daimler, and Jaguar
Land Rover.
---------------------------------------------------------------------------
It may be helpful to understand why NHTSA does not apply SKIP logic
to P2s but does apply SKIP logic to SHEVPSs. Note the difference
between SHEVP2 and SHEVPS architectures: P2 architectures are better
for ``larger vehicle applications because they can be integrated with
existing conventional powertrain systems that already meet the
additional attribute requirements'' of large-vehicle segments.\193\ No
SKIP logic applies to P2s because NHTSA believes that this type of
hybridized powertrain is sufficient to meet all the performance
requirements for all types of vehicles. Manufacturers have proven this
with vehicles like the Ford F-150 Hybrid and Toyota Tundra Hybrid.\194\
If NHTSA were to size (in the Autonomie simulations) the SHEVPS motors
and engines to achieve ``not optimum'' performance, the electric motors
would be unrealistically large (on both a size and cost basis), and the
accompanying engine also would have to be a very large displacement
engine, which is not characteristic of how vehicle manufacturers apply
SHEVPS to ICE vehicles in the real world. Instead, for vehicle
applications that have particular performance requirements--which the
analysis defines as vehicles with engines that belong to an excluded
manufacturer, engines belonging to a pickup truck or shared with a
pickup truck, or the engine's peak HP is more than 405 hp--those
vehicles can adopt P2 architectures that should be able to handle the
vehicle's performance requirements.
---------------------------------------------------------------------------
\193\ Kapadia et al. (2017).
\194\ Buchholz, K., 2022 Toyota Tundra: V8 Out, Twin-Turbo
Hybrid Takes Over, Warrendale, VA: SAE International, Last revised:
Aug. 22, 2021, available at: https://www.sae.org/news/2021/09/2022-toyota-tundra-gains-twin-turbo-hybrid-power (accessed: Sept. 10,
2025); Visnic, B., Hybridization the Highlight of Ford's All-New
2021 F-150, Last revised: June 30, 2020, available at: https://www.sae.org/articles/hybridization-highlight-fords-new-2021-f-150-sae-ma-03885 (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
While strong hybridization is allowed on all vehicle types, NHTSA
allows different types of strong hybrid powertrains to be applied to
different types of vehicles for the reasons discussed above. NHTSA
believes that allowing SHEVPS and P2 powertrains to be applied subject
to the base vehicle's performance requirements is a reasonable approach
to maintaining a performance-neutral analysis.
The engine and transmission technologies on a vehicle are
superseded when PHEV technologies are applied. For example, the Model
applies an AT8L2 transmission with all PHEV20T/50T plug-in
technologies, and the Model applies an eCVT transmission for all
PHEV20PS/50PS and PHEV20H/50H plug-in technologies in the fleet; Draft
TSD Chapter 3.3 provides more details on different system combinations
of hybridization. A vehicle adopting PHEV20PS/50PS receives a hybrid
full-time Atkinson cycle engine, and a vehicle adopting PHEV20H/PHEV50H
receives an HCR engine. For PHEV20T/50T, the vehicle receives a TURBO1
engine.
Autonomie determines the effectiveness of each hybridized
powertrain type by modeling the basic components, or building blocks,
for each powertrain and then combining the components modularly to
determine the overall efficiency of the entire powertrain. The
components, or building blocks, which contribute to the effectiveness
of a hybridized powertrain in the analysis include the vehicle's
battery, electric motors, power electronics, and accessory loads.
Autonomie identifies components for each hybridized powertrain type and
then interlinks those components to create a powertrain architecture.
Autonomie then models each hybridized powertrain architecture and
provides an effectiveness value for each architecture. For example,
Autonomie determines a PHEV's efficiency in part by considering the
efficiencies of the battery (including charging efficiency), the
electric traction drive system (ETDS) (the electric machine and power
electronics), and mechanical power transmission devices.\195\ Autonomie
further combines the modeled hybrid components of the hybrid powertrain
to include the ICE and related power for transmission components.\196\
Argonne uses data from their Advanced Mobility Technology Laboratory
(AMTL) to develop Autonomie's hybrid powertrain models. The modeled
powertrains are not intended to represent any specific manufacturer's
architecture but act as surrogates predicting representative levels of
effectiveness for each hybrid technology. NHTSA discusses the
procedures for modeling each of these subsystems in detail in the Draft
TSD and in the CAFE Analysis Autonomie Documentation and provides a
summary below.
---------------------------------------------------------------------------
\195\ Iliev, S. et al., Vehicle Technology Assessment, Model
Development, and Validation of a 2021 Toyota RAV4 Prime, DOT HS 813
356, NHTSA: Washington, DC (2023), available at: https://downloads.regulations.gov/NHTSA-2023-0022-0010/attachment_6.pdf
(accessed: Sept. 10, 2025).
\196\ See the CAFE Analysis Autonomie Documentation.
---------------------------------------------------------------------------
The fundamental components of a hybrid powertrain's propulsion
system--the electric motor and inverter--ultimately determine the
vehicle's performance and efficiency. For this analysis, Autonomie
employs a set of electric motor efficiency maps created by Oak Ridge
National Laboratory (ORNL), one for a traction
[[Page 56493]]
motor and an inverter, the other for a motor/generator and
inverter.\197\ The electric motor efficiency maps, created from
production vehicles like the 2007 Toyota Camry hybrid and the 2011
Hyundai Sonata hybrid, represent electric motor efficiency as a
function of torque and motor rotations per minute (RPM). These
efficiency maps provide nominal and maximum speeds, as well as a
maximum torque curve. Argonne uses the maps to determine the efficiency
characteristics of the motors, which include some of the losses due to
power transfer through the electric machine.\198\ Specifically, Argonne
scales the efficiency maps, specific to powertrain type, to have total
system peak efficiencies ranging from 96 to 98 percent \199\--such that
their peak efficiency value corresponds to the latest state-of-the-art
technologies, as opposed to retaining dated system efficiencies (90 to
93 percent).\200\
---------------------------------------------------------------------------
\197\ Burress, T. et al., Evaluation of the 2007 Toyota Camry
Hybrid Synergy Drive System, ORNL: Washington, DC (2008), available
at: https://doi.org/10.2172/928684 (accessed: Sept. 10, 2025)
(hereinafter, ``Burress et al. (2008)''); Olszewski, M., Annual
Progress Report for the Power Electronics and Electric Machinery
Program, ORNL/TM-2011/263, ORNL: Washington, DC (2011), available
at: https://info.ornl.gov/sites/publications/files/Pub31483.pdf
(accessed: Sept. 10, 2025) (hereinafter, ``Olszewski (2011)'').
\198\ CAFE Analysis Autonomie Documentation chapter titled
``Vehicle and Component Assumptions--Electric Machines--Electric
Machine Efficiency Maps.''
\199\ CAFE Analysis Autonomie Documentation chapter titled
``Vehicle and Component Assumptions--Electric Machines--Electric
Machine Peak Efficiency Scaling.''
\200\ Burress et al. (2008); Olszewski (2011).
---------------------------------------------------------------------------
Beyond the powertrain components, Autonomie also considers electric
accessory devices that consume energy and affect overall vehicle
effectiveness, such as headlights, radiator fans, wiper motors, engine
control units, transmission control units, cooling systems, and safety
systems. In real-world driving and operation, the electrical accessory
load on the powertrain varies depending on how the driver uses certain
features and the condition in which the vehicle is operating, such as
night driving or hot weather driving. However, for regulatory test
cycles related to fuel economy, the electrical load is repeatable
because the fuel economy regulations control these factors. Accessory
loads during test cycles vary by powertrain type and vehicle technology
class, since distinctly different powertrain components and vehicle
masses consume different amounts of energy.
The analysis fleets consist of different vehicle types with varying
accessory electrical power demand. For instance, vehicles with
different motor and battery sizes require different sizes of electric
cooling pumps and fans to manage component temperatures optimally.
Autonomie has built-in models that can simulate these varying subsystem
electrical loads. However, for this analysis, NHTSA uses a fixed (by
vehicle technology class and powertrain type), constant power draw to
represent the effect of these accessory loads on the powertrain on the
2-cycle test. NHTSA intends and expects that fixed accessory load
values will, on average, have similar impacts on effectiveness as found
on actual manufacturers' systems. This process is in line with the past
analyses.201 202 NHTSA aggregates electrical accessory load
modeling assumptions for the different powertrain types (hybridized and
conventional) and technology classes from data from the Draft TAR, EPA
Proposed Determination,\203\ data from manufacturers,\204\ research and
development data from DOE's Vehicle Technologies
Office,205 206 207 and DOT-sponsored vehicle benchmarking
studies completed by Argonne's AMTL.
---------------------------------------------------------------------------
\201\ Technical Assessment Report at Chapter 5 (2016).
\202\ EPA Proposed Determination TSD at pp. 2-270 (2016).
\203\ Id.
\204\ Alliance of Automobile Manufacturers (now Auto Innovators)
Comments on Draft TAR, at p. 30.
\205\ DOE, Electric Drive Systems Research and Development,
Office of Energy Efficiency & Renewable Energy (EERE) (2025),
available at: https://www.energy.gov/eere/vehicles/electric-drive-systems-research-and-development (accessed: Sept. 10, 2025).
\206\ Argonne National Laboratory, Advanced Mobility Technology
Laboratory (AMTL) (2025), available at: https://www.anl.gov/taps/advanced-mobility-technology-laboratory (accessed: Sept. 10, 2025).
\207\ DOE's lab years are 10 years ahead of manufacturers'
potential production intent (e.g., 2020 lab year is MY 2030).
---------------------------------------------------------------------------
Certain technologies' effectiveness for reducing fuel consumption
requires optimization through the appropriate sizing of the powertrain.
Autonomie uses sizing control algorithms based on data collected from
vehicle benchmarking,\208\ and the modeled hybrid components are sized
based on performance neutrality considerations. This analysis
iteratively minimizes the size of the powertrain components to maximize
efficiency while enabling the vehicle to meet multiple performance
criteria. The Autonomie simulations use a series of resizing algorithms
that contain ``loops,'' such as the acceleration performance loop (0-60
mph), which automatically adjusts the size of certain powertrain
components until a criterion, like the 0-60 mph acceleration time, is
met. As the algorithms examine different performance or operational
criteria that must be met, no single criterion can degrade; once a
resizing algorithm completes, all criteria will be met, and some may be
exceeded as a necessary consequence of meeting others.
---------------------------------------------------------------------------
\208\ CAFE Analysis Autonomie Documentation chapter titled
``Vehicle Sizing Process--Vehicle Powertrain Sizing Algorithms--
Light-Duty Vehicles--Conventional Vehicle Sizings Algorithm.''
---------------------------------------------------------------------------
Autonomie applies different powertrain sizing algorithms depending
on the type of vehicle considered because different types of vehicles
not only contain specific, optimized components, but they must also
operate in varying driving modes. While the conventional powertrain
sizing algorithm must consider only the power of the engine, the more
complex algorithm for hybridized powertrains must simultaneously
consider multiple factors, which could include the engine power,
electric machine power, battery power, and battery capacity. Also,
while the resizing algorithm for all vehicles must satisfy the same
performance criteria, the algorithm for some electric powertrains must
also allow those hybridized vehicles to operate in certain driving
cycles, like the US06 cycle, without assistance of the combustion
engine and ensure the electric motor/generator and battery can handle
the vehicle's regenerative braking power, all-electric mode operation,
and intended range of travel.
To establish the effectiveness of the technology packages,
Autonomie simulates the vehicles' performance on compliance test
cycles.\209\ For vehicles with conventional powertrains and micro
hybrid powertrains, Autonomie simulates the vehicles using the 2-cycle
test procedures and guidelines.\210\ For mild HEVs and strong HEVs,
Autonomie simulates the same 2-cycle test, with the addition of
repeating the drive cycles until the final state-of-charge (SOC) is
approximately the same as the initial SOC, a process described in SAE
J1711; SAE J1711 also provides test cycle guidance for testing specific
to plug-in
[[Page 56494]]
HEVs.\211\ PHEVs have a different range of modeled effectiveness during
``standard-setting'' CAFE Model runs, in which the PHEV operates under
a ``charge sustaining'' (gasoline-only) mode--similar to how SHEVs
function.
---------------------------------------------------------------------------
\209\ EPA, How Vehicles are Tested (2025), available at: https://www.fueleconomy.gov/feg/how_tested.shtml (accessed: Sept. 10,
2025); Good, D., EPA Test Procedures for Electric Vehicles and Plug-
in Hybrids, Draft Summary, EPA: Washington, DC (2017), available at:
https://www.fueleconomy.gov/feg/pdfs/EPA%20test%20procedure%20for%20EVs-PHEVs-11-14-2017.pdf (accessed:
Sept. 10, 2025); CAFE Analysis Autonomie Documentation, chapter
titled ``Test Procedure and Energy Consumption Calculations.''
\210\ 40 CFR part 600.
\211\ PHEV testing is broken into several phases based on SAE
J1711: charge-sustaining on the city and HWFET cycle, and charge-
depleting on the city and HWFET cycles.
---------------------------------------------------------------------------
Chapters 2.4 and 3.3 of the Draft TSD and the CAFE Analysis
Autonomie Documentation chapter titled ``Test Procedure and Energy
Consumption Calculations'' discuss the components and test cycles used
to model each hybrid powertrain type; please refer to those chapters
for more technical details on each of the modeled technologies
discussed in this section.
The range of effectiveness for the hybrid technologies used in this
analysis is a result of the interactions between the components listed
above and how the modeled vehicle operates on its respective test
cycle. This range of values results in some modeled effectiveness
values being close to real-world measured values and some modeled
values departing from measured values, depending on the level of
similarity between the modeled hardware configuration and the real-
world hardware and software configurations. The range of effectiveness
values for the hybrid technologies applied in the fleet is shown in
Draft TSD Figure 3-23 and Figure 3-24.
Some advanced engine technologies indicate low effectiveness values
when paired with hybrid architectures. The low effectiveness results
from the application of advanced engines to existing P2 architectures.
This effect is expected and illustrates the importance of using the
full-vehicle modeling to capture interactions between technologies and
to capture instances of both complementary technologies and non-
complementary technologies. In developing its hybrid engine maps, NHTSA
considers the engine, engine technologies, electric motor power, and
battery pack size. The hybrid engine maps are calibrated to operate in
their respective hybrid architecture most effectively and to allow the
electric machine to provide propulsion or assistance in regions of the
engine map that are less efficient. As the Model sizes the powertrain
for any given application, it considers all these parameters as well as
performance neutrality metrics to provide the most efficient solution.
In this instance, the P2 powertrain improves fuel economy, in part, by
allowing the engine to spend more time operating at efficient engine
speed and load conditions. This reduces the advantage of adding
advanced engine technologies, which also improve fuel economy, by
broadening the range of speed and load conditions for the engine to
operate at high efficiency. This redundancy in fuel-saving mechanisms
results in a lower effectiveness when the technologies are added to
each other.
The technology effectiveness values are developed specifically to
support analyses for a rulemaking timeframe. For example, the hybrid
Atkinson engine peak thermal efficiency was updated based on 2017
Toyota Prius engine data.\212\ As mentioned above, Argonne scales the
efficiency maps, specific to powertrain type, to have total system peak
efficiencies ranging from 96 to 98 percent \213\--such that their peak
efficiency value corresponds to the latest state-of-the-art
technologies, as opposed to retaining dated system efficiencies (90 to
93 percent).\214\ The 2016 maps scaled to peak efficiency are
equivalent to (if not exceed) efficiencies seen in vehicles today and
in the future. Though the base references for these technologies are
from a few years ago, NHTSA has worked with Argonne to update
individual inputs to reflect the latest improvements. Accordingly,
NHTSA has made no changes to the electric machine efficiency maps for
this proposed rule analysis.
---------------------------------------------------------------------------
\212\ Atkinson Engine Peak Efficiency is based on 2017 Prius
peak efficiency scaled up to 41 percent. Autonomie Model
Documentation at 138. See ANL--All
Assumptions_Summary_NPRM_022021.xlsx, ANL--Summary of Main Component
Performance Assumptions_NPRM_022021.xlsx, Argonne Autonomie Model
Documentation_NPRM.pdf and ANL--Data Dictionary_NPRM_022021.XLSX,
which can be found in the rulemaking docket (NHTSA-2023-0022) by
filtering for Supporting & Related Material.
\213\ See CAFE Analysis Autonomie Documentation, chapter titled
``Electric Machine Peak Efficiency Scaling.''
\214\ Burress et al. (2008); Olszewski (2011).
---------------------------------------------------------------------------
When the CAFE Model turns a vehicle powered by an ICE into a
hybridized vehicle, it must remove the parts and costs associated with
the ICE (and, potentially, the transmission--depending on the
hybridization level and powertrain type) and add the costs of a battery
pack and other non-battery hybridization components, such as the
electric motor and power inverter. To estimate battery pack costs for
this analysis, NHTSA needs an estimate of how much battery packs cost
now (i.e., a ``base year'' cost) and estimates of how that cost could
reduce over time (i.e., the ``learning effect''). The general concept
of learning effects is discussed in detail in Section II.C and in
Chapter 2 of the Draft TSD, while the specific learning effect NHTSA
applied to battery pack costs in this analysis is discussed below.
NHTSA estimates base year battery pack costs for most hybrid
technologies using BatPaC, which is an Argonne model designed to
calculate the cost of hybrid battery packs.
Traditionally, a user would use BatPaC to cost a battery pack for a
single vehicle, and the user would vary factors such as battery cell
chemistry, battery power and energy, battery pack interconnectivity
configurations, battery pack production volumes, charging constraints,
or combinations of these factors, to name a few, to see how those
factors would increase or decrease the cost of the battery pack.
However, several hundreds of thousands of simulated vehicles in the
analysis have hybridized powertrains, meaning that NHTSA would have to
run individual BatPaC simulations for each full-vehicle simulation that
requires a battery pack. This would have been computationally intensive
and impractical. Instead, Argonne staff builds ``lookup tables'' with
BatPaC that provide battery pack manufacturing costs, battery pack
weights, and battery pack cell capacities for vehicles with varying
power requirements modeled in these large-scale simulation runs.
Just like with other vehicle technologies, the specifications of
different vehicle manufacturers' battery packs are extremely diverse.
NHTSA, therefore, endeavored to develop battery pack costs that
reasonably encompass the cost of battery packs for vehicles in each
technology class.
In conjunction with the agency's partners at Argonne working on the
CAFE analysis Autonomie modeling, NHTSA references assessment and
outlook reports,\215\ vehicle teardown reports,\216\ and stakeholder
[[Page 56495]]
discussions \217\ to determine common battery pack chemistries for each
modeled hybrid technology. The CAFE Analysis Autonomie Documentation
chapter titled ``Battery Performance and Cost Model--BatPaC Examples
From Existing Vehicles in the Market'' includes more detail about the
reports referenced for this analysis.\218\ For mild hybrids, NHTSA uses
the lithium iron phosphate (LFP)-G \219\ chemistry because power and
energy requirements for mild hybrids are very low, the charge and
discharge cycles (or need for increased battery cycle life) are high,
and the battery raw materials are much less expensive than a nickel
manganese cobalt (NMC)-based cell chemistry. NHTSA uses NMC622-G \220\
for all other hybrid vehicle technology base (MY 2022) battery pack
cost calculations. NHTSA believes that, based on available data,\221\
NMC622 is more representative for the MY 2022 base year battery costs
than LFP, and any additional cost reductions from manufacturers
switching to LFP chemistry-based battery packs in years beyond 2022 are
accounted for in the battery cost learning effects. The learning
effects estimate potential cost savings for future battery advancements
(a learning rate applied to the battery pack DMC); this proposed rule
includes a dynamic NMC/LFP cathode mix over each future model year (for
PHEVs). The battery chemistry that NHTSA uses is intended to represent
reasonably what is used in the MY 2022 U.S. fleet, which is the DMC
base year for the BatPaC calculations.\222\
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\215\ Rho Motion, EV Battery subscriptions, available at:
https://rhomotion.com/ (accessed: Sept. 10, 2025); BNEF, Electric
Vehicle Outlook 4Q 2023: Growth Ahead, Last revised: Jan. 4, 2024,
available at: https://about.bnef.com/insights/clean-transport/electrified-transport-market-outlook-4q-2023-growth-ahead/
(accessed: Sept. 10, 2025); Benchmark Mineral Intelligence, Cathode,
Anode, and Gigafactories subscriptions, available at: https://benchmarkminerals.com/ (accessed: Sept. 10, 2025); International
Energy Agency, Global EV Outlook 2022: Securing Supplies For an
Electric Future, International Energy Agency (2022) available at:
https://iea.blob.core.windows.net/assets/ad8fb04c-4f75-42fc-973a-6e54c8a4449a/GlobalElectricVehicleOutlook2022.pdf (accessed: Sept.
10, 2025).
\216\ Hummel, P. et al., UBS Evidence Lab Electric Car
Teardown--Disruption Ahead? UBS: Zurich, Switzerland (2017),
available at: https://neo.ubs.com/shared/d1ZTxnvF2k (accessed: Sept.
10, 2025); A2Mac1: Automotive Benchmarking, (proprietary data),
available at: https://portal.a2mac1.com/ (accessed: Sept. 10, 2025).
\217\ See Docket Submission of Ex Parte Meetings Prior to
Publication of the Corporate Average Fuel Economy Standards for
Passenger Cars and Light Trucks for Model Years 2027-2032 and Fuel
Efficiency Standards for Heavy-Duty Pickup Trucks and Vans for Model
Years 2030-2035 Notice of Proposed Rulemaking memorandum, which can
be found in the rulemaking docket (NHTSA-2023-0022) by filtering for
Supporting & Related Material.
\218\ CAFE Analysis Autonomie Documentation chapter titled
``Battery Performance and Cost Model--BatPac Examples From Existing
Vehicles in the Market.''
\219\ Lithium iron phosphate (LiFePO4) cathode and
graphite anode.
\220\ Lithium nickel manganese cobalt oxide
(LiNiMnCoO2) cathode and graphite anode.
\221\ Rho Motion, EV Battery subscriptions, available at:
https://rhomotion.com/ (accessed: Sept. 10, 2025); International
Energy Agency, Global EV Outlook 2023, International Energy Agency
(2023), available at https://www.iea.org/reports/global-ev-outlook-2023 (accessed: Sept. 10, 2025).
\222\ For this analysis, 2021$ costs have been updated to 2024$;
this is not reflected directly in the base Battery Cost csv file,
however, as this conversion was performed external to the file
itself.
---------------------------------------------------------------------------
NHTSA also looks at vehicle sales volumes for MY 2022 to determine
a reasonable base production volume assumption.\223\ In practice, a
single battery plant can produce packs using different cell chemistries
with different power and energy specifications, as well as battery pack
constructions with varying battery pack designs--different cell
interconnectivities (to alter overall pack power end energy) and
thermal management strategies--for the same base chemistry. However, in
BatPaC, a battery plant is assumed to manufacture and assemble a
specific battery pack design, and all cost estimates are based on one
single battery plant manufacturing only that specific battery pack. For
example, if a manufacturer has more than one PHEV in its vehicle lineup
and each uses a specific battery pack design, a BatPaC user would
include manufacturing volume assumptions for each design separately to
represent each plant producing each specific battery pack. NHTSA has
examined battery pack designs for vehicles sold in MY 2022 to determine
a reasonable manufacturing plant production volume assumption. NHTSA
considers each assembly line designed for a specific battery pack and
for a specific PHEV as an individual battery plant. Since battery
technologies and production are still evolving, it is likely to be some
time before battery cells can be treated as commodities where the
specific numbers of cells are used for varying battery pack
applications and all other metrics remain the same.
---------------------------------------------------------------------------
\223\ See Chapter 2.2.1.1 of the Draft TSD for more information
on data NHTSA uses for sales volumes.
---------------------------------------------------------------------------
Similar to previous rulemakings, NHTSA uses sales as a starting
point to analyze potential base modeled battery manufacturing plant
production volume assumptions. Since actual production data for
specific battery manufacturing plants are extremely hard to obtain and
the battery cell manufacturer is not always the battery pack
manufacturer,\224\ NHTSA calculates an average production volume per
manufacturer metric to approximate hybrid vehicle production volumes
for this analysis. This metric is calculated by taking an average of
all of one hybrid vehicle type (for example, all PHEVs) battery
energies reported in a vehicle manufacturer's pre-MY 2022 reports \225\
and dividing by the averaged sales-weighted energy per-vehicle; the
resulting volume is then rounded to the nearest 5,000. Manufacturers
are not required to report gross battery pack sizes for the pre-model
year or mid-model year compliance reports, so NHTSA estimates pack size
for each vehicle based on proprietary data and publicly available data,
like a manufacturer's published or announced specifications. This
process is repeated for all hybrid vehicle technologies. NHTSA believes
this provided a reasonable base year plant production volume--
especially in the absence of actual production data--since the
compliance report data from manufacturers already includes accurate
related data, such as vehicle model and estimated sales information
metrics.\226\ The final battery manufacturing plant production volume
assumptions for different hybrid technologies are as follows: mild
hybrid and strong hybrids are manufactured assuming 200,000 packs and
PHEVs are manufactured assuming 20,000 packs.
---------------------------------------------------------------------------
\224\ Zhou, Y. et al., Lithium-Ion Battery Supply Chain for E-
Drive Vehicles in the United States: 2010-2020, ANL/ESD-21/3,
Argonne, IL: Argonne National Laboratory (2021), available at:
https://publications.anl.gov/anlpubs/2021/04/167369.pdf (accessed:
Sept. 10, 2025); Gohlke, D. et al., Quantification of Commercially
Planned Battery Component Supply in North America Through 2035,
Final Report, ANL-24/14, ANL: Alexandria, VA (2024), available at:
https://publications.anl.gov/anlpubs/2024/03/187735.pdf (accessed:
Sept. 10, 2025).
\225\ 49 CFR 537.7.
\226\ NHTSA uses publicly available range and pack size
information and linked the information to vehicle models.
---------------------------------------------------------------------------
As mentioned above, the BatPaC Lookup Tables provide $/kWh battery
pack costs based on vehicle power and energy requirements. As the total
cost of a battery pack increases the higher the power/energy
requirements, the cost per kWh decreases. This represents the cost of
hardware that is needed in all battery packs but is deferred across
more kW/kWh in larger packs, which reduces the per kW/kWh cost. Table
3-78 in Draft TSD Chapter 3.3.5 shows an example of the BatPaC-based
lookup tables for SHEVPS technology classes.
Note that the values in the table discussed above should not be
considered the total battery $/kWh costs that are used for vehicles in
the analysis in future model years. As detailed below, battery costs
are also projected to decrease over time as manufacturers improve
production processes, shift battery chemistries, and make other
technological advancements. In addition, select modeled tax credits
further reduce the estimated costs; additional discussion of those tax
credits is located throughout this preamble, Draft TSD Chapter 2.3, and
PRIA Chapters 8 and 9.
The CAFE Analysis Autonomie Documentation details other specific
assumptions that Argonne used to simulate battery packs and their
associated base year costs for the full-vehicle simulation modeling,
including updates to the battery management unit
[[Page 56496]]
costs and the range of power and energy requirements used to bound the
lookup tables.\227\ CAFE Analysis Autonomie Documentation and Chapter
3.3 of the Draft TSD provide further information about how NHTSA used
BatPaC to estimate base year battery costs. The full range of BatPaC-
generated battery DMCs is in the file ANL--Summary of Main Component
Performance Assumptions_NPRM_2206.\228\ Note again that these charts
represent the DMC using a dollar per kW/kWh metric; battery absolute
costs used in the analysis by technology key can be found in the CAFE
Model Battery Costs File.
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\227\ CAFE Analysis Autonomie Documentation chapter titled
``Battery Performance and Cost Model--Use of BatPac in Autonomie for
FRM runs.''
\228\ The DMCs in the Argonne file are in 2021$ (from the 2024
final rule).
---------------------------------------------------------------------------
The DOE and Argonne have developed battery cost correlation
equations from BatPaC for use in the 2024 CAFE final rule analysis--
cost equations that continue to be used in this analysis.\229\ These
cost equations--developed for use through MY 2035--are tailored for
different vehicle segments,\230\ different levels of
hybridization,\231\ and anticipated plant production volumes.\232\
These equations represent cost improvements achieved from advanced
manufacturing, pack design, and cell design with current and
anticipated future battery chemistries,\233\ design parameters,
forecasted market prices, and vehicle technology penetration. Argonne's
Cost Analysis and Projections for U.S.-Manufactured Automotive Lithium-
ion Batteries report contains a detailed discussion of the inputs and
assumptions used to generate these cost equations.\234\
---------------------------------------------------------------------------
\229\ Argonne National Laboratory, Cost Analysis and Projections
for U.S.-Manufactured Automotive Lithium-Ion Batteries. ANL/CSE-24/
1, (2024), available at: https://publications.anl.gov/anlpubs/2024/01/187177.pdf (accessed: Sept. 10, 2025) (hereinafter, ``ANL/CSE-24/
1'').
\230\ The vehicle classes considered in this project include
compact cars, midsize cars, midsize SUVs, and pickup trucks.
\231\ The levels of hybridization considered in this project
include light-duty micro HEVs, mild HEVs, strong HEVs, and PHEVs.
\232\ Production volumes were determined for each vehicle class
and type for each model year. See ANL/CSE-24/1 at Equation 1 and
Table 13.
\233\ Battery cathode chemistries considered in this project
include nickel-based materials (NMC622, NMC811, NMC95, and LMNO) as
well as lower cost LFP cathodes; varying percentages of silicon
content (5%, 15%, and 35%) within a graphite anode were considered,
as well.
\234\ ANL/CSE-24/1.
---------------------------------------------------------------------------
While batteries and relative battery components are the biggest
cost drivers of hybridization, non-battery hybridization components,
such as electric motors, power electronics, and wiring harnesses, also
add to the total cost required to electrify a vehicle. Different levels
of hybrid vehicles have variants of non-battery hybridization
components and configurations to accommodate different vehicle classes
and applications with respective designs. For instance, some SHEVs may
be engineered with only one electric motor, while other SHEVs may be
engineered with two or even three electric motors within their
powertrains to provide AWD functionality. In addition, some hybrid
vehicle types still include conventional powertrain components, like an
ICE and transmission.
For all hybrid vehicle powertrain types, NHTSA groups non-battery
hybridization components into four major categories: electric motors,
power electronics (generally including the DC-DC converter, inverter,
and power distribution module), charging components (charger, charging
cable, and high-voltage cables), and thermal management systems. NHTSA
further groups the components into those composing the electric
traction drive system, and all other components. Though each
manufacturer's ETDS and power electronics vary between the same hybrid
vehicle types and between different hybrid vehicle types, NHTSA
considers the ETDS for this analysis to be composed of the electric
motor and inverter, power electronics, and thermal system.
When researching costs for different non-battery hybridization
components, NHTSA finds that different reports vary in components
considered and cost breakdown. This is not surprising, as vehicle
manufacturers use different non-battery hybridization components in
different vehicle systems, or even in the same vehicle type, depending
on the application. In order of the component categories discussed
above, NHTSA examines cost teardown studies discussed in Draft TSD
Chapter 3.3.5 on Table 3-82. Using the best available estimate for each
component from the different reports captures components in most
manufacturers' systems but not all; NHTSA believes, however, that this
is a reasonable metric and approach for this analysis, given the non-
standardization of hybrid powertrain designs and subsequent component
specifications. Other sources NHTSA uses for non-battery hybridization
component costs include an EPA-sponsored FEV teardown of a 2013
Chevrolet Malibu ECO with eAssist for some BISG component costs,\235\
which were validated against a 2019 Dodge Ram eTorque system's publicly
available retail price,\236\ and the 2015 NAS report.\237\ Broadly, the
total BISG system cost, including the battery, fairly matches these
other cost estimates. NHTSA is not making any changes to hybrid vehicle
costs for this proposed rule, outside of transitioning to 2024$.
---------------------------------------------------------------------------
\235\ FEV, Inc., Light Duty Vehicle Technology Cost Analysis:
2013 Chevrolet Malibu ECO With eAssist BAS Technology Study, FEV
P311264, Contract No. EP-C-12-014, WA 1-9 (2014); EPA: Washington,
DC (2014), available at: https://www.regulations.gov/document/EPA-HQ-OAR-2015-0827-0342 (accessed: Sept. 10, 2025).
\236\ Colwell, K.C., The 2019 Ram 1500 eTorque Brings Some
Hybrid Tech, if Little Performance Gain, to Pickups, Car and Driver,
Last revised: Mar. 14, 2019, available at: https://www.caranddriver.com/reviews/a22815325/2019-ram-1500-etorque-hybrid-pickup-drive (accessed: Sept. 10, 2025).
\237\ 2015 NAS Report, at p. 305.
---------------------------------------------------------------------------
For the non-battery electrification component learning curves,
NHTSA uses cost information from Argonne's 2016 Assessment of Vehicle
Sizing, Energy Consumption, and Cost Through Large-Scale Simulation of
Advanced Vehicle Technologies report.\238\ The report provides
estimated cost projections from the 2010 lab year to the 2045 lab year
for individual vehicle components.\239\ NHTSA considers the component
costs used in EVs and determines the learning curve by evaluating the
year over year cost change for those components. Argonne published a
2020 and a 2022 version of the same report; however, those versions did
not include a discussion of the high- and low-cost estimates for the
same components.\240\ The learning estimates generated using the 2016
report align in the middle of the high and low cost estimates from the
Argonne reports, and therefore NHTSA continues to apply the learning
curve estimates based on the 2016 report. There are many sources that
NHTSA could have picked to develop learning
[[Page 56497]]
curves for non-battery electrification component costs; however, given
the uncertainty surrounding extrapolating costs out to MY 2050, NHTSA
believes these learning curves provide a reasonable estimate.
---------------------------------------------------------------------------
\238\ Moawad, A. et al., Assessment of Vehicle Sizing, Energy
Consumption and Cost Through Large Scale Simulation of Advanced
Vehicle Technologies, ANL/ESD-15/28 (2016), available at: https://doi.org/10.2172/1245199 (accessed: Sept. 10, 2025).
\239\ DOE's lab year equates to 5 years after a model year
(e.g., DOE's 2010 lab year equates to MY 2015). ANL/ESD-15/28 at
116.
\240\ Islam, E. et al., Energy Consumption and Cost Reduction of
Future Light-Duty Vehicles Through Advanced Vehicle Technologies: A
Modeling Simulation Study Through 2050, ANL/ESD-19/10, ANL (2020),
available at: https://publications.anl.gov/anlpubs/2020/08/161542.pdf (accessed: Sept. 10, 2025); Islam, E. et al., A
Comprehensive Simulation Study to Evaluate Future Vehicle Energy and
Cost Reduction Potential, ANL/ESD-22/6, Alexandria: VA (2022),
available at: https://publications.anl.gov/anlpubs/2023/11/179337.pdf (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
In summary, NHTSA calculates the total hybrid powertrain costs by
summing individual component costs, which ensures that all technologies
in a hybrid powertrain appropriately contribute to the total system
cost. NHTSA combines the costs associated with the ICE (if applicable)
and transmission, non-battery hybridization components like the
electric machine, and battery pack to create a full-system cost.
Chapter 3.3.5.4 of the Draft TSD presents the total costs for each
hybrid powertrain option, broken out by the components NHTSA discussed
throughout this section. In addition, the section discusses where to
find each of the component costs in the CAFE Model's various input
files.
4. Road Load Reduction Paths
No car or truck uses energy (whether gas or otherwise) 100 percent
efficiently when it is driven down the road. If the energy in a gallon
of gas is thought of as a pie, the amount of energy ultimately
available from that gallon to propel a car or truck down the road would
only be a small slice. Instead, most of the energy is lost due to
thermal and frictional losses in the engine and drivetrain and drag
from ancillary systems (e.g., the air conditioner, alternator
generator, or various pumps). The rest is lost to what engineers call
road loads. For the most part, road loads include wind resistance (or
aerodynamics), drag in the braking system, and rolling resistance from
the tires. At low speeds, aerodynamic losses are very small, but as
speeds increase these losses rapidly become dramatically higher than
any other road load. Drag from the brakes in most cars is practically
negligible. Tire rolling resistance losses can be significant: at low
speeds rolling resistance losses can be more than aerodynamic losses.
Whatever energy is left after these road loads is spent on accelerating
the vehicle anytime its speed increases. This is where reducing the
mass of a vehicle is important to efficiency because the amount of
energy to accelerate the vehicle is always directly proportional to a
vehicle's mass. All else being equal, reduce a car's mass and better
fuel economy is guaranteed. However, at freeway speeds, aerodynamics
plays a more dominant role in determining fuel economy than any other
road load or vehicle mass.
NHTSA includes three road load reducing technology paths in this
analysis: the Mass Reduction Path, Aerodynamic Improvements (AERO)
Path, and Low Rolling Resistance Tires (ROLL) Path. For all three
paths, NHTSA assigns analysis fleet technologies and identifies
adoption features based on the vehicle's body style. The light-duty
fleet body styles NHTSA includes in the analysis are convertible,
coupe, sedan, hatchback, wagon, SUV, pickup, minivan, and van. Figure
II-3 shows the light-duty fleet body styles used in the analysis.
[GRAPHIC] [TIFF OMITTED] TP05DE25.029
As expected, the road load forces described above operate
differently based on a vehicle's body style, and the technology
adoption features and effectiveness values reflect this. The following
sections discuss the three Road Load Reduction Paths.
5. Mass Reduction
MR is a relatively cost-effective means of improving fuel economy,
and vehicle manufacturers are expected to apply
[[Page 56498]]
various MR technologies to meet fuel economy standards. Vehicle
manufacturers can reduce vehicle mass through several different
techniques, such as modifying and optimizing vehicle component and
system designs, part consolidation, and adopting materials that are
conducive to MR (e.g., advanced high strength steel (AHSS), aluminum,
magnesium, and plastics, including carbon fiber reinforced plastics).
For this analysis, NHTSA considers five levels of MR technology
(MR1-MR5) that include increasing amounts of advanced materials and MR
techniques applied to the vehicle's glider.\241\ The subsystems that
may make up a vehicle glider include the vehicle body, chassis,
interior, steering, electrical accessory, brake, and wheels systems.
NHTSA accounts for mass changes associated with powertrain changes
separately.\242\ The agency's estimates of how manufacturers could
reach each level of MR technology, and a discussion of advanced
materials and MR techniques can be found in Chapter 3.4 of the Draft
TSD.
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\241\ Note that in the previous analysis associated with the MYs
2024-2026 final rule, there was a sixth level of mass reduction
available as a pathway to compliance. For this analysis, this
pathway was removed because it relied on extensive use of carbon
fiber composite technology to an extent that is only found in
purpose-built racing cars and a few hundred road legal sports cars
costing hundreds of thousands of dollars. Draft TSD Chapter 3.4
provides additional discussion on the decision to include five mass
reduction levels in this analysis.
\242\ Glider mass reduction can sometimes enable a smaller
engine while maintaining performance neutrality. Smaller engines
typically weigh less than bigger ones. NHTSA captures any changes in
the resultant fuel savings associated with powertrain mass reduction
and downsizing via the Autonomie simulation. Autonomie calculates a
hypothetical vehicle's theoretical fuel mileage using a mass
reduction to the vehicle curb weight equal to the sum of mass
savings to the glider plus the mass savings associated with the
downsized powertrain.
---------------------------------------------------------------------------
The MR5 technology represents a high level of MR and requires a
blend of aluminum and carbon fiber components. Achieving MR5 with
aluminum exclusively is unlikely to be achievable by manufacturers
during the rulemaking timeframe. While aluminum technology can be a
potent MR pathway, it has its limitations. First, aluminum does not
have a fatigue endurance limit. That is, with aluminum components there
is always some combination of stress and cycles when failure occurs.
Automotive design engineering teams will dimension highly stressed
cross sections to provide an acceptable number of cycles to failure.
But this often comes at mass savings levels that fall short of what
would be expected purely based on density specific strength and
stiffness properties for aluminum.
Looking at real data, the mostly aluminum (cab and bed are made
from aluminum) 2021 Ford F150 achieves less than a 14-percent MR
compared to its 2014 all-steel predecessor.\243\ This is an especially
pertinent comparison because both vehicles have the same footprint
within a 2-percent margin and presumably were engineered to similar
duty cycles given that they both came from the same manufacturer. Per
the agency's regression analysis, the Ford F-150 achieves MR3. As
mentioned in the Draft TSD Chapter 3.4, a body in white structure made
almost entirely from aluminum is roughly required to get to MR4. It may
be possible to achieve MR5 without the use of carbon fiber, but the
resultant vehicle would not achieve performance parity with customer
expectations in terms of crash safety, noise and vibration levels, and
interior content. The discontinued Lotus Elise is an example of an
aluminum and fiberglass car that achieved MR5 but represents an
extremely niche vehicle application that is unlikely to translate to
mainstream, high-volume models. Therefore, it is entirely reasonable to
assume that carbon fiber ``hang on'' panels and closures would be
necessary to achieve MR5 at performance parity.
---------------------------------------------------------------------------
\243\ Ford, 2021 F-150 Technical Specifications, available at:
https://www.fromtheroad.ford.com/content/dam/fordmediasite/us/en/library/2021/specs/2021-F-150-Technical-Specs.pdf (accessed: Sept.
10, 2025); Ford, 2014 F-150 Technical Specifications, available at:
https://www.edmunds.com/ford/f-150/2014/features-specs/ (accessed:
Sept. 10, 2025).
---------------------------------------------------------------------------
In past rules, commenters have noted that the NAS study relies on
very little application of carbon fiber technology to achieve their
highest level of MR technology. NHTSA notes that the NAS study espouses
a maximum level of MR of approximately 14.5 percent using composites
(e.g., fiberglass) and carbon fiber technology only in closures
structures (e.g., doors, hoods, and decklids) and hang-on panels (e.g.,
fenders). This is the ``alternative scenario 2'' in the NAS study and
is a similar light-weighting technology application strategy to what
the analysis roughly associates with MR5, but MR5 requires a 20-percent
MR. In this scenario, NHTSA is allotting more MR potential for the same
carbon fiber technology application than the NAS study does.
NHTSA assigns MR levels to vehicles in the analysis fleet by using
regression analyses that consider a vehicle's body design \244\ and
body style, in addition to several vehicle design parameters, like
footprint, power, bed length (for pickup trucks), and battery pack size
(if applicable), among other factors. NHTSA has been improving on the
light-duty regression analysis since the 2016 Draft Technical
Assessment Report (TAR) and continues to find that it reasonably
estimates MR technology levels of vehicles in the analysis fleet.
Chapter 3.4 of the Draft TSD contains a full description of the
regression analyses used for the analysis fleet and examples of results
of the regression analysis for select vehicles.
---------------------------------------------------------------------------
\244\ The body design categories NHTSA uses are 3-box and 2-box
pickup trucks. A 3-box has a box in the middle for the passenger
compartment, a box in the front for the engine and a box in the rear
for the luggage compartment. A 2-box has a box in front for the
engine and then the passenger and luggage box are combined into a
single box.
---------------------------------------------------------------------------
There are several ways NHTSA ensures that the CAFE Model considers
MR technologies in the way that manufacturers might apply them in the
real world. Given the degree of commonality among the vehicle models
built on a single platform, manufacturers do not have complete freedom
to apply unique technologies to each vehicle that shares the same
platform. While some technologies (e.g., low rolling resistance tires)
are very nearly ``bolt-on'' technologies, others involve substantial
changes to the structure and design of the vehicle and therefore often
necessarily affect all vehicle models that share that platform. In most
cases, MR technologies are applied to platform level components and
therefore the same design and components are used on all vehicle models
that share the platform. Each vehicle in the analysis fleet is
associated with a specific platform family. A platform ``leader'' in
the analysis fleet is a vehicle variant of a given platform that has
the highest level of MR technology in the analysis fleet. As the Model
applies technologies, it ``levels up'' all variants on a platform to
the highest level of MR technology on the platform. For example, if a
platform leader is already at MR3 in MY 2024, and a ``follower'' starts
at MR0 in MY 2024, the follower will get MR3 at its next redesign
(unless the leader is redesigned again before that time, and further
increases the MR level associated with that platform, then the follower
would receive the new MR level).
In addition to leader-follower logic for vehicles that share the
same platform, NHTSA also restricts MR5 technology to platforms that
represent 80,000 vehicles or fewer. The CAFE Model does not apply MR5
technology to platforms representing high-volume sales, like a
Chevrolet Traverse, for example, where hundreds of thousands of units
are sold
[[Page 56499]]
per year. NHTSA uses the combination of the leader-follower logic and
80,000-unit threshold to make the simulation of MR technologies more
realistic. This is because NHTSA assumes that MR5 would require carbon
fiber technology.\245\ There is high global demand from a variety of
industries for a limited supply of carbon fibers; specifically,
aerospace, military/defense, and industrial applications demand most of
the carbon fiber currently produced. Today, only about 10 percent of
the global dry carbon fiber supply is allocated to the automotive
industry, limiting the global supply base to supporting approximately
70,000 vehicles.\246\ In addition, the production process for carbon
fiber components is significantly different than for traditional
vehicle materials. NHTSA uses this adoption feature as a proxy for
stranded capital (i.e., when manufacturers amortize research,
development, and tooling expenses over many years) from leaving the
traditional processes and to represent the significant paradigm change
to tooling and equipment that would be required to support molding
carbon fiber panels. There are no other adoption features for MR in the
analysis.
---------------------------------------------------------------------------
\245\ See the Final TSD for CAFE standards for MYs 2024-2026 and
Chapter 3.4 of the Draft TSD accompanying this rulemaking for more
information about carbon fiber.
\246\ Sloan, J., Carbon Fiber Suppliers Gear Up for Next
Generation Growth, Last revised: Feb. 11, 2020, available at:
https://www.compositesworld.com/articles/carbon-fiber-suppliers-gear-up-for-next-gen-growth (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
In the Autonomie simulations, MR technology is simulated as a
percentage of mass removed from the specific subsystems that make up
the glider. The mass of subsystems that make up the vehicle's glider is
different for every technology class, based on glider weight data from
the A2Mac1 database \247\ and two NHTSA-sponsored studies that examined
light-weighting a passenger car and light truck. NHTSA accounts for MR
from powertrain improvements separately from glider MR. Autonomie
considers several components for powertrain MR, including engine
downsizing and fuel tank, exhaust systems, and cooling system light-
weighting.\248\ With regard to the light-duty vehicle fleet, the 2015
NAS report suggested an engine downsizing opportunity exists when the
glider mass is light-weighted by at least 10 percent. The 2015 NAS
report also suggested that 10-percent light-weighting of the glider
mass alone would boost fuel economy by 3 percent and any engine
downsizing following the 10-percent glider MR would provide an
additional 3-percent increase in fuel economy.\249\ The NHTSA light-
weighting studies applied engine downsizing (for some vehicle types but
not all) when the glider weight was reduced by 10 percent. Accordingly,
the analysis limits engine resizing to several specific incremental
technology steps; important for this discussion, engines in the
analysis are resized only when MR of 10 percent or greater is applied
to the glider mass or when one powertrain architecture replaces another
architecture. A summary of how the different MR technology levels
improve fuel consumption is shown in Draft TSD Chapter 3.4.4.
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\247\ A2Mac1: Automotive Benchmarking, available at: https://portal.a2mac1.com/ (accessed: Sept. 10, 2025). The A2Mac1 database
tool is widely used by industry and academia to determine the bill
of materials (a list of the raw materials, sub-assemblies, parts,
and quantities needed to manufacture an end-product) and mass of
each component in the vehicle system.
\248\ Though NHTSA does not account for mass reduction in
transmissions, NHTSA does reflect design improvements as part of
mass reduction when going from, for example, an older AT6 to a newer
AT8 that has similar if not lower mass.
\249\ 2015 NAS Report
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NHTSA's MR costs are based on two NHTSA light-weighting studies--
the teardown of a MY 2011 Honda Accord and a MY 2014 Chevrolet
Silverado pickup truck \250\--and the 2021 NAS report.\251\ The costs
for MR1-MR4 rely on the light-weighting studies, while the cost of MR5
references the carbon fiber costs provided in the 2021 NAS report.
Unlike the other technologies in this analysis that have a fixed
technology cost (for example, it costs about $3,000 to add an AT10L3
transmission to a light-duty SUV or pickup truck in MY 2027), the cost
of MR is calculated on a dollar per pound saved basis based on a
vehicle's starting weight. Put another way, for a given vehicle
platform, an initial mass is assigned using the aforementioned
regression model. The amount of mass to reach each of the five levels
of MR is calculated by the CAFE Model based on this number and then
multiplied by the dollar per pound saved figure for each of the five MR
levels. The dollar per pound saved figure increases at a nearly linear
rate going from MR0 to MR4. However, this figure increases steeply
going from MR4 to MR5 because the technology cost to realize the
associated mass savings level is an order of magnitude larger. This
dramatic increase is reflected by all three studies NHTSA relied on for
MR costing, and NHTSA believes that it reasonably represents what
manufacturers would expect to pay for using increasing amounts of
carbon fiber on their vehicles.
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\250\ Singh, H., Mass Reduction for Light-Duty Vehicles for
Model Years 2017-2025, Final Report, DOT HS 811 666 (2012),
available at: https://static.nhtsa.gov/nhtsa/downloads/CAFE/2017-25_Final/811666.pdf (accessed: Sept. 10, 2025); Singh, H. et al.,
Mass Reduction for Light-Duty Vehicles for Model Years 2017-2025,
Report No. DOT HS 812 487, NHTSA: Washington, DC (2018), available
at: https://downloads.regulations.gov/NHTSA-2021-0053-0011/attachment_5.pdf (accessed: Sept. 10, 2025).
\251\ This analysis applied the cost estimates per pound derived
from passenger cars to all passenger car segments, and the cost
estimates per pound derived from full-size pickup trucks to all
light-duty truck and SUV segments. The cost estimates per pound for
carbon fiber (MR5) were the same for all segments.
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Like past analyses, NHTSA considers several options for MR
technology costs. The agency has determined that the NHTSA-sponsored
studies accounted for significant factors the agency believes are
important to include in this analysis, including materials
considerations (material type and gauge, while considering real-world
constraints such as manufacturing and assembly methods and complexity),
safety (including the Insurance Institute for Highway Safety's (IIHS)
small overlap tests), and functional performance (including towing and
payload capacity and noise, vibration, and harshness (NVH)), and
gradeability in the pickup truck study.\252\
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\252\ Draft TSD Chapter 7.3 has additional detail on this
analysis.
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First, NHTSA limits application of MR5 in the analysis to represent
the limited volume of available dry carbon fiber and the resultant high
costs of the raw materials. This constraint is described above and in
more detail in Draft TSD Chapter 3. The CAFE Model assumes that there
is not enough carbon fiber readily available to support vehicle
platforms with more than 80,000 vehicles sold per year. NHTSA believes
this volume constraint does more to limit the application of MR5
technology in the analysis than does its high price. Even if a lower
price is used, the dominant constraint would still be volume. Second,
NHTSA does not believe that a lower price would prove to be a
competitive pathway to compliance with exotic materials technology
compared to other less expensive technologies with higher
effectiveness. The MR5 effectiveness as applied to vehicles in this
analysis considers the total effect of reducing that level of mass from
the vehicle, from the vehicle's starting MR level. As an example, while
the cost of going from MR0 or MR1 to MR5 may be slightly overstated
(but still limited in total application by the volume cap), the cost of
going from MR4 to MR5 is not. NHTSA continues to consider the balance
of carbon fiber and other
[[Page 56500]]
advanced materials for MR to meet MR5 levels and may update that value
in future rules.
6. Aerodynamic Improvements
The energy required for a vehicle to overcome wind resistance, or
more formally what is known as aerodynamic drag, ranges from minimal
drag at low speeds to extremely significant drag at highway
speeds.\253\ Reducing a vehicle's aerodynamic drag is, therefore, an
effective way to reduce the vehicle's fuel consumption. Aerodynamic
drag is characterized as proportional to the frontal area (A) of the
vehicle and a factor called the coefficient of drag (Cd).
The coefficient of drag (Cd) is a dimensionless value that
represents a moving object's resistance against air, which depends on
the shape of the object and flow conditions. The frontal area (A) is
the cross-sectional area of the vehicle as viewed from the front.
Aerodynamic drag of a vehicle is often expressed as the product of the
two values, CdA, which is also known as the drag area of a
vehicle. The force imposed by aerodynamic drag increases with the
square of vehicle velocity, accounting for the largest contribution to
road loads at higher speeds.\254\
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\253\ 2015 NAS Report, at p. 207.
\254\ See, e.g., Pannone, G., Technical Analysis of Vehicle Load
Reduction Potential for Advanced Clean Cars, Final Report (2015),
available at: https://ww2.arb.ca.gov/sites/default/files/2020-04/13_313_ac.pdf (accessed: Sept. 10, 2025). The graph on p. 20 shows
how the aerodynamic force becomes the dominant load force at higher
speeds.
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Manufacturers can reduce aerodynamic drag either by reducing the
drag coefficient or reducing vehicle frontal area, which can be
achieved by passive or active aerodynamic technologies. Passive
aerodynamics refers to aerodynamic attributes that are inherent to the
shape and size of the vehicle. Passive attributes can include the shape
of the hood, the angle of the windscreen, or even overall vehicle ride
height. Active aerodynamics refers to technologies that variably deploy
in response to driving conditions. Examples of active aerodynamic
technologies are grille shutters, active air dams, and active ride
height adjustment. Manufacturers may employ both passive and active
aerodynamic technologies to improve aerodynamic drag values.
There are four levels of aerodynamic improvement (over AERO0, the
first level) available in the analysis (AERO5, AERO10, AERO15, AERO20).
Refer to Figure II-3 for a visual of each body style considered in the
analysis. Each AERO level is associated with 5-, 10-, 15-, or 20-
percent aerodynamic drag improvement values over a reference value
computed for each vehicle body style. These levels, or bins,
respectively correspond to the level of aerodynamic drag reduction over
the reference value (e.g., ``AERO5'' corresponds to the 5-percent
aerodynamic drag improvement value over the reference value). While
each level of aerodynamic drag improvement is technology agnostic--that
is, manufacturers can ultimately choose how to reach each level by
using whatever technologies work for the vehicle--NHTSA estimates a
pathway to each technology level based on data from a National Research
Council of Canada-sponsored wind tunnel testing program. The program
included an extensive review of production vehicles utilizing
aerodynamic drag improvement technologies and of industry
comments.\255\ NHTSA's example pathways for achieving each level of
aerodynamic drag improvement are discussed in Chapter 3.5 of the Draft
TSD.
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\255\ Larose, G. et al., Evaluation of the Aerodynamics of Drag
Reduction Technologies for Light-Duty Vehicles: A Comprehensive Wind
Tunnel Study, SAE International Journal of Passenger Cars--
Mechanical Systems, Vol. 9(2): pp. 772-84 (2016), available at:
https://doi.org/10.4271/2016-01-1613 (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
NHTSA assigns aerodynamic drag reduction technology levels in the
analysis fleets based on vehicle body styles.\256\ NHTSA computes an
average coefficient of drag based on vehicle body styles, using
coefficient of drag data from the MY 2015 analysis fleet. Different
body styles offer different utility and have varying levels of form
drag. This analysis considers both frontal area and body style as
unchangeable utility factors affecting aerodynamic forces; therefore,
the analysis assumes all reductions in aerodynamic drag forces come
from improvements in the drag coefficient. Then NHTSA uses drag
coefficients for each vehicle in the analysis fleet to establish an
initial aerodynamic technology level for each vehicle. NHTSA compares
the vehicle's drag coefficient to the calculated drag coefficient by
body style mentioned above to assign initial levels of aerodynamic drag
reduction technology to vehicles in the analysis fleets. NHTSA can find
most vehicles' drag coefficients in manufacturers' publicly available
specification sheets; however, in cases where this information cannot
be found, NHTSA uses engineering judgment to assign the initial
technology level.
---------------------------------------------------------------------------
\256\ These assignments do not necessarily match the body styles
that manufacturers use for marketing purposes. Instead, NHTSA makes
these assignments based on engineering judgment and the categories
used in the modeling, considering how this affects a vehicle's AERO
and vehicle technology class assignments.
---------------------------------------------------------------------------
NHTSA looks at vehicle body style and vehicle HP to determine which
types of vehicles can adopt different aerodynamic technology levels.
For this analysis, AERO15 and AERO20 cannot be applied to minivans, and
AERO20 cannot be applied to convertibles, pickup trucks, and wagons.
NHTSA does not allow application of AERO15 and AERO20 technology to
vehicles with more than 780 HP. This threshold is informed by
information about performance of ICE vehicles. NHTSA recognizes that
manufacturers tune aerodynamic features on these vehicles to provide
desirable downforce at high speeds and to provide sufficient cooling
for the powertrain, rather than reducing drag, resulting in middling
drag coefficients despite advanced aerodynamic features. Therefore,
manufacturers may have limited ability to improve aerodynamic drag
coefficients for high performance ICE vehicles without reducing HP.
This threshold for performance vehicles only limits the application of
aerodynamic technologies on 2,518 units of sales volume in the analysis
fleet.\257\
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\257\ See the Market Data Input File.
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The aerodynamic technology effectiveness values that show the
potential fuel consumption improvement from AERO0 technology are found
and discussed in Chapter 3.5.4 of the Draft TSD. For example, the
AERO20 values represent the range of potential FCIVs that could be
achieved through the replacement of AERO0 technology with AERO20
technology for every technology key that is not restricted from using
AERO20. NHTSA uses the change in fuel consumption values between entire
technology keys and not the individual technology effectiveness values.
Using the change between whole technology keys captures the
complementary or non-complementary interactions among technologies.
NHTSA has carried forward the established AERO technology costs
previously used in the 2020 final rule, the MYs 2024-2026 standards
analysis,\258\ and the 2024 rulemaking and has updated those costs to
the dollar-year used in this analysis. For light-duty AERO
improvements, the cost to achieve AERO5 is relatively low, as
manufacturers can make most of the improvements through body styling
changes. The cost to achieve AERO10 is higher than AERO5, due to the
addition
[[Page 56501]]
of several passive aerodynamic technologies, and consecutively the cost
to achieve AERO15 and AERO20 is much higher than AERO10 due to use of
both passive and active aerodynamic technologies. The cost estimates
are based on CBI submitted by the automotive industry in advance of the
2018 CAFE NPRM and on the agency's assessment of manufacturing costs
for specific aerodynamic technologies. The 2018 FRIA contains
discussion of the cost estimates.\259\ NHTSA has not received
additional comments in previous rulemakings from stakeholders regarding
the AERO costs since they were established in the 2018 FRIA during the
MYs 2024-2026 standards analysis and has continued to use the
established costs for this analysis. Draft TSD Chapter 3.5 contains
additional discussion of aerodynamic improvement technology costs, and
costs for all technology classes across all model years are in the CAFE
Model's Technologies Input File.
---------------------------------------------------------------------------
\258\ Note the FRIA accompanying the 2020 final rule, Chapter
VI.C.5.e.
\259\ Note the PRIA accompanying the 2018 NPRM, Chapter
6.3.10.1.2.1.2 for a discussion of these cost estimates.
---------------------------------------------------------------------------
7. Low Rolling Resistance Tires
Tire rolling resistance burns additional fuel when driving. As a
car or truck tire rolls, at the point the tread touches the pavement,
the tire flattens out to create what tire engineers call the contact
patch. The rubber in the contact patch deforms to mold to the tiny
peaks and valleys of the pavement. The interlock between the rubber and
these tiny peaks and valleys creates grip. Every time the contact patch
leaves the road surface as the tire rotates, it must recover to its
original shape, and then as the tire goes all the way around, it must
create a new contact patch that molds to a new piece of road surface.
However, this molding and repeated re-molding action takes energy. Just
like stretching a rubber band requires work, so does deforming the
rubber and the tire to form the contact patch. When thinking about the
efficiency of driving a car down the road, this means that not all the
energy produced by a vehicle's engine can go into propelling the
vehicle forward. Instead, some small, but appreciable, amount goes into
deforming the tire and creating the contact patch repeatedly. This also
explains why tires with low pressure have higher rolling resistance
than properly inflated tires. When the tire pressure is low, the tire
deforms more to create the contact patch, which is the same as
stretching the rubber farther in the analogy above. Larger deformations
consume even more energy, which results in worse fuel economy. Low
rolling resistance tires have characteristics that reduce frictional
losses associated with the energy dissipated mainly in the deformation
of the tires under load, thereby improving fuel economy.
NHTSA uses three levels of low rolling resistance tire technology
for the light-duty analysis. Each level of low rolling resistance tire
technology reduces rolling resistance by 10 percent from an industry-
average rolling resistance coefficient (RRC) value of 0.009.\260\ RRC
data from a NHTSA-sponsored study shows that similar vehicles across
the light-duty vehicle categories have been able to achieve similar RRC
improvements. Chapter 3.6 of the Draft TSD presents more information on
this comparison. Draft TSD Chapter 3.6.1 shows the light-duty low
rolling resistance technology options and their associated RRC.
---------------------------------------------------------------------------
\260\ See Technical Analysis of Vehicle Load Reduction by
CONTROLTEC for California Air Resources Board (Apr. 29, 2015). NHTSA
determined the industry-average baseline RRC using a CONTROLTEC
study prepared for the CARB, in addition to considering CBI
submitted by vehicle manufacturers prior to the 2018 light-duty NPRM
analysis. The RRC values used in this study were a combination of
manufacturer information, estimates from coast-down tests for some
vehicles, and application of tire RRC values across other vehicles
on the same platform. The average RRC from surveying 1,358 vehicle
models by the CONTROLTEC study is 0.009. The CONTROLTEC study
compared the findings of their survey with values provided by the
U.S. Tire Manufacturers Association for original equipment tires.
The average RRC from the data provided by the U.S. Tire
Manufacturers Association is 0.0092, compared to the average of
0.009 from CONTROLTEC.
---------------------------------------------------------------------------
NHTSA has been using ROLL10 and ROLL20 in the last several CAFE
Model analyses. NHTSA has only recently included ROLL30 due to lack of
widespread commercial adoption of ROLL30 tires in the fleet within the
rulemaking timeframe, despite commenters' argument on availability of
the technology on current vehicle models and the possibility that there
would be additional tire improvements over the next decade.\261\ NHTSA
has received comments in previous CAFE rules that also reflect the
application of ROLL30 by OEMs, though they discourage considering the
technology due to high cost and possible wet traction reduction. With
increasing use of ROLL30 application by OEMs,\262\ and material
selection making it possible to design low rolling resistance
independent of tire wet grip (discussed in detail in Chapter 3.6 of the
Draft TSD), NHTSA considers ROLL30 as a viable future technology during
this rulemaking period. NHTSA believes that the tire industry is in the
process of moving automotive manufacturers towards higher levels of low
rolling resistance technology in the vehicle fleet. NHTSA believes
that, at this time, the emerging tire technologies that would achieve
30-percent improvement in rolling resistance, like changing tire
profile, stiffening tire walls, employing novel synthetic rubber
compounds, or adopting improved tires along with active chassis
control, among other technologies, may be available for commercial
adoption in the fleet during this rulemaking timeframe.
---------------------------------------------------------------------------
\261\ See The Safer Affordable Fuel-Efficient (SAFE) Vehicles
Rule for Model Years 2021-2026 Passenger Cars and Light Trucks,
Docket No. NHTSA-2018-0067-11985.
\262\ See Evaluation of Rolling Resistance and Wet Grip
Performance of OEM Stock Tires Obtained From NCAP Crash Tested
Vehicles Phase One and Two, Memo to Docket--Rolling Resistance Phase
One and Two; Technical Analysis of Vehicle Load Reduction by
CONTROLTEC for California Air Resources Board, Docket No. NHTSA-
2021-0053-0010 (Apr. 29, 2015); Evans, L. R. et al., NHTSA Tire Fuel
Efficiency Consumer Information Program Development: Phase 2--
Effects of Tire Rolling Resistance Levels on Traction, Treadwear,
and Vehicle Fuel Economy, Report No. DOT HS 811 154, Docket No
NHTSA-2008-0121-0035 (2009).
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Assigning low rolling resistance tire technology to the analysis
fleet is difficult because RRC data are not part of tire manufacturers'
publicly released specifications, and because vehicle manufacturers
often offer multiple wheel and tire packages for the same nameplate.
Consistent with previous rules, NHTSA uses a combination of CBI, data
from a NHTSA-sponsored ROLL study, and assumptions about parts-sharing
to assign tire technology in the analysis fleet. A slight majority of
vehicles (54.9 percent) in the analysis fleet do not use any ROLL
improvement technology, while 13.0 percent of vehicles use ROLL10, and
28.4 percent of vehicles use ROLL20. Only 3.7 percent of vehicles in
the analysis fleet use ROLL30.
The CAFE Model can apply ROLL technology at either a vehicle
refresh or redesign. NHTSA recognizes that some vehicle manufacturers
prefer to use higher RRC tires on some performance cars and SUVs. Since
many performance cars have higher torque, to avoid tire slip, OEMs
prefer to use higher RRC tires for these vehicles. Like the aerodynamic
technology improvements discussed above, NHTSA applies ROLL technology
adoption features based on vehicle HP and body style. All vehicles in
the light-duty fleet that have below 350 hp can adopt all levels of
ROLL technology. Draft TSD Chapter 3.6.3 shows that all light-duty
vehicles under 350 hp can adopt ROLL technology, and as vehicle HP
increases, fewer vehicles can adopt the highest levels of ROLL
[[Page 56502]]
technology. Draft TSD Chapter 3.6 shows how effective the different
levels of ROLL technology are at improving vehicle fuel consumption.
DMCs and learning rates for ROLL10 and ROLL20 are the same as prior
analyses \263\ but are updated to the dollar-year used in this
analysis. In the absence of ROLL30 DMCs from tire manufacturers,
vehicle manufacturers, or studies, NHTSA extrapolated the DMCs from
ROLL10 and ROLL20 to develop the DMC for ROLL30. NHTSA believes that
the added cost of each tire technology accurately represents the price
difference that would be experienced by the different fleets. ROLL
technology costs are discussed in detail in Chapter 3.6 of the Draft
TSD, and ROLL technology costs for all vehicle technology classes can
be found in the CAFE Model's Technologies Input File.
---------------------------------------------------------------------------
\263\ See Transportation Research Board, Tires and Passenger
Vehicle Fuel Economy: Informing Consumers, Improving Performance,
Special Report 286 (2006), available at: https://nap.nationalacademies.org/catalog/11620/tires-and-passenger-vehicle-fuel-economy-informing-consumers-improving-performance (accessed:
Sept. 10, 2025); NHTSA, Corporate Average Fuel Economy for MY 2011
Passenger Cars and Light Trucks, Final Regulatory Impact Analysis
(2009), available at: https://www.nhtsa.gov/sites/nhtsa.gov/files/cafe_final_rule_my2011_fria.pdf (accessed: Sept. 10, 2025); EPA and
NHTSA, Joint Technical Support Document: Rulemaking to Establish
Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate
Average Fuel Economy Standards 3-77 (2010), available at: https://www.federalregister.gov/documents/2010/05/07/2010-8159/light-duty-vehicle-greenhouse-gas-emission-standards-and-corporate-average-fuel-economy-standards (accessed: Sept. 10, 2025); EPA and NHTSA,
Draft Technical Assessment Report: Midterm Evaluation of Light-Duty
Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel
Economy Standards for Model Years 2022-2025 at 5-153 and 154, 5-419,
EPA-420-D-16-900 (July 2016), available at: https://www.nhtsa.gov/sites/nhtsa.gov/files/draft-tar-final.pdf (accessed: Sept. 10,
2025). In brief, the estimates for ROLL10 are based on the
incremental $5 value for four tires and a spare tire in the NAS/NRC
Special Report and confidential manufacturer comments that provided
a wide range of cost estimates. The estimates for ROLL20 are based
on incremental interpolated ROLL10 costs for four tires (as NHTSA
and EPA believed that ROLL20 technology would not be used for the
spare tire) and are seen to be fairly consistent with CBI
suggestions by tire suppliers.
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8. Simulating Air-Conditioning Efficiency and Off-Cycle Technologies
For this proposal, NHTSA's analysis of the regulatory alternatives
removes FCIVs) for AC efficiency and OC technologies starting in MY
2028. NHTSA is making this change to align with its conclusion that
technology specific incentives should not be considered when running
the compliance simulation that informs its consideration of maximum
feasible standards. Instead, NHTSA's analysis for MY 2028 and beyond is
based on simulating compliance based on 2-cycle testing. To simulate
compliance pathways using the CAFE Model without AC efficiency and OC
technologies, NHTSA sets the maximum allowable FCIV to 0g carbon
dioxide (CO2)/mi in the Scenarios Input File. Section VI
contains a more detailed discussion of how AC efficiency and OC
benefits affect compliance with NHTSA's fuel economy standards.\264\
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\264\ Compliance with NHTSA's fuel economy standards is
determined in accordance with EPA's calculation procedures at 40 CFR
600.512.
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Under EPA's current procedures for determining fleet average fuel
economy for CAFE compliance, manufacturers may generate FCIVs, which
improve their fuel economy values. Manufacturers may generate FCIVs for
the addition of OC and AC efficiency technologies, which can provide
fuel economy benefits in real-world vehicle operation that are not
fully captured using the 2-cycle test procedures (e.g., FTP and HFET)
used to measure fuel economy.\265\ Starting in MY 2027, only
automobiles powered by ICEs are eligible to generate FCIVs, and the OC
FCIV program is currently being phased out between MYs 2031-2033, with
manufacturers no longer being able to generate OC FCIVs for MY 2033 and
beyond. OC technologies can include, but are not limited to, thermal
control technologies, high-efficiency alternators, and high-efficiency
exterior lighting. As an example, manufacturers can generate FCIVs for
the addition of thermal control technologies like active seat
ventilation and solar reflective surface coating, which help to
regulate the temperature within the vehicle's cabin--making it more
comfortable for the occupants and reducing the use of low-efficiency
heating, ventilation, and air-conditioning (HVAC) systems. AC
efficiency technologies are technologies that reduce the operation of
or the loads on the compressor, which pressurizes AC refrigerant. The
less the compressor operates or the more efficiently it operates, the
less load the compressor places on the engine or battery storage
system, resulting in better fuel efficiency. AC efficiency technologies
can include, but are not limited to, blower motor controls, internal
heat exchangers, and improved condensers/evaporators.
---------------------------------------------------------------------------
\265\ See 49 U.S.C 32904(c) (``The Administrator shall measure
fuel economy for each model and calculate average fuel economy for a
manufacturer under testing and calculation procedures prescribed by
the Administrator. . . . [T]he Administrator shall use the same
procedures for passenger automobiles the Administrator used for
model year 1975 (weighted 55 percent urban cycle and 45 percent
highway cycle), or procedures that give comparable results.'').
---------------------------------------------------------------------------
Since EPA first proposed allowing manufacturers to earn FCIVs for
AC efficiency and OC technologies, NHTSA has not modeled AC efficiency
and OC technologies in the CAFE Model like other vehicle technologies,
for several reasons. Each time NHTSA adds a technology option to the
CAFE Model's technology pathways, the agency increases the number of
Autonomie simulations by approximately a hundred thousand. This means
that adding just five AC efficiency and five OC technology options
would double the agency's Autonomie simulations to around 2 million
total simulations. Instead, for applicable model years, the CAFE Model
applies predetermined AC efficiency and OC benefits to each
manufacturer's fleet after the CAFE Model applies traditional
technology pathway options. The CAFE Model attempts to apply pathway
technologies and AC efficiency and OC technologies in a way that both
minimizes cost and allows the manufacturer to meet a given CAFE
standard without over-or under-complying. The predetermined benefits
that the CAFE Model applies for AC efficiency and OC technologies are
based on manufacturers' MY 2024 mid-model year CBI compliance reports.
NHTSA uses manufacturers' MY 2024 AC efficiency and OC FCIVs they
achieved via the ``menu'' as a starting point for each regulatory
class, then holds those values constant from MYs 2024-2031 for the No-
Action Alternative and through MY 2027 for action alternatives. Unlike
previous versions of this analysis, NHTSA does not extrapolate the MY
2024 values to future model years. Instead, the CAFE Model assumes that
FCIVs for MY 2027 will be the same as they were for MY 2024.
Manufacturers have been able to settle in on a level of AC efficiency
and OC technologies that maximize their return on investment (ROI);
therefore, NHTSA does not anticipate a significant increase in
manufacturers' AC efficiency and OC FCIVs between MYs 2024-2027 for any
regulatory category. Additional details about how NHTSA determines AC
efficiency and OC technology application rates are discussed Chapter
3.7 of the Draft TSD.
Because the CAFE Model applies AC efficiency and OC technology
benefits independent of the technology pathways, NHTSA must account for
the costs of those technologies independently, as well. NHTSA generates
costs for these technologies on a dollars per gram of CO2
per mile ($ per g/mi) basis, as AC efficiency and OC technology
benefits are applied in the
[[Page 56503]]
CAFE Model on a gram per mile basis (as in the regulations). NHTSA
updates the AC efficiency and OC technology costs by implementing an
updated calculation methodology and converting the DMCs to 2024
dollars. The AC efficiency costs are based on data from EPA's 2010 FRIA
and the 2010 and 2012 Joint NHTSA/EPA TSDs.266 267 268 NHTSA
has used data from EPA's 2016 Proposed Determination TSD \269\ to
develop the updated OC costs that were used for the 2022 final rule and
now this proposed rule.
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\266\ EPA, Final Rulemaking to Establish Light-Duty Vehicle
Greenhouse Gas Emission Standards and Corporate Average Fuel Economy
Standards Regulatory Impact Analysis for MYs 2012-2016, Last
revised: May 14, 2025, available at: https://www.epa.gov/regulations-emissions-vehicles-and-engines/final-rule-model-year-2012-2016-light-duty-vehicle (accessed: Sept. 10, 2025)
(hereinafter, ``Final Rulemaking MYs 2012-2016'').
\267\ Final Rulemaking MYs 2012-2016.
\268\ EPA, Joint Technical Support Document: Final Rulemaking
for 2017-2025 Light-Duty Vehicle Greenhouse Gas Emission Standards
and Corporate Average Fuel Economy Standards, EPA-420-R-12-901, EPA:
Washington, DC (2012) available at: https://www.nhtsa.gov/sites/nhtsa.gov/files/joint_final_tsd.pdf (accessed: Sept. 10, 2025).
\269\ EPA, Proposed Determination on the Appropriateness of the
Model Year 2022-2025 Light-Duty Vehicle Greenhouse Gas Emissions
Standards under the Midterm Evaluation: Technical Support Document,
EPA-420-R-16-020 (2016).
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For this rulemaking, NHTSA is removing FCIVs from its standard-
setting analysis starting with MY 2028, which is the first year in
which a removal of FCIVs could go into effect.\270\ NHTSA believes that
the FCIVs generated under the OC and AC efficiency programs are no
longer representative of real-world fuel savings. The values for adding
such technologies were estimated from emission-reduction assessments
performed on MY 2008 automobiles. As fuel economy has improved in the
model years since these assessments were performed, the FCIVs for
adding OC technologies have increasingly represented a larger
percentage improvement in putative fuel economy values. As a result,
the values for FCIVs have become less representative of real-world fuel
savings and have created market distortions that undermine EPCA's
purposes by incentivizing the addition of technology that does not
provide commensurate fuel savings in the real world. NHTSA seeks
comment on this determination. Additional details and assumptions used
for AC efficiency and OC costs are discussed in Chapter 3.7.2 of the
Draft TSD.
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\270\ 49 U.S.C. 32904(d).
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E. Consumer Responses to Manufacturer Compliance Strategies
The prior subsections of Section II have discussed how
manufacturers might respond to the proposed standards. While the
technology analysis outlined different compliance strategies available
to manufacturers, the costs and benefits that would accrue because of
the proposed standards are dependent on how consumers respond to
manufacturers' compliance decisions. The next few subsections describe
how the agency models how consumers may respond to changes in vehicle
prices and attributes caused by manufacturers' compliance decisions, as
simulated by the CAFE Model.
1. Consumer Responses to Manufacturer Compliance Strategies for 2027-
2031
a. Macroeconomic and Consumer Behavior Assumptions
Most of the economic effects simulated within the analysis are
influenced by macroeconomic conditions that are outside the agency's
influence. For example, fuel prices are determined mainly by global
petroleum supply and demand, yet they affect how much fuel efficiency-
improving technology U.S. manufacturers would apply to their vehicles,
how much more consumers would be willing to pay to purchase models
offering higher fuel economy, how much buyers would drive those
vehicles, and the value of each gallon of fuel saved from improved fuel
efficiency. Constructing these forecasts of the consequences of CAFE
standards requires robust projections of demographic and macroeconomic
variables that span the full timeframe of the analysis, including real
GDP, consumer confidence, U.S. population, and real disposable personal
income.
The analysis presented with the proposal employs fuel price
projections developed by EIA, an agency within DOE, which collects,
analyzes, and disseminates independent and impartial energy information
to promote sound policy-making and public understanding of energy. EIA
uses its National Energy Modeling System (NEMS) to produce its AEO,
which presents projections of future fuel prices (among many other
economic and energy-related variables), and these are the source of
some inputs to the agency's analysis. The agency's analysis for the
proposal uses AEO's 2025 Alternative Transportation Case projections of
U.S. population, GDP, disposable personal income, GDP deflator, and
fuel prices. NHTSA uses AEO's 2025 Alternative Transportation Case
because this case is intended to reflect recent policy directives and
therefore provides a more informed analysis of conditions that will
affect fuel prices than the reference case (which is tied, in part, to
Federal energy policies that are no longer in place), especially in the
near-term. The analysis also relies on S&P Global's forecasts of the
total number of U.S. households \271\ and the University of Michigan's
Consumer Sentiment Index from its fall 2024 U.S. Economic Forecast,
which EIA also uses to develop the projections it reports in its AEO.
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\271\ NHTSA sourced the data from IHS-Polk. S&P Global purchased
IHS Markit and rights to this data in 2022.
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These macroeconomic assumptions are important inputs to the
analysis, but they are also uncertain, particularly over the long
lifetimes of the vehicles affected by this proposed rule. To reflect
the effects of this uncertainty, the agency also uses AEO's Low Oil
Price and High Oil Price side cases to analyze the sensitivity of its
analysis to alternative fuel price projections. The purpose of the
sensitivity analysis, which is discussed in greater detail in Chapter 9
of the PRIA, is to measure the degree to which different assumptions
about fuel prices can change simulated outcomes. NHTSA similarly uses
low and high economic growth cases from S&P Global's March 2025
forecast as bounding cases for the macroeconomic variables in its
analysis.
The agency will consider updating these inputs if newer versions of
the data are available prior to conducting the analysis for the final
rule. NHTSA seeks comments on these data sources. If commenters feel
that there are better alternative sources of the same or similar data,
the agency requests commenters to identify their preferred data source
and explain why they believe it is more appropriate within the context
of this CAFE rulemaking.
The analysis presented for this proposed rulemaking uses a 2024
base year, consistent with the use of vehicle data for MY 2024, and
data for that year represents actual observations rather than estimates
to the extent possible. Chapter 4.1 of the Draft TSD discusses
macroeconomic forecasts and assumptions NHTSA uses in this analysis.
Another key assumption that permeates the agency's analysis is how
much consumers are willing to pay for improved fuel economy. The
payback period assumption also has important implications for other
regulatory analysis results, including the effect of standards on sales
and the use of new vehicles, as well as the number and use
[[Page 56504]]
of older, used vehicles. The agency has updated its review of the
academic literature on willingness to pay as part of its analysis of
this proposal, which is discussed in Draft TSD Chapter 4.21 and PRIA
Chapter 2.1.2. As noted in previous rulemakings, the range of estimates
presented in the literature is wide. Some of the studies conclude that
consumers value much of the potential savings in fuel costs from
driving higher mpg vehicles, while others conclude that consumers
significantly undervalue expected fuel savings. The more recent studies
suggest that consumers value somewhere between 24 and the full lifetime
value of undiscounted fuel savings, which is also supported by several
of the older studies.
Manufacturers have repeatedly informed the agency that they believe
that consumers only value between 2 to 3 years of fuel savings when
choosing among competing models to purchase,\272\ and the plurality of
consumers when surveyed about their payback preferences have stated
they are willing to pay for technology that repays the upfront cost
within 24 months.\273\ The agency also performed a retrospective
analysis using the CAFE Model with reference fleets created to support
prior rules. The agency modeled how the 2020 reference fleet (used for
the 2022 final rule), similarly projected forward, compared with the
2022 reference fleet (used in the 2024 final rule), and how the 2022
reference fleet (used for the 2024 final rule) projected forward with
different payback assumptions compared with the 2024 reference fleet
used in this NPRM. These simulations provided model predictions about
the technology penetration rates under different assumptions about the
length of the payback period and under different projections of future
fuel prices and technology costs. By comparing these to actual
penetration rates NHTSA could judge the Model's ability to predict
technology adoption under each payback assumption. The payback
assumption that most accurately predicted technology adoption is 36
months, followed by 30 months. Both longer and shorter payback periods
create a larger divergence.
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\272\ See, e.g., 87 FR 25710, 25856 (May 2, 2022).
\273\ Some survey data such as Consumer Reports shows consumers
with lower payback periods (around 24 months). However, the
methodology employed by surveys like Consumer Reports are less
rigorous than the revealed preferences data from the other sources,
which is why Circular A-4 directs the agencies to attempt to use
studies that rely on revealed preferences when feasible.
---------------------------------------------------------------------------
After weighing the results from the academic literature, previous
statements from manufacturers, and the agency's retrospective analysis,
NHTSA is using a 36-month payback assumption for the analysis of this
proposal. While this estimate represents a longer payback period
assumption than was applied in the analysis of the previous three CAFE
rules, the agency tentatively believes that the preponderance of the
evidence suggests that 36 months is appropriate. NHSTA seeks comments
on whether this represents an appropriate representation of consumer
willingness to pay higher upfront prices for future fuel savings.
Recognizing the consequences of the payback assumption in the agency's
regulatory analysis, NHTSA also includes sensitivity cases to examine
the impacts of longer and shorter payback periods in Chapter 9 of the
PRIA. These concepts are explored more thoroughly in Chapter 4.2.1.1 of
the Draft TSD and Chapter 2.1 of the PRIA.
b. Fleet Composition
The composition of the on-road fleet--and how it changes in
response to standards--determines many of the costs and benefits of the
proposed rule. For example, how much fuel is consumed depends on the
number and efficiency of new vehicles sold and how rapidly older, less
efficient, less safe vehicles are retired. Reducing the stringency of
the CAFE standards would lower the price of new vehicles compared to
the No-Action Alternative and would lead to a relative increase in
sales of newer, safer vehicles, which in turn would decrease the price
of used vehicles leading to the quicker retirement of the oldest, least
safe, and less fuel-efficient vehicles on the road.
The analysis accompanying the proposal dynamically simulates
changes in the vehicle fleet's size, composition, and usage as
manufacturers and consumers respond to regulatory alternatives, fuel
prices, and macroeconomic conditions. The analysis of fleet composition
is composed of two forces: how sales of new vehicles and their
integration into the existing fleet change in response to each
regulatory alternative, and how economic and regulatory factors
influence the retirement of used vehicles from the fleet (scrappage).
NHTSA models sales and scrappage independently.
CAFE standards have been rising every year for nearly two decades.
This constant increase in standards has been accompanied by a rise in
both the costs of new vehicles and the age of the on-road fleet. The
average selling price for new cars and light trucks rose nearly 50
percent between 2012 and 2024 and now approaches $50,000, while U.S.
households' average income increased only about half as much over that
same period. As the financial burden on households to purchase a new
vehicle has increased substantially, recent annual sales of new cars
and light trucks have been slightly lower than they were immediately
before and after the 2008 recession. Meanwhile, the total number of
cars and light trucks in use rose by about 30 million, with the entire
increase representing used vehicles, while their average age rose from
10.6 to 12.6 years.\274\
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\274\ Parekh, N., & Campau T., Average Age of Vehicles Hits New
Record in 2024, Last revised: May 22, 2024, available at: https://www.spglobal.com/mobility/en/research-analysis/average-age-vehicles-united-states-2024.html (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
Below are brief descriptions of how the agency models sales and
scrappage; for full explanations, readers should refer to Chapter 4.2.1
of the Draft TSD.
(1) Sales
By reducing the regulatory costs of complying with fuel economy
standards, the proposal would lead to an increase in new vehicle sales
relative to the No-Action Alternative. For the purposes of regulatory
evaluation, the relevant metric is the difference in the number of new
vehicles sold between the baseline and each alternative rather than the
absolute number of sales under any alternative. The agency's analysis
of the response of new vehicle sales to different stringencies of fuel
economy standards includes three components: a forecast of sales based
exclusively on macroeconomic factors, which is used to determine the
sales quantity for the No-Action Alternative; the assumed price
elasticity of new vehicle demand, which interacts with estimated price
increases under each alternative to create differences in sales
relative to the No-Action Alternative; and a fleet share model that
projects differences in the passenger and non-passenger automobile
fleet shares under each alternative.
The first component of the sales response model is the nominal
total new vehicle sales forecast, which is based on a small set of
macroeconomic inputs that together determine the size of the new
vehicle market in each future year under the baseline alternative. This
statistical model is intended to provide only an initial forecast of
light-duty vehicle sales; it does not incorporate the effect of prices
on sales and is not intended to be used for analysis of the response to
price changes in the new vehicle market. NHTSA's projection oscillates
in the early model years
[[Page 56505]]
before settling to follow a constant trend in the 2030s. This result is
generally consistent with the continued response to sales volatility in
the years following the coronavirus disease of 2019 (COVID-19) pandemic
and the supply chain challenges immediately thereafter. NHTSA
acknowledges that excluding the regulatory costs to comply with the
baseline standards has the potential to underestimate the effect of
prevailing conditions on vehicle sales; however, given that the
macroeconomic assumptions used in this analysis take into account the
effects of various regulatory policies and the fact that the relevant
metric is the differences created by alternative CAFE stringencies, the
agency feels that this approach provides a reasonable starting point.
NHTSA will continue to monitor changes in macroeconomic conditions and
their effects on new vehicle sales and will update its baseline
forecast for use in the final rule analysis as appropriate.
The agency's baseline sales forecast assumes that total new vehicle
sales are driven primarily by conditions in the U.S. economy that are
outside the influence of the automobile industry. Over time, new
vehicle sales have been cyclical--rising when prevailing economic
conditions are positive (periods of growth) and falling during periods
of economic contraction. While changes to vehicles' designs and prices
that occur as consequences of manufacturers' compliance with earlier
standards (and with regulations on vehicles' features other than fuel
economy) exert some influence on the volume of new vehicle sales, they
are far less influential than macroeconomic conditions. The effects of
compliance are not large enough to reverse broader cyclical trends in
sales; instead, they produce the marginal differences in sales among
regulatory alternatives that the agency's sales module is designed to
simulate. Increases in new models' prices caused by higher regulatory
costs reduce sales below the cyclical trend, and slow fleet turnover,
while decreases in prices have the opposite effect.
NHTSA is statutorily barred from considering the fuel economy of
dedicated automobiles (e.g., battery electric or hydrogen vehicles) and
therefore has removed dedicated automobiles from the sales forecast it
uses to analyze the proposed rule. NHTSA uses market penetration rates
from the AEO 2025 Alternative Transportation Case to estimate the
market share of the gasoline-powered fleet. The agency then applies
this market share to the total light-duty forecast produced by the
nominal forecast.\275\ An independent projection like the AEO 2025
Alternative Transportation Case is a reliable estimate of the future
market share for gasoline-powered vehicles.
---------------------------------------------------------------------------
\275\ NHTSA also considers other approaches, such as assuming
the full fleet in future model years would be composed of gasoline-
powered vehicles or holding the current market penetration rate for
dedicate automobiles constant. Draft TSD Chapter 4.2.1.2 provides
more discussion of the selected approach and alternatives
considered.
---------------------------------------------------------------------------
The second component of the sales response model captures how price
changes affect the number of vehicles sold. NHTSA estimates the change
in sales from its initial forecast during future years under each
regulatory alternative by applying an assumed price elasticity of new
vehicle demand to the percent difference in average price between the
regulatory alternatives and the No-Action Alternative. This price
change does not represent an increase or decrease from the previous
model year, but rather the percent difference in the average price of
new vehicles between the baseline and each regulatory alternative for
that particular model year. The average new vehicle price in the
baseline is defined as the observed price in 2024 (the last historical
data year before the simulation is run) plus the average regulatory
cost associated with the No-Action Alternative for each future model
year.\276\ The agency also subtracts any tax credits for which a PHEV
may qualify from those regulatory costs to simulate sales.\277\
---------------------------------------------------------------------------
\276\ The CAFE Model currently operates as if all costs incurred
by the manufacturer as a consequence of meeting regulatory
requirements, whether those costs are the cost of additional
technology applied to vehicles in order to improve fleetwide fuel
economy or civil penalties paid when fleets fail to achieve their
standard, are ``passed through'' to buyers of new vehicles in the
form of price increases.
\277\ For additional details about how NHTSA models tax credits,
see Section II.C.5b above.
---------------------------------------------------------------------------
Within the CAFE Model's logic, there is an implicit assumption that
new vehicle models within the same regulatory class (e.g., passenger
automobiles) are close substitutes for one another, including vehicles
with differing powertrains.\278\ NHTSA recognizes that different
vehicle attributes may alter the perceived value of vehicles. NHTSA
implements several guardrails to prevent the CAFE Model from adopting
technologies for fuel economy that could adversely affect the utility
of vehicles, such as maintaining performance neutrality, including
phase-in caps, and defining technology pathways by using engineering
judgement. The agency acknowledges that, even with these constraints,
it is possible that CAFE standards may influence attributes other than
price or fuel economy that are unaccounted for in the agency's sales
analysis.
---------------------------------------------------------------------------
\278\ The CAFE Model does not assign different preferences
between technologies, and outside the standard-setting restrictions,
the Model will apply technology on a cost-effectiveness basis.
Similarly, outside of the sales response to changes in regulatory
costs, consumers are assumed to be indifferent to specific
technology pathways and will demand the same vehicles despite any
changes in technological composition.
---------------------------------------------------------------------------
NHTSA has previously invested considerable resources in developing
a discrete choice model of the new automobile market that would (1)
enable the agency to incorporate the effect of additional vehicle
attributes on buyers' choices among competing models; (2) reflect
consumers' differing preferences for specific vehicle attributes; and
(3) provide the capability to simulate responses, such as strategic
pricing strategies by manufacturers intended to alter the mix of models
they sell and enable them to comply with new CAFE standards. However,
those efforts have not yet produced a satisfactory and operational
model.\279\ Instead, NHTSA accounts for the possibility of decreased
utility of vehicles because of CAFE standards outside of the sales
module.
---------------------------------------------------------------------------
\279\ NHTSA's experience partly reflects the fact that these
models are highly sensitive to their data inputs and estimation
procedures, and even versions that fit well when calibrated to data
from a single period--usually a cross section of vehicles and
shoppers or actual buyers--often produce unreliable forecasts for
future periods, which NHTSA's regulatory analyses invariably
require. This occurs because they are often unresponsive to relevant
shifts in economic conditions or consumer preferences, and also
because it is difficult to incorporate factors such as the
introduction of new model offerings--particularly those utilizing
advances in technology or vehicle design--or shifts in
manufacturers' pricing strategies into their representations of
choices and forecasts of future sales or market shares. For these
reasons, most vehicle choice models have been better suited for
analysis of the determinants of historical variation in sales
patterns than for forecasting future sales, volumes and market
shares of particular categories.
---------------------------------------------------------------------------
Because the price elasticity that is applied in the Model assumes
no perceived change in the quality of the product, and the vehicles
produced under different regulatory scenarios have inherently different
operating costs, the price metric must account for this difference. The
price change to which the elasticity is applied in this analysis
represents the residual price difference between the baseline and each
regulatory alternative after deducting the value of fuel savings over
the first 3 years of each model year's lifetime.
The price elasticity is also specified as an input, and for the
proposal, the agency assumed a value of -0.4, meaning that a 5-percent
increase in the average price of a new vehicle produces a 2-percent
decrease in total sales.
[[Page 56506]]
NHTSA has used this same elasticity in prior rulemakings. Estimates of
this parameter reported in published literature vary widely,\280\ and
NHTSA believes that its choice is a reasonable one within this range,
but NHTSA also presents sensitivity cases that explore higher and lower
elasticities in PRIA Chapter 9. Chapter 4.2.1.2 of the Draft TSD
further presents the evidence that NHTSA believes supports its
decision. The agency seeks comment on this sales elasticity
assumption--including whether NHTSA should consider applying separate
short-run and long-run elasticity assumptions in the analysis. If
commenters believe that an alternative assumption would be appropriate,
NHTSA requests that they provide specific references to estimates in
the econometric literature that would support such alternatives.
---------------------------------------------------------------------------
\280\ See Jacobsen, M. et al., The Effects of New-Vehicle Price
Changes on New- and Used-Vehicle Markets and Scrappage, EPA-420-R-
21-019 (2021), available at: https://cfpub.epa.gov/si/si_public_record_Report.cfm?Lab=OTAQ&dirEntryId=352754 (accessed:
Sept. 10, 2025) (reporting a range of estimates, with a value of
approximately -0.4 representing an upper bound of this range). NHTSA
selects this point estimate for the central case and explores
alternative values in the sensitivity analysis.
---------------------------------------------------------------------------
The third and final component of the sales model is the dynamic
fleet share module (DFS). This analysis uses the DFS developed during
the previous rulemaking. The baseline fleet share projection is derived
from the agency's own compliance data for the 2024 fleet and from the
2025 AEO projections for subsequent model years. These shares are
applied to the total industry sales derived in the first stage of the
total sales model to estimate sales volumes of car and light truck body
styles. NHTSA determines individual model sales using the following
sequence: (1) individual manufacturer shares of each regulatory class
(either passenger cars or light trucks) are multiplied by total
industry sales of vehicles in that regulatory class and then (2) each
vehicle within a manufacturer's volume of that regulatory class is
assigned the same percentage share of that manufacturer's sales as in
MY 2024. This assumes that consumer preferences for particular styles
of vehicles are determined in the aggregate (i.e., at the industry
level), but that manufacturers' sales shares of those body styles are
consistent with their MY 2024 sales. Within a given regulatory class,
NHTSA assumes a manufacturer's sales shares of individual models are
also constant over time.
This approach also implicitly assumes that manufacturers are
currently pricing individual vehicle models within market segments in a
way that maximizes their profit. Without more information about each
manufacturer's true cost of production, including its fixed and
variable components and its target profit margins for its individual
vehicle models, there is no basis to assume that strategic shifts
within a manufacturer's portfolio will occur in response to standards.
Similar to the second component of the sales module, the DFS
applies an elasticity to the change in price between each regulatory
alternative and the No-Action Alternative to determine the change in
fleet share from its baseline value. NHTSA uses the net regulatory cost
differential (costs minus fuel savings) in a logistic model to capture
the changes in fleet share between passenger cars and light trucks,
with a relative price coefficient of -0.000042. NHTSA selects this
methodology and price coefficient based on a review of academic
literature.\281\ When the total regulatory costs for passenger
automobiles of meeting standards minus the value of the resulting fuel
savings exceed that of non-passenger automobiles, the market share of
non-passenger automobiles will rise relative to passenger automobiles.
For example, a $100 net regulatory cost increase in passenger
automobiles relative to light trucks would produce around a 0.1-percent
shift in market share towards light trucks, assuming the latter
initially represent 60 percent of the fleet.
---------------------------------------------------------------------------
\281\ NHTSA describes this literature review and the calibrated
logit model in more detail in the accompanying docket memo
``Calibrated Estimates for Projecting Light-Duty Fleet Share in the
CAFE Model.''
---------------------------------------------------------------------------
As discussed in preamble Section VI, the agency proposes to modify
its regulatory definitions for vehicle classification starting with MY
2028. The agency takes account of this reclassification after it
simulates the aggregate sales and dynamic fleet share responses to
changes in vehicle prices. NHTSA assigns vehicles both an ``initial''
classification based on how they are classified under the current
regulations and a ``revised'' classification for how they would be
classified under the proposed regulations. The aggregate sales response
is calculated at the fleetwide level, so regulatory classification only
affects changes in sales insofar as a reclassified vehicle model incurs
a different regulatory cost to comply with the requirements of its new
regulatory class. For the dynamic fleet share model, the regulatory
costs are borne by a vehicle's ``initial'' classification, so an SUV
that is reclassified from the light truck fleet to the passenger car
fleet has its regulatory costs for the dynamic fleet share analysis
attributed to the light truck fleet throughout the analysis. This
method assumes that each individual model's sales shares within the
``initial'' regulatory class remain constant. This may cause the
counterintuitive effect of an increase in a vehicle's price, leading to
an increase in that vehicle's sales. NHTSA considered applying its
existing model to sales shares determined by the ``revised''
classification but decided against this due to the cross-elasticities
used in this analysis being estimated based on the current
classification system. NHTSA includes several sensitivity cases to
explore different approaches, as presented in PRIA Chapter 9. NHTSA
seeks comment on this approach and whether it is appropriate to apply
the dynamic fleet share's price coefficient to the ``revised''
regulatory classes, and if not, if there is an alternative elasticity
or methodology the agency could employ in its analysis.
(2) Scrappage
New and used vehicles can substitute for each other within broad
limits. When the price of a good increases, so does the demand for its
substitutes, causing the equilibrium price and quantity of substitutes
supplied to rise. Because the proposal would lower the price of new
vehicles, demand for used vehicles would decrease, causing the
equilibrium market price for used vehicles to decrease and
simultaneously increasing the rate at which used vehicles are retired.
Because used vehicles are not manufactured, their supply only can be
increased by keeping more of those that would otherwise be retired in
use longer, which corresponds to a reduction in their scrappage or
retirement rates. As older vehicles are used longer, the average age of
the fleet rises and the safety risk to all road users likewise
increases, because older vehicles are less safe than newer ones.
When new vehicles become more expensive, demand for used vehicles
increases. Because used vehicles are more valuable in such
circumstances, they are scrapped at a lower rate, and just as rising
new vehicle prices push some prospective buyers into the used vehicle
market, rising prices for used vehicles force some prospective buyers
to acquire even older vehicles or models with fewer desired attributes.
The effect of fuel economy standards on scrappage is partially
dependent on how consumers value future fuel savings; NHTSA assumes
consumers values only the first 36 months of fuel savings when making a
purchasing decision.
Many competing factors influence the decision to scrap a vehicle,
including the cost to maintain and operate it, the
[[Page 56507]]
household's demand for vehicle miles traveled (VMT), the cost of
alternative means of transportation, and the value that can be attained
through reselling or scrapping the vehicle for parts. In theory, a car
owner will decide to scrap a vehicle when the value of the vehicle
minus the cost to insure, register, maintain, and repair the vehicle is
less than its value as scrap material; in other words, when the owner
realizes more value from scrapping the vehicle than from continuing to
drive it or from selling it. Typically, the owner that scraps the
vehicle is not the original owner.
While scrappage decisions are made at the household level, NHTSA is
unaware of sufficiently detailed household data to capture scrappage at
that level. Instead, NHTSA uses aggregate data measures that capture
broader market trends. In addition, the aggregate results are
consistent with the rest of the CAFE Model, as the Model does not
attempt to project manufacturers' pricing strategies; the Model assumes
instead that all regulatory costs to make a particular vehicle
compliant are passed on to the purchaser who buys the vehicle.
The dominant source of scrappage is ``engineering scrappage,''
which is largely determined by the age of a vehicle and the durability
of the specific model year or vintage it represents. NHTSA uses
proprietary vehicle registration data from S&P Global to estimate
vehicle age and durability. Other factors affecting owners' decisions
to retire used vehicles or retain them in service include fuel economy
and new vehicle prices; for historical data on new vehicle transaction
prices, NHTSA uses National Automobile Dealers Association (NADA)
data.\282\ The data consists of the average transaction price of all
light-duty vehicles; because the transaction prices are not broken down
by body style, the scrappage module may miss unique trends within a
particular vehicle body style. The transaction prices reflect the
amount consumers paid for new vehicles and exclude any trade-in value
credited towards the purchase. This may be relevant particularly for
pickup trucks, which have experienced considerable changes in average
price as luxury and high-end options entered the market over the past
decade. Future versions of the agency's scrappage module may consider
incorporating price series that consider the price trends for cars,
SUVs and vans, and pickups separately, and NHTSA asks commenters to
identify any data or resources that could assist the agency in this
pursuit.
---------------------------------------------------------------------------
\282\ The data can be obtained from NADA. For reference, the
data for MY 2024 may be found at https://www.nada.org/nada/research-data/nada-data.
---------------------------------------------------------------------------
Vehicle survival rates, which are determined over time by
scrappage, follow a roughly logistic function with age--that is, when a
vintage is young, few vehicles in the cohort are scrapped; as they age,
more and more of the cohort are retired each year, and the annual rate
at which vehicles are scrapped reaches a peak. Scrappage then declines
as vehicles enter their later years, as fewer and fewer vehicles in the
cohort remain on the road. The analysis uses a logistic function to
capture this trend of vehicle scrappage with age. The data shows that
the durability of successive model years generally increases over time;
put another way, historically, newer vehicles last longer than older
vintages. However, this trend is not constant across all vehicle ages--
the instantaneous scrappage rate of vehicles is lower generally for
more recent vintages up to a certain age, but must increase thereafter
so that the final share of vehicles remaining converges to a similar
share remaining for historically observed vintages.\283\ NHTSA's
scrappage model uses fixed effects to capture potential changes in
durability across model years and ensures that vehicles approaching the
ends of their lives are scrapped in the analysis.
---------------------------------------------------------------------------
\283\ Some possible reasons for why durability may have changed
are new automakers entering the market or general changes to
manufacturing practices like switching some models from a car
chassis to a truck chassis.
---------------------------------------------------------------------------
The final source of vehicle scrappage is from cyclical effects,
which the Model captures using forecasts of GDP and fuel prices. The
macroeconomic conditions variables discussed above are included in the
logistic model to capture cyclical effects. Finally, the change in new
vehicle prices projected in the Model (technology costs minus 36 months
of fuel savings and any tax credits passed through to the consumer) is
included, and changes in this variable are the source of differing
scrappage rates among regulatory alternatives. NHTSA seeks comment on
its scrappage module and asks that commenters with any suggested
revisions provide resources with sufficient detail to analyze
alternative methodologies.
In addition to the variables included in the scrappage module,
NHTSA considers several other potential variables that likely either
directly or indirectly influence scrappage in the real world, including
maintenance and repair costs, the value of scrapped metal, vehicle
characteristics, the quantity of new vehicles purchased, higher
interest rates, and unemployment. These variables are excluded from the
scrappage module either because of difficulties in obtaining data to
measure them accurately or other modeling constraints. Their exclusion
from the module is not intended to diminish their importance but rather
highlights the practical constraints of modeling intricate decisions
like scrappage. NHTSA seeks comments on whether it should include any
of these variables and, if so, requests that commenters suggest
specific methodologies that would produce robust and unbiased estimates
that could be used in a regulatory analysis setting.
NHTSA expects that the proposed reset would accelerate the
retirement of older vehicles compared to the No-Action Alternative.
Because the proposed standard would reduce the regulatory burden on
manufacturers and by extension the price of new vehicles, the demand
and price for used vehicles would decrease, which would incentivize
households to replace the older vehicles that are costly to maintain
with newer, cheaper options--including newer used vehicles.
c. Changes in Vehicle-Miles Traveled
As described in the fleet turnover section, fuel economy standards
influence the quantity of new vehicles sold and how quickly older
vehicles are retired. Model years of different vintages possess
distinguishable characteristics, with newer vehicles typically being
more fuel efficient and safer than their older contingents. While the
decision itself to buy a new vehicle or retire an older vehicle may
confer certain costs and benefits to their owners, most of the effects
are realized only through the use of those vehicles. The agency's
proposal to lower standards would accelerate fleet turnover compared to
the baseline, which would result in more miles being driven in newer,
safer vehicles compared to older, less safe vehicles. As a result,
fewer miles would be driven in the oldest, least safe vehicles on the
road, and the number of fatal accidents would be expected to decrease
as well.
Deciphering which vehicles are being driven is just as important as
how many miles are being driven. Any shift in miles driven by older
vehicles to newer vehicles creates a corresponding shift in societal
benefits, which include both safety and environmental benefits. To
capture how CAFE standards influence the distribution of miles across
the fleet, NHTSA estimates VMT based on the average use of vehicles at
different ages, the total number of vehicles in use, and the
composition of the fleet by ages.
[[Page 56508]]
These three components--average vehicle usage, new vehicle sales, and
older vehicle scrappage--jointly determine total VMT projections for
each alternative.
VMT is determined by how much households want to drive and how much
they can afford to do so. NHTSA believes that a significant portion of
light-duty VMT is unaffected by fuel economy standards. Households have
some basic level of travel demand that needs to be met such as driving
to work or school, and those households will drive those miles
regardless of the imposition that fuel economy standards may impose.
NHTSA's perspective is that the total demand for VMT should not vary
excessively across alternatives. To prevent large differences from
arising among the regulatory alternatives, the agency constrains the
aggregate amount of VMT--besides VMT attributable to the ``rebound
effect''--across alternatives to be equal with the No-Action
Alternative.
In prior rules, the agency used the Federal Highway Administration
(FHWA) VMT Forecasting Model to project total VMT in future calendar
years and then adjusted alternatives based on fleet composition. NHTSA
employed this methodology because it used a reliable, external
projection of annual VMT as a starting point. However, since the FHWA
model includes miles that will be driven in dedicated automobiles,
NHTSA reconsidered for this analysis how to calculate VMT.
The No-Action Alternative's projection of VMT for this proposal
uses the simulated projections of the gas-powered fleet produced by the
sales and scrappage models and applies it to estimates of VMT per
vehicle. Vehicles of different ages and body styles have different
costs to own and operate, and usage changes across vehicle ages
independent of CAFE standards. To account properly for the average
value of consumer and societal costs and benefits associated with
vehicle usage under various alternatives, it is necessary to partition
miles by age and body type. Using S&P Global odometer data, NHTSA
creates ``mileage accumulation schedules'' as an initial estimate of
how much a vehicle is expected to drive at each age throughout its
life. The mileage accumulation schedules also account for differences
in driving habits based on body style. Multiplying the numbers of each
vehicle projected to be in the fleet by the per-vehicle VMT estimates
from the mileage accumulation schedules creates a forecast of VMT in
each calendar year.
The methodology to allocate miles within the regulatory
alternatives is similar. NHTSA uses the forecasts of the fleet produced
by the sales and scrappage models and multiplies those by mileage
accumulation schedules to create a total estimate of VMT. NHTSA then
scales the alternative's VMT to match the No-Action Alternative's
aggregate VMT, preserving the percentage of VMT driven by each model.
NHTSA seeks comments on whether it should remove the VMT constraint
and allow alternatives to have differing levels of VMT. While much of
household VMT is likely inelastic, it may be reasonable to assume that
fleets with differing sizes, age distributions, and inherent cost of
operation may have marginally different annual VMT (even without
considering VMT associated with rebound miles). In previous rules,
NHTSA elected to continue to constrain VMT across alternatives in part
because of the difficulty of determining whether VMT would shift to
other modes of transportation and, if so, how to account for the
impacts of any such mode shift. NHTSA seeks comments on whether it is
appropriate to consider mode shifts if the agency removes the VMT
constraints and asks commenters to provide either any data or suggested
modeling approaches that could assist the agency.
An example of a portion of household travel that is elastic is
known as ``rebound'' mileage. The fuel economy rebound effect--a
specific example of the well-documented energy efficiency rebound
effect for energy-consuming capital goods--refers to motorists who
choose to increase vehicle use (as measured by VMT) when fuel economy
is improved and, as a result, the cost per mile (CPM) of driving
declines. If fuel economy increases, the cost to drive additional miles
decreases, resulting in vehicles with better fuel efficiency being
driven more. For the proposed rule, reducing the level of fuel economy
required by government regulation would reduce the number of miles
driven.
NHTSA has employed several different rebound effect estimates
through the years. Until recently, the agency had historically used an
estimate between 15 and 20 percent. The agency lowered its estimate in
the 2022 final rule to 10 percent, a value that was also carried
forward in the 2024 final rule. To support this proposal, NHTSA re-
reviewed the literature related to the fuel economy rebound effect,
which is extensive and covers multiple decades and geographic
regions.\284\ The totality of evidence, without artificially excluding
certain studies based on arbitrary selection criteria, suggests that a
plausible range for the rebound effect is 10-50 percent. This range
implies that, for example, a 10-percent reduction in vehicles' fuel CPM
would lead to an increase of between 1 to 5 percent in the number of
miles they are driven annually. The central tendency of this range
appears to be at or slightly above its midpoint, which is 30 percent.
Considering only those studies that NHTSA believes utilize robust and
reliable data, employ identification strategies that are likely to
prove effective at isolating the rebound effect, and apply rigorous
estimation methods, suggests a range of approximately 10-45 percent,
with most of the estimates falling in the 15-30 percent range.
---------------------------------------------------------------------------
\284\ Draft TSD Chapter 4.3.4 provides more information.
---------------------------------------------------------------------------
When NHTSA reviewed the literature for both the 2022 and 2024
rules, the agency arrived at a similar result. However, NHTSA chose to
use an estimate at the lowest end supportable by the academic
literature. NHTSA argued that both economic theory and empirical
evidence suggested that the rebound effect was declining over time due
to factors such as increasing income (which increases the value of
travelers' time), progressively smaller reductions in fuel costs in
response to continuing increases in fuel economy, and slower growth in
car ownership and the number of license holders. The agency also noted
that certain studies with lower estimates of the rebound effect were
associated with recently published studies that rely on U.S. data,
measure vehicle use using actual odometer readings, control for the
potential endogeneity of fuel economy, and--critically--estimate the
response of vehicle use to variation in fuel economy itself rather than
to fuel cost per distance driven or fuel prices. The agency gave
greater weight to these studies, which suggested a rebound effect in
the 5-15 percent range.
Consistent with NHTSA's surveys of the latest available data for
each successive CAFE analysis, as discussed above, the agency
reconsidered for this analysis its prior assumptions about rebound
effect trends discussed in the 2022 and 2024 final rules--in particular
assumptions about the rebound effect declining over time--and concluded
that a rebound estimate of 15 percent is appropriate. In particular, a
meta-analysis of 74 recently published studies of the rebound effect
noted that ``the magnitude of the rebound effect in
[[Page 56509]]
road transport can be considered to be, on average, in the area of 20
[percent],'' and that the most likely long-run estimate was about 32
percent \285\--both significantly higher than the agency's prior 10
percent-value and higher than the 15 percent-value employed in this
analysis. The agency believes that selecting a rebound estimate that is
well-supported by the scientific consensus is more appropriate than
speculating about trends that have yet to manifest. NHTSA examines the
sensitivity of estimated impacts to values of the rebound effect
ranging from 10 to 20 percent to account for the uncertainty
surrounding its exact value. NHTSA seeks comments on its approach to
accounting for the rebound effect. For a more complete discussion of
the rebound literature, refer to Draft TSD Chapter 4.3.4.
---------------------------------------------------------------------------
\285\ Dimitropoulos, A. et al., The Rebound Effect in Road
Transport: A Meta-analysis of Empirical Studies, OECD Environment
Working Papers, No. 113, OECD Publishing: Paris, France (2016),
available at: https://dx.doi.org/10.1787/8516ab3a-en (accessed:
Sept. 10, 2025).
---------------------------------------------------------------------------
In order to calculate total VMT after allowing for the rebound
effect, the CAFE Model applies the price elasticity of VMT (taken from
the FHWA forecasting model) to the change in fuel cost per mile
resulting from higher fuel economy and uses the result to adjust the
initial estimate of each model's annual use accordingly. The CAFE Model
applies this adjustment after the reallocation step described
previously, because that adjustment is intended to ensure that total
VMT is identical among alternatives before considering the contribution
of increased driving due to the rebound effect. Its contribution
differs among regulatory alternatives because alternatives requiring
higher fuel economy lead to larger reductions in the per-mile fuel cost
of driving and thus to larger increases in vehicle use.
To summarize, because the proposed standards would lower the cost
of newer vehicles, more of the base household travel demand will be
satisfied by safer, newer vehicles, and simultaneously, newer vehicles
will have lower fuel economy, leading to fewer miles being driven and
resulting in a further reduction in fatalities and fuel expenditures.
Chapter 4.3 of the Draft TSD provides more information on how NHTSA
accounts for and models VMT.
d. Changes to Fuel Consumption
NHTSA uses the fuel economy, age, and VMT estimates to determine
changes in fuel consumption. NHTSA divides the expected vehicle use by
the anticipated mpg to calculate the gallons consumed by each simulated
vehicle, and when aggregated, the total fuel consumed in each
alternative.
F. Simulating Emissions Impacts of Regulatory Alternatives
Changes in fuel consumption because of changes in CAFE standards
(and resulting technology application) will result in changes in
emissions of various pollutants.\286\ Vehicle-related emissions are
computed by multiplying vehicle activity (e.g., miles traveled, hours
operated, or gallons of fuel burned), population (or number of
vehicles), and emission factors. An emission factor is a representative
rate that attempts to relate the quantity of a pollutant released to
the atmosphere per unit of activity. As in past rules, the CAFE Model
generates vehicle activity levels (both miles traveled and fuel
consumption), while emission factors have been adapted from models
developed and maintained by other Federal agencies.
---------------------------------------------------------------------------
\286\ The various pollutants include carbon monoxide (CO),
volatile organic compounds (VOCs), nitrogen oxides (NOX),
sulfur oxides (SOX), particulate matter with a diameter
of 2.5-micron ([micro]m) or less (PM2.5), carbon dioxide
(CO2), methane (CH4), and nitrous oxide
(N2O).
---------------------------------------------------------------------------
This section provides a brief overview of how the agency estimates
the resulting changes in emissions and associated effects from
emissions of those pollutants.\287\ In this section, emissions that are
generated between the initial point of oil extraction and delivering
fuel to vehicles' fuel tanks or energy storage systems are referred to
as ``upstream'' emissions, while ``downstream'' emissions refer to
those emitted by vehicles' exhaust systems, and also include other
emissions generated during vehicle refueling, use, and inactivity
(called ``soaking''), including hydrofluorocarbons leaked from
vehicles' AC systems.\288\ Emissions also include particulate matter
released into the atmosphere by brake and tire wear (BTW), as well as
evaporation of volatile organic compounds from fuel pumps and vehicles'
fuel storage systems during refueling and when parked.
---------------------------------------------------------------------------
\287\ While NHTSA considers the impacts of this rulemaking on
the levels of various pollutant emissions, the main analysis does
not include a monetization of any changes in levels of carbon
dioxide, methane, and nitrous oxide emissions. (An analysis using
the domestic-only valuation of those emissions is included in a
sensitivity case). Monetized changes in criteria pollutant emissions
are discussed in the preamble Section II.G and Chapter 6.2.2 of the
Draft TSD.
\288\ Emissions from HFC leakage from air conditioner systems
are not captured in the CAFE Model analysis due to limitations in
the pollutants modelled by MOVES5.
---------------------------------------------------------------------------
For the proposed rule, the agency updated upstream petroleum
emission factors using R&D GREET 2024, a lifecycle emissions model
developed by Argonne.\289\ As in past analyses, the agency derived
emission factors for the following four upstream emission processes for
gasoline and diesel: (1) petroleum extraction; (2) petroleum
transportation and storage; (3) petroleum refining; and (4) fuel
transportation, storage, and distribution (TS&D). A detailed
description of how the agency used R&D GREET 2024 to generate upstream
emission factors appears in Chapter 5 of the Draft TSD. In this
proposal, NHTSA uses a simplified parameterized economic model for
estimating the response of domestic fuel production to changes in U.S.
fuel consumption, as such responses also affect upstream emissions
estimates related to the rule. Using this model, NHTSA estimates that
20 percent of the reduction in fuel consumption will be translated into
reductions in domestic fuel production.
---------------------------------------------------------------------------
\289\ Argonne National Laboratory, The Research and Development
Greenhouse Gases, Regulated Emissions, and Energy Use in
Technologies (R&D GREET) Model 2024, Last revised: Jan. 2025,
available at: https://greet.anl.gov/ (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
The agency estimated downstream emission factors for gasoline and
diesel fuels for the majority of pollutants using EPA's MOVES5 model, a
regulatory highway emissions inventory model developed by that agency's
National Vehicle and Fuel Emissions Laboratory.\290\ \291\
---------------------------------------------------------------------------
\290\ EPA, Motor Vehicle Emission Simulator: MOVES5, Office of
Transportation and Air Quality, Last revised: Aug. 26, 2025,
available at: https://www.epa.gov/moves/latest-version-motor-vehicle-emission-simulator-moves (accessed: Sept. 10, 2025).
\291\ The one exception is that downstream CO2
emission factors were generated based on the carbon content and mass
density per unit of each specific type of fuel assuming each fuel's
entire carbon content is converted to CO2 emissions
during combustion.
---------------------------------------------------------------------------
[[Page 56510]]
Currently, the MOVES5 methodology for projecting future emission
inventories includes estimated effects from Federal emissions standards
for light-duty vehicles, including EPA's CO2 standards for
MYs 2024-2026 and MYs 2027-2031. NHTSA conducted this analysis prior to
EPA publishing its proposal to rescind its action titled ``Endangerment
and Cause or Contribute Finding for Greenhouse Gases Under Section
202(a) of the Clean Air Act'' (Endangerment Finding) and all resulting
greenhouse gas emissions standards for light-, medium-, and heavy-duty
vehicles and engines \292\ and is exploring options to update the
relevant emission factors consistent with EPA's latest methodology for
the final rule. For purposes of this proposal, NHTSA believes the
existing model provides a reasonable basis for estimating emission
inventories in response to the policy options analyzed but requests
comments on this assumption.
---------------------------------------------------------------------------
\292\ Reconsideration of 2009 Endangerment Finding and
Greenhouse Gas Vehicle Standards; Proposed Rule, 90 FR 36288 (2025),
available at: https://www.federalregister.gov/documents/2025/08/01/2025-14572/reconsideration-of-2009-endangerment-finding-and-greenhouse-gas-vehicle-standards (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
Another update to the analysis that NHTSA is exploring is the
methodology for applying downstream emission factors to vehicle classes
within the CAFE Model. MOVES regulatory classes no longer directly map
to the CAFE Model vehicle classes beginning in MY 2028, at which time
NHTSA is proposing to subject vehicles to the amended vehicle
classification definitions. Adjusting the downstream emission factors
requires an understanding of the implications of reclassification on
mapping regulatory and vehicles classes between MOVES and the CAFE
Model. It is NHTSA's expectation that any modification of downstream
emission factors will result in only minor changes in the magnitude of
the relative differences among alternatives. Draft TSD Chapter 5.3
contains additional detail about how the agency generated the
downstream emission factors used in this analysis, and Section VI
presents additional information about NHTSA's proposals for vehicle
reclassification beginning in MY 2028.
As with downstream emission factors, the agency generated BTW
emission factors using the latest version of EPA's MOVES5 model.\293\
NHTSA believes that compared to previous versions of MOVES, MOVES5's
updated assumptions about brake pad composition and vehicle weights to
estimate brake wear emissions that vary by model year, regulatory
class, and fuel type present reasonable estimates for use in the
agency's regulatory analysis. For further reading on BTW assumptions
and how the agency employed those assumptions in the CAFE Model, please
refer to Draft TSD Chapter 5.3.3.4. NHTSA seeks comments on this
methodology.
---------------------------------------------------------------------------
\293\ EPA, Brake and Tire Wear Emissions from Onroad Vehicles in
MOVES5, EPA: Washington, DC, pp. 1-69 (2024), available at: https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P101CTUW.pdf (accessed: Sept. 10,
2025).
---------------------------------------------------------------------------
The CAFE Model computes select health impacts resulting from
localized population exposure to PM2.5 and its precursor
pollutants that are measured by the number of instances predicted to
result from exposure to each ton of relevant pollutant.\294\ As in past
CAFE analyses, NHTSA relied on publicly available scientific literature
to estimate PM2.5-related effects for each upstream and
downstream emissions source \295\ and employed certain assumptions to
determine the most reasonable approach to incorporate estimates from
literature into the Model.\296\ NHTSA includes additional discussion of
the agency's approach to estimating these effects in Chapter 5.4 of the
Draft TSD.
---------------------------------------------------------------------------
\294\ As the health incidences for the different source sectors
are all based on the emission of 1 ton of the same pollutants,
NOX, SOX, and directly emitted
PM2.5, differences in the incidence per ton values arise
from differences in the geographic distribution of each pollutant's
emissions, which in turn affects the number of people exposed to the
estimated concentrations of each pollutant.
\295\ EPA, Estimating the Benefit per Ton of Reducing
PM2.5 Precursors from 17 Sectors, EPA: Washington, DC,
pp. 1-108 (2018), available at: https://19january2017snapshot.epa.gov/benmap/estimating-benefit-ton-reducing-pm25-precursors-17-sectors_.html (accessed: Sept. 10,
2025); Fann, N. et al., Assessing Human Health PM2.5 and
Ozone Impacts from U.S. Oil and Natural Gas Sector Emissions in
2025, Environmental Science & Technology, Vol. 52(15): pp. 8095-103
(2018), available at: https://doi.org/10.1021/acs.est.8b02050
(accessed: Sept. 10, 2025) (hereinafter, ``Fann et al.''); Wolfe, P.
et al., Monetized Health Benefits Attributable to Mobile Source
Emission Reductions Across the United States in 2025, The Science of
the Total Environment, Vol. 650(Pt 2): pp. 2490-98 (2019), available
at: https://doi.org/10.1016/j.scitotenv.2018.09.273 (accessed: Sept.
10, 2025) (hereinafter, ``Wolfe et al.''). Health incidence per ton
values corresponding to this paper were sent by EPA staff.
\296\ Some CAFE Model upstream emissions components do not
correspond to any single EPA source sector identified in available
literature, so NHTSA determined the most reasonable approach was to
use a weighted average of different source sectors to generate those
values. NHTSA is also aware that EPA in 2023 updated its estimated
benefits for reducing PM2.5 from several sources, but
those do not include mobile sources (which include the vehicles
subject to CAFE standards). NHTSA has thus retained the
PM2.5 incidence per ton values from the previous CAFE
analysis for consistency with the current mobile source emissions
estimates.
---------------------------------------------------------------------------
G. Simulating Economic Impacts of Regulatory Alternatives
The following sections describe NHTSA's approach for measuring the
economic costs and benefits that would result from amending previously
established CAFE standards. OMB Circular A-4 states that benefits and
costs reported in regulatory analyses must be defined and measured
consistently with economic theory and also should reflect how
alternative regulations are anticipated to change the behavior of
producers and consumers from a baseline scenario without the
regulation.\297\ Fuel economy standards affect vehicle manufacturers,
buyers of new vehicles, owners of used vehicles, and suppliers of fuel,
all of whom respond in complex ways to the standards that DOT
establishes for future model years. NHTSA's accounting framework for
the economic costs and benefits of CAFE standards was developed for a
scenario in which standards are being set for cars and light trucks
produced during future model years, for which no standards currently
exist. Under this framework, NHTSA assumes hypothetical baseline
standards for those future years to be identical to those in the last
model year for which the agency previously established standards. Costs
of alternative standards considered for future model years are measured
relative to those for meeting the baseline standards, while benefits
for each alternative are savings or other gains to buyers and users of
new cars and light trucks or the general public, again measured in
reference to the baseline alternative.
---------------------------------------------------------------------------
\297\ Office of Management and Budget, Circular A-4 (Sept. 17,
2003), available at: https://www.whitehouse.gov/wp-content/uploads/2025/08/CircularA-4.pdf (accessed Sept. 10, 2025).
---------------------------------------------------------------------------
Most of the agency's rulemakings have established standards for
future model years that are above their hypothetical baseline level, so
the costs of meeting them have consisted primarily of manufacturers'
outlays to increase the fuel economy of their car and light truck
models to meet those higher standards, while benefits have consisted
primarily of fuel savings for buyers and subsequent owners of models
offering higher fuel economy. In rulemakings, such as this one, where
the agency is proposing to reduce previously established standards for
future model years due to updated economic, market, and technological
realities, manufacturers' costs will be reduced compared to those for
meeting the previous standards, while new cars and light trucks will
consume more fuel
[[Page 56511]]
than if those previous standards remained in place.
Thus, the estimated costs of meeting the revised standards are
reported as negative values--representing regulatory cost savings--
while vehicle buyers' increased costs for fuel are similarly reported
as negative benefits. When the agency has historically raised CAFE
standards, it has assumed that manufacturers' costs to increase fuel
economy would be passed on to buyers as increased purchase prices for
new models, and the analysis supporting this proposed rule assumes that
reduced costs to manufacturers for meeting less demanding CAFE
standards will be reflected in lower prices for new cars and light
trucks.
NHTSA's approach to estimating the economic impacts of regulatory
alternatives it considers in this rulemaking, including the assumptions
it relies upon and the methodologies it employs, is discussed in detail
in Chapter 6 of the Draft TSD and throughout the PRIA (particularly
Chapter 5). The safety implications of the proposed rule, including
monetary measures of those impacts, are covered in Section II.H below.
Regulatory analysis needs to express costs and benefits that occur
at different future times in comparable terms, which is done by
discounting each future year's impacts to their present values.
Following guidance presented in OMB Circular A-4 (2003), NHTSA presents
the current values of all economic impacts quantified in its regulatory
analysis discounting using the recommended rates of 3 and 7 percent.
The categories of economic costs and benefits resulting from
NHTSA's proposed amendment to its previously established CAFE standards
are described in Chapter 5 of the PRIA (see in particular Table 5-1).
Monetary values of those estimates are presented in Chapter 8 (for the
central analysis) and Chapter 9 (showing the results of various
sensitivity analyses around key parameters and assumptions) of the
accompanying PRIA.
Table II-8 below lists the economic benefits and costs analyzed in
conjunction with this proposal and identifies where to find
explanations of how they were estimated. The organization of the table
shows how individual elements of the analysis are grouped together to
produce NHTSA's estimates of each alternative's private and external
costs and benefits.\298\ Private benefits and costs are those borne by
vehicle manufacturers and by users of new cars and light trucks,
including their initial purchasers and subsequent owners. External
costs and benefits result indirectly from producing and consuming fuel
and are borne by the public rather than just those who purchase and use
vehicles. Social costs and benefits are the sum of their private and
external components.
---------------------------------------------------------------------------
\298\ Changes in tax revenues are a transfer and not an economic
externality as traditionally defined, but NHTSA groups tax revenue
changes together with other external costs because fuel taxes fund
government activities affecting society as a whole rather than only
consumers or manufacturers.
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[[Page 56512]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.030
BILLING CODE 4910-59-P
[[Page 56513]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.031
BILLING CODE 4910-59-C
The remainder of this section briefly describes the key economic
impacts of the proposed amendment and explains how they are categorized
within the PRIA (with the exception of safety costs, which as noted
earlier are covered in Section II.H).
---------------------------------------------------------------------------
\299\ This table presents the societal costs and benefits. Costs
and benefits that affect only the consumer analysis, such as sales
taxes, insurance costs, and reallocated VMT, are intentionally
omitted from this table. Chapters 8.2.3 and 8.3.3 of the PRIA
describe consumer-specific costs and benefits.
\300\ Since taxes are transfers from consumers to governments, a
portion of the Savings in Retail Fuel Costs includes taxes avoided.
The Loss in Fuel Tax Revenue is completely offset within the Savings
in Retail Fuel Costs.
---------------------------------------------------------------------------
1. Private Costs and Benefits
Manufacturers' efforts to meet CAFE standards consist primarily of
adding new technology to their car and light truck models, and together
with any necessary design or engineering modifications, this increases
their production costs. NHTSA assumes manufacturers pass these costs on
to buyers of models that offer higher fuel economy by raising their
selling prices.\301\ While the agency incorporates the effects of
available tax credits in its analysis, these credits simply transfer
revenue from taxpayers to vehicle buyers and have no net effect on the
benefits or costs of the proposed rule. Estimates of technology costs
reported throughout this proposed rule should be interpreted as
excluding the value of tax credits unless otherwise noted.
---------------------------------------------------------------------------
\301\ While NHTSA recognizes that some manufacturers may defray
their regulatory costs for meeting increased fuel economy standards
through more complex pricing strategies, the agency lacks sufficient
insight into manufacturers' pricing strategies to analyze such
alternative approaches.
---------------------------------------------------------------------------
Resetting prevailing CAFE standards would reduce the cost of
technology that manufacturers would need to add to their car and light
truck models in order to comply with CAFE standards, and NHTSA assumes
that this reduction in regulatory costs would be passed through to
vehicle buyers in the form of lower prices. Relaxing standards would
reduce the regulatory burden on manufacturers and enable them to
produce models that offer combinations of fuel economy, other features,
and prices that align more closely with consumer demand, resulting in
higher vehicle sales compared to the No-Action Alternative. The CAFE
reset would improve consumer welfare for consumers who are able to
purchase vehicles at lower prices, and their collective welfare gain is
measured by the increase in consumer surplus from higher sales of new
cars and light trucks. Consumer surplus represents the value a good or
service provides to consumers (the maximum they would have been willing
to pay for it) over and above its market price, and OMB guidance states
that it should be accounted for in regulatory analysis.\302\ Resetting
previous standards will keep would-be purchasers from being priced out
of the new vehicle market as manufacturers raise prices to recover
their costs for applying more technology to meet higher standards, so
buyers' consumer surplus will increase as sales rise rather than
decline as it would have with the higher fuel economy standards in the
No-Action Alternative. Section II.C.2.f of this preamble and Chapter
2.4 of the Draft TSD provide more details.
---------------------------------------------------------------------------
\302\ OMB's Circular A-4 explains that the ``net reduction in
the total surplus (consumer plus producer) is a real cost to
society,'' and recommends that changes in consumer or producer
surplus should be monetized ``when they are significant.''
---------------------------------------------------------------------------
Generally, NHTSA's CAFE rulemaking analyses include estimates of
benefits to consumers from improving fuel economy, measured by the
resulting reduction in vehicles' fuel costs. However, while improved
fuel economy reduces vehicles' fuel cost throughout their lifetimes,
new car buyers and subsequent owners do not appear to value those
savings fully. If they did, manufacturers would presumably offer the
levels of fuel economy that buyers demand, and market-determined fuel
economy levels would balance the costs of improving it against the
private benefits from saving fuel. To the extent regulating fuel
economy does not improve the welfare of vehicle owners, regulation can
only be justified if it produces additional benefits that are not
experienced by buyers themselves. As discussed in II.E, NHTSA assumes
that consumers are only willing to pay for fuel economy improvements
that repay the higher prices of models offering those improvements
within 36 months.
In past rulemakings, the agency has described its assumption that
buyers will forgo purchasing vehicles with higher fuel economy, even
when they appear to offer future savings exceeding their price
premiums, as an example of what is often termed an ``energy paradox''
or ``energy-efficiency gap.'' Although there has been extensive debate
about whether and why such a gap might arise, NHTSA has recently
justified stricter standards partly by assuming that potential car and
light truck buyers act shortsightedly when they refuse to purchase
models whose lower fuel costs would more than repay their higher
purchase prices. This rationale is fundamentally different from the
agency's traditional justification that fuel economy standards are
necessary to remedy some ``externality''--whereby buyers' choices cause
economic harm to others--that arises from producing and consuming fuel.
Without clear evidence of such ``myopia,'' continuing to raise CAFE
standards distorts the market by constraining manufacturers to provide
levels of fuel economy above those consumers demand, causing
manufacturers to raise prices to recover their higher costs for
producing those vehicles or to sacrifice improvements in their models'
other features. Instead, the agency increasingly believes a more likely
explanation for buyers' reluctance to purchase higher mpg models is
that their unsatisfactory combinations of price and other features
offset the attraction of lower fuel costs, and recent
[[Page 56514]]
research supports this interpretation.\303\ Chapter 6.1.3 of the Draft
TSD provides further detailed review of this research. NHTSA has
acknowledged this potential ``opportunity cost'' of raising fuel
economy standards in its recent rules but has attempted to estimate its
magnitude only as one of a large number of sensitivity analyses. The
agency has justified this decision by claiming there is uncertainty in
the literature over the degree to which requiring higher fuel economy
will lead manufacturers to delay or forgo improvements to their models'
features and how consumers would react. NHTSA has also cited data from
EPA's Fuel Economy Trends Report showing that HP and acceleration have
not decreased even when fuel economy standards were rising. However,
these arguments did not consider the possibility that manufacturers
could have offered further improvements in their models' other features
or lower prices without continuing pressure to increase fuel economy.
---------------------------------------------------------------------------
\303\ For example, Leard et al. (2023) finds that consumers
value performance improvements at three times the rate at which they
value improvements in fuel economy and that forgone improvements in
performance from recent changes in CAFE standards have essentially
offset consumer welfare improvements from the fully valued savings
in fuel costs. Klier and Linn (2016) find that if performance trade-
offs resulted from a hypothetical 10-percent increase in regulatory
stringency, U.S. consumers would value the resulting fuel economy
gains at levels approximately 65-85-percent greater than their
willingness to pay for any associated forgone horsepower. Reynaert
(2020) finds that the European Union's emission standards caused
manufacturers to choose between fuel economy and performance, and
that the standards were ultimately not welfare improving. In
addition to forgoing technological improvements that would improve
performance, economists have also modeled manufacturers trading off
performance for fuel economy at a fixed level of technology in order
to reduce compliance costs (Whitefoot et al. 2017).
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NHTSA includes an estimate of the extent to which relaxing
standards will reduce the opportunity cost of meeting previously
established standards in its primary analysis of this proposed rule.
The agency assumes that this cost must be sufficient to account for
buyers' apparent unwillingness to purchase models whose higher fuel
economy would repay their higher purchase prices. NHTSA estimates the
opportunity cost as the value of fuel savings consumers are unwilling
to pay for voluntarily that accrues between years 4 and 10 of a
vehicle's life.\304\ In practice, manufacturers will respond to lower
standards by adjusting the technologies they add to vehicles as well as
by altering the tuning of these technologies and mix of vehicles in
their production fleets, with the goal of increasing profits. For
individual vehicle models this could result in a pure cost reduction,
an improvement in other vehicle features, or a combination of the
two.\305\ At the vehicle level, NHTSA's estimates of changes in costs
and other vehicle attributes could be over- or under-estimates.
However, at the aggregate level it is reasonable to assume, as NHTSA
does, that there is likely to be a combination of lower technology
costs and a reduction in the implicit opportunity cost relative to the
No-Action Alternative. Chapter 6.1.3 of the Draft TSD includes a
detailed description of the agency's method for developing this
measure, including its assumptions about manufacturers' anticipated
response; the agency seeks comments on its approach as well as
suggestions for improving it.
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\304\ As explained in Chapter 6.1.3 of the Draft TSD, consumers
value the first 10 years of discounted fuel savings but are
unwilling to pay for more than 3 years, because the value of fuel
savings during years 4 through 10 is offset by the cost of
sacrifices in improvements to vehicles' other attributes.
\305\ As explained in Draft TSD Chapter 2.3.5, NHTSA attempts to
maintain performance neutrality when a technology is applied to a
vehicle so that the change is only applied to improving fuel
economy.
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Resetting previously established CAFE standards will permit lower
fuel economy for some new cars and light trucks, thus increasing their
fuel consumption and raising their owners' fuel costs accordingly. The
difference between fuel consumption in the No-Action Alternative and in
each regulatory alternative represents that alternative's effect on
total fuel use, and the cost of this additional consumption is
estimated using forecasts of retail fuel prices. The agency's
assumptions about future fuel prices are discussed in detail in Chapter
4.1.2 of the Draft TSD.
Lowering existing standards will lead to relatively shorter driving
ranges of models that achieve lower fuel economy in the action
alternatives, requiring their users to refuel more frequently than
under the No-Action Alternative. Drivers (and passengers) of future new
cars and light trucks will economize on refueling stops as fuel economy
increases over time under each regulatory alternative. However, their
savings will be more modest than under the No-Action Alternative, so it
appears as an incremental increase in the frequency of refueling stops
in the analysis. NHTSA estimates the cost of more frequent fill-ups by
calculating the amount of time it takes to locate a retail outlet,
refuel one's vehicle, and pay, accounting for the typical number of
passengers traveling with the driver, and multiplying by DOT's
recommended value of travel time. For a full description of the
agency's methodology, refer to Chapter 6.1.5 of the Draft TSD. The
agency seeks comment on whether, and the extent to which, a reasonable
manufacturer may simply install a larger fuel tank--potentially
eliminating any refueling time savings.
Under the regulatory alternatives, new car and light truck models
that achieve lower fuel economy would be driven slightly less than in
the No-Action Alternative, as their higher fuel cost reduces the fuel
economy rebound effect described in preamble Section II.E.1.c. Again,
the proposed rule would continue to raise fuel economy standards but at
a slower rate than under the No-Action Alternative. For example, while
vehicle use would continue to increase under each regulatory
alternative, it would increase more slowly than under the No-Action
Alternative. Additional driving enables buyers of new cars and light
trucks to travel more frequently or reach more desirable destinations,
but because vehicle use would grow more slowly, these benefits would be
more modest when CAFE standards are reset.\306\
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\306\ NHTSA does not estimate benefits associated with
reallocating travel among vehicles of different ages, because there
is no associated change in total VMT until the rebound effect is
introduced. Chapter 6.1.5 of the Draft TSD explains NHTSA's
methodology for reallocating travel and discusses whether any
benefits would result as well as how they would be measured. NHTSA
seeks comment on its methodology for calculating the benefits from
reallocated mileage, as well as on whether it is reasonable to
assume that reduced sales of new vehicles leads to a transfer of
some travel to older models and any welfare implications of such a
transfer.
---------------------------------------------------------------------------
In addition to the private costs and benefits described above,
Table II-8 includes maintenance and repair cost savings as a line item
without an associated dollar value; the agency expects the proposed
reset of CAFE standards to reduce technology requirements for meeting
the new standards and thus to lower buyers' costs to repair and
maintain new vehicles. However, the agency does not currently possess
robust data to quantify maintenance and repair costs in the analysis.
NHTSA requests comments on whether the agency should include estimates
of repair and maintenance costs--and that interested commenters provide
sufficiently robust data to support an informed analysis.
NHTSA also is aware that alternative approaches based on revealed
preference have been used to estimate the implicit compliance cost of
similar vehicle regulations.\307\ Observed
[[Page 56515]]
behavior also shows that consumers prefer vehicles with fuel economy
technologies added only if fuel savings exceed the technology costs
within a fairly short period, despite the fact that estimated lifetime
fuel costs are conspicuously printed on the Monroney window sticker.
Analyses that rely on revealed preferences may better capture consumer
preferences and the potential costs imposed by regulations than an
engineering-based approach. NHTSA has included an alternative analysis
of the benefits and costs of the proposed rule in Appendix II applying
a revealed preference approach and seeks comment on the assumptions,
methodology and data sources used in this analysis.
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\307\ EPA, Reconsideration of 2009 Endangerment Finding and
Greenhouse Gas Vehicle Standards, Draft Regulatory Impact Analysis,
Appendix B (2025), available at: https://www.epa.gov/system/files/documents/2025-07/420d25003.pdf (accessed: Sept. 10, 2025).
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2. External Costs and Benefits
In general, NHTSA's CAFE rulemakings set standards for which there
are no existing standards and require manufacturers to improve fuel
economy. Higher fuel economy standards increase vehicle use via the
rebound effect and contribute to increased traffic congestion and
highway noise. These impacts are largely felt by other road users (and
nearby residents) rather than the drivers generating additional
mileage. Conversely, resetting previous CAFE standards will reduce fuel
economy levels compared to the No-Action Alternative, and the resulting
reduction in travel will lower the external costs that congestion and
noise impose on others. NHTSA estimates these impacts by updating per-
mile congestion and noise costs from increased automobile and light
truck use originally reported in FHWA's 1997 Highway Cost Allocation
Study to account for changes in congestion levels, travelers' value of
time, and inflation, an approach it also used for the 2020, 2022, and
2024 final rules.
Part of the change in new car and light truck buyers' costs for
fuel represents changes in tax revenue received by Federal, state, and
some local government agencies. Any variation in the fuel tax burden on
drivers is exactly offset by changes in tax revenues, so this transfer
does not affect net benefits from changing CAFE standards. However,
NHTSA estimates those offsetting changes in drivers' fuel tax payments
and tax revenue received by government agencies to highlight this
transfer and show its potential impact on government finances.
Fuel production, distribution, and use generate emissions of
certain ``criteria'' or regulated pollutants, and the population's
exposure to these pollutants causes adverse effects on public health.
Raising or lowering CAFE standards affects these emissions by changing
the volume of fuel produced and consumed, and NHTSA estimates these
changes in emissions and their economic consequences for public health.
The CAFE Model estimates monetized health effects associated with
population exposure to fine particulate matter, which is emitted
directly by refineries and vehicles and also formed in the atmosphere
via physical and chemical reactions involving other regulated
pollutants emitted by refining and using fuel.\308\ Chapter 5 of the
Draft TSD accompanying this proposed rule includes a detailed
description of the Model's procedures for calculating emissions of
these pollutants and assessing their consequences for public health.
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\308\ As discussed in Section II.F above, although other
criteria pollutants are currently regulated, only impacts from these
three pollutants are calculated since they are emitted regularly by
refineries and motor vehicles, cause the most severe effects on
human health, and have been the subject of extensive research to
quantify and monetize their health impacts. NHTSA's regulatory
analysis does not attempt to quantify the adverse health effects of
air toxics, which are emitted during fuel production and use, or
ozone, which is formed in the atmosphere by emissions of regulated
pollutants.
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NHTSA does not include monetized estimates of changes in so-called
greenhouse gas (GHG) emissions in the central analysis.\309\ There are
significant uncertainties related to the monetization of GHGs that
include, but are not limited to: the magnitude of the change in climate
due to a change in GHG emissions; the relationship between changes in
the climate and the economy and, therefore, the resulting economic
impacts; future economic and population growth, which are important for
estimating vulnerability, willingness to pay to avoid impacts, and the
ability to adapt to future changes; future technological advancements
that would reduce vulnerability and impacts; the share of impacts from
GHG emissions that affect citizens and residents of the United States;
and the appropriate discount rates to use when discounting in an
intergenerational context.
---------------------------------------------------------------------------
\309\ E.O. 14154, Unleashing American Energy (Jan. 20, 2025),
available at: https://www.govinfo.gov/content/pkg/DCPD-202500121/pdf/DCPD-202500121.pdf (accessed: Sept. 10, 2025); Office of
Information and Regulatory Affairs, Guidance Implementing Section 6
of Executive Order 14154, ``Unleashing American Energy,'' M-25-27
(May 5, 2025), available at: https://www.whitehouse.gov/wp-content/uploads/2025/02/M-25-27-Guidance-Implementing-Section-6-of-Executive-Order-14154-Entitled-Unleashing-American-Energy.pdf
(accessed: Sept. 10, 2025).
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Due to the many uncertainties related to monetizing impacts of
changes in GHG emissions, NHTSA does not monetize these impacts in the
central analysis. Monetizing these impacts could potentially result in
flawed decision-making due to overreliance on highly uncertain values.
To confirm that NHTSA's exclusion of this value does not bias the cost-
benefit analysis that informs NHTSA's determination of maximum feasible
standards, and in accord with the decision in Center for Biological
Diversity v. NHTSA,\310\ NHTSA has included a sensitivity case in PRIA
Chapter 9 using the domestic-only monetization of the GHG estimate that
was previously used in the 2020 final rule.
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\310\ Ctr. for Biological Diversity v. Nat'l Highway Traffic
Safety Admin., 538 F.3d 1172, 1198 (9th Cir. 2008).
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Resetting CAFE standards would increase domestic consumption of
gasoline compared to the regulatory baseline, producing a corresponding
increase in the Nation's demand for crude petroleum. The U.S. accounts
for a significant share of global oil consumption, so the resulting
increase in global petroleum demand will exert some upward pressure on
worldwide prices, but the financial consequences of higher prices are
transfers that do not affect economic welfare. Unlike in decades past,
when the U.S. was heavily dependent upon foreign petroleum and
therefore broadly exposed to price shocks attributable to supply
disruption, the U.S. is now an established net exporter of petroleum.
Accordingly, while domestic petroleum production does not completely
insulate the U.S. from international disruptions in petroleum
generation, any transfer from global consumers to petroleum producers
becomes a financial benefit to the U.S. economy.
Higher U.S. petroleum consumption increases all domestic consumers'
exposure to the risks of potential rapid increases in oil prices and
interruptions in petroleum imports, although rising domestic production
cushions the latter's effect. Individual petroleum users are unlikely
to consider the effect of their own consumption on such economy-wide
risks, so they may unwittingly impose costs on others that increase
with domestic petroleum use. NHTSA includes this effect as a cost of
the proposed standards, and Chapter 6.2.4.4 of the Draft TSD explains
how the agency estimates its magnitude.
Some analysts assert that raising or lowering petroleum imports may
also influence U.S. military spending, but most careful studies
conclude that
[[Page 56516]]
changes in petroleum use on the scale likely to result from changing
CAFE standards are unlikely to affect military activity. Thus, as
Chapter 6.2.4.5 of the Draft TSD explains in detail, NHTSA does not
consider the potential impact of changing CAFE standards on military
spending.
NHTSA is also monitoring the availability of critical minerals used
in electrified powertrains and whether any shortage of such materials
could emerge as an additional energy security concern. While nearly all
electricity in the United States is generated through the conversion of
domestic energy sources and thus its supply does not raise security
concerns, EVs (as well as hybrids and plug-in hybrids) also require
batteries to store and deliver that electricity. Currently, the most
common EV battery chemistries include relatively scarce materials
(compared to other automotive parts) which are sourced, in large part,
from foreign adversaries or potentially insecure or unstable overseas
sites. While all mined materials (including those in vehicles powered
by ICEs) can pose environmental challenges during extraction and
conversion to usable material, this is particularly true with minerals
used in battery production. Known supplies of some of these critical
minerals are also highly concentrated in a few countries and therefore
face similar market power concerns to petroleum products.
NHTSA is restricted from considering the fuel economy of
alternative fuel sources in determining CAFE standards, so the agency
only considers the gasoline powered fleet in simulating compliance with
fuel economy regulatory alternatives and determining their effects.
While the cost of critical minerals may affect the cost to supply both
plug-in and non-plug-in hybrids that require larger batteries, this
would apply primarily to manufacturers whose voluntary compliance
strategy emphasizes hybridization. NHTSA does not include costs or
benefits related to these emerging energy security considerations in
its analysis for its proposal because, as noted above, pursuant to its
statutory authority to set CAFE standards, NHTSA cannot consider
alternative fueled vehicles when setting standards.
The analysis considers the direct labor effects that the proposed
standards would have across the automotive sector. The effects include:
(1) dealership labor related to new light-duty sales; (2) assembly
labor for new vehicles, engines, and transmissions; and (3) labor for
developing and producing technologies that improve fuel economy but
exclude any broader implications of fuel economy standards for economy-
wide employment. NHTSA has used this approach in several recent
rulemakings but has not highlighted its results because of its limited
scope and the uncertainty introduced by rapidly changing labor inputs
for vehicle assembly and technology development. NHTSA seeks comment on
alternative approaches to the labor analysis that the agency could
consider, including approaches that could supplement the agency's
current approach or succeed it in future rulemakings. Chapter 6.2.5 of
the Draft TSD describes the current process NHTSA uses to estimate
labor impacts in additional detail.
H. Simulating Safety Effects of Regulatory Alternatives
Fuel economy standards have the potential to lead manufacturers to
alter the vehicles they produce in ways that may have unintended
consequences for motor vehicle safety. The analysis accompanying the
proposal includes a comprehensive measure of safety impacts from three
sources:
Changes in Vehicle Mass
NHTSA calculates the safety impact of changes in vehicle mass made
to reduce fuel consumption to comply with the standards. Statistical
analysis of historical crash data indicates reducing mass in heavier
vehicles generally improves safety for occupants in lighter vehicles
and other road users such as pedestrians and cyclists, while reducing
mass in lighter vehicles generally reduces safety.
Impacts of Vehicle Prices on Fleet Turnover
Vehicles have become safer over time through a combination of new
safety regulations and voluntary safety improvements. NHTSA expects
this trend to continue as emerging technologies, such as advanced
driver assistance systems, are incorporated into new vehicles. Safety
improvements will continue regardless of changes in the standards.
Vehicle technologies added to comply with increased fuel economy
standards increase vehicle prices, slowing the acquisition of newer
vehicles and retirement of older ones.
The standards also influence the composition of the new light-duty
sales mix. As the safety of light trucks, SUVs, and passenger cars is
affected by technologies that manufacturers employ to meet the
standards differently--particularly MR--fleets with different
compositions of body styles have varying safety risks. Therefore,
changing the share of each type of light-duty vehicle in the projected
future fleet impacts safety outcomes.
Changes in Safety Associated With ``Rebound Effect'' Driving
The ``rebound effect'' predicts consumers will drive more when the
cost of driving declines. More stringent standards reduce vehicle
operating costs, and in response, some consumers may choose to drive
more. Additional driving increases exposure to risks associated with
motor vehicle travel, and this added exposure translates into higher
fatalities and injuries. Slowing vehicle turnover results in an older
fleet on average. As a result, this slowing turnover exacerbates the
safety costs of additional driving resulting from the ``rebound
effect.''
Resetting the CAFE standards as proposed would improve safety
overall. Setting less stringent standards would accelerate fleet
turnover, limit the amount of rebound driving, and reduce the need to
apply MR across the fleet.
The contributions of the three factors described above generate the
differences in safety outcomes among regulatory alternatives. NHTSA's
analysis makes extensive efforts to allocate the differences in safety
outcomes between the three factors. Fatalities expected during future
years under each alternative are projected by deriving a fleetwide
fatality rate (fatalities per VMT) that incorporates the effects of
differences in each of the three factors from the reference baseline
and then multiplying it by that alternative's expected VMT. Fatalities
are converted into a societal cost by multiplying estimated fatalities
by the DOT-recommended value of a statistical life (VSL), supplemented
by additional economic costs not considered in VSL measurements.
Traffic injuries and property damage are also modeled directly using
the same process and valued using costs specific to each injury
severity level.
All three factors influence predicted fatalities, but only two of
them--changes in vehicle mass and in the composition of the light-duty
fleet in response to changes in vehicle prices--impose increased risks
on drivers and passengers not compensated for by accompanying benefits.
In contrast, increased driving associated with the rebound effect is a
consumer choice that reveals the benefits of additional travel.
Consumers who choose to drive more have decided that the utility of
additional driving exceeds the additional costs for doing so, including
the crash risk that they perceive additional driving involves. As
discussed in Chapter 7 of the Draft TSD,
[[Page 56517]]
the benefits of rebound driving are accounted for by offsetting a
portion of the added safety costs.
NHTSA's analysis considers the safety impact to both vehicle
occupants and non-occupants, such as pedestrians and cyclists. The
agency categorizes safety outcomes through three measures of light-duty
vehicle safety: fatalities occurring in crashes, serious injuries, and
the amount of property damage incurred in crashes with no injuries.
Counts of fatalities among occupants of automobiles and non-occupants
are obtained from NHTSA's Fatal Accident Reporting System for 1975-
2022. Estimates of the number of serious injuries to drivers and
passengers of light-duty vehicles are tabulated from NHTSA's General
Estimates System (GES) for 1990-2015, and from its Crash Report
Sampling System (CRSS) for 2016-2021. Both GES and CRSS include annual
samples of motor vehicle crashes occurring throughout the United
States. Weights for different types of crashes were used to expand the
samples of each type to estimates of the total number of crashes
occurring during each year. Finally, estimates of the number of
automobiles involved in property damage-only crashes each year were
also developed using CRSS.
NHTSA does not anticipate, and does not model, any changes in
safety from the proposed changes in vehicle classification. A vehicle's
safety performance is unrelated to its CAFE vehicle classification;
instead, the safety risk is dependent on its physical attributes, the
safety technologies incorporated, and how the vehicle is used.
1. Mass Reduction Impacts
Vehicle MR can be one of the more cost-effective means of improving
efficiency, particularly for makes and models built with less high-
strength steel or aluminum closures or low-mass components.
Manufacturers have stated that they would continue to reduce mass of
some of their models to meet more stringent standards (such as those
currently in place), and therefore, this expectation is incorporated
into the modeling analysis supporting the proposal. Safety trade-offs
associated with MR have occurred in the past, particularly before
standards were attribute-based, because manufacturers chose, in
response to standards, to build smaller and lighter vehicles; these
smaller, lighter vehicles did not fare as well in crashes as larger,
heavier vehicles, on average. Although NHTSA now uses attribute-based
standards, in part to reduce or eliminate the incentive to downsize
vehicles to comply with the standards, NHTSA is mindful of the
possibility of related safety trade-offs. For this reason, NHTSA
accounts for how the application of MR to meet standards affects the
safety of a specific vehicle given changes in GVWR.
For this proposed rule, the agency employed the modeling technique,
developed in the 2016 Puckett and Kindelberger report, to analyze the
updated crash and exposure data by examining the cross sections of the
societal fatality rate per billion VMT by mass and footprint, while
controlling for driver age, gender, and other factors, in separate
logistic regressions for five vehicle groups and nine crash types.
NHTSA utilized the relationships between weight and safety from this
analysis, expressed as percentage increases in fatalities per 100-pound
weight reduction (which is how MR is applied in the technology
analysis; see Section II.D.2.e), to examine the weight impacts applied
in this analysis. The effects of MR on safety were estimated relative
to (incremental to) the regulatory baseline in the analysis, across all
vehicles for MY 2024 and beyond. The analysis of MR includes two
opposing impacts.
Research has consistently shown that MR affects ``lighter'' and
``heavier'' vehicles differently across crash types. The 2016 Puckett
and Kindelberger report found MR concentrated among the heaviest
vehicles is likely to have a beneficial effect on overall societal
fatalities, while MR concentrated among the lightest vehicles is likely
to have a detrimental effect on occupant fatalities but a slight
benefit to pedestrians and cyclists. This represents a relationship
between the dispersion of mass across vehicles in the fleet and
societal fatalities: decreasing dispersion is associated with a
decrease in fatalities. For collisions with large mass disparities, MR
in heavier vehicles would be more beneficial to the occupants of
lighter vehicles than it would be harmful to the occupants of the
heavier vehicles. MR in lighter vehicles is more harmful to the
occupants of lighter vehicles than it is beneficial to the occupants of
the heavier vehicles.
To capture the differing effect on lighter and heavier vehicles
accurately, NHTSA splits vehicles into lighter and heavier vehicle
classifications in the analysis. However, this poses a challenge to
creating statistically meaningful results. There is limited relevant
crash data to use for the analysis. Each partition of the data reduces
the number of observations per-vehicle classification and crash type
and thus reduces the statistical robustness of the results. The
methodology employed by NHTSA was designed to balance these competing
forces as a trade-off to capture the impact of mass-reduction across
vehicle CWs and crash types while preserving the potential to identify
robust estimates.
While the mass-size-safety coefficients employed in the analysis
are not statistically significant at the 95th-percent confidence level,
multiple coefficients are significant at the 85th-percent confidence
level, and, to NHTSA's best knowledge, represent the most robust and
accurate representation of the safety impact of MR. It is essential for
NHTSA, as a safety agency, to consider potential safety impacts of its
regulations using the best available estimates. As the agency believes
that the point estimates still represent the best available data, NHTSA
continues to include a measurement of mass-safety impacts in its
analysis.
While the agency does not attempt to model safety impacts on a
vehicle model-level basis, resetting the standards as proposed would
lessen the need to apply MR broadly across the fleet and would allow
manufacturers to incorporate MR more tactfully within its fleet. In
addition, the agency's proposed vehicle reclassification could
incentivize manufacturers to apply MR to larger vehicles, which would
provide other road users tangible safety benefits.
A more detailed description of the mass-safety analysis can be
found in Chapter 7.3 of the Draft TSD.
2. Sales/Scrappage Impacts
As described in Section II.E.1.b, resetting CAFE standards would
have important safety consequences because of the resulting
acceleration in fleet turnover. Less stringent standards would allow
manufacturers to sell more vehicles demanded by consumers at cheaper
prices, which would increase the rate at which newer vehicles, and
their associated safety improvements, enter the on-road population. The
sales response also influences the mix of vehicles on the road based on
the relative net price increases caused by CAFE standards. Setting less
stringent standards also removes distortionary effects, pushing
consumers into less preferred body styles, which may have different
intrinsic safety risks. Similarly, as the price of new vehicles
decreases, the fleet turnover compared to the baseline increases,
meaning more newer, safer vehicles would replace older, less safe
vehicles on the road. These effects would reduce the safety risk not
only for both the occupants of newer vehicles but also for other road
users who benefit from newer vehicles
[[Page 56518]]
equipped with advanced driving assistance systems.
Any effect of sales and scrappage on fleet composition will affect
the distribution of both ages and model years present in the on-road
light-duty fleet. Because each of these vintages carries with it
inherent rates of fatal crashes, and newer vintages are generally safer
than older ones, changing that distribution will change the safety
performance of the fleet, affecting the total number of on-road
fatalities under each regulatory alternative. Similarly, the dynamic
fleet share model captures the changes in the light-duty fleet's
composition of cars and light trucks. As cars and trucks have different
fatality rates, differences in fleet composition across the
alternatives will affect fatalities.
At the highest level, NHTSA calculates the impact of the sales and
scrappage effects by multiplying the VMT of a vehicle by the fatality
risk of that vehicle. For this analysis, NHTSA uses the distribution of
miles calculated in Chapter 4.3 of the Draft TSD. The fatality risk
measures the likelihood that a vehicle will be involved in a fatal
accident per mile driven. NHTSA calculates the fatality risk of a
vehicle based on the vehicle's model year, age, and style, while
controlling factors that are independent of the intrinsic nature of the
vehicle, such as behavioral characteristics. Using this same approach,
NHTSA designed separate models for fatalities, non-fatal injuries, and
property damaged vehicles.
The vehicle fatality risk described above captures the historical
evolution of automotive safety. Given that modern technologies are
proliferating faster than ever and offer greater safety benefits than
traditional safety improvements through crash avoidance, NHTSA
augmented the fatality risk projections with knowledge about
forthcoming safety improvements. NHTSA applied estimates of the market
uptake and improving effectiveness of crash avoidance technologies to
estimate their effect on the fleetwide fatality rate, including
incorporating both the direct effect of those technologies on the crash
involvement rates of new vehicles equipped with them, as well as the
``spillover'' effect of those technologies on improving the safety of
occupants of vehicles that are not equipped with these technologies.
NHTSA's approach to measuring these impacts first derives
effectiveness rates for these advanced crash avoidance technologies
from safety technology literature. NHTSA then applies these
effectiveness rates to specific crash target populations for which the
crash avoidance technology is designed to mitigate, which are then
adjusted to reflect the current pace of adoption of the technology,
including any public commitment by manufacturers to install these
technologies or recent regulatory actions. These technologies include
Forward Collision Warning (FCW), Automatic Emergency Braking (AEB),
Lane Departure Warning (LDW), Lane Keep Assist (LKA), Blind Spot
Detection (BSD), Lane Change Assist (LCA), and Pedestrian Automatic
Emergency Braking (PAEB). The products of these factors produce a
fatality rate reduction percentage that is applied to the fatality rate
trend model discussed above, which projects both vehicle and non-
vehicle safety trends. The combined model produces a projection of
impacts of changes in vehicle safety technology as well as behavioral
and infrastructural trends. A much more detailed discussion of the
methods and inputs used to make these projections of safety impacts
from advanced technologies is provided in Chapter 7 of the Draft TSD.
3. Rebound Effect Impacts
The additional VMT demanded due to the rebound effect is
accompanied by more exposure to risk. However, rebound miles are not
imposed on consumers by regulation, but rather are a freely chosen
activity resulting from reduced vehicle operational costs. As such,
NHTSA has long believed that a large portion of the safety risks
associated with additional driving are offset by the benefits drivers
gain from added driving. The level of risk internalized by drivers is
uncertain. This analysis assumes that drivers internalize 90 percent of
this risk, which mostly offsets the societal impact of added fatalities
from this voluntary consumer choice. However, by resetting the
standards, NHTSA would expect fewer rebound miles and therefore fewer
crashes, injuries, and fatalities. Additional discussion of
internalized risk is contained in Chapter 7.5 of the Draft TSD. NHTSA
seeks comment on this assumption. In particular, the agency asks
commenters for any evidence that could be used to bolster a higher or
lower estimate of how much consumers internalize the risk of driving an
additional mile.
4. Value of Safety Impacts
Fatalities, nonfatal injuries, and property damage crashes are
valued as a societal cost within the CAFE Model's cost and benefit
accounting. Their value is based on the comprehensive value of a
fatality, which includes lost quality of life and is quantified in the
VSL, as well as economic costs related to medical and emergency care,
insurance administrative costs, legal costs, and other economic impacts
not captured in the VSL. These values were first derived from data in
Blincoe et al. (2015), updated in Blincoe et al. (2023), adjusted to
2024 dollars, and updated to reflect DOT guidance on the VSL.\311\
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\311\ DOT, Departmental Guidance on Valuation of a Statistical
Life in Economic Analysis, Last revised: Apr. 28, 2025, available
at: https://www.transportation.gov/office-policy/transportation-policy/revised-departmental-guidance-on-valuation-of-a-statistical-life-in-economic-analysis (accessed: Sept. 10, 2025).
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Nonfatal injury costs, which differ by severity, were weighted
according to the relative incidence of injuries across the Abbreviated
Injury Scale (AIS). To determine this incidence, NHTSA applied a KABCO/
MAIS translator to CRSS KABCO based injury counts from 2017-2019. This
produced the MAIS-based injury profile. This profile was used to weight
nonfatal injury unit costs derived from Blincoe et al. (2023), adjusted
to 2024 price and income levels and updated consistently with DOT
guidance on the VSL. Property-damaged vehicle costs were also taken
from Blincoe et al. (2023) and adjusted to 2024 economics.
For the analysis, NHTSA assigns a societal value of $14.1 million
for each fatality, $338,000 for each nonfatal injury, and $9,700 for
each property damaged vehicle. As discussed in the previous section,
NHTSA discounts 90 percent of the safety costs associated with the
rebound effect. The remaining 10 percent of those safety costs are not
considered to be internalized by drivers and appear as a cost of the
standards that influence net benefits. Similarly, the effects on safety
attributable to changes in mass and fleet turnover are not offset by
additional benefits since manufacturers are responsible for deciding
how to design and price vehicles. However, 90 percent of these costs
are also treated as private costs since they are borne by owners of
vehicles rather than society more broadly. The safety costs not
internalized by drivers are equal to 10 percent of the sum of the mass-
safety effects, fleet turnover effects, and rebound-related fatality
and non-fatal injuries, plus the cost of any property damage.
III. Regulatory Alternatives Considered in This NPRM
A. General Basis for Alternatives Considered
NHTSA considers regulatory alternatives in rulemaking analyses as a
way of evaluating the comparative
[[Page 56519]]
effects of different potential ways of accomplishing its desired goal,
which in this case is to fulfill the statutory mandate to set maximum
feasible standards. E.O. 12866 and E.O. 13563, as well as OMB Circular
A-4, encourage agencies to evaluate regulatory alternatives in their
rulemaking analyses.
For this proposal, NHTSA developed separate alternatives for two
distinct periods of time (MYs 2022-2026 and MYs 2027-2031) and two
distinct fleets (passenger cars (PC) and light trucks (LT)).
Alternatives analysis begins with a ``No-Action'' Alternative,
typically described as what would occur in the absence of any
regulatory action by the agency--in other words, the baseline.\312\
Accordingly, NHTSA developed 16 total alternatives: a No-Action and
three action alternatives for passenger cars for MYs 2022-2026; a No-
Action and three action alternatives for light trucks for MYs 2022-
2026; a No-Action and three action alternatives for passenger cars for
MYs 2027-2031; and a No-Action and three action alternatives for light
trucks for MYs 2027-2031. The proposed standards may, in places, be
referred to as the ``Preferred Alternative(s),'' but NHTSA intends
``proposed standards'' and ``Preferred Alternative(s)'' to be used
interchangeably for purposes of this document. While the agency
tentatively believes the Preferred Alternative(s) represent the maximum
feasible fuel economy standards for each model year under consideration
when viewed in context of the proposed structural changes (i.e.,
reclassification, elimination of FCIVs, and elimination of credit
trading) and in light of statutory constraints (i.e., not considering
dedicated vehicles, non-petroleum performance of dual fueled vehicles,
or the availability of regulatory credits), NHTSA requests comment on
each alternative analyzed.
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\312\ Office of Management and Budget, Circular A-4 (Sept. 17,
2003), available at: https://www.whitehouse.gov/wp-content/uploads/2025/08/CircularA-4.pdf (accessed Sept. 10, 2025), General Issues,
2. Developing a Baseline.
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Each action alternative sets fuel economy stringency levels for
each model year that can be defined in terms of percentage changes in
stringency from one model year to the next, which may be different for
passenger cars and light trucks.\313\ Although the stringency levels
can be defined in terms of percentage changes in stringency from one
model year to the next for ease of understanding, pursuant to the
statute they are actually defined as coefficients that define the
following mathematical functions that relate fuel economy to footprint
levels.
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\313\ Note that the percentage changes from 1 year to the next
are applied to the footprint functions that define the standards,
rather than to an average or summary mpg value corresponding to a
given footprint function. The PC and LT target curve function
coefficients are defined in Equation III-1 and Equation III-2,
respectively. See Draft TSD Chapter 1.2.1 for a complete discussion
of the footprint curve functions and how they are calculated.
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For passenger cars, NHTSA is defining final fuel economy targets as
shown in Equation III-1.
Equation III-1: Passenger Car Fuel Economy Footprint Target Curve
[GRAPHIC] [TIFF OMITTED] TP05DE25.032
Where:
TARGETFE is the fuel economy target (in mpg) applicable
to a specific vehicle model type with a unique footprint
combination, and
a is a maximum fuel economy target (in mpg),
b is a minimum fuel economy target (in mpg),
c is the slope (in gallons per mile per square foot, or gpm per
square foot), of a line relating fuel consumption (the inverse of
fuel economy) to footprint, and
d is an intercept (in gpm) of the same line.
Here, MIN and MAX are functions that take the minimum and maximum
values, respectively, of the set of included values. For example,
MIN[40, 35] = 35 and MAX(40, 25) = 40, such that MIN[MAX(40, 25), 35] =
35.
The resulting functional form is depicted in graphs displaying the
passenger car target function in each model year for each regulatory
alternative in Sections III.B.1 and III.B.3 below.
For light trucks, NHTSA is defining fuel economy targets as shown
in Equation III-2.
Equation III-2: Light Truck Fuel Economy Footprint Target Curve
[GRAPHIC] [TIFF OMITTED] TP05DE25.033
[[Page 56520]]
Where:
TARGETFE is the fuel economy target (in mpg) applicable
to a specific vehicle model type with a unique footprint
combination, and
a, b, c, and d are as for passenger cars, but taking values specific
to light trucks.
The exception to defining action alternatives in terms of yearly
stringency changes occurs in the transition from MYs 2027-2028, where
NHTSA is proposing to change the regulatory classifications for non-
passenger automobiles. Because NHTSA is using a different set of
initial footprint curve parameters (i.e., slope, intercept, and
cutpoints) for each fleet starting in MY 2028, the change in stringency
from MYs 2027-2028 cannot be defined using multiplication by a common
factor. Instead, NHTSA first applied a year-over-year stringency
adjustment to each proposed alternative for each regulatory class ``m''
in MY 2027 to generate initial target function parameters for MY 2028
shown in Equation III-3.
Equation III-3: Scaling Equations for Initial MY 2028 Target Function
Parameters
[GRAPHIC] [TIFF OMITTED] TP05DE25.034
Here ``D2028'' equals the percentage year-to-year change
in stringency from MYs 2027-2028 in a given alternative. The agency
then uses Equation III-4 to determine the MY 2028 predicted average
standard for each regulatory class without reclassification. To
calculate the average standard, the agency uses the total number of
automobiles in each class in the MY 2024 fleet data.
Equation III-4: Determination of MY 2028 Class Average Standards Under
No Reclassification
[GRAPHIC] [TIFF OMITTED] TP05DE25.035
Here ``[eegr]m,0'' equals the total number of
automobiles produced in class ``m'' according to the classifications
based on existing regulations.
NHTSA then performed an analogous calculation using Equation III-5
to determine the predicted average standard for each regulatory class
under the proposed reclassification condition. The alternative
classification and the initial parameter estimates are described in
Chapter 1 of the Draft TSD. To calculate the average standard, the
agency uses the MY 2024 fleet data with the new reclassification
criteria applied in each class.
Equation III-5: Determination of MY 2028 Class Average Stringencies
Under Alternative Classification using Alternative Parameter Estimates
[GRAPHIC] [TIFF OMITTED] TP05DE25.036
[[Page 56521]]
Here ``[eegr]m,A'' equals the total number of automobiles produced
in class ``m'' according to the proposed reclassification.
The class averages are used to generate a ratio, which is used as a
scaling factor to generate the final target function coefficients in
each alternative as shown in Equation III-6:
Equation III-6: Scaling Equations for Final MY 2028 Target Function
Parameters
[GRAPHIC] [TIFF OMITTED] TP05DE25.037
This process ensures that a change in target function shape
preserves the year-to-year change in stringency ``D2028''
for the class.
For this proposal, NHTSA applies individual rates of change to the
passenger car and the light truck fleet standards in different model
years in some of the action alternatives. In the Preferred Alternative,
the respective standards for both fleets change at the same rate
starting in MY 2028. However, the two remaining action alternatives
evaluated for this proposal have passenger car fleet rates-of-change in
fuel economy that differ from the rates-of-change in fuel economy for
the light truck fleet in MY 2028. NHTSA has discretion to set CAFE
standards that increase at different rates for passenger cars and light
trucks, because NHTSA, by law, must set maximum feasible CAFE standards
separately for passenger cars and light trucks.
1. MYs 2022-2026
NHTSA's analysis resets the passenger and non-passenger automobile
fuel economy target functions in 2022 and increases them through 2026
at levels consistent with the available data for that timeframe and the
context for those years, as discussed in more detail in Section V.
Unlike past rules that set CAFE standards, in which the last model year
for which standards are currently set serves as the base year for
describing the regulatory alternatives considered in terms of annual
percentage increases in standards, NHTSA analyzed reset standards for
this proposed rule using MY 2022 as the base year, consistent with the
Secretary's memorandum titled ``Fixing the CAFE Program'' (Jan. 28,
2025).\314\ NHTSA considered several potential approaches for analyzing
regulatory alternatives for that model year within a reasonable range
of feasible average fuel economy standards.
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\314\ See DOT, Memorandum: Fixing the CAFE Program (2025),
available at: https://www.transportation.gov/briefing-room/memorandum-fixing-cafe-program (accessed: Sept. 10, 2025).
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The agency relied in large part on the observed capabilities of the
gasoline- and diesel-powered vehicle fleets over the model years
covered by the standards. While NHTSA always examines manufacturer
capabilities (also referred to as ``achieved'' fuel economy values for
each manufacturer's fleet in each model year) relative to the proposed
standards as part of its evaluation of maximum feasible standards, this
analysis is unique in that the data-based projections that NHTSA would
generally rely on to estimate manufacturer behavior are not necessary
because, by definition, there cannot be projections for MYs 2022-2025
(and likely for MY 2026, by which time a final rule will be issued),
but only observed data. That said, as discussed in Section V, NHTSA
believes the appropriate qualitative context exists for giving meaning
to the section 32902(f) factors related to manufacturer compliance for
model years that have already passed or are currently underway.
NHTSA defined a potential standards range using the mean fit curve
and the mean fit curve minus one standard deviation,\315\ and then
selected three levels of standards that the agency believed represented
reasonable low-, medium-, and high-level resetting functions for the MY
2022 passenger car and light truck fleets, respectively. These three
functions represent different ways that NHTSA could consider the
available data for MY 2022, accounting for the removal of section
32902(h) technologies and compliance credits, and consistent with the
agency's balancing of the four factors as described in more detail in
Section V. The lowest level function for MY 2022 that NHTSA considered
for this proposal represents standards that weigh economic
practicability most heavily by recognizing that the prior standards for
that model year were not only infeasible for the gasoline- and diesel-
powered vehicle fleets (from the perspective of manufacturers
reasonably being able to apply technology during the rulemaking
timeframe), but also that the fleet-average performance has been below
the fleet-average standards for several years and that a low-level
standard represents an opportunity for vehicle manufacturers to comply
with a standard that influences their obligations to improve fleet fuel
economy without distorting typical design cycles or technology
application in a manner inconsistent with NHTSA's statutory
authority.\316\ Under these standards, about 80 percent of passenger
cars and light trucks would have met or exceeded their target function
values for MY 2022.
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\315\ Mean fit level here refers to standards developed based on
the relationship between fuel consumption and footprint using
ordinary least-squares without any further adjustment. NHTSA
examined fleetwide compliance and found that around half of the
vehicles produced in the MY 2022 fleet complied with these
standards. For the mean fit minus standard deviation, NHTSA reasoned
that focusing on the central mass of the distribution of vehicles'
fuel economy values would seem to be a good indicator that the
proposed level was technologically feasible and economically
practicable.
\316\ See ``Resetting the Corporate Average Fuel Economy
Program,'' 90 FR 24518 (June 11, 2025).
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On the opposite end, the high-level function considered for MY 2022
represents a balancing that still weighs economic practicability, but
recognizes that some manufacturers have been able to apply technology
that improves the fuel economy levels of their gasoline- and diesel-
powered fleets at a cadence that, if applicable to the rest of the
fleet had the model year not already passed, would have pushed the
fleet to higher average fuel economy levels, thereby saving more fuel
and placing more weight on energy conservation. That said, the fact
that a large number of manufacturers' gasoline- and diesel-based fleets
cannot comply with that standard--some by a significant amount--is
evidence that such a standard is beyond maximum feasible for the
gasoline- and diesel-powered passenger and non-passenger automobile
fleets for MY 2022. Under these standards, about 30 percent of
passenger cars and 50 percent of light trucks, by sales volume, failed
to meet their target function values for MY 2022.
The MY 2022 mid-level functions that NHTSA is proposing as the
Preferred Alternative for passenger and non-passenger automobiles
reflect a standard that the agency tentatively concludes is maximum
feasible, based on the exclusion of factors prohibited from
consideration by section 32902(h) and a subsequent balancing of the
section 32902(f) factors considering the real-world context for this
action. The mid-level functions represent NHTSA's consideration of the
actual, measured gasoline- and diesel-based fleet average
[[Page 56522]]
fuel economy performance and represents standards at a level that the
agency believes is technologically feasible and economically
practicable for the entire MY 2022 fleet. NHTSA believes the mid-level
function represents a balancing pursuant to section 32902(f) that
recognizes the prior standards were set at levels aimed to induce
changes in technology application and automobile designs beyond what
the market could bear, and in doing so, considered vehicle technologies
and manufacturers' use of compliance credits in a manner prohibited by
section 32902(h). The failure by a significant number of manufacturers'
fleets to meet these standards is evidence that they exceeded the
maximum feasible standards for the model year. At the same time, the
mid-level standard recognizes that compliance actions by several
manufacturers may be evidence that additional fleet fuel economy
improvements could have been feasible, subject to the concept expressed
at the time of EPCA's passage, that NHTSA's standards should not impose
impossible burdens on the automotive industry or unduly limit consumer
choice as to capacity and performance of motor vehicles.
Some manufacturers have chosen to respond to prior standards--which
NHTSA has determined were set in contravention of EPCA's prohibition
against consideration of EVs or plug-in hybrids using the battery to
facilitate propulsion--by producing electric and plug-in hybrid
vehicles and applying or acquiring credits generated by such vehicles
to achieve compliance. That said, the mid-level functions for MY 2022
represent NHTSA's best judgment in establishing maximum feasible
standards, recognizing that inclusion of section 32902(h) factors in
prior rulemakings has pushed standards beyond maximum feasible levels.
The agency has tentatively concluded that the proposed standard for MY
2022 provides the most reasonable weighting of the section 32902(f)
factors as an appropriate reformed starting point upon which to base
increases in the stringency of standards for subsequent model years.
Under these proposed standards, about 75 percent of passenger cars and
70 percent of light trucks, by sales volume, would have met or exceeded
their target function values for MY 2022--but 25 percent of passenger
cars and 30 percent of light trucks would have failed to do so.
For MYs 2023-2026, NHTSA considered a range of standards based on
the low-, mid-, and high-range functions all increasing at the same
rate--a relatively modest rate of 0.5 percent per year--from each
alternative's MY 2022 starting point. This is a different approach than
NHTSA has taken in previous standard-setting actions, but it is an
approach that better effectuates NHTSA's reset of the CAFE standards to
maximum feasible levels beginning in MY 2022. In reaching this
tentative conclusion, NHTSA examined both real-world data and input on
the capabilities of manufacturers' gasoline- and diesel-powered fleets
to improve consistently over time. Critically, this was done while
excluding consideration of prohibited technology and policy factors for
the first time since alternative fueled vehicles have worked their way
into the light-duty fleet in appreciable numbers.
Using data from EPA's 2024 Automotive Trends Report, the latest
report available at the time this NPRM was drafted, NHTSA analyzed
recent yearly improvements in ICE efficiency using data categorized by
engine package.\317\ That data shows that since MY 2010, gasoline- and
diesel-powered vehicle fuel consumption has improved on average by 1
percent per year. In some years, fuel consumption improved by as much
as 5.7 percent from the prior year; however, in some years prior to
2020, fuel consumption increased over the prior year by only 1.2
percent. From MYs 2020-2023, fuel consumption only improved by an
average of 0.7 percent per year. Correspondingly, Auto Innovators
(formerly known as the Alliance of Automobile Manufacturers, or the
Alliance, for short) commented on NHTSA's 2023 NPRM that ``[b]etween
2012 and 2022, the average 2-cycle fuel consumption (gal/mile) of non-
EVs improved at an average annual rate of 1.3 [percent] (passenger
cars) and 2.0 [percent] (light trucks).'' \318\ In addition, based on
the data used for this analysis,\319\ the change in fuel economy for
gasoline- and diesel-powered vehicles from MYs 2022-2024 was a total of
2 percent, or an average of 1 percent per year.
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\317\ EPA, Explore the Automotive Trends Data (2025), available
at: https://www.epa.gov/automotive-trends/explore-automotive-trends-data (accessed: Sept. 10, 2025).
\318\ See Corporate Average Fuel Economy Standards for Passenger
Cars and Light Trucks for Model Years 2027-2032 and Fuel Efficiency
Standards for Heavy-Duty Pickup Trucks and Vans for Model Years
2030-2035, Docket No. NHTSA-2023-0022-60652, at p. 7. The Alliance
cited S&P Global Mobility research that was subsequently provided to
NHTSA for review.
\319\ Comparison of the MY 2022 mid-model year data set and the
MY 2024 mid-model year data set, as discussed in Section II.
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NHTSA is proposing the 0.5 percent rate of increase for MYs 2023-
2026 in part because the agency believes that higher rates of increase
were driven by standards set by NHTSA or other agencies that either
unlawfully considered prohibited statutory factors or exceeded
statutory authority. In addition, to the extent that prior
unrealistically high standards induced technology application that was
either not ready or not attractive to the market, the proposed
stringency rates afford automakers the opportunity to determine the
most economically practicable and technologically feasible paths
forward for their individual product mixes, while still ensuring that
the gasoline- and diesel-fueled vehicle fleet sees real-world
improvements in fuel economy.
While fuel-economy-improving technologies applicable to the
gasoline- and diesel-powered vehicle fleet certainly exist, much of
that technology has been applied to vehicles over the past 15 years--a
period of rapidly increasing fuel economy standards. With a baseline
fleet inclusive of EVs and plug-in hybrids using battery propulsion,
manufacturers seeking to comply with standards solely using gasoline-
and diesel-based powertrain efficiency improvements, cannot continually
add additional technology to gasoline- and diesel-fueled vehicles at a
reasonable cost. Table III-1 shows that as basic naturally aspirated
engine technology penetration rates decreased sharply, there was a
concurrent increase in rates of advanced powertrain technology,
including the addition of mild and strong hybrid technology. As
discussed in Section II above, it is unreasonable to assume that all
technologies can be applied to all vehicle types, depending on vehicle
functionality and capability, and technology that increases fuel
economy at more than incremental levels on vehicles where it could
feasibly be applied is available only at significant cost. NHTSA
anticipates that the proposed rates of annual increase would allow
technology penetration rates to propagate across the fleet in a cost-
effective manner.
[[Page 56523]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.038
While the rate of increase for all MYs 2023-2026 alternatives is
the same, the actual level of standards required by each regulatory
alternative is different based on the differing MY 2022 reset points.
Accordingly, NHTSA has presented a range of stringency options to allow
the agency to analyze or select an alternative in its final rule from
any stringency level within that range. The range of alternatives
represents different ways that the agency could balance the section
32902(f) factors for MYs 2022-2026. Specifically, NHTSA considers both
the unique contextual situation applicable to those model years \321\
and technologically feasible and economically practicable rates of per-
year increases for the gasoline- and diesel-powered fleets. NHTSA seeks
comment on these alternatives for MYs 2022-2026, in addition to any
other regulatory alternatives that the agency should consider for these
model years.
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\320\ Some vehicles will have multiple powertrain technologies,
such as pairing a turbo engine with a mild hybrid stop/start
technology. This will result in the technology penetration rates
adding up to more than 100 percent.
\321\ NHTSA is proposing to reset standards for these model
years, which have passed or for which manufacturers have already
determined their fleets, or such determination is well underway,
because NHTSA determined that in establishing the prior standards,
the agency impermissibly considered electric vehicles in its
analysis.
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2. MYs 2027-2031
Consistent with NHTSA's approach for MYs 2022-2026, the agency
endeavored to reset future model years' standards at levels that
reflect the technological and economic capabilities of the gasoline-
and diesel-powered vehicle fleets, but also in a manner that reflects
how proposed compliance provisions (discussed in more detail in Section
VI) would impact manufacturers' ability to comply. NHTSA performed an
analysis, similar to its analysis of feasible per-year rates of
stringency increase for gasoline- or diesel-powered vehicle
improvements for MYs 2022-2026 discussed above, to establish a range of
regulatory alternatives that encompassed the ways the agency believes
manufacturers could improve their fleet fuel economies year-over-year.
The agency began by using MY 2024 market data as a starting point
for characterizing the technology and compliance levels of the vehicle
fleet, and then relied on the CAFE Model to simulate the fleet's
expected evolution under the current regulatory fleet classifications
in future years in the No-Action Alternative and using the proposed
alternative classification regulations starting in MY 2028 in the
action alternatives. NHTSA's proposed action alternatives are
consistent with footprint curves estimated using the current
classification for MY 2027, and consistent with footprint curves
estimated using the alternative classification for MY 2028 onward.
NHTSA developed alternatives to produce class average target
function values that reflected different rates of growth from MYs 2022-
2028, with MY 2027 acting as a ``bridge'' year between MYs 2026-2028,
when NHTSA proposes to use updated regulatory classification
definitions. Class average target functions were computed by taking the
production-weighted harmonic mean of the target function values for
vehicles in each class as shown in Equation III-4. To produce estimates
of the class average target function values in MY 2022 and MY 2026,
NHTSA used the MY 2022 fleet under current classification regulations
and the proposed standards in each year. This produced a value for each
fleet in MY 2022 and MY 2026. For MY 2027, NHTSA used the MY 2024 fleet
under the pre-existing classification regulations and using the
relevant proposed standards for each alternative. This produced a value
for each class in each alternative. For MY 2028, NHTSA used the MY 2024
fleet under the proposed reclassification regulations and using the
relevant proposed standards for each alternative. This once again
produced a value for each class in each alternative. NHTSA followed
this approach to determine class averages using standard coefficients,
classifications, and fleets consistent with how the underlying
footprint curves were estimated for each model year.
For Alternative 1, NHTSA set the 2028 standards such that the class
average target function values were equal to those computed for 2022
using this approach. For MY 2027, standards for Alternative 1 were set
such that the class average equaled the midpoint between class averages
calculated for MY 2026 and those proposed for MY 2028. In this way MY
2027 acts as a link between the 2026 standards, which were developed
using the MY 2022 fleet and initial classification, and the proposed MY
2028 standards, which were developed using the MY 2024 fleet and the
proposed reclassification.
NHTSA used a similar approach to develop Alternative 3. For
Alternative 3, NHTSA set standards in MY 2028 such that the class
average target function values were equal to those obtained by applying
a 1.5-percent annual increase to the MY 2022 standards. NHTSA then used
the same approach as in Alternative 1 to determine the midpoint of the
average target function values in MY 2026 and MY 2028 and set standards
that would achieve that level of stringency based on the MY 2024 fleet
and the initial classification. NHTSA estimated the 1.5-percent annual
increases as an upper bound for Alternative 3 stringency based on the
agency's assessment, using the EPA Automotive Trends report of
gasoline- and diesel-powered vehicle fuel
[[Page 56524]]
economy values and additional stakeholder feedback.
For Alternative 2, NHTSA proposed MY 2027 standards such that the
class average target function values were equal to those obtained by
applying a 0.5-percent annual growth rate to the MY 2022 standards. For
MY 2028, NHTSA determined the class average target function values by
applying a 0.25-percent adjustment to the class averages for 2027.
While both years' standards were determined using these growth rates,
the rate of change year to year between the coefficients does not
exactly equal these factors due to the change in fleet and
classification used to compute these averages. NHTSA estimated that
these were appropriate mid-range annual increases based on the agency's
assessment of feasible annual increases for gasoline- and diesel-
powered vehicle fleet and because manufacturers would likely require
time in MY 2028 and beyond to recalibrate production decisions based on
the combination of reset stringency levels and vehicle classification
updates.
For MYs 2029-2031, NHTSA applied simple year over year percentage
increases to its proposed 2028 standards. For Alternative 1 and
Alternative 2, NHTSA used a rate of 0.25 percent per year, while for
Alternative 3, NHTSA used a rate of 1 percent per year. Alternative 3's
higher rate of increase supposes that manufacturers could respond to
standards that increase more rapidly in the later years, while for the
other alternatives 0.25 percent was chosen to illustrate how
manufacturers would be able to adjust compliance to a more moderate
rate of increase following the adjustment to reclassification mentioned
above and described in more detail in Section VI.
The projected levels of fuel economy under each of the three
regulatory alternatives for MYs 2027-2031 continually push
manufacturers to improve real-world fuel economy, and even the least
stringent option would exceed fuel efficiency merely driven by market
demand.\322\ NHTSA treated market demand for fuel-economy improvements
as a floor for determining action alternatives in MY 2027 and MY 2028
by rescaling its estimated coefficients using the approach outlined in
Equation III-3 through Equation III-6 such that they produced standards
achievable for manufacturers when only market demanded technology was
applied. Any standard less stringent than this floor would not be
projected to change manufacturers' technology adoption decisions from
those they would make in the absence of standards. In accordance with
the purpose of the statutory scheme to increase fleet fuel economy of
gasoline- and diesel-powered vehicles, NHTSA chose alternatives lying
above this floor.
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\322\ As discussed in more detail in Section II, NHTSA's
assumptions about market-driven fuel economy improvements in the
absence of regulatory requirements involve manufacturer application
of technology that pays for itself within 36 months. NHTSA makes
this assumption based on manufacturer statements over successive
CAFE rulemakings and also believes that this assumption is supported
by the relevant literature. NHTSA has not attempted to quantify
manufacturer behavior in the absence of standards other than this
payback assumption but is interested in comments on any other
assumptions of manufacturer behavior in the absence of standards
that the agency should consider.
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NHTSA recognizes that the process for creating regulatory
alternatives for this proposal is different in some ways from how the
agency has created regulatory alternatives in past rules; however, the
process used was necessary to effectuate a reset to bring the CAFE
program into compliance with the law and require a significant
reclassification of the passenger car and light truck fleets to reflect
better the intent of the CAFE program established by Congress.
Previously, NHTSA evaluated regulatory alternatives based on varying
levels of stringency increases from the last year of the previously
established standards. Since NHTSA considered the fuel efficiency of
EVs in establishing those previous standards, in contravention of the
law, a stringency increase from the last year of those standards is on
its face higher than the maximum feasible standards NHTSA could
establish if only considering gasoline- and diesel-fueled vehicles. In
fact, as discussed in more detail in Section V, NHTSA is proposing to
set standards that are, on their face, lower in MY 2022 than MY 2021 in
part because actual compliance data clearly demonstrated that
manufacturers were unable to achieve the MY 2022 standards with their
gasoline- and diesel-powered vehicle fleets. Additional information on
how NHTSA's development of these regulatory alternatives comports with
the agency's requirements to set maximum feasible standards is
discussed in Section V. Like for MYs 2022-2026, the alternatives
considered for MYs 2027-2031 include a range of stringency options to
allow the agency to analyze or select an alternative in its final rule
from any stringency level within that range. NHTSA seeks comment on the
range of alternatives presented, in addition to any other alternatives
that the agency should consider.
3. Minimum Domestic Passenger Car Standard Analysis Update
EPCA, as amended by EISA, requires that any manufacturer's
domestically manufactured passenger car fleet must meet the greater of
either 27.5 mpg on average or 92 percent of the average fuel economy
projected by the Secretary for the combined domestic and non-domestic
passenger automobile fleets manufactured for sale in the United States
by all manufacturers in the model year. Along with calculating each
regulatory alternative, NHTSA must calculate a minimum standard for
domestically manufactured passenger automobiles in accordance with 49
U.S.C. 32902(b)(4)(B). Since the 2020 final rule, NHTSA has calculated
the ``minimum domestic passenger car standard'' (MDPCS) using an offset
to account for the fact that the agency's model cannot predict any
shift in vehicle designs (as opposed to technology application) that
manufacturers might make in response to CAFE standards. Additional
information about the origin of the MDPCS and the related offset
calculation can be found in Section V.
NHTSA reviewed the analysis it uses to calculate the MDPCS offset,
which accounts for differences between the passenger car standards the
agency forecasts in its rulemaking analyses and the actual passenger
car standards EPA calculates for CAFE final compliance in accordance
with 49 U.S.C. 32904(a). In support of its 2020 final rule, NHTSA used
forecasted data from its 2009, 2010, and 2012 final rule analyses and
actual CAFE final compliance data for MYs 2011-2018 to develop the
initial MDPCS offset of 1.9 percent. NHTSA developed the original
offset value for use in its 2020 final rule; however, the agency
continued to use that same offset value in its 2022 and 2024 final
rules without updating the underlying analysis. In addition to
promulgating two final rules since it developed the initial MDPCS
offset, NHTSA has also collected five additional model years of final
compliance data--with two of those model years having been verified by
EPA in accordance with 49 U.S.C. 32904(a). For this rulemaking, NHTSA
updated the analysis to add new data sources and refine the methodology
used to calculate the value of the offset.
NHTSA supplemented the original analysis with additional data, such
as estimated passenger car standards from subsequent rulemaking
analyses and calculated passenger car standards from newer CAFE final
compliance data. NHTSA began with the Market Data Input File containing
the MY 2017
[[Page 56525]]
baseline fleet, which the agency used in the 2020 final rule analysis,
covering MYs 2021-2026. The agency then identified and removed all the
model types of dedicated AFVs from the Market Data Input File,
consistent with the section 32902(h) prohibition on considering the
fuel economy of dedicated and dual-fueled vehicles when setting maximum
feasible standards. Next, NHTSA ran the 2020 final rule version of the
CAFE Model with the modified Market Data Input File to produce an
analysis devoid of dedicated AFVs. The agency then extracted the
passenger car standard from the resulting Compliance Output Report for
MYs 2017-2050.
Next, NHTSA added the following CAFE final compliance data for
additional model years to the analysis: MYs 2012-2021, which have been
verified by EPA in accordance with 49 U.S.C. 32904(a), and MYs 2022-
2023, which have yet to be verified. As a proxy for individual model
types of dedicated AFVs, NHTSA identified and removed the manufacturers
that produce only dedicated AFVs from the compliance data and
calculated the passenger car standard for MYs 2012-2023.\323\
---------------------------------------------------------------------------
\323\ Because NHTSA does not receive final model year data in
the same format from EPA as manufacturers submit their pre-model
year data and final model year data to the agency, NHTSA cannot
simply remove Excel rows with dedicated vehicles as the agency did
to create its MY 2022 and MY 2024 Market Data Input Files. For
purposes of this analysis, NHTSA believes that final model year data
are the appropriate source to use.
---------------------------------------------------------------------------
Next, NHTSA modified the methodology it uses to calculate the
offset. In the original offset analysis, NHTSA included comparisons
between actual passenger car standards calculated from final model year
compliance data to passenger car standards projected in proposed rules,
in addition to those projected in final rules. For CAFE compliance,
manufacturers are required to meet only those standards estimated and
published in final rules, not those estimated and published in proposed
rules. Consequently, including comparisons to proposed rules may skew
the results from the offset analysis. NHTSA included comparisons to
passenger car standards forecasted only in final rules in the updated
analysis.
NHTSA compared the MDPCSs estimated from CAFE Model outputs from
MYs 2017-2050 to the MDPCSs calculated from actual compliance data from
MYs 2012-2023 and calculated the relative change (in percent) between
them for each model year. NHTSA then calculated the offset by taking
the average of the relative changes in MDPCS for MYs 2017-2023, which
are those model years where the CAFE Model outputs (excluding all
individual model types of dedicated AFVs) overlapped with CAFE
compliance data that excluded manufacturers that produced only
dedicated AFVs. The updated MDPCS offset analysis shows that the
passenger car standards projected with the MY 2017 baseline fleet and
the 2020 final rule version of the CAFE Model were more stringent than
the actual passenger car standards calculated for CAFE final compliance
by an average of 0.7 percent, less than half of the offset calculated
previously.
The MYs 2027-2031 proposed MDPCSs presented in this Table III-2
include the 0.7-percent offset. NHTSA believes that the basis for the
offset, which is based on the agency's inability to project the precise
mix of vehicles sold in the future, is inapplicable to the proposed MYs
2022-2026 standards because those standards incorporate the most up-to-
date data available to the agency for vehicle sales volume and
footprint sizes in MY 2022. The agency's proposed MDPCSs for MYs 2027-
2031 include this offset to ensure that the standard is sufficiently
reflective of industry capabilities while still considering the
original intent behind the MDPCS.
The proposed MDPCS for each model year is as follows:
BILLING CODE 4910-59-P
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B. Regulatory Alternatives Considered
The regulatory alternatives considered by the agency in this
proposed rule are presented in Table III-3 as percentage changes in
stringency over the preceding model year. In the sections that follow,
NHTSA presents the literal coefficients that define the standards
curves in each model year for each alternative that corresponds to
these percentage rates.
[[Page 56526]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.040
The following subchapters define the regulatory alternatives
(including the No-Action Alternative) by time period and provide
details on how NHTSA developed them.
1. No-Action Alternatives for Passenger Cars and Light Trucks
a. No-Action Alternative for MYs 2022-2026 Amendment
The analysis of the No-Action Alternative assumes that the
following CAFE standards remain in place: the CAFE standards for MYs
2022-2023 that were finalized in the 2020 final rule,\324\ and the CAFE
standards for MYs 2024-2026 that were finalized in the 2022 final
rule.\325\ The analysis also applies the statutory limitations in 49
U.S.C. 32902(h) in all model years in the analysis; specifically, the
fuel economy of dedicated automobiles is not considered, dual-fueled
automobiles are considered only when operated on gasoline or diesel
fuel, and the trading, transferring, or availability of credits is not
considered.
---------------------------------------------------------------------------
\324\ 85 FR 24174 (Apr. 30, 2020).
\325\ 87 FR 25710 (May 2, 2022).
---------------------------------------------------------------------------
The No-Action Alternative standards for the existing MYs 2022-2026
passenger car and light truck fleets are defined by the following
coefficients:
[GRAPHIC] [TIFF OMITTED] TP05DE25.041
[[Page 56527]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.042
These equations are represented graphically below, where the x-axis
represents vehicle footprint and the y-axis represents fuel economy.
[GRAPHIC] [TIFF OMITTED] TP05DE25.043
[[Page 56528]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.044
For the No-Action Alternative for MYs 2022-2026, the MDPCS is
applied as it was established in the 2020 and 2022 final rules,
including the offset originally calculated in those rules to account
for recent projection errors as part of estimating the total passenger
car fleet fuel economy standard.
[GRAPHIC] [TIFF OMITTED] TP05DE25.045
b. No-Action Alternative for MYs 2027-2031 Amendment
The analysis of the No-Action Alternative assumes the following
CAFE standards remain in place: the CAFE standards for MYs 2024-2026
that were finalized in the 2022 final rule \326\ and the CAFE standards
for MYs 2027-2031 that were finalized in the 2024 final rule.\327\ The
analysis also applies the statutory limitations in 49 U.S.C. 32902(h)
in all model years in the analysis; specifically, the fuel economy of
dedicated automobiles is not considered, dual-fueled automobiles are
considered only as operated on gasoline or diesel fuel, and the
trading, transferring, or availability of credits is not considered.
---------------------------------------------------------------------------
\326\ 87 FR 25710 (May 2, 2022).
\327\ 89 FR 52540 (June 24, 2024).
---------------------------------------------------------------------------
The No-Action Alternative standards for the existing MYs 2027-2031
passenger car and light truck fleets are defined by the following
coefficients, which (for the purposes of this analysis) are assumed to
persist without change in subsequent model years:
[[Page 56529]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.046
[GRAPHIC] [TIFF OMITTED] TP05DE25.047
These equations are represented graphically below:
[[Page 56530]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.048
[[Page 56531]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.049
For the No-Action Alternative for MYs 2027-2031, the MDPCS is
applied as it was established in the 2024 final rule.
---------------------------------------------------------------------------
\328\ The light truck CAFE target function coefficients
established in the 2024 final rule are identical for MY 2027 and MY
2028. As a result, the MY 2027 and MY 2028 lines overlap with each
other.
[GRAPHIC] [TIFF OMITTED] TP05DE25.050
2. Action Alternatives for Passenger Cars and Light Trucks
In addition to the No-Action Alternative, NHTSA has considered
three action alternatives for passenger cars and light trucks. These
action alternatives are specified below and demonstrate different
possible approaches to balancing the statutory factors applicable for
setting fuel economy standards for passenger cars and light trucks, as
discussed in more detail in Section V.
a. Action Alternatives for MYs 2022-2026 Amendment
(1) Alternative 1
Alternative 1 begins with a MY 2022 set of target function
parameters with which 80 percent of the passenger car fleet complied in
MY 2022, and with which 80 percent of light trucks complied in MY 2022.
From there, Alternative 1 would increase CAFE stringency by 0.5 percent
per year for MYs 2022-2026 for passenger cars and light trucks.
[[Page 56532]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.051
[GRAPHIC] [TIFF OMITTED] TP05DE25.052
These equations are represented graphically below:
[[Page 56533]]
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[[Page 56534]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.054
Under this alternative, the MDPCS is as follows:
[GRAPHIC] [TIFF OMITTED] TP05DE25.055
(2) Alternative 2--Preferred Alternative
The Preferred Alternative begins with a MY 2022 set of target
function parameters with which 75 percent of the passenger car fleet
complied in MY 2022, and with which 70 percent of light trucks complied
in MY 2022. From there, the Preferred Alternative would increase CAFE
stringency by 0.5 percent per year for MYs 2022-2026 for passenger cars
and light trucks.
[[Page 56535]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.056
[GRAPHIC] [TIFF OMITTED] TP05DE25.057
These equations are represented graphically below:
[[Page 56536]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.058
[[Page 56537]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.059
Under this alternative, the MDPCS is as follows:
[GRAPHIC] [TIFF OMITTED] TP05DE25.060
(3) Alternative 3
Alternative 3 begins with a MY 2022 set of target function
parameters with which 70 percent of the passenger car fleet complied in
MY 2022, and with which 50 percent of light trucks complied in MY 2022.
From there, Alternative 3 would increase CAFE stringency by 0.5 percent
per year for MYs 2022-2026 for passenger cars and light trucks.
[[Page 56538]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.061
[GRAPHIC] [TIFF OMITTED] TP05DE25.062
[GRAPHIC] [TIFF OMITTED] TP05DE25.063
These equations are represented graphically below:
[[Page 56539]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.064
[[Page 56540]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.065
b. Action Alternatives for MYs 2027-2031 Amendment
(1) Alternative 1
Alternative 1 would increase CAFE stringency for passenger cars by
0.1 percent from MYs 2026-2027, by 0.3 percent from MYs 2027-2028, and
0.25 percent per year for MYs 2029-2031. Alternative 1 would increase
CAFE stringency for light trucks by 0.8 percent from MYs 2026-2027, by
0.6 percent from MYs 2027-2028, and by 0.25 percent year over year for
MYs 2029-2031.
[GRAPHIC] [TIFF OMITTED] TP05DE25.066
[[Page 56541]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.067
These equations are represented graphically below. Note that the
shapes of the curves for MY 2027 are also different from the shapes of
the curves for MYs 2028-2031 due to the proposed reclassification in MY
2028.
[GRAPHIC] [TIFF OMITTED] TP05DE25.068
[[Page 56542]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.069
For this rulemaking, NHTSA has updated the analysis it uses to
estimate the offset and calculated an offset of 0.7 percent, which will
be applicable to the MDPCS for each action alternative in MYs 2027-
2031. Under this alternative, the MDPCS is as follows:
[GRAPHIC] [TIFF OMITTED] TP05DE25.070
(2) Alternative 2--Preferred Alternative
The Preferred Alternative would increase CAFE stringency for
passenger cars by 0.35 percent from MYs 2026-2027, by 0.25 percent from
MYs 2027-2028, and 0.25 percent per year for MYs 2029-2031. The
Preferred Alternative would increase CAFE stringency for LTs by 0.7
percent from MYs 2026-2027, by 0.25 percent from MYs 2027-2028, and by
0.25 percent per year for MYs 2029-2031.
[[Page 56543]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.071
[GRAPHIC] [TIFF OMITTED] TP05DE25.072
These equations are represented graphically below. Note that the
shapes of the curves for MY 2027 are also different from the shapes of
the curves for MYs 2028-2031 due to the proposed reclassification in MY
2028.
[[Page 56544]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.073
[[Page 56545]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.074
For this rulemaking, NHTSA has updated the analysis it uses to
estimate the offset applied to the MDPCS, which is now calculated at
0.7 percent and is applied to each action alternative in MYs 2027-2031.
Under this alternative, the MDPCS is as follows:
[GRAPHIC] [TIFF OMITTED] TP05DE25.075
(3) Alternative 3
Alternative 3 would increase CAFE stringency for passenger cars by
1.4 percent from MYs 2026-2027, by 1.5 percent from MYs 2027-2028, and
1.0 percent year over year for MYs 2029-2031. Alternative 3 would
increase CAFE stringency for LTs by 0.4 percent from MYs 2026-2027, by
0.2 percent from MYs 2027-2028, and by 1.0 percent year over year for
MYs 2029-2031.
[[Page 56546]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.076
[GRAPHIC] [TIFF OMITTED] TP05DE25.077
These equations are represented graphically below. Note that the
shapes of the curves for MY 2027 are also different from the shapes of
the curves for MYs 2028-2031 due to the proposed reclassification in MY
2028.
[[Page 56547]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.078
[[Page 56548]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.079
Under this alternative, the MDPCS is as follows:
[GRAPHIC] [TIFF OMITTED] TP05DE25.080
IV. Effects of the Regulatory Alternatives
A. Effects of the Regulatory Alternatives for MYs 2022-2026
NHTSA does not estimate any impacts from changes to the MY 2022-
2026 standards other than the difference between the estimated achieved
compliance value and the proposed standard for each manufacturer's
fleet. At the time of the proposal, manufacturers have already produced
fleets for MYs 2022-2025, either partially or completely. Furthermore,
manufacturers have already made vehicle design decisions related to
their MY 2026 fleets, leaving them limited options to adjust their
production for that year in response to the proposed standards. As a
result, NHTSA's proposed standards are expected to have no impact on
manufacturers' production decisions. Similarly, new vehicles produced
for MYs 2022-2024 have already been purchased, as have, at the time of
this proposal, most new vehicles produced in MY 2025. While
manufacturers may adjust prices for vehicles produced in MYs 2025-2026
in response to the proposed standards, modeling such price changes
would require significant speculation about how manufacturers will make
decisions regarding their pricing strategies.
Table IV-1 through Table IV-9 present compliance gaps for domestic
passenger cars, imported passenger cars, and non-passenger automobile
fleets for MYs 2022-2024, comparing the fuel economy levels that have
been achieved to those that would have been achieved under the
standards contemplated by NHTSA.
[[Page 56549]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.081
---------------------------------------------------------------------------
\329\ Domestic passenger car standard equals the larger of two
values: the value computed based on the manufacturer's domestic
passenger car fleet, and the minimum domestic passenger car standard
for the model year. The minimum domestic passenger car standard is
set equal to 92 percent of the average fuel economy for the entire
passenger car fleet in the model year as projected by NHTSA when the
standards are promulgated.
\330\ Calculated achieved fuel economy does not include the
effects of AC/OC adjustments.
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[[Page 56550]]
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[[Page 56551]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.083
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[[Page 56552]]
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[[Page 56553]]
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[GRAPHIC] [TIFF OMITTED] TP05DE25.087
[[Page 56554]]
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[[Page 56555]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.089
BILLING CODE 4910-59-C
Unlike MYs 2022-2024, NHTSA is not yet in possession of pre- or
mid-model year manufacturer data for MYs 2025-2026 from which to
generate estimates of fuel economy standards and values. As a reminder,
a manufacturer's fleet fuel economy standard is generated based on a
calculation of sales-weighted volumes of vehicles by footprint and fuel
economy in a particular regulatory fleet. MPG values are not the
standards; instead, the coefficients that go into the mathematical
functions that create the footprint-to-fuel economy relationship curves
define the standards. Accordingly, without data for MYs 2025-2026 in
hand, NHTSA performed sensitivity cases using the CAFE Model to
generate estimated fleet average CAFE standards for MYs 2025-2026.
---------------------------------------------------------------------------
\331\ Calculated achieved fuel economy does not include the
effects of AC/OC adjustments.
\332\ Calculated achieved fuel economy does not include the
effects of AC/OC adjustments.
\333\ Domestic passenger car standard equals the larger of two
values: the value computed based on the manufacturer's domestic
passenger car fleet, and the minimum domestic passenger car standard
for the model year. The minimum domestic passenger car standard is
set equal to 92 percent of the average fuel economy for the entire
passenger car fleet in the model year as projected by NHTSA when the
standards are promulgated.
\334\ Calculated achieved fuel economy does not include the
effects of AC/OC adjustments.
\335\ Calculated achieved fuel economy does not include the
effects of AC/OC adjustments.
\336\ Calculated achieved fuel economy does not include the
effects of AC/OC adjustments.
\337\ Domestic passenger car standard equals the larger of two
values: the value computed based on the manufacturer's domestic
passenger car fleet, and the minimum domestic passenger car standard
for the model year. The minimum domestic passenger car standard is
set equal to 92 percent of the average fuel economy for the entire
passenger car fleet in the model year as projected by NHTSA when the
standards are promulgated.
\338\ Calculated achieved fuel economy does not include the
effects of AC/OC adjustments.
\339\ Calculated achieved fuel economy does not include the
effects of AC/OC adjustments.
\340\ Calculated achieved fuel economy does not include the
effects of AC/OC adjustments.
---------------------------------------------------------------------------
Table IV-10 through Table IV-13 show the estimated required CAFE
level for MYs 2025-2026. Table IV-10 shows these values for passenger
cars, light trucks, and the fleet as a whole for the Preferred
Alternative. Tables Table IV-11through Table IV-13 show these values by
regulatory class (domestic passenger cars, imported passenger cars, and
light trucks) for each manufacturer in each alternative. It is
important to note that these values are projections of the average mpg
that the fleets will need to achieve. The actual level of performance
that each manufacturer would need to meet varies and is calculated for
each manufacturer's compliance fleet based on the footprint of each
vehicle in the fleet and the corresponding footprint curve.
---------------------------------------------------------------------------
\341\ Values derived from CAFE Model analysis using proposed MYs
2022-2026 footprint curves. See RIA Chapter 9, sensitivity case
``Proposed standards (2022-2026)'' for additional details.
---------------------------------------------------------------------------
BILLING CODE 4910-59-P
[[Page 56556]]
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[GRAPHIC] [TIFF OMITTED] TP05DE25.091
[[Page 56557]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.092
[[Page 56558]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.093
B. Effects of the Regulatory Alternatives for 2027-2031
1. Effects on Vehicle Manufacturers
Each regulatory alternative considered in this proposed rule, aside
from the No-Action Alternative, would change the stringency of both
passenger car and light truck CAFE standards during MYs 2027-2031. To
estimate the potential effects of each of these alternatives, including
effects beyond these years, NHTSA has, as it has done with all recent
CAFE rulemakings, assumed that standards would continue unchanged after
the last model year to be covered by CAFE targets (in this case, after
MY 2031).
The estimated required average fuel economy values for the
passenger car, light truck, and total fleets for each action
alternative that NHTSA considered alongside values for the No-Action
Alternative are presented in Table IV-14 below. NHTSA recognizes that
the size and composition of the fleet (i.e., in terms of distribution
across the range of vehicle footprints) can change over time, affecting
the average fuel economy requirements under both the passenger car and
light truck standards, and for the overall fleet. To the extent the
fleet differs from NHTSA's projections, average requirements also would
differ from NHTSA's projections.
[[Page 56559]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.094
[GRAPHIC] [TIFF OMITTED] TP05DE25.095
Manufacturers' achieved average fuel economy does not always
exactly match each CAFE standard in each model year, and some
manufacturers have tended to exceed at least one requirement.\342\
NHTSA uses the CAFE Model to approximate compliance solutions of
manufacturers, while observing statutory constraints on the factors
NHTSA may consider in setting standards (and thus its analysis of
alternative standards).\343\ As discussed in the accompanying PRIA and
Draft TSD, NHTSA simulates manufacturers' responses to each alternative
given a wide range of input estimates (e.g., technology cost and
efficacy and fuel prices), each of which is subject to uncertainty.
NHTSA's analysis simply illustrates one potential way manufacturers
could respond to each regulatory alternative; manufacturers' actual
responses may differ from NHTSA's simulations, and therefore the
achieved compliance levels will likely differ from the estimated
achieved fuel economy for each regulatory alternative shown in these
tables.
---------------------------------------------------------------------------
\342\ Over-compliance can be the result of multiple factors
including projected ``inheritance'' of technologies (e.g., changes
to engines shared across multiple vehicle model/configurations)
applied in earlier model years, future technology cost reductions
(e.g., decreased technology costs due to learning), and changes in
fuel prices that affect technology cost effectiveness. As in all
past rulemakings over the last decade, NHTSA assumes that beyond
fuel economy changes in response to CAFE standards, manufacturers
may also improve fuel economy via technologies that would pay for
themselves within the first 36 months of vehicle operation.
\343\ NHTSA's standard-setting analysis does not consider
factors prohibited under 49 U.S.C. 32902(h), including the
application of compliance credits and consideration of fuel economy
attributable to alternative fuel sources. For plug-in hybrid
vehicles, this means only the gasoline-powered operation (i.e., non-
electric fuel economy, or charge sustaining mode operation only) is
considered when selecting technology to meet the standards.
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[[Page 56560]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.096
[GRAPHIC] [TIFF OMITTED] TP05DE25.097
The SHEV share of the fleet initially (i.e., in MY 2024) is around
10 percent, and the Model shows this share increasing to 41 percent for
all alternatives by MY 2026. By the end of the regulatory period (MYs
2027-2031), SHEV penetration rates reach 52-55 percent for the action
alternatives and 80 percent for the No-Action Alternative (including
both the passenger car and light truck fleets). SHEVs are estimated to
make up a similar portion of the light truck fleet and the passenger
car fleet across MYs 2027-2031 in each of the regulatory alternatives.
The PHEV share of the fleet in MY 2024 is around 3.4 percent for
light trucks and 1.7 percent for passenger cars. While their market
shares do not increase to the levels seen for SHEVs, PHEVs are
estimated to make up around 13 percent of the light truck fleet for all
the regulatory alternatives by MY 2031, and around 10 percent for the
No-Action Alternative. In the passenger car fleet, PHEV penetration
stays under 3 percent for all regulatory alternatives across MYs 2027-
2031.\344\
---------------------------------------------------------------------------
\344\ Due to the statutory constraints imposed on the analysis
by EPCA that exclude consideration of AFVs, BEVs are not a
compliance option in any model year. Similarly, PHEVs can be
introduced by the CAFE Model, but only their charge-sustaining fuel
economy value (as opposed to their charge-depleting fuel economy
value) is considered in this analysis.
---------------------------------------------------------------------------
Variation in penetration rates across regulatory alternatives
generally results from differences in the number of vehicles or models
a manufacturer would need to add technology to comply with each
alternative. For example, a certain technology pathway could be the
most cost-effective pathway if a manufacturer is just shy of its fuel
economy target, but the pathway likely becomes ineffective if there's a
larger gap, which may necessitate pursuing broader changes in
powertrain technology across the manufacturer's fleet. For more detail
on the technology application by regulatory fleet, see PRIA Chapter
8.2.2.1.
[[Page 56561]]
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[GRAPHIC] [TIFF OMITTED] TP05DE25.099
[GRAPHIC] [TIFF OMITTED] TP05DE25.100
[[Page 56562]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.101
BILLING CODE 4910-59-C
The PRIA also presents NHTSA's estimates of manufacturers'
potential application of fuel-saving technologies, including advanced
transmissions, aerodynamic improvements, and reduced vehicle mass, in
response to each regulatory alternative. The accompanying PRIA Appendix
provides more detailed and comprehensive results, and the underlying
CAFE Model Output File provide all the information used to construct
these estimates, including the specific combination of technologies
estimated to be applied to every vehicle model/configuration in each of
MYs 2024-2050.
NHTSA's analysis estimates manufacturers' regulatory costs for
compliance with the CAFE standards. As summarized in Table IV-22, NHTSA
estimates manufacturers' cumulative regulatory costs across MYs 2027-
2031 would total $117 billion under the No-Action Alternative and $73.9
billion, $73.9 billion, and $77.8 billion under regulatory alternatives
1, 2, and 3, respectively, considered in this proposal. These
regulatory costs account for fuel-saving technologies added in the
simulation (and AC improvements and other OC technologies through MY
2027). Table IV-22 below shows estimated costs by manufacturer. The
variation in aggregate costs among manufacturers is a function of both
differences in the quantities of vehicles produced for sale in the
United States and differences in technology application and compliance
pathways. Technology costs for each model year are defined on an
incremental basis, with costs equal to the relevant technology applied
minus the costs of the initial technology state in a reference fleet
(i.e., MY 2024).\345\ The accompanying PRIA Appendix presents results
separately for each manufacturer's compliance fleets (i.e., domestic
passenger car, imported passenger car, and light truck) under each
regulatory alternative and model year, and the underlying CAFE Model
Output File also show results for each manufacturer's combined
passenger car fleet (i.e., domestic and imported cars).
---------------------------------------------------------------------------
\345\ As discussed in the Draft TSD, the technology costs
considered in the CAFE Model reflect a markup factor to account for
manufacturer profits and other retail costs. For more detail
regarding the calculation of technology costs, see the CAFE Model
Documentation.
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BILLING CODE 4910-59-P
[[Page 56563]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.102
NHTSA assumes that technology costs are reflected in vehicle
prices. NHTSA's estimates of the average costs to new vehicle
purchasers from MYs 2027-2031 are summarized in Table IV-23 and Table
IV-24.
[GRAPHIC] [TIFF OMITTED] TP05DE25.103
[[Page 56564]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.104
Table IV-25 shows how these costs could vary among manufacturers.
See Chapter 8.2.2 of the PRIA for more details of the effects on
vehicle manufacturers, including compliance and regulatory costs.
[GRAPHIC] [TIFF OMITTED] TP05DE25.105
Fuel savings and regulatory costs act as countervailing forces on
new vehicle sales. All else being equal, as fuel savings increase, the
CAFE Model projects higher new vehicle sales, but as regulatory costs
increase, the CAFE Model projects lower new vehicle sales. Both fuel
savings and regulatory costs increase with stringency. The magnitude of
these fuel savings and vehicle price increases depend on manufacturer
compliance decisions, especially technology application. Draft TSD
Chapter 4.2.1.2 discusses NHTSA's approach to estimating new vehicle
sales. For all scenarios modeled in this analysis, vehicle sales stay
constant relative to the No-Action Alternative through MY 2026, after
which the CAFE Model begins applying technology differently in response
to the standards that would be set under the various regulatory
alternatives. The three regulatory alternatives result in essentially
the same vehicle sales for all model years. The No-Action Alternative,
which has higher projected regulatory costs starting in MY 2027,
results in approximately 0.1 to 0.4 percent lower vehicle sales in each
model year for MY 2027 and beyond, compared to the regulatory
alternatives. Figure IV-1 shows the estimated annual light-duty
industry sales by regulatory alternative.
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Differences in sales and the cost of technology applied to vehicles
in turn tend to affect projected automobile industry labor
utilizations. Because the action alternatives produce similar levels of
technology costs and sales volumes, the related changes in labor
predicted by the CAFE Model across these alternatives are also
negligible. For the No-Action Alternative, since the CAFE Model
directly translates costs into labor hours, the additional technology
costs convert to a higher labor impact than decreased sales volumes,
resulting in a level of automotive employment, measured in person
years, that is about 1 percent higher than the regulatory alternatives
by MY 2031. Figure IV-2 shows the estimated number of person years
under each alternative.
[GRAPHIC] [TIFF OMITTED] TP05DE25.107
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The accompanying Draft TSD Chapter 6.2.5 discusses NHTSA's approach
to estimating automobile industry employment, and the accompanying PRIA
Chapter 8 (and its Appendix I) and CAFE Model Output File provide more
detailed results of NHTSA's light-duty analysis.
2. Effects on Society
NHTSA accounts for the effects of the standards on society using a
benefit-cost framework. The categories considered include private costs
borne by manufacturers and passed on to consumers; external costs,
which include government costs and costs pertaining to emissions,
congestion, noise, and energy security; and costs associated with
safety impacts. In this accounting framework, the CAFE Model records
costs and benefits related to vehicles in the fleet throughout the
lifetime of a particular model year and also allows for the accounting
of costs and benefits by calendar years. Examining program effects
through this lens illustrates the temporal differences in major cost
and benefit components and allows NHTSA to examine costs and benefits
tied only to those vehicles that are directly impacted by this
proposal.
NHTSA splits effects on society into private costs, external costs,
private benefits, and external benefits. Table IV-26 and Table IV-27
present NHTSA's estimates of the costs and benefits of changing CAFE
standards in each alternative considered in this proposal, as well as
the party (private interests or society as a whole) to which they
accrue. Manufacturers are directly regulated under the program and
incur additional production costs when they apply technology to their
vehicle offerings to improve fuel economy. NHTSA assumes that those
costs are fully passed through to new car and truck buyers in the form
of higher prices (and conversely, that decreases in technology costs
pass through as lower prices for consumers).
While incremental maintenance and repair costs and benefits would
change for buyers of new cars and trucks affected by modified CAFE
standards, NHTSA does not include these impacts in the analysis because
they are difficult to estimate, and NHTSA does not currently have
sufficient data to estimate them accurately. NHTSA may include
estimates of the impact that CAFE standards have on lifetime
maintenance and repair costs in future analyses if sufficient data
become available.
The analysis's estimates also take into account the rebound effect,
in which vehicles are driven more as increased fuel economy reduces the
cost of driving. NHTSA also assumes that drivers of new vehicles
internalize 90 percent of the risk associated with increased exposure
to crashes when they engage in additional travel.
The value of fuel savings,\346\ which accrue to new car and truck
buyers, is the largest component of the estimated private benefits
associated with each of the regulatory alternatives. For this proposal,
the estimates reflect forgone fuel savings for consumers, as fuel
efficiency is lower than it would be under the No-Action Alternative.
NHTSA is exploring options for the final rule to present the value of
fuel savings as those savings accrue to multiple buyers over the
vehicle's life; currently, the value of fuel savings is presented as
one value attached to the entire vehicle's life. In contrast, in the
real world, a vehicle may have multiple owners that experience
different benefits between the up-front savings from reduced technology
application under lower fuel economy standards and the forgone fuel
savings for the vehicle's first owner for the time that they own the
vehicle. NHTSA seeks comment on such alternative presentations of fuel
savings that the agency could include for informational purposes in the
final rule, in addition to its traditional presentation of fuel savings
as shown below.
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\346\ Fuel savings are valued in NHTSA's analysis at retail fuel
prices (inclusive of Federal and state taxes).
---------------------------------------------------------------------------
Benefits to new vehicle buyers are also expected to be reduced as
the regulatory alternatives increase the cost of driving relative to
the No-Action Alternative (i.e., lower fuel economy increases the per-
mile cost of travel) and results in more frequent refueling and a
rebound-related reduction in the mobility benefits of travel. While
fuel savings diminish under the proposed standards, by reducing
standards NHTSA enables manufacturers to provide a mix of vehicles with
attributes that consumers desire. NHTSA accounts for forgone
improvements in attributes other than fuel economy due to CAFE
standards through the implicit opportunity cost in its analysis;
however, the agency does not account for changes in the fleet mix
offered by manufacturers in an effort to comply with standards,
including eliminating some models entirely. Because the proposed
standards would prevent these distortionary effects, it would increase
the range of choices available to Americans and would, thus, provide
additional benefits to new car and truck buyers.
In addition to private benefits and costs--those borne by
manufacturers, buyers, and owners of cars and light trucks--there are
other benefits and costs from resetting CAFE standards that are borne
more broadly throughout the economy or society, which NHTSA refers to
as external benefits and costs.\347\ In the case of the proposed
standards, the increase in per-mile fuel costs would lead to a
reduction in congestion and road noise costs, due to reduced rebound
travel.\348\ The external benefits of health outcomes related to
exposure of criteria pollutants and of improved energy security also
would decrease slightly relative to the No-Action Alternative under
each of the regulatory alternatives considered in this proposal.
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\347\ Some of these external benefits and costs result from
changes in economic and environmental externalities from supplying
or consuming fuel, while others do not involve changes in such
externalities but are similar in that they are borne by parties
other than those whose actions impose them.
\348\ NHTSA also accounts for changes in fuel tax revenue that
occurs as a result of changes in fuel consumption. Changes in tax
revenues are considered a transfer and not an economic externality
as defined traditionally, but NHTSA groups these with social costs
instead of private costs because that loss in revenue affects
society as a whole as opposed to impacting only consumers or
manufacturers. The offsetting changes in costs to consumers are
accounted for in the estimates of fuel cost savings, which are
valued at retail prices inclusive of taxes.
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Table IV-26 and Table IV-27 below present NHTSA's estimates of the
benefits and costs of each regulatory alternative at different discount
rates and from both model year and calendar year perspectives.
Estimated net benefits are positive for all regulatory alternatives at
both the 3- and 7-percent discount rates and for each perspective, with
higher costs and benefits estimated in the calendar year analysis.
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3. Physical and Environmental Effects
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\349\ Totals in the following table may not sum perfectly due to
rounding.
\350\ Totals in the following table may not sum perfectly due to
rounding.
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NHTSA estimates various physical and environmental effects
associated with the standards. These include quantities of fuel
consumed, non-criteria and criteria pollutant emissions, and health and
safety impacts. Table IV-28 shows the average annual impacts, including
the on-road fleet sizes, vehicle-miles traveled (VMT), fuel
consumption, and CO2 emissions, across alternatives and
grouped by decade. The overall size of the on-road ICE fleet decreases
in later decades regardless of alternative due to declining ICE sales,
with the lowest on-road fleet size projected under the No-Action
Alternative.\351\ All three regulatory alternatives result in
marginally larger fleets by 2050 compared to the No-Action Alternative.
Increased sales over time increases the existing vehicle stock, thereby
expanding the size of the overall fleet.
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\351\ NHTSA's projection of total sales excludes BEVs and FCEVs.
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In the No-Action Alternative, the decreasing size of the overall
ICE fleet results in ICE VMT decreases in the later decades, with the
lowest average VMT per year occurring between 2041 and 2050. Similarly,
on an annual basis fuel consumption (measured in gallons of gasoline
gallon equivalents) and non-criteria emissions decline in the later
decades due to reduced VMT and new, more efficient vehicles replacing
older, less efficient vehicles in the fleet. Relative to the No-Action
Alternative, all regulatory alternatives considered
[[Page 56569]]
result in slightly lower VMT but increase fuel consumption and non-
criteria emissions due to a larger ICE fleet, with the largest
increases observed in Alternative 1.
[GRAPHIC] [TIFF OMITTED] TP05DE25.110
NHTSA's analysis estimates total annual consumption of fuel by the
ICE on-road fleet on a calendar basis for 2024 through 2050, as shown
in Figure IV-3 for the No-Action Alternative, Alternative 1,
Alternative 2, and Alternative 3. Gasoline consumption decreases over
time, with smaller decreases seen under the regulatory alternatives
compared to the No-Action Alternative. Note that in many of the figures
presented, the lines representing different regulatory alternatives lay
nearly on top of each other, indicating that estimated impacts are very
similar.
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\352\ These rows report total vehicle units observed during the
period. For example, 1,760 million units are modeled in the on-road
fleet for CYs 2024-2030. On average, this represents approximately
251 million vehicles in the on-road fleet for each calendar year in
this calendar year cohort; this is the highest average across all
cohorts.
\353\ These rows report total miles traveled during the period.
For example, 21,577 billion miles traveled in CYs 2024-2030. On
average, this represents approximately 3.08 trillion annual miles
traveled in this calendar year cohort.
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NHTSA estimates the non-criteria emissions attributable to the
light-duty on-road fleet, from both vehicles and upstream energy sector
processes (e.g., petroleum refining, or fuel transportation and
distribution) as shown in Figure IV-4, Figure IV-5, and Figure IV-
6.\354\ All three non-criteria emissions follow similar trends of
decline in the years between 2024-2050, with smaller declines for the
regulatory alternatives compared to the No-Action Alternative.\355\
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\354\ While NHTSA considers the impacts of this rulemaking on
the levels of CO2, CH4, and N2O
emissions, the analysis does not include a monetization of any
changes. An analysis using the domestic-only value of these
emissions is included in a sensitivity case.
\355\ Note that CO2 emissions are expressed in units
of million metric tons (mmt) while emissions from other pollutants
are expressed in metric tons.
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NHTSA estimates criteria pollutant emissions attributable to the
light-duty on-road fleet from both vehicles and upstream energy sector
processes (e.g., petroleum refining, or fuel transportation and
distribution) as shown in Figure IV-8, Figure IV-9, and Figure IV-10.
Changes in criteria pollutant emissions in turn lead to changes in
adverse health outcomes described in later sections. Under the No-
Action Alternative and each regulatory alternative, NHTSA projects a
decrease in emissions of all criteria pollutants attributable to the
light-duty on-road ICE fleet between 2024 and 2050 due to the analogous
decrease in VMT and retirement of older less efficient vehicles. These
criteria for pollutant emissions increase relative to the baseline as
the stringencies of proposed alternatives decrease.
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Health impacts quantified by the CAFE Model include various
instances of hospital visits due to respiratory problems, minor
restricted activity days, non-fatal heart attacks, acute bronchitis,
premature mortality,\356\ and other effects of criteria pollutant
emissions on health. Table IV-29 shows changes in select health
outcomes relative to the No-Action Alternative, across all action
alternatives. The magnitude of the differences relates directly to the
changes in the volumes of criteria pollutants emitted. See Chapter 5.4
of the Draft TSD for information regarding how the CAFE Model
calculates these health impacts.
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\356\ Premature mortality includes deaths that are estimated to
occur before the normally expected life span of persons within a
group defined by specific demographic characteristics.
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NHTSA also quantifies safety impacts in its analysis. These include
the estimated numbers of fatalities, non-fatal injuries, and property
damage crashes occurring over the lifetimes of the light-duty vehicles
considered in the analysis. The following table shows the changes in
these projected outcomes under the action alternatives relative to the
reference baseline.
[[Page 56576]]
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Decreasing fuel economy stringency leads to a reduction in adverse
safety outcomes from rebound-related reductions in VMT (motorists
choosing to drive less as driving becomes more expensive), and the
increase in scrappage causing newer vehicles with more safety features
to enter the fleet sooner. The impacts of mass changes are nonlinear
and depend on the specific fleet receiving those changes, with mass
increases in passenger cars causing a reduction in adverse safety
outcomes and mass increases for light trucks causing an increase in
adverse safety outcomes. Though the point estimates applied suggest a
marginal increase under the regulatory alternatives, NHTSA notes that
none of these safety outcomes due to mass changes can be distinguished
statistically from zero. Chapter 7.1.5 of the PRIA accompanying this
document contains an in-depth discussion of the effects of the various
alternatives on these safety measures, and Chapter 7 of the Draft TSD
contains information regarding the construction of the safety
estimates.
4. Sensitivity Analysis
The regulatory impact analysis conducted to support this rulemaking
relies on many different inputs, parameters, and other analytical
assumptions that reflect the agency's best judgments regarding a
variety of factors relevant to the anticipated outcomes of the proposed
CAFE standards reset, which are all applied within an analytical
framework using the CAFE Model. NHTSA recognizes that the values of
many analytical inputs are uncertain, and some to a significant degree,
which in turn results in uncertainty for some estimates of the
benefits, costs, and other outcomes. Some of the uncertain input
parameters have a considerable influence on specific types of estimated
impacts, and some are likely to do so for the bulk, while others may
affect the results of the analysis more broadly. To understand the
effect that particular assumptions have on the estimated outcomes,
NHTSA conducted a sensitivity analysis by running the CAFE Model using
alternative assumptions (referred to as ``sensitivity cases''). The
results allow NHTSA to explore a range of potential analytical inputs
and to understand the sensitivity of estimated impacts to changes in
these specified model inputs. The sensitivity cases developed for this
analysis span assumptions related to technology applicability and cost,
economic conditions, consumer response, externality values, and safety
assumptions, among others.\357\
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\357\ In contrast to an uncertainty analysis, where many
assumptions are varied simultaneously, the sensitivity analyses
included here vary a single assumption and provide information about
the influence of each individual factor, rather than suggesting that
an alternative assumption would have justified a different Preferred
Alternative.
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A sensitivity analysis can identify two critical pieces of
information: how big an influence does each parameter exert on the
analysis, and how sensitive the model results are to that assumption.
NHTSA acknowledges, however, that influence is different from
likelihood. NHTSA does not mean to suggest that any one of the
sensitivity cases presented here is inherently more likely than the
collection of assumptions that represent the analysis NHTSA conducted
to support the proposals advanced in this rulemaking (referred to as
the ``central analysis''). The sensitivity analysis simply provides an
indication of which assumptions have the greatest impact and the extent
to which future deviations from the central analysis assumptions could
affect the actual future costs and future benefits of the rule.
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BILLING CODE 4910-59-C
Chapter 9 of the accompanying PRIA summarizes results for each of
the sensitivity cases, and detailed model inputs and outputs are
available on NHTSA's website.\359\ The figures in Section IV.B.1
illustrate the relative changes produced by the sensitivity effects of
selected inputs on the costs and benefits estimated for this proposal.
Each collection of figures groups sensitivity cases by the category of
input assumption (e.g., macroeconomic assumptions, technology, and
safety assumptions). The figures provide a sense of which inputs are
ones for which a different assumption would have a much different
effect on analytical findings, and which ones would not have been much
affected. For example, assuming a different oil price trajectory would
have a relatively large effect, as would changing the assumptions about
the effects of changes in vehicle mass on safety outcomes. Chapter 9 of
the PRIA provides an extended discussion of these findings and presents
net benefits estimated under each of the cases included in the
sensitivity analysis. The results presented in the earlier subsections
of Section IV and discussed in Section V are drawn from the central
analysis and reflect NHTSA's best judgments regarding many different
factors; the sensitivity analysis discussed here is simply to
illustrate how differences in assumptions can lead to differences in
analytical outcomes, some of which can be large and some of which may
be smaller.
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\358\ NHTSA's sensitivity cases applying a monetized value to
changes in NCEs use NCE values derived from the 2019 EPA Regulatory
Impact Analysis for the Repeal of the Clean Power Plan. EPA,
Regulatory Impact Analysis for the Repeal of the Clean Power Plan,
and the Emission Guidelines for Greenhouse Gas Emissions From
Existing Electric Utility Generating Units, EPA-452/R-19-003 EPA:
Washington, DC (2019), available at: https://www.epa.gov/sites/default/files/2019-06/documents/utilities_ria_final_cpp_repeal_and_ace_2019-06.pdf (accessed: Sept.
10, 2025). These values (per metric ton) range from $8.98 (2024) to
$13.98 (2050) for CO2, $268.58 to $474.37 for CH4, and $3144.65 to
$5033.59 for N20 (3% discount rate, 2024 dollars). The specific
values used for this sensitivity at both 3-percent and 7-percent
discount rates can be found in the Parameters Input file associated
with these sensitivity cases.
\359\ NHTSA, Corporate Average Fuel Economy, (2025), available
at: https://www.nhtsa.gov/laws-regulations/corporate-average-fuel-economy (accessed: Sept. 10, 2025).
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Overall, NHTSA finds that, for light-duty vehicles, the Preferred
Alternative in this proposal, Alternative 2, produces positive
estimated net benefits under all sensitivity cases, at both 3- and 7-
percent discount rates. Societal net benefits are highest in the
``Mass-size-safety (high)'' case ($46.7 billion) and lowest in the
``Mass-size-safety (low)'' case ($1.3 billion), when applying a 3-
percent social discount rate.
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V. Basis for NHTSA's Tentative Conclusion That the Proposed Standards
Are Maximum Feasible
In this section, NHTSA discusses the statutory and other factors,
data, and analysis that the agency has considered in the selection of
the proposed CAFE standards for MYs 2022-2026 and MYs 2027-2031.
A. EPCA, as Amended by EISA
Under EPCA, NHTSA is required to set separate average fuel economy
standards for new passenger cars and light trucks produced or imported
for sale in the United States at the ``maximum feasible'' levels NHTSA
determines manufacturers can achieve in each model year to which the
standards apply.\360\ That mandate is subject to important limiting
considerations, which center on the statutory concept of ``maximum
feasibility.'' In determining maximum feasibility, NHTSA must consider
the factors set forth in section 32902(f). Specifically, the fuel
economy standards established by NHTSA must be based on consideration
of technological feasibility, economic practicability, the effects of
other Government standards applicable to motor vehicles, and the need
of the Nation to conserve energy.\361\
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\360\ 49 U.S.C. 32902(a) and (b)(2)(B).
\361\ 49 U.S.C. 32902(f).
---------------------------------------------------------------------------
Consistent with the terms of the CAFE program, fuel economy
standards are designed based on light-duty vehicles powered by
``fuel,'' which is defined in EPCA to include gasoline, diesel fuel, or
other liquid or gaseous fuels with similar combustion properties as
identified by NHTSA.\362\ While EPCA includes specific provisions
designed to incentivize automakers to invest in the development of new
technologies, including battery-electric and other alternative-fuel
powertrains, BEVs are fueled by electricity, which is an ``alternative
fuel'' as defined by EPCA.\363\ EPCA prohibits NHTSA from considering
the fuel economy of alternative-fueled vehicles in setting or amending
its standards.\364\ As for dual-fueled vehicles, such as plug-in hybrid
electric vehicles (but not non-plug-in hybrid vehicles),\365\ the
statute requires NHTSA to consider their fuel economy only while
operated exclusively on gasoline or diesel fuel.\366\ EPCA also
prohibits NHTSA from considering the availability of compliance credits
in setting or amending its standards.\367\
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\362\ 49 U.S.C. 32901(a)(10).
\363\ 49 U.S.C. 32901(a)(1)(J).
\364\ 49 U.S.C. 32902(h).
\365\ See 63 FR 66066 (Dec. 1, 1998). Non-plug-in hybrid
vehicles are not dual-fueled vehicles under Chapter 329 because any
electricity generated by the electric motors or other electric
components are generated solely by the petroleum-fueled engine and
the batteries are incapable of charging from an external source: ``a
vehicle which is entirely dependent on a petroleum fuel for its
motive power, regardless of whether electricity is used in the
powertrain, is powered by petroleum.''
\366\ 49 U.S.C. 32901(a)(1), (8), (9), and (10); 49 U.S.C.
32902(h).
\367\ Id. at 32902(h)(3).
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In addition to these considerations, section 32902 includes several
provisions specifying how NHTSA must prescribe CAFE standards,
including the form that the CAFE standards must take and the manner and
timing of setting such standards and any subsequent amendments. The
following subsections discuss in greater detail these requirements,
including the requirement to set maximum feasible fuel economy
standards.
[[Page 56582]]
1. Administrative Provisions Governing CAFE Standard Setting
a. Lead Time, Amendatory Authority, and Number of Model Years for Which
Standards May Be Set at a Time
EPCA requires that NHTSA prescribe new CAFE standards at least 18
months before the beginning of each model year.\368\ In addition, EPCA
authorizes NHTSA to prescribe regulations amending the standard
established previously for a model year to a level that the Secretary
decides is the maximum feasible average fuel economy level for that
model year.\369\ NHTSA had interpreted EPCA previously to allow
amendments reducing the stringency of an industry-wide fuel economy
standard for a particular model year up until the beginning of the
model year in question.\370\ The beginning of the model year is
considered generally to be October 1st of the calendar year preceding
the named model year (e.g., a MY 2027 vehicle might be offered for sale
on or after October 1st, 2026).\371\ However, the statute does not
contain any language suggesting that reading or any limitation on the
model years for which standards may be amended. The only statutory
provision addressing a time limitation of an amendment to an existing
standard states that NHTSA must provide at least 18 months of lead time
if the standards are amended to become more stringent.\372\ EPCA
contains no lead time requirement if the amendment makes an average
fuel economy standard less stringent. As such, NHTSA interprets EPCA as
authorizing amendment of standards after a model year has concluded, so
long as the amendment makes the standard less stringent. NHTSA proposes
to amend standards beginning in MY 2022 as set forth in this NPRM.
Proposing amended standards beginning with MY 2022 is consistent with
the Secretary's direction in the January 28, 2025, memorandum titled
``Fixing the CAFE Program'' and is also the earliest model year for
which NHTSA has not concluded compliance proceedings.
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\368\ 49 U.S.C. 32902(a).
\369\ 49 U.S.C. 32902(c).
\370\ 49 FR 41250, 41255 (Oct. 22, 1984); 53 FR 14241, 14241-
14302 (Apr. 28, 1988).
\371\ See In re Ctr. for Auto Safety, 793 F.2d 1346 (D.C. Cir.
1986).
\372\ 49 U.S.C. 32902(c).
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NHTSA is aware that this is a change in its previous interpretation
of the statute, with respect to generally applicable standards.\373\
NHTSA's prior interpretation was made in response to a manufacturer
request for broad downward adjustment to standards in response to
manufacturer non-compliance. In this case, NHTSA proposes to amend
existing standards because they were promulgated in violation of
specific statutory provisions and do not advance the purposes of the
CAFE program in the manner most faithful to Congress's design. NHTSA
does not believe that Congress intended for NHTSA to leave in place
codified standards promulgated in violation of such statutory
provisions, and moreover, did not intend for NHTSA to place several
vehicle manufacturers in the position of committing violations because
they could not meet a standard that is beyond maximum feasible.\374\
This conclusion is consistent with NHTSA's rationale for amending
standards for low-volume manufacturers in some cases well after the
conclusion of a model year, to avoid penalizing manufacturers for
NHTSA's own conduct (there, a delay in addressing the manufacturers'
petitions).\375\ NHTSA's interpretation here is further supported by
recent legislative action amending the CAFE civil penalty provision,
which applies to years for which the Secretary of Transportation
(NHTSA, by delegation) has not notified a manufacturer of the penalty
due for an average fuel economy less than the applicable standard.\376\
That statutory change likewise applies to MY 2022 and later.\377\
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\373\ 49 FR 41250, 41255 (Oct. 22, 1984) (referencing the EPCA
Conference Report's statement that ``[a]n amendment which has the
effect of making an average fuel economy standard less stringent can
be promulgated at any time prior to the beginning of the model year
in question,'' the Administrative Procedure Act's definition of a
``rule,'' and the agency's belief that Congress intended to provide
certainty and finality for manufacturers' planning purposes and that
Congress intended standards to ``encourage the achievement of
particular fuel economy levels rather than simply ratifying past
conduct.''); 53 FR 14241-14302 (Apr. 28, 1988) (explaining that
retroactive downward adjustments were inconsistent with the
statutory scheme as inferred by congressionally imposed credit and
civil penalty provisions, equity considerations, the APA, and
General Motors' perceived theories of Congressional intent). See
also Gen. Motors Corp. v. Nat'l Highway Traffic Safety Admin., 898
F.2d 165 (D.C. Cir. 1990).
\374\ 49 U.S.C. 32911(b) (``A manufacturer of automobiles
commits a violation if the manufacturer fails to comply with an
applicable average fuel economy standard under section 32902 of this
title.'').
\375\ See 87 FR 39439, 39441 (July 1, 2022).
\376\ Section 40006 of Public Law 119-21, 139 Stat. 72 (July 4,
2025). https://www.congress.gov/119/plaws/publ21/PLAW-119publ21.pdf.
\377\ NHTSA's prior justification that amending standards after
the end of a model year ``would undermine the limits Congress placed
on NHTSA's authority to mitigate penalties'' no longer applies now
that Congress has removed the civil penalty for all model years for
which NHTSA is proposing to amend standards. See Gen. Motors Corp.,
898 F.2d at 173.
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EISA also requires NHTSA to ``issue regulations . . . prescribing
average fuel economy standards for at least 1, but not more than 5,
model years.'' \378\ In the 2020 final rule, NHTSA explained that it
interpreted EISA's legislative history to suggest that Congress
included the 5-year maximum limitation so NHTSA would issue standards
for a period of time where it would have reasonably realistic estimates
of market conditions, technologies, and economic practicability (i.e.,
not setting standards too far into the future because of potential
feasibility challenges or the uncertainty surrounding future market
conditions).\379\ NHTSA explained, however, that the concerns Congress
sought to address by imposing those limitations are not present for
nearer model years where NHTSA already has existing standards and noted
that revisiting existing standards is contemplated by both 49 U.S.C.
32902(c) and 32902(g). NHTSA stated that the agency therefore believed
that it is reasonable to interpret section 32902(b)(3)(B) as applying
only to the establishment of new standards rather than to the combined
action of establishing new standards and amending existing standards.
---------------------------------------------------------------------------
\378\ 49 U.S.C. 32902(b)(3)(B).
\379\ 85 FR 24174, 25129 (Apr. 30, 2020).
---------------------------------------------------------------------------
In addition, NHTSA stated that the statute allows NHTSA to revisit
existing standards and separately the statute allows NHTSA to prescribe
new standards ``for at least 1, but not more than 5, model years'' when
it ``issue[s] regulations.'' NHTSA also explained that it was not clear
whether the statute precluded multiple concurrent or quickly sequential
rulemakings ``issuing regulations'' for different periods of time.
NHTSA provided as an example that it could issue two separate
rulemakings, one amending a single model year's standard and one
setting new standards for the five immediately ensuing model years, but
this would be an unnecessary waste of resources that could be saved by
consolidating agency (and commenter) work into a single rulemaking. For
these reasons, NHTSA concluded that its interpretation was reasonable
and appropriate.
Consistent with the 2020 interpretation, NHTSA continues to believe
that the 5-year maximum applies only to rulemakings establishing new
standards, and not to--as in this case--the amendment of existing
standards. Unlike a situation when NHTSA must be cautious about setting
new standards for distant future years, the agency is proposing amended
standards to rectify placing
[[Page 56583]]
manufacturers in a situation where they violate unlawful standards set
at beyond maximum feasible levels due to the consideration of factors
prohibited explicitly from consideration in 49 U.S.C. 32902(h).
Moreover, as in the example NHTSA provided in the 2020 final rule, the
agency believes the public interest in efficiency is best served by
presenting proposed amendments for all model years covered by this
proposed rule in one notice. NHTSA emphasizes that two separate
analyses were conducted for the 2022-2026 and 2027-2031 standards, as
described elsewhere in the preamble. It made sense, however, to seek
public input on the standards in a single proceeding. In addition, this
is the first time that NHTSA's consideration of maximum feasible
standards for all model years has appropriately excluded the 32902(h)
factors, meaning this is the first time the public will be able to
provide comments on a fuel economy standards trajectory for the
automotive fleet that appropriately only includes gasoline- and diesel-
powered vehicles. Accordingly, NHTSA has concluded that it is
appropriate to present all years covered by this amendment in one
action.
b. Separate Standards for Passenger Automobiles and Non-Passenger
Automobiles
EPCA requires NHTSA to set separate standards for passenger
automobiles and non-passenger automobiles for each model year.\380\
Based on the plain language of the statute, NHTSA has long interpreted
this requirement as preventing NHTSA from setting a single combined
CAFE standard for passenger and non-passenger automobiles. EPCA
requires separate CAFE standards for passenger and non-passenger
automobiles to reflect the different fuel economy capabilities of those
different types of vehicles; over the history of the CAFE program, this
requirement has remained unchanged.
---------------------------------------------------------------------------
\380\ 49 U.S.C. 32902(b)(1).
---------------------------------------------------------------------------
Since 2012, NHTSA has at times proposed or finalized standards for
passenger and non-passenger automobiles that increase at different
numerical rates year over year.\381\ Even if NHTSA set passenger and
non-passenger automobile standards previously with the same numerical
rates of increase (i.e., percentage increase from the prior years'
standard, which could, for example, increase at a rate of 2 percent for
both passenger and non-passenger automobiles), the standards themselves
were different because of the starting point for each fleet. This
underscores that NHTSA's obligation is to set maximum feasible
standards separately for each fleet, based on an assessment of each
fleet's circumstances and considering the 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.
---------------------------------------------------------------------------
\381\ See 85 FR 24174, 25186 (Apr. 30, 2020) (while the agency
finalized a different set of standards, it considered and explained
that net benefits appear to be maximized under the 2 percent/3
percent alternative, which proposed to raise PC standards at 2
percent per year and LT standards at 3 percent per year); 89 FR
52540, 52547 (June 24, 2024) (explaining that after consideration of
relevant data and comments, an alternative that raised PC stringency
at 2 percent per year and held LT stringency at 0 percent per year
for 2 years, followed by 2 percent increases, was maximum feasible).
---------------------------------------------------------------------------
c. Minimum Standards for Domestic Passenger Automobiles
The 2007 EISA CAFE amendments also required NHTSA to begin setting
a separate standard for domestically manufactured passenger
automobiles.\382\ Unlike the generally applicable standards for
passenger and non-passenger automobiles described above, the compliance
obligation of the MDPCS is identical for all manufacturers. The statute
states that any manufacturer's domestically manufactured passenger car
fleet must meet the greater of either 27.5 mpg on average or ``92
percent of the average fuel economy projected by the Secretary for the
combined domestic and non-domestic passenger automobile fleets
manufactured for sale in the United States by all manufacturers in the
model year, which projection shall be published in the Federal Register
when the standard for that model year is promulgated in accordance with
[49 U.S.C. 32902(b)].'' \383\ Consistent with the statutory language
stating that the 92-percent standards must be determined at the time an
overall passenger car standard is promulgated and published in the
Federal Register, NHTSA has also determined that it must recalculate
the MDPCS when amending a passenger car standard.\384\
---------------------------------------------------------------------------
\382\ 49 U.S.C. 32902(b)(4). In the CAFE program, ``domestically
manufactured'' is defined by Congress in 49 U.S.C. 32904(b). The
definition roughly provides that a passenger car is ``domestically
manufactured'' as long as at least 75 percent of the cost to the
manufacturer is attributable to value added in the United States,
Canada, or Mexico, unless the assembly of the vehicle is completed
in Canada or Mexico and the vehicle is imported into the United
States more than 30 days after the end of the model year.
\383\ 49 U.S.C. 32902(b)(4). Since the statutory requirement was
established, the ``92 percent'' has always been greater than 27.5
mpg and foreseeably will continue to be so in the future.
\384\ 77 FR 62624, 63028 (Oct. 15, 2012) (explaining that the
agency does not read EISA as precluding ``any change, ever, in the
minimum standard after it is first promulgated for a model year''
and that ``the language of the statute suggests that the 92 percent
should be determined anew any time the passenger car standards are
revised''); 85 FR 24174, 25124 (Apr. 30, 2020); 87 FR 25710, 25962
(May 2, 2022).
---------------------------------------------------------------------------
Since the first post-EISA CAFE rules establishing the MDPCS (the
2008 proposal for MYs 2011-2015 standards and the subsequent 2009 final
rule for MY 2011 standards), NHTSA has interpreted ``92 percent of the
average fuel economy projected by the Secretary'' to mean 92 percent of
the average fuel economy standard projected by the Secretary.\385\
Consistent with NHTSA's longstanding interpretation, the proposed MDPCS
presented in this NPRM for each model year is based on the projected
passenger automobile standards. NHTSA has also limited the proposed
MDPCS to the gasoline- and diesel-powered vehicles assessed in this
analysis. NHTSA believes doing so is required by EPCA for the reasons
discussed throughout this proposal and in the interpretive rule
``Resetting the Corporate Average Fuel Economy Program,'' issued in May
2025,\386\ which is discussed in more detail below. In short, EPCA
itself is premised on gasoline- and diesel-powered vehicles and it
presumes that U.S. fleets will be composed of those vehicles. It is
inconsistent with the statute's text and structure to peg the domestic
standard to vehicles--specifically EVs, which are powered by an
``alternative fuel'' within the statutory definition--that are
different in kind from the gasoline- and diesel-powered vehicles
presupposed by EPCA.
---------------------------------------------------------------------------
\385\ 74 FR 14196, 14410 (May 29, 2009) (``NHTSA calculated 92
percent of the final projected passenger car standards as the
minimum standard, which for MY 2011 is 27.8.''); 75 FR 25324, 25614
(May 7, 2010); 89 FR 52540, 52792 (June 24, 2024).
\386\ 90 FR 24518 (June 11, 2025).
---------------------------------------------------------------------------
As in the 2020, 2022, and 2024 final rules, NHTSA continues to
recognize industry concerns that actual total passenger car fleet
standards have differed significantly from past projections, perhaps
more so when NHTSA projects into the future. In the 2020 final rule,
the compliance data showed that the standards projected in the 2012
final rule were consistently more stringent than the actual standards
as calculated at the end of the model year, by an average of 1.9
percent. NHTSA stated that this difference indicated that in
rulemakings conducted in 2009 through 2012, NHTSA's and
[[Page 56584]]
EPA's projections of passenger car vehicle footprints and production
volumes underestimated the production of larger passenger cars over the
MYs 2011-2018 period.\387\ Unlike the passenger car standards and light
truck standards, which are vehicle-attribute-based and automatically
adjust with changes in consumer demand, the MDPCS is not attribute-
based, and therefore it does not adjust with changes in consumer demand
and production. Instead, it is a fixed standard established at the time
of the rulemaking. As a result, by assuming a smaller footprint fleet,
on average, than what was actually produced, the MYs 2011-2018 MDPCS
ended up being more stringent and placed a greater burden on
manufacturers of domestic passenger cars than was projected and
expected at the time of the rulemakings that established those
standards.
---------------------------------------------------------------------------
\387\ 85 FR 24174, 25127 (Apr. 30, 2020).
---------------------------------------------------------------------------
In the 2020 final rule, NHTSA concurred with industry concerns over
the impact of changes in consumer demand (especially when contrasted
against what was assumed in the 2012 rulemaking about future consumer
demand for greater fuel economy) on manufacturers' ability to comply
with the MDPCS, particularly for those manufacturers that produce
larger passenger cars domestically. Some of the largest civil penalties
for noncompliance in the history of the CAFE program have been paid
based on noncompliance with the MDPCS.\388\ NHTSA also expressed
concern at that time that consumer demand may shift even more in the
direction of larger passenger cars if fuel prices continue to remain
low. NHTSA explained that sustained low oil prices can be expected to
have real effects on consumer demand for additional fuel economy, and
if that occurs, it is foreseeable that consumers may be even more
interested in 2WD crossovers and passenger-car-fleet SUVs (and less
interested in smaller passenger cars) than they were at the time.
Therefore, to help avoid outcomes from application of the MDPCS in the
MYs 2021-2026 timeframe similar to those observed over the preceding
model years, NHTSA determined that it was reasonable and appropriate to
consider the recent projection errors as part of estimating the total
passenger car fleet fuel economy for MYs 2021-2026. Thus, in the 2020
final rule, NHTSA projected the passenger car fleet fuel economy
standard for each model year and applied an offset based on the
historical 1.9-percent difference identified for MYs 2011-2018.
---------------------------------------------------------------------------
\388\ See the Civil Penalties Report visualization tool at
https://www.nhtsa.gov/corporate-average-fuel-economy/cafe-public-information-center for more specific information about civil
penalties previously paid.
---------------------------------------------------------------------------
NHTSA continued to apply the 1.9-percent offsets in calculating the
MDPCS for the 2022 and 2024 final rules after additional quantitative
and qualitative analysis showing the offset, and specifically the 1.9
percent-value, was still appropriate and reasonable. NHTSA noted in the
2022 final rule its concern with the stringency in overall standards
for MYs 2024-2026 and the increase in the civil penalty rate as reasons
why the agency should continue to employ the 1.9-percent offset,
specifically if automakers struggling to meet the MDPCS would choose to
import their passenger cars rather than produce them domestically.\389\
In the 2024 final rule, NHTSA retained the offset, stating all of the
reasons presented previously for the offset continued to apply.
---------------------------------------------------------------------------
\389\ 87 FR 25710, 25965-25966 (May 2, 2022).
---------------------------------------------------------------------------
For this rulemaking, NHTSA reviewed the analysis it used to
calculate the MDPCS offset and updated the analysis to add new data
sources and refine the methodology used to calculate the offset value.
NHTSA describes the updated analysis in more detail in Section III. The
MYs 2027-2031 proposed MDPCS presented in this NPRM accordingly
includes a recalculated 0.7 percent-offset. NHTSA believes that the
basis for the offset, the inability to project precisely the mix of
vehicles sold in the future, is inapplicable to the proposed MYs 2022-
2026 standards because those standards incorporate the most up-to-date
data available to the agency for vehicle sales volume and footprint
sizes in MY 2022. NHTSA's proposed MDPCS for MYs 2027-2031 include this
offset to ensure that the standard sufficiently reflects industry
capabilities while still considering the original intent behind the
MDPCS.
The proposed MDPCS for each model year is as follows:
[GRAPHIC] [TIFF OMITTED] TP05DE25.126
d. Attribute-Based Standards Defined by a Mathematical Function
EISA requires NHTSA to set CAFE standards ``based on 1 or more
vehicle attributes related to fuel economy and express[ed] . . . in the
form of a mathematical function.'' \390\ Under attribute-based
standards, every vehicle model has a fuel economy target, the levels of
which depend on the level of that vehicle's determining attribute. The
manufacturer's fleet average CAFE performance is calculated by the
harmonic production-weighted average of those targets. This means that
no vehicle is required to meet its target; instead, manufacturers are
free to balance improvements however they deem best within their
fleets.
---------------------------------------------------------------------------
\390\ 49 U.S.C. 32902(b)(3)(A).
---------------------------------------------------------------------------
While CAFE standards for passenger cars and light trucks must be
specified as a mathematical function dependent on one or more
attributes related to fuel economy, NHTSA has the authority to select
which attributes and mathematical functions. Prior to the requirement
that CAFE standards be attribute-based and defined by a mathematical
function, CAFE standards were instead specified as single mpg values
(e.g., 27.5 mpg for passenger cars and 20.7 mpg for light trucks).
Because these single-mpg standards were wholly independent of fleet
composition, these requirements posed a significantly greater technical
challenge for manufacturers producing more larger vehicles for the U.S.
market than for manufacturers focused more on smaller
[[Page 56585]]
vehicles, because smaller vehicles achieve greater fuel economy levels
generally. Therefore, because the standards are fleet-average
standards, these single-mpg standards presented an inherent incentive
to shift production toward smaller vehicles rather than increasing the
application of fuel-saving technologies across entire fleets, meaning
that fuel economy benefits would be available primarily to purchasers
of smaller vehicles, rather than available broadly to consumers with a
more diverse range of vehicle preferences.
In setting attribute-based standards, NHTSA has sought to reflect
the trade-off (i.e., the relationship) between the attribute and fuel
economy, consistent with the overarching purpose of the program to
conserve energy. If the shape of the standards captures these trade-
offs, every manufacturer is more likely to continue adding fuel-
efficient technology across the distribution of the attribute within
their fleet, instead of changing the attribute--and other correlated
attributes, including fuel economy--as part of their compliance
strategy. The shape of the standards is discussed in more detail in
Draft TSD Chapter 1.
Historically, NHTSA has based standards on vehicle footprint, and
the agency is proposing to continue to do so in this rulemaking. As in
previous rulemakings, NHTSA is proposing to define the standards in the
form of a constrained linear function that sets higher (more stringent)
targets for smaller footprint vehicles and lower (less stringent)
targets for larger footprint vehicles. These footprint curves are
discussed in more detail in Section II and Draft TSD Chapter 1.
2. Maximum Feasible Standards
As discussed above, EPCA requires NHTSA to consider four factors in
determining what levels of CAFE standards would be maximum feasible. In
the sections below, NHTSA presents its understanding of the meanings of
those four factors, in addition to other statutory requirements the
agency must consider.
a. Technological Feasibility
Under EPCA, ``[t]echnological feasibility'' refers to whether a
particular method of improving fuel economy is available for deployment
in commercial application in the model year for which a standard is
being established. Though NHTSA is not limited in determining the level
of new standards to technology already being commercially applied at
the time of the rulemaking, NHTSA is not required to attempt to account
for every technology that might conceivably be applied to improve fuel
economy and has considered it unnecessary to do so given that many
technologies address fuel economy in similar ways. It is also important
to note that technological feasibility and economic practicability are
often conflated. The question of whether a fuel-economy-improving
technology does or will exist (technological feasibility) is a
different question from what economic consequences could ensue if NHTSA
effectively requires that technology to become widespread in the fleet
in the absence of sufficient consumer demand for such technologies
(economic practicability). Accordingly, it is possible for standards to
be technologically feasible but still beyond the level that NHTSA
determines to be maximum feasible due to consideration of the other
relevant factors.
NHTSA has long rejected interpretations of the technological
feasibility factor that would require NHTSA to set ``technology-
forcing'' standards. NHTSA has recognized that ``[i]t is important to
remember that technological feasibility must also be balanced with the
other of the four statutory factors. Thus, while `technological
feasibility' can drive standards higher by assuming the use of
technologies that are not yet commercial, `maximum feasible' is still
also defined in terms of economic practicability, for example, which
might caution the agency against basing standards (even fairly distant
future standards) entirely on such technologies'' (emphasis
original).\391\ NHTSA has also concluded that ``as the `maximum
feasible' balancing may vary depending on the circumstances at hand for
the model years in which the standards are set, the extent to which
technological feasibility is simply met or plays a more dynamic role
may also shift.'' \392\
---------------------------------------------------------------------------
\391\ 77 FR 62624, 63015 (Oct. 15, 2012).
\392\ Id.
---------------------------------------------------------------------------
NHTSA continues to believe that the crucial question on the
technological feasibility factor is not whether technologies exist to
meet the standards. Rather, the question is how much existing
technology should be required to be added to new cars and trucks to
conserve fuel, and how appropriately to balance any additional fuel
conserved against the additional cost the mileage requirements will
impose on new vehicles. Regardless of whether technological feasibility
allows the agency to set technology-forcing standards, technological
feasibility does not require, by itself, NHTSA to set technology-
forcing standards if other statutory factors would point the agency in
a different direction. NHTSA has applied this moderating interpretation
of technological feasibility over the course of multiple
rulemakings.\393\
---------------------------------------------------------------------------
\393\ Id.; see also 75 FR 25324, 25605 (May 7, 2010).
---------------------------------------------------------------------------
b. Economic Practicability
NHTSA has long interpreted ``[e]conomic practicability'' to focus
on whether a standard is one ``within the financial capability of the
industry, but not so stringent as to'' lead to ``adverse economic
consequences, such as a significant loss of jobs or the unreasonable
elimination of consumer choice.'' \394\ In evaluating economic
practicability, the agency considers the uncertainty surrounding future
market conditions and consumer demand for fuel economy alongside
consumer demand for other vehicle attributes. NHTSA has explained in
the past that this factor can be especially important during
rulemakings in which the auto industry is facing significantly adverse
economic conditions (with a corresponding risk of significant job
losses). Consumer acceptability is also a major component of economic
practicability,\395\ which can involve consideration of anticipated
consumer responses not just to increased vehicle cost, but also to the
way manufacturers may change vehicle models and vehicle sales mix in
response to CAFE standards. In attempting to determine the economic
practicability of attribute-based standards, NHTSA considers a wide
variety of elements, including the annual rate at which manufacturers
can increase the percentage of their fleet that employs a particular
type of fuel-saving technology, as well as manufacturer fleet mixes.
NHTSA also considers the effects on consumer affordability resulting
from costs to comply with the standards, and consumers' valuation of
fuel economy, among other things.
---------------------------------------------------------------------------
\394\ 67 FR 77015, 77021 (Dec. 16, 2002).
\395\ See Ctr. for Auto Safety v. NHTSA, 793 F.2d 1322 (D.C.
Cir. 1986) (Administrator's consideration of market demand as
component of economic practicability found to be reasonable); see
also Public Citizen v. NHTSA, 848 F.2d 256 (D.C. Cir. 1988)
(Congress established broad guidelines in the fuel economy statute;
agency's decision to set lower standards was a reasonable
accommodation of conflicting policies).
---------------------------------------------------------------------------
NHTSA's consideration of economic practicability depends on a
number of elements. These include expected availability of capital to
make investments in new technologies and production facilities;
manufacturers' expected ability to sell vehicles with certain
technologies; likely consumer choices; and other elements. NHTSA's
[[Page 56586]]
analysis also incorporates assumptions to capture aspects of consumer
preferences, vehicle attributes, safety, and other elements relevant to
an impacts estimate. Although the agency accounts for safety
independently under its longstanding practice, it also considers safety
as closely related to, and in some circumstances, a subcomponent of
economic practicability. Because manufacturers have finite resources to
invest in research and development, investment into the development and
implementation of fuel-saving technology necessarily comes at the
expense of investing in other areas, such as safety technology.
Moreover, when making decisions on how to equip vehicles, manufacturers
must balance cost considerations to avoid pricing more consumers out of
the market. As manufacturers add technology to increase fuel
efficiency, they may decide against installing additional safety
equipment to reduce cost increases. And as the prices of new vehicles
increase beyond the reach of more consumers, such consumers continue to
drive or purchase older, less safely used vehicles. In assessing
economic practicability, NHTSA thus also considers the harm to the U.S.
economy caused by highway fatalities and injuries.
c. The Effect of Other Motor Vehicle Standards of the Government on
Fuel Economy
The effect of other motor vehicle standards of the Government on
fuel economy involves analysis of the effects of compliance with
emission, safety, noise, or damageability standards on fuel economy
capability and thus on average fuel economy. From the CAFE program's
earliest years until recently,\396\ the effects of compliance with such
standards on fuel economy capability over the history of the CAFE
program have been negative ones. For example, safety standards that
have the effect of increasing vehicle weight thereby lower fuel economy
capability, thus decreasing the level of average fuel economy that
NHTSA can determine to be feasible. For recent proposals, including
this proposal, NHTSA has captured the added weight due to safety
standards in baseline vehicle mass estimates. There are no safety
standards with compliance dates within the timeframe of this proposal
expected to impose further effects on light-duty vehicle mass. NHTSA
had also previously considered EPA's motor vehicle emissions standards
set pursuant to the CAA when both agencies had set standards in joint
rules and also set separate yet coordinated standards. However, this
proposal does not incorporate EPA's non-criteria emissions standards as
a result of the proposed rescission of its Endangerment Finding and all
resulting greenhouse gas emissions standards for light-, medium-, and
heavy-duty vehicles and engines.\397\ NHTSA will continue to monitor
actions in this area for the final rule.
---------------------------------------------------------------------------
\396\ 42 FR 63184, 63188 (Dec. 15, 1977); see 42 FR 33534, 33537
(June 30, 1977).
\397\ 90 FR 36288 (Aug. 1, 2025).
---------------------------------------------------------------------------
In addition, as discussed further below in the section titled
``Factors That NHTSA Is Prohibited from Considering'' and at length in
the final rule titled ``Resetting the Corporate Average Fuel Economy
Program,'' \398\ NHTSA acknowledges that in the previous rulemakings,
the agency considered standards set by the California Air Resources
Board (CARB). Regardless of whether NHTSA previously explicitly
considered those standards as ``other motor vehicle standards of the
Government'' or otherwise, NHTSA now explicitly rejects such
consideration. For the reasons explained in this section, CARB's
standards are not ``other motor vehicle standards of the Government on
fuel economy.''
---------------------------------------------------------------------------
\398\ 90 FR 24518 (June 11, 2025).
---------------------------------------------------------------------------
Under EPCA's blanket preemption provision, states may not adopt or
enforce regulatory requirements related to fuel economy standards.\399\
This preemption mandate holds true regardless of whether EPA has
granted waivers for emissions requirements under the CAA. In any event,
the President has signed into law three resolutions adopted by Congress
under the Congressional Review Act (CRA) to disapprove waivers EPA
granted under CAA section 209,\400\ including for, as is relevant to
the model years and vehicle classes under consideration in this
proposal, the Advanced Clean Cars II action. Given the above, CARB
standards cannot be justified as policies properly incorporated in the
analytical baseline for EPCA purposes.
---------------------------------------------------------------------------
\399\ See 49 U.S.C. 32919.
\400\ H.J. Res. 87 (Pub. L. 119-15); H.J. Res. 88 (Pub. L. 119-
16); H.J. Res. 89 (Pub. L. 119-17); see also The White House,
Statement by the President, Last revised: June 12, 2025, available
at: https://www.whitehouse.gov/briefings-statements/2025/06/statement-by-the-president/ (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
In addition, regardless of the status of the CARB standards given
EPA's proposed repeal, NHTSA believes that the best interpretation of
the text of EPCA rebuts the conclusion that CARB's standards are
appropriately considered under this section 32902(f) factor. The
statute uses the singular ``the Government,'' which refers to the
Federal Government, consistent with the 1994 recodification discussed
below. This reference likely reflects that only the Federal Government
has authority to set standards ``on fuel economy,'' as EPCA itself
provides. Under this reading, even if California were held to have
authority to set vehicle emission standards pursuant to a waiver under
the CAA, for purposes of the maximum feasibility determination, such
standards could not be considered because they are not standards of
``the Government,'' as that term is used in EPCA. Again, the use of the
definite article ``the'' in reference to the relevant Government
suggests that Congress limited consideration to standards set by the
Federal Government. Congress easily could have referred to standards
set by ``a government'' if it sought to authorize NHTSA to consider
state standards in the maximum feasible determination. Congress did not
do so.
EPCA's history buttresses the plain meaning of the text. As
initially passed in 1975, EPCA mandated average fuel economy standards
for passenger cars beginning with MY 1978. The law required the
Secretary of Transportation to establish, through regulation, maximum
feasible fuel economy standards for MYs 1981-1984 with the intent to
provide steady increases to achieve the standard established for 1985
and thereafter authorized the Secretary to adjust that standard. For
the statutorily established standards for MYs 1978-1980, EPCA provided
each manufacturer with the right to petition for changes in the fuel
economy standards applicable to that manufacturer, based on the
application of other Federal standards.\401\ A petitioning manufacturer
had the burden of demonstrating that a ``Federal fuel economy standards
reduction'' was likely to exist for that manufacturer in one or more of
those model years and that it had made reasonable technology choices.
``Federal standards,'' for that limited purpose, included not only
safety standards, noise emission standards, property loss reduction
standards, and emission standards issued under various Federal
statutes, but also ``emissions standards applicable by reason of
section 209(b) of [the CAA].'' Critically, all definitions, processes,
and required findings regarding a Federal fuel economy
[[Page 56587]]
standards reduction were located within a single self-contained
subsection of 15 U.S.C. 2002, which applied only to MYs 1978-1980.\402\
---------------------------------------------------------------------------
\401\ Public Law 94-163, 89 Stat. 871 (Dec. 22, 1975). https://www.govinfo.gov/content/pkg/STATUTE-89/pdf/STATUTE-89-Pg871.pdf.
\402\ As originally enacted as part of Public Law 94-163, that
subsection was designated as sec. 502(d) of the Motor Vehicle
Information and Cost Savings Act.
---------------------------------------------------------------------------
In 1994, Congress recodified several laws related to
transportation. As part of this recodification, the CAFE provisions
were moved to title 49 of the United States Code. In doing so,
unnecessary provisions were deleted. Specifically, the recodification
eliminated subsection (d). The House report describing the
recodification declared that the subdivision was already ``executed,''
and described its purpose as ``[p]rovid[ing] for modification of
average fuel economy standards for model years 1978, 1979, and 1980.''
\403\ It is generally presumed, when Congress includes text in one
section and not in another, that Congress knew what it was doing and
made the decision deliberately. As part of the same recodification, the
relevant language now found at 49 U.S.C. 32902(f) changed from ``effect
of other Federal motor vehicle standards on fuel economy'' to ``effect
of other motor vehicle standards of the Government on fuel economy''
(emphasis added).\404\ The Senate report accompanying the legislation
clarified that ``United States Government'' is substituted for ``United
States'' (when used in referring to the Government), ``Federal
Government'' and other terms identifying the Government the first time
the reference appears in a section. Thereafter, in the same section,
``Government'' is used unless the context requires the complete term to
be used to avoid confusion with other governments.\405\
---------------------------------------------------------------------------
\403\ H.R. Rep. No. 103-180, at 583-584, tab. 2A.
\404\ See Public Law 103-272, 108 Stat. 745 (July 5, 1994),
https://www.congress.gov/103/statute/STATUTE-108/STATUTE-108-Pg745.pdf (to revise, codify, and enact without substantive changes
certain laws related to transportation).
\405\ S. Rep. 103-265.
---------------------------------------------------------------------------
Accordingly, consistent with the statutory intent and text, NHTSA
has limited its consideration to the effect of other Federal motor
vehicle standards on fuel economy.
d. The Need of the United States To Conserve Energy
NHTSA has historically interpreted ``the need of the United States
to conserve energy'' to mean ``the consumer cost, national balance of
payments, environmental, and foreign policy implications of our need
for large quantities of petroleum, especially imported petroleum.''
\406\
---------------------------------------------------------------------------
\406\ 42 FR 63184, 63188 (Dec. 15, 1977).
---------------------------------------------------------------------------
(1) Consumer Costs and Fuel Prices
With regard to NHTSA's consideration of the need for energy
conservation, fuel purchases for vehicles are costly to vehicle owners
and operators. Projections of future fuel prices help NHTSA to
determine the value of fuel savings both to new vehicle buyers and to
society and the amount of fuel economy that the new vehicle market is
likely to demand in the absence of new standards. Future fuel prices
also inform NHTSA about ``the consumer cost9 . . . of our need for
large quantities of petroleum.'' \407\ In this proposal, NHTSA's
analysis relies on fuel price projections from EIA's AEO for 2025,
Alternative Transportation Case.\408\ Federal Government agencies
generally use EIA's price projections in their assessment of future
energy-related policies.
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\407\ Id.
\408\ EIA, Annual Energy Outlook 2025: Case Descriptions, EIA:
Washington, DC (2025), available at https://www.eia.gov/outlooks/aeo/assumptions/pdf/case_descriptions.pdf (accessed: Sept. 10,
2025). The Alternative Transportation case removes the following
policies from the modeling: NHTSA CAFE and EPA tailpipe greenhouse
gas standards for light-duty vehicles in MY 2027 and beyond, EPA
Phase 3 tailpipe greenhouse gas standards for freight trucks and
buses in MY 2027 and beyond, EPA low nitrogen oxide requirements for
freight trucks in MY 2027 and beyond, and California Air Resources
Board's Advanced Clean Truck (ACT) rule (for both California and CAA
sec. 177 states). That case also modifies the following behavioral
assumptions: Passenger vehicle manufacturers introduce new electric
vehicle nameplates endogenously based on growth in EV sales, rather
than based on plans announced in 2024; charging infrastructure
buildout is coupled with growth in EV registrations, rather than
being exogenously determined based on private- and public-sector
announcements; and projected increase in eligibility for IRA sec.
30D credits--in other words, manufacturer reshoring of EV and
battery supply chains--is significantly slowed.
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(2) National Balance of Payments
The need of the United States to conserve energy has historically
included consideration of the ``national balance of payments'' because
of concerns that importing large amounts of oil created a significant
wealth transfer to oil-exporting countries and left the U.S.
economically vulnerable.\409\ In the 20th and early 21st centuries, the
U.S. trade deficit was mainly driven by petroleum.\410\ As recently as
2009, almost half of the deficit was composed of petroleum
imports.\411\ However, this concern has largely abated in more recent
CAFE actions, in part because other factors besides petroleum
consumption have since played a bigger role in the U.S. trade deficit,
and because of the substantial rebalancing of international petroleum
markets largely driven by shale oil productivity in the United States.
In light of significant increases in U.S. oil production and
corresponding decreases in oil imports, this concern is likely to
remain far less pronounced for the foreseeable future.\412\
Increasingly, changes in the price of fuel have come to represent
transfers between domestic consumers of fuel and domestic producers of
petroleum rather than gains or losses to foreign entities.
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\409\ 42 FR 63184, 63192 (Dec. 15, 1977) (``A major reason for
this need [to reduce petroleum consumption] is that the importation
of large quantities of petroleum creates serious balance of payments
and foreign policy problems. The United States currently spends
approximately $45 billion annually for imported petroleum. But for
this large expenditure, the current large U.S. trade deficit would
be a surplus.'').
\410\ EIA, Today in Energy: Recent improvements in petroleum
trade balance mitigate U.S. trade deficit, U.S. Energy Information
Administration, Last revised: July 21, 2014, available at: https://www.eia.gov/todayinenergy/detail.php?id=17191 (accessed: Sept. 10,
2025).
\411\ Id.
\412\ Although future changes in trade policy and its potential
macroeconomic impacts remain a source of uncertainty in EIA's
outlooks, the most recent Short Term Energy Outlook projections U.S.
crude oil production to remain around 13.3 million barrels per day
in 2026 compared with 13.4 million barrels per day in 2025, and U.S.
crude oil inventories are expected to increase by almost 12 percent
from 2025 to 2026. See EIA, Short-Term Energy Outlook, Last revised:
Sept. 9, 2025, available at: https://www.eia.gov/outlooks/steo/.
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Although total energy independence is not possible for any country
that participates in the global energy market, the fact that the U.S.
is now a net oil exporter necessarily reduces risks from global price
fluctuation. Even if the U.S. consumed only domestically produced
petroleum and continued to export, the U.S. economy would still be
subject to oil price fluctuations due to external events and
situations. But changes in the oil market mean that the risk of damage
to the U.S. economy and of additional pain for U.S. drivers is lower
than it was in previous decades. To be sure, risk still exists, and
both production and consumption of oil are relevant to how big that
risk might be. But the risk is much lower than it would have been in
the absence of the rapid growth in U.S. oil production, and this
diminished risk means that the need of the U.S. to conserve energy is
significantly less than it was at earlier points in the history of the
program.
(3) Environmental Effects
Beginning with the outset of the CAFE program, NHTSA has
consistently considered environmental issues, mindful of the need to
conserve energy under EPCA, of its statutory authority to set CAFE
standards, and of the National
[[Page 56588]]
Environmental Policy Act (NEPA).\413\ In addition to discussing how
these effects are weighted in NHTSA's balancing of maximum feasible
standards for this action, discussed below, NHTSA also summarizes
information related to the environmental effects of this action in
Chapter 8.2.5 of the PRIA, and in the section below titled ``National
Environmental Policy Act.'' For more detail on the NEPA analysis
conducted in conjunction with this proposal, please refer to the
accompanying Draft Supplemental Environmental Impact Statement (Draft
SEIS).
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\413\ 53 FR 33080, 33096 (Aug. 29, 1988); 53 FR 39275, 39302
(Oct. 6, 1988).
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NHTSA seeks comment on whether Congress has given it authority
under EPCA to consider environmental effects when setting fuel economy
standards. EPCA's charge is for the agency to set maximum feasible fuel
economy standards to reduce national vulnerability to supply shocks
while balancing statutory factors--none of which includes environmental
effects. Among those statutory considerations is the effect of other
Federal government standards on fuel economy. NHTSA has traditionally
considered the fact that the vehicles NHTSA regulates are also subject
to compliance obligations under the Environmental Protection Agency's
criteria emission standards (e.g., mass attributable to adding a
catalytic converter) in setting fuel-economy standards. This is
appropriate, since EPA is the Federal environmental regulator. NHTSA is
not an environmental regulator, and rather than turn NHTSA into one,
Congress instead directed the agency to consider the impact of
regulations established by environmental regulators on fuel economy
when establishing standards. This question of the appropriateness of
NHTSA's historic consideration of environmental effects when setting
fuel economy standards has become more relevant in light of the United
States recent emergence as a net petroleum exporter. NHTSA solicits
comment on whether consideration of potential effects of upstream
activity such as domestic extraction and refining of petroleum
conflicts with or is otherwise not contemplated by Congress' delegation
of fuel-economy regulatory authority to NHTSA, including because those
upstream activities are subject to regulation by the EPA under the
Clean Air Act. In light of EPCA's initial passage as an energy
conservation statute and the United States being a net energy exporter,
the agency seeks comment on whether environmental effects should remain
relevant under ``the need of the United States to conserve energy,'' or
any other factor.
(4) Foreign Policy Implications
U.S. consumption and imports of petroleum products can impose costs
on the domestic economy that are not reflected in the market price for
crude petroleum or in the prices paid by consumers for petroleum
products such as gasoline. These costs include the risk of disruptions
to the U.S. economy caused by sudden increases in the global price of
oil and its resulting impact on fuel prices faced by U.S.
consumers.\414\ Higher U.S. consumption of crude oil or refined
petroleum products could increase the magnitude of external economic
costs, thus increasing the true economic cost of supplying
transportation fuels above the resource costs of producing them.
Conversely, reducing U.S. consumption of crude oil or refined petroleum
products (by reducing motor fuel use) can reduce these external costs.
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\414\ While the U.S. maintains a military presence in certain
parts of the world to help secure global access to petroleum
supplies, that is neither the primary nor the sole mission of U.S.
forces overseas. In addition, the scale of oil consumption
reductions associated with CAFE standards would be insufficient to
alter any existing military missions focused on ensuring the safe
and expedient production and transportation of oil around the globe.
See Chapter 7 of the PRIA for more information on this topic.
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While these costs are considerations, the United States has
significantly increased oil production capabilities in recent years and
has become a net energy exporter.\415\ The U.S. today produces enough
oil to satisfy nearly all its energy needs and is projected to continue
to do so. In 1977, the U.S. consumed 18.43 million barrels of oil per
day, producing 10.39 million, and importing 8.81 million. By 2007, when
EISA was adopted, U.S. consumption had risen to 20.68 million barrels
of oil per day, with production dropping to 7.85 million, and imports
increasing significantly to 13.47 million. By 2022, the landscape had
dramatically shifted toward stability, with U.S. consumption dropping
slightly to 20.01 million barrels of oil per day, production
skyrocketing to 20.08 million, and imports plummeting to 8.32
million.\416\ Further, as petroleum imports have declined
substantially, even the source of such imports has shifted away from
more volatile sources in the Middle East and toward North America. And
the source of these imports shifted dramatically as well. In 1977, 8.64
million barrels of oil per day were imported from OPEC and Persian Gulf
countries, while only 540 thousand barrels were imported from Canada.
In 2007, 8.14 million barrels per day were imported from OPEC and
Persian Gulf countries, but Canadian imports increased to 2.23 million.
By 2022, OPEC and Persian Gulf imports dropped to only 2.23 million
barrels per day, while Canadian imports jumped to 4.37 million. This
significant change in circumstances has added new stable supply to the
global oil market since the adoption of EPCA and EISA, even as U.S.
imports shifted away from volatile and adversarial sources and toward
North American sources. NHTSA's assessment of the weight of this factor
in balancing the ``need of the Nation to conserve energy'' has shifted
accordingly, as discussed in more detail below.
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\415\ EIA, U.S. Energy Facts Explained: The United States has
been an annual net total energy exporter since 2019, Last revised:
July 15, 2025, available at: https://www.eia.gov/energyexplained/us-energy-facts/imports-and-exports.php (accessed: Sept. 10, 2025).
\416\ EIA, Oil and Petroleum Products Explained, Last revised:
Jan. 19, 2024, available at: https://www.eia.gov/energyexplained/oil-and-petroleum-products/imports-and-exports.php (accessed: Sept.
10, 2025).
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e. Factors That NHTSA Is Prohibited From Considering
EPCA also provides that in determining the level at which NHTSA
should set CAFE standards for a particular model year, the agency may
not consider the fuel economy of dedicated automobiles; must consider
dual-fueled automobiles to be operated only on gasoline or diesel fuel;
and may not consider, when prescribing a fuel economy standard, the
trading, transferring, or availability of credits under section
32903.\417\ Because of the location of these restrictions in the United
States Code, at 49 U.S.C. 32902(h), these are also referred to as the
``section 32902(h)'' factors for brevity.
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\417\ 49 U.S.C. 32902(h).
---------------------------------------------------------------------------
On June 11, 2025, NHTSA published in the Federal Register an
interpretive rule titled ``Resetting the Corporate Average Fuel Economy
Program,'' which set forth NHTSA's interpretation of how it could
consider the section 32902(h) limitations when setting maximum feasible
CAFE standards.\418\ That rule described the history surrounding EPCA's
passage in 1975: EPCA was passed in the context of the Arab oil
embargoes of the 1970s when American consumers and the U.S. economy
were threatened by gasoline shortages and high fuel prices. The House
report accompanying EPCA noted that, as a result, the legislation
sought to address the national security
[[Page 56589]]
dangers of America's dependence on foreign oil.\419\ Consistent with
that context, the House report stated that the purpose of the CAFE
program was to induce automakers into offering America's consumers more
fuel-efficient vehicle options to advance the national goal of
conserving energy while simultaneously ``recogniz[ing] that the
automobile industry has a central role in our national economy and that
any regulatory program must be carefully drafted so as to require of
the industry what is attainable without either imposing impossible
burdens on it or unduly limiting consumer choice as to capacity and
performance of motor vehicles.'' \420\
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\418\ 90 FR 24518 (June 11, 2025).
\419\ See H.R. Rep. No. 94-340, at 6-10, 87-88 (1975) (available
in the docket for this action) (``In 1973 the embargo affected 14
percent of U.S. petroleum consumption and precipitated a $10- to
$20-billion drop in GNP. . . . In June of 1973 the average selling
price for regular gasoline was reported to be approximately 38.8
cents per gallon, including tax. By June of 1974 that price had
increased to 55.1 cents per gallon, an addition in excess of 42
percent. Yet in the same period, gasoline demand went from 6.8
million barrels per day to 7.0 million barrels per day. In other
words, gasoline demand actually increased by 2.9 percent even though
prices had jumped by over 42 percent. . . . Part B of title V of the
bill establishes a long range program for improving automobile fuel
economy by requiring manufacturers and importers to meet
increasingly stringent average fuel economy standards, and to
disclose the fuel economy of each new automobile sold in the United
States.'').
\420\ Id. at p. 87.
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As originally enacted, EPCA did not limit the Secretary's
consideration of factors when setting maximum feasible standards.
Limitations in section 32902(h) first appeared in the AMFA.\421\ AMFA
aimed to displace energy derived from imported oil to help achieve
energy security and improve air quality by encouraging the development
of widespread use of methanol, ethanol, and natural gas as
transportation fuels by consumers and the production of methanol,
ethanol, and natural gas-powered motor vehicles. The statute specified
that, in carrying out responsibilities to set maximum feasible fuel
economy standards, ``the Secretary shall not consider the fuel economy
of alcohol powered automobiles or natural gas powered automobiles, and
the Secretary shall consider dual energy automobiles and natural gas
dual energy automobiles to be operated exclusively on gasoline or
diesel fuel.'' \422\ One member of Congress described AMFA's approach
as ``evenhanded'' in that the bill did not favor one alternative fuel
over another; rather, ``[i]t allow[ed] the market to pick the non-
petroleum alternative fuel of the future.'' \423\
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\421\ Alternative Motor Fuels Act of 1988, Public Law 100-494,
102 Stat. 2441 (Oct. 14, 1988). https://www.govinfo.gov/content/pkg/STATUTE-102/pdf/STATUTE-102-Pg2441.pdf.
\422\ Id. at 102 Stat. 2450.
\423\ 134 Cong. Rec. H25122 (Sept. 23, 1988) (statement of Rep.
Sharp).
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The conferees specifically noted their intent to ensure that the
Secretary of Transportation did not erase the AMFA incentives by
setting the CAFE standards for passenger or non-passenger automobiles
``at a level that assumes a certain penetration of alternative fueled
vehicles.'' \424\ Specifically, ``[i]t is intended that [NHTSA's
maximum feasibility] examination will be conducted without regard to
the penetration of alternative fuel vehicles in any manufacturer's
fleet, in order to ensure that manufacturers taking advantage of the
incentives offered by this bill do not then find DOT including those
incentive increases in the manufacturer's `maximum fuel economy
capability.' '' \425\
---------------------------------------------------------------------------
\424\ Id. at 25124 (statement of Rep. Dingell).
\425\ Id.
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The Energy Policy Act of 1992 expanded the section 32902(h)
limitations to include all dedicated alternative-fueled vehicles.\426\
The Energy Policy Act's accompanying House report acknowledged that the
widespread use of alternative fuels faced several problems, but
expanded the AMFA requirements to keep the program ``fuel neutral.''
\427\ This statutory expansion was because ``all the data, experience,
and knowledge gathered concerning alternative fuels over the past two
decades points to the fact that no one fuel is `the winner.' '' \428\
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\426\ Energy Policy Act of 1992, Public Law 102-486 (1992)
(``Title V of the Motor Vehicle Information and Cost Savings Act (15
U.S.C. 2001 et seq.) is amended . . . in section 502(e)--(A) by
striking `alcohol powered automobiles or natural gas powered' and
inserting in lieu thereof `dedicated' '').
\427\ H.R. Rep. No. 102-474, at 35 (1992).
\428\ Id.
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There have been no subsequent substantive changes to the language
in 49 U.S.C. 32902(h),\429\ including with the enactment of EISA in
2007. The statutory prohibition was clear at the time of enactment and
has remained clear: it is impermissible for NHTSA to consider the fuel
economy of dedicated automobiles in setting maximum feasible fuel
economy standards. NHTSA affirms that it did not consider any of these
statutorily prohibited factors in determining the maximum feasible
standards proposed in the present rulemaking.
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\429\ In 1994, Congress restated the laws related to
transportation in one comprehensive title in the recodification of
title 49 of the United States Code, see S. Rep. No. 103-265 (1994);
H.R. Rep. No. 103-180 (1993). The recodification, which was enacted
to restate without substantive change all transportation laws in one
title, substituted simple language for ``awkward and obsolete
terms,'' and eliminated superseded, executed, and obsolete laws. The
standard changes made uniformly throughout the revised section are
explained in a report preceding the law. Important for this
interpretation, ``[t]he words `may not' are used in a prohibitory
sense, as `is not authorized to' and `is not permitted to.' ''
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f. Additional Considerations Relevant to NHTSA's Statutory
Determination of Maximum Feasibility
There are additional considerations relevant to NHTSA's
determination of maximum feasible standards that the agency evaluates
in conjunction with its analysis of the four enumerated section
32902(f) factors mentioned above.
NHTSA has historically considered the potential for adverse safety
consequences in setting CAFE standards, both independently and in the
context of the section 32902(f) factors.\430\ NHTSA assesses the
potential safety impacts of alternative standards and considers them in
balancing the statutory considerations and determining the maximum
feasible level of the standards. Courts have upheld NHTSA's
implementation of EPCA in this manner.\431\
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\430\ See 42 FR 33534, 33551 (June 30, 1977).
\431\ See Center for Biological Diversity v. NHTSA, 538 F.3d
1172, 1203-04 (9th Cir. 2008) (upholding NHTSA's analysis of vehicle
safety issues associated with weight in connection with the MYs
2008-2011 light truck CAFE rulemaking).
---------------------------------------------------------------------------
NHTSA also considers consumer demand, which is ``not specifically
designated as a factor, but neither is it excluded from consideration;
the factors of `technological feasibility' and `economic
practicability' are each broad enough to encompass the concept.'' \432\
As the D.C. Circuit has recognized, NHTSA ``is directed to weigh the
`difficulties of individual automobile manufacturers;' there is no
reason to conclude that difficulties due to consumer demand for a
certain mix of vehicles should be excluded.'' \433\
---------------------------------------------------------------------------
\432\ Ctr. for Auto Safety v. Nat'l Highway Traffic Safety
Admin., 793 F.2d 1322, 1338 (D.C. Cir. 1986).
\433\ Id. at 1339.
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In concert with E.O. 12866, NHTSA considers net benefits as
relevant to determining maximum feasible CAFE standards. EPCA does not
mandate that NHTSA set standards at the point at which net benefits are
maximized, and NHTSA does not believe it is compelled to do so.\434\
That said, this proposed rule
[[Page 56590]]
is net beneficial as required by DOT Order 2100.7, Ensuring Reliance
Upon Sound Economic Analysis in Department of Transportation Policies,
Programs, and Activities.\435\ While E.O. 12866 states that agencies
should ``in choosing among alternative regulatory approaches, . . .
select those approaches that maximize net benefits,'' \436\ even if
NHTSA believed it could quantify enough relevant factors to determine
the CAFE levels at which net benefits were maximized with reasonable
accuracy, there may be other considerations that would lead the agency
to conclude that maximum feasible CAFE standards are not the ones that
maximize net benefits--especially if weighing statutory factors would
lead to a different conclusion. For example, in 2012, NHTSA rejected
the regulatory alternative that appeared to maximize net benefits (and
all alternatives more stringent than that one) based on the conclusion
that even though estimated net benefits were maximized, the ``resultant
technology application and cost'' were simply too high, and thus made
those standards economically impracticable, and thus beyond maximum
feasible.\437\
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\434\ See the 2010 final rule, which considered among the
regulatory alternatives one that maximized net benefits, but
explained that nothing in EPCA or EISA mandated that NHTSA choose
CAFE standards that maximize net benefits (75 FR 25324, 25606 (May
7, 2010)); the 2012 final rule, which also considered among the
regulatory alternatives one that maximized net benefits, and also
explained that nothing in EPCA or EISA mandated that NHTSA choose
CAFE standards that maximize net benefits, in fact, directly
rejecting the regulatory alternative that maximized net benefits as
beyond maximum feasible for the MYs 2017-2025 timeframe (77 FR 62624
(Oct. 15, 2012)); and the 2020 final rule, which stated that if the
difference in net benefits between regulatory alternatives was
within $20 billion that was relatively small in the total context of
the program and therefore the agency did not believe that the point
at which net benefits were maximized was meaningful for determining
maximum feasible CAFE standards in that final rule.
\435\ See DOT, Ensuring Reliance Upon Sound Economic Analysis in
Department of Transportation Policies, Programs, and Activities,
Last revised: Jan. 29, 2025, available at: https://www.transportation.gov/mission/ensuring-reliance-upon-sound-economic-analysis-department-transportation-policies-programs
(accessed: Sept. 10, 2025), which requires DOT rulemaking activities
to be based on sound economic principles and analysis supported by
rigorous cost-benefit requirements and data-driven decisions
regardless of whether the rulemaking falls below the economic
threshold required for review by the Office of Information and
Regulatory Affairs.
\436\ 58 FR 51735 (Oct. 4, 1993).
\437\ 77 FR 63050 (Oct. 15, 2012).
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In addition, NHTSA has historically considered that some
manufacturers may choose to pay a civil penalty rather than meet their
applicable CAFE standard if the cost of paying the civil penalty is
less than the cost of adding fuel economy technology. NHTSA did so
through an option in the CAFE Model's Market Data Input file that
provided that, if ``Y'' for ``yes'' was selected for a specific
manufacturer's fine payment preferences, then the algorithm would stop
applying additional technology to this manufacturer's product line when
cost-effective technology solutions were exhausted.\438\ NHTSA had
historically justified programming the CAFE Model's technology
selection algorithm accordingly because some manufacturers did choose
to pay a civil penalty when applicable (i.e., when the civil penalty
rate was higher than $0) rather than apply technology, and NHTSA
believed that its modeling was intended to reflect manufacturer
decision-making in response to standards, even if that decision was to
pay penalties.
---------------------------------------------------------------------------
\438\ See CAFE Model Documentation for 2024 FRM, at 82.
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In July 2025, Congress eliminated CAFE civil penalties, resetting
the penalty rate to $0. In this rulemaking, and notwithstanding the
change in the CAFE penalty rate, NHTSA has assumed, based upon its
review and analysis of the relevant statutory provisions, that
manufacturers will make the maximum practicable effort to comply with
the proposed standards. ``Practicable'' in this context means subject
to real-world constraints on technology application such as refresh and
redesign cycles and technology applicability, concepts discussed in
detail in Section II. This reading of all of EPCA's provisions best
effectuates the statute's command that NHTSA establish maximum feasible
standards that achieve industry-wide fuel economy improvements.\439\
NHTSA remains charged with setting maximum feasible standards and the
July 2025 amendment only altered the civil penalty rate. If NHTSA
considered a manufacturer's ability to elect a $0 penalty as a factor
in setting standards, it could significantly distort the consideration
of maximum feasible standards by making virtually any standards look
feasible. Making the assumption that manufacturers will make maximum
practicable efforts to comply means that the 49 U.S.C. 32902(f) factors
that NHTSA must consider in setting maximum feasible standards--in
particular, economic practicability--are given meaning. To be clear,
this does not mean NHTSA assumes all manufacturers will comply with
standards for all fleets. For example, if a manufacturer could not
redesign a portion of their fleet within the standard-setting years or
if their baseline compliance position was simply lower than that of the
rest of the industry, the CAFE Model is not assuming the manufacturer
will nevertheless comply at any cost. This approach appropriately
places the focus in standard setting on the feasibility of
manufacturers to meet the standards through their vehicle production,
consistent with the statutory direction to set maximum feasible
standards without regard to the availability of compliance pathways
that NHTSA cannot statutorily consider.\440\
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\439\ NHTSA notes that in all modern CAFE analyses NHTSA
employed a threshold at which regulatory costs (technology costs
plus civil penalty payments) would be indicative that a standard
exceeded maximum feasibility. NHTSA's longstanding position that a
standard that would require significant civil penalty payment would
exceed maximum feasibility remains unchanged.
\440\ 49 U.S.C. 32902(h). It could be considered evading the
statutory prohibition to instead consider an alternative means of
addressing a shortfall, such as through the use of credit
application.
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NHTSA's modeling assumption that manufacturers will make maximum
practicable efforts to comply with CAFE standards despite the $0
penalty rate is supported by longstanding real-world experience. For
example, the 1979 ``Automotive Fuel Economy Program Third Annual Report
to the Congress'' issued by DOT stated in its recommendation that the
statutory scheme be amended to allow a longer period for credit carry
forward and carry back that ``[a] number of manufacturers have raised
the point that failure to meet the fuel economy standards involves a
violation of the law, regardless of whether the short fall involves a
penalty or involves the use of credits being carried forward or
backward. The manufacturers have expressed strong reluctance to engage
in any corporate planning that would involve violations.'' \441\
---------------------------------------------------------------------------
\441\ 44 FR 5742 (Jan. 29, 1979).
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Today and more recently, many manufacturers have formal corporate
policies committing themselves to complying with applicable legal
standards. For example, Jaguar Land Rover states in its Code of Conduct
that the products and services that they offer ``shall comply with
applicable laws, including emissions and safety standards.'' \442\ In
the proposal preceding the 2024 final rule, NHTSA sought comment on its
manufacturer fine payment preference assumptions--which are
differentiated by specific manufacturer and model year--and Jaguar Land
Rover commented that they do ``not view fine payment as an appropriate
compliance route or as a
[[Page 56591]]
flexibility in the regulation.'' \443\ NHTSA changed this assumption
for Jaguar Land Rover for the 2024 final rule. Similarly, the General
Motors (GM) global environmental policy states that the company is
``committed to complying with all applicable laws and regulations,''
\444\ and Toyota's Code of Conduct states that Toyota will comply with
``applicable laws and regulations'' and ``international environmental
standards.'' \445\ Honda's corporate responsibility statement likewise
states that Honda shall comply with all applicable environmental laws
and regulations in all jurisdictions in which they operate,\446\ and
Stellantis' code of conduct and most recent Climate Policy Report state
that the company is both committed to complying with applicable laws
and to CAFE compliance specifically.\447\ NHTSA does not assume that
all companies listed have formerly treated civil penalty payment as a
violation of CAFE standards, but rather that when an applicable
standard is in effect, manufacturers have reasons to give that standard
due consideration even given a $0 penalty rate. NHTSA thus believes
that it is reasonable to assume in its analysis of maximum feasibility
that manufacturers will make the maximum practicable effort to comply
with the applicable standards. NHTSA seeks comment on this assumption.
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\442\ Jaguar Land Rover Code of Conduct, p. 16, available at:
https://www.jlr.com/download-centre?_gl=1*1nnalls*_ga*MTkyNDk3NDUzNy4xNzUyNTk3MDE4*_ga_G78VTFVFM0*czE3NTI1OTcwMTckbzEkZzEkdDE3NTI1OTcwNTYkajIxJGwwJGgw (accessed:
Sept. 10, 2025).
\443\ Jaguar, Docket No. NHTSA-2023-0022-57296, at p. 5.
\444\ GM, General Motors Global Environmental Policy (2023),
available at: https://investor.gm.com/static-files/f5f872bd-9612-47f9-a5e1-d6c0ce1e6772 (accessed: Sept. 10, 2025).
\445\ Toyota Code of Conduct, pp. 14 and 17 (2023), available
at: https://www.toyota.com/content/dam/tusa/usa/our-story/code-of-conduct-en.pdf (accessed: Sept. 10, 2025).
\446\ Honda, Honda Corporate Responsibility Statement, available
at https://csr.honda.com/longform-content/honda-corporate-responsibility-statement/ (accessed: Oct. 20, 2025).
\447\ Stellantis, Code of Conduct, available at https://www.stellantis.com/content/dam/stellantis-corporate/group/governance/code-of-conduct/Stellantis_CoC_EN.pdf (accessed: Oct. 21,
2025); Stellantis, 2024/2025 Climate Policy Report, https://www.stellantis.com/content/dam/stellantis-corporate/sustainability/csr-disclosure/stellantis/2024/Stellantis-2024-Climate-Policy-Report.pdf (accessed: Oct. 21, 2025).
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B. Other Statutory Requirements
1. Administrative Procedure Act
The APA governs agency rulemaking generally and provides the
standard of judicial review for agency actions. To be upheld under the
``arbitrary and capricious'' standard of judicial review under the APA,
an agency rule must be rational, based on consideration of the relevant
factors, and within the scope of authority delegated to the agency by
statute. The agency must examine the relevant data and articulate a
satisfactory explanation for its action, including a ``rational
connection between the facts found and the choice made.'' \448\ The APA
also requires that agencies provide notice and comment to the public
when proposing regulations,\449\ as NHTSA is doing with this NPRM and
its accompanying materials.
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\448\ Burlington Truck Lines, Inc. v. U.S., 371 U.S. 156, 168
(1962).
\449\ 5 U.S.C. 553.
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2. National Environmental Policy Act
The National Environmental Policy Act of 1969, 42 U.S.C. 4321 et
seq., as amended (NEPA) directs that environmental considerations be
integrated into the Federal decision-making process, considering the
purpose and need for agencies' actions. To explore the potential
environmental consequences of this rulemaking action, NHTSA prepared a
Draft Supplemental Environmental Impact Statement (Draft SEIS) for the
proposed rule. Although NHTSA is proposing MYs 2022-2031 CAFE
standards, because no change in manufacturer behavior is possible for
MYs 2022-2026 passenger car and light truck fleets, the main analyses
of reasonably foreseeable impacts of the Proposed Action and
alternatives presented in the Draft SEIS cover expected environmental
impacts associated only with the proposed MYs 2027-2031 standards.
EPCA and EISA require that the Secretary of Transportation
determine the maximum feasible levels of CAFE standards in a manner
that disregards the potential use of CAFE credits or application of
alternative fuel technologies toward compliance in model years for
which NHTSA is issuing new standards.\450\ NEPA, however, does not
impose such constraints on analysis; instead, NEPA requires Federal
agencies to consider reasonably foreseeable environmental impacts of
their proposed actions.\451\ NHTSA's Draft SEIS therefore presents
results of an ``unconstrained'' analysis that considers manufacturers'
potential use of CAFE credits and application of alternative fuel
technologies (including PHEVs using their charge depleting fuel economy
values, BEVs and FCEVs) to allow consideration of real-world
environmental consequences of the proposed action and
alternatives.\452\ The rest of this preamble, and importantly NHTSA's
balancing of relevant EPCA/EISA factors explained in Section V.C.1 and
2, employs the ``standard setting'' modeling to avoid consideration of
the prohibited items in 49 U.S.C. 32902(h) in determining maximum
feasible standards. As a result, the impacts reported in this section
may differ from those reported elsewhere in the preamble. NHTSA
conducts modeling both ways (``standard setting'' and
``unconstrained'') to reflect the various statutory requirements of
EPCA/EISA and NEPA, respectively.
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\450\ 49 U.S.C. 32902(h). See Resetting the Corporate Average
Fuel Economy Program; Interpretive Rule, 90 FR 24518 (June 11,
2025).
\451\ 42 U.S.C. 4332(2); DOT Order 5610.1D, sec. 13.f.
\452\ See Appendix C of the Draft SEIS for a discussion of the
full range of modeled electrified technologies.
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NHTSA's Draft SEIS describes the reasonably foreseeable impacts
across a variety of environmental resources, including energy, air
quality, emissions effects, and historic and cultural resources. The
impacts of the Proposed Action and alternatives are discussed in
proportion to their significance, qualitatively and quantitatively, as
applicable.\453\ The findings of the analysis are summarized in Section
V.C.3, and more detailed discussion--in particular for any qualitative
resource assessment--can be found in the Draft SEIS.
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\453\ Section 13.g(2) of DOT Order 5610.1D.
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The Draft SEIS is one input among many to NHTSA's decision-making
process to set CAFE standards. In preparing the Draft SEIS, NHTSA has
considered and taken into account the Supreme Court's recent opinion in
Seven County Infrastructure Coalition v. Eagle County, Colorado and its
progeny.\454\ Agencies are granted substantial deference to determine
the scope of the environmental effects that they address and may decide
whether to evaluate environmental effects from separate projects
upstream or downstream from this action.\455\
[[Page 56592]]
Because the Proposed Action amends standards for vehicle model years
for which CAFE standards have previously been established, the Draft
SEIS discusses certain potential environmental effects from sectors
that EPCA does not delegate authority to NHTSA to regulate. NHTSA's
prior CAFE EISs contained analysis of the potential environmental
impacts from these sectors. Seven County made clear, however, that NEPA
does not require NHTSA to analyze potential environmental effects from
these sectors.
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\454\ Seven Cnty. Infrastructure Coal. v. Eagle Cnty., Colorado,
145 S. Ct. 1497 (2025); see also Sierra Club v. FERC, 145 F.4th 74,
88-9 (D.C. Cir. 2025).
\455\ See Seven Cnty. Infrastructure Coal. v. Eagle Cnty.,
Colorado, 145 S. Ct. 1497, 1504 (2025) (``Courts should defer to
agencies' discretionary decisions about where to draw the line when
considering indirect environmental effects and whether to analyze
effects from other projects separate in time or place. See
Department of Transportation v. Public Citizen, 541 U.S. 752, 767,
124 S. Ct. 2204, 159 L.Ed.2d 60. In sum, when assessing significant
environmental effects and feasible alternatives for purposes of
NEPA, an agency will invariably make a series of fact-dependent,
context-specific, and policy-laden choices about the depth and
breadth of its inquiry--and also about the length, content, and
level of detail of the resulting EIS. Courts should afford
substantial deference and should not micromanage those agency
choices so long as they fall within a broad zone of
reasonableness.'').
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NHTSA has determined that analyses of such effects are not
necessary for reasoned decision-making with respect to setting CAFE
standards, because Congress has not given NHTSA authority under EPCA to
take those effects into account when setting CAFE standards. NHTSA
includes a discussion of these effects in the Draft SEIS solely for
informational purposes.
Additionally, in light of the Seven County opinion, together with
the 2023 legislative amendments to the NEPA statute and the 2025
rescission of CEQ NEPA regulations, NHTSA seeks comment on whether
NHTSA is required to prepare an EIS for any similar CAFE standard-
setting action--that is to say, whether Congress has given NHTSA
discretion, when setting CAFE standards, to take into account the
potential environmental effects of its CAFE standards in terms of the
environmental effects from the sector that those standards directly
regulate (i.e., the regulated vehicles themselves).
C. Evaluating the Statutory Factors and Other Considerations To Arrive
at the Proposed Standards
The following discussion contains NHTSA's explanation of how the
agency has considered the analysis in this preamble and the
accompanying Draft TSD and PRIA and other relevant information in
tentatively determining that the proposed standards are maximum
feasible for MYs 2022-2031 passenger cars and light trucks. As
discussed in detail throughout the section below, NHTSA believes the
proposed small, steady, incremental increases in fuel economy standards
over time, which preserve the ability for manufacturers to focus on
safety, affordability, and consumer choice, are reasonable and
appropriate, and appropriately balance the four EPCA factors.
1. Why is NHTSA's tentative conclusion different from the 2020, 2022,
and 2024 final rules?
The fuel economy standards NHTSA has promulgated in recent years
have failed to satisfy faithfully EPCA's requirements in 49 U.S.C.
32902(h) because the prior standards considered the fuel economy of
dedicated vehicles and dual-fueled vehicles in charge-depleting mode.
Consequently, they do not advance and, indeed, have come to undermine
the goals established in EPCA for the CAFE program. In accordance with
its authority to reconsider and modify past policy decisions,\456\ and
in exercise of the Secretary's express authority to ``prescribe
regulations amending'' CAFE standards,\457\ NHTSA now proposes to reset
the CAFE program and sets out the following reasons for the proposed
changes in this NPRM.
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\456\ See, e.g., Phoenix Hydro Corp. v. FERC, 775 F.2d 1187,
1191 (D.C. Cir. 1985); Alabama Educ. Ass'n v. Chao, 455 F.3d 386,
392 (D.C. Cir. 2006) (quoting Motor Vehicle Mfrs. Ass'n of U.S.,
Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 57 (1983));
Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2125 (2016); FCC
v. Fox Television Stations, Inc., 556 U.S. 502 (2009).
\457\ 49 U.S.C. 32902(c).
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As summarized in NHTSA's final rule published on June 11,
2025,\458\ and relevant to the model years under consideration in this
action, NHTSA in its 2020, 2022, and 2024 final rules took the position
that the agency could account for the factors prohibited from
consideration in section 32902(h) by using a narrow construction of
that provision. This narrow interpretation permitted dedicated
alternative and dual-fueled vehicles to be added to the fleet of
vehicles in response to reasons other than NHTSA's CAFE standards,\459\
and outside of the years for which NHTSA was setting standards.
Specifically, in the 2022 and 2024 final rule baselines, NHTSA
accounted for Zero Emission Vehicle (ZEV) mandates applicable in
California and the other states that have adopted them,\460\ and some
vehicle manufacturers' voluntary commitments to the state of California
to continued annual nationwide reductions of vehicle greenhouse gas
emissions through MY 2026, with greater rates of electrification than
would have been expected under NHTSA's 2020 final rule; and in all
three final rules' baselines, NHTSA accounted for manufacturers' joint
responses to previously promulgated fuel economy and greenhouse gas
emissions standards, which included dedicated EVs. NHTSA prohibited the
consideration of dedicated or dual-fueled vehicles only as a compliance
option in response to the agency's fuel economy standards during
``standard setting'' years (i.e., the model years being evaluated as
the subject of the active rulemaking), and similarly prohibited
consideration of manufacturers' use of compliance credits only during
the standard setting years. In other words, the model did not apply
dedicated or dual-fueled technology to a manufacturer's fleet of
vehicles when simulating a cost-effective pathway for the manufacturer
to comply with a given level of CAFE standards in standard setting
years only, but application of the technology was otherwise permitted.
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\458\ 90 FR 24518 (June 11, 2025).
\459\ In accordance with E.O. 12866 of Sept. 30, 1993 (58 FR
51735, Oct. 4, 1993) and OMB Circular A-4 (Sept. 17, 2003), to
evaluate properly the benefits and costs of regulations and their
alternatives, agencies must identify a ``no action'' baseline: what
the world will be like if the proposed rule is not adopted.
\460\ 42 U.S.C. 7507. Other states have adopted California's ZEV
program requirements under sec. 177 of the Clean Air Act (so-called
``Section 177 states'').
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As NHTSA concluded in the June 2025 final rule and reaffirms here,
its prior consideration of the factors prohibited in section 32902(h)--
even if in response to reasons other than NHTSA's standards and even if
in non-standard setting years--is inconsistent with a plain reading of
section 32902(h) and with the most faithful approach to standard
setting in furtherance of the design and purposes of EPCA.
As discussed below, the large increases in the stringency of
standards applicable to the succeeding model years through MY 2026 were
not feasible or practicable, within the meaning of EPCA, for new gas-
powered cars and trucks likely to be produced in those years. The
inclusion of EVs inherently impacted the agency's determination of
maximum feasible standards because EVs are generally imputed to have
significantly higher fuel economy than ICE vehicles.\461\ NHTSA would
not have proposed or adopted standards as stringent as the previous
standards if NHTSA had not considered the fuel economy of EVs in its
modeling analysis. NHTSA reasoned that this was appropriate because
``accounting for technology improvements that manufacturers would make
even in the absence of CAFE standards allows NHTSA to gain
[[Page 56593]]
a more accurate understanding of the effects of the final rule.'' \462\
However, the inclusion of dedicated vehicles in NHTSA's previous
analysis impacted materially the standards that ultimately were
promulgated.
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\461\ Fuel economy for EVs is determined using the PEF set by
the Department of Energy. For example, one EV manufacturer had a
fuel economy performance of 739.9 and 751.9 miles per gallon for its
MY 2020 domestic passenger and light truck fleets as compared to the
43.4 and 30.2 miles per gallon overall performance of the same
fleets for all manufacturers.
\462\ 89 FR 52540, 52611 (June 24, 2024).
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The following chart shows the stringency of the existing CAFE
standards for MYs 2022-2026 passenger cars and light trucks as
estimated in the 2020 and 2022 final rules and compares those standards
to the provisional (i.e., not based on EPA final compliance data) fuel
economy performance levels of gas-powered vehicles manufactured for
sale in MYs 2022-2024.\463\
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\463\ Provisional performance values are based on non-final fuel
economy performance (i.e., submitted to NHTSA as part of
manufacturers' pre- and mid-model year reports, but not EPA final
compliance data) and are subject to change based on final verified
fuel economy values and sales volumes.
[GRAPHIC] [TIFF OMITTED] TP05DE25.127
The gasoline- and diesel-powered vehicle fleet--the only fleet that
NHTSA is allowed to consider in setting standards--is unable to comply
with the previously estimated standards in all model years and all
regulatory classes for which the agency has provisional gasoline- and
diesel-powered vehicle fuel economy performance data; the noncompliance
increases in each successive model year because the baseline fleet upon
which the current standards continuously apply stringency increases is
inclusive of EVs that inflate overall fleet fuel economy performance.
Indeed, compared to the provisional performance data for the 2022,
2023, and 2024 passenger car fleets, the 2022 standards are 12.9
percent, 15.3 percent, and 19.4 percent higher, respectively. Compared
to the provisional performance data for the 2022, 2023, and 2024 light
truck fleet, the 2022 standards are 7.0 percent, 9.1 percent, and 15.1
percent higher, respectively. While some may argue that such an
analysis is not relevant when conducted across the entire U.S. fleet,
because fuel economy standards apply to individual manufacturer fleets,
the conclusion that the 2022 standards exceeded maximum feasibility is
confirmed on a manufacturer-by-manufacturer fleet level analysis as
well. On an individual manufacturer basis, only a single manufacturer's
passenger car fleet can meet the MY 2022 standard with gasoline- or
diesel-fueled vehicles (Hyundai's domestic passenger car fleet), and
only a single manufacturer's gasoline- or diesel-fueled light truck
fleet meets their standard (Subaru). This information confirms that the
existing standards were set in a way that considered factors beyond the
capability of gasoline- and diesel-powered vehicle fleets at the time
the standards were promulgated.
NHTSA also recognizes that its tentative conclusion that MYs 2022-
2023 standards are legally impermissible differs from NHTSA's and EPA's
joint 2020 final rule.\464\ However, that final rule also suffered from
some of the same deficiencies as the 2022 and 2024 final rules by
including consideration of the section 32902(h) factors, though to a
lesser extent than the 2022 and 2024 final rules because of the
inclusion of CARB's ZEV standards in the baseline used for those later
rules. Furthermore, the annual 1.5-percent rate of increase applied in
the 2020 final rule, which reflected consideration of input provided by
several major automakers and other interested parties, has not proven
to reflect the real-world year-over-year fuel economy improvements
feasible for gasoline- and diesel-powered vehicles. Indeed, compared to
the provisional performance data for the 2022, 2023, and 2024 passenger
car fleets, the 2020 standards are 13.7 percent, 16.3 percent, and 12.4
percent higher, respectively. Compared to the provisional performance
data for the 2022, 2023, and 2024 light truck fleet, the 2020 standards
are 7.7 percent, 9.8 percent, and 8.5 percent higher, respectively.
---------------------------------------------------------------------------
\464\ 85 FR 24174 (Apr. 30, 2020).
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The same faults apply to the existing standards for MY 2027 and
beyond. For passenger cars, based on NHTSA's updated estimates of
manufacturer compliance with the No-Action Alternative, approximately
77 percent of the MY 2027 fleet will not be able to comply with the
standard and only three individual manufacturers' fleets will
comply.\465\ This is likely based on the significant (8 percent, 8
percent, and 10 percent) stringency increases in MYs 2024-2026, which,
as discussed in Section III, greatly outweigh manufacturers' ability to
improve the fuel economy of their ICE fleets.\466\ In fact, NHTSA
estimates that the gasoline- and diesel-fueled passenger car fleet will
not be able to comply with the standard in any year from MYs 2027-2031,
with anywhere from 47 to 77
[[Page 56594]]
percent of the fleet out of compliance during those years. Similarly,
NHTSA estimates that 91 percent of the gasoline- and diesel-fueled
light truck fleet will not be able to comply with the MY 2027
standards, again most likely because of the overly stringent standards
in MYs 2024-2026. By MY 2031, the projected disparity between the
standards and compliance decreases, more so for non-passenger
automobiles, likely again because of the 2 years of flat standards.
However, the gasoline- and diesel-fueled passenger car fleet is
projected to miss the No-Action Alternative standards by more than 3
miles per gallon in MY 2031.
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\465\ Manufacturers that are projected to comply are Mazda,
Mitsubishi, and Toyota.
\466\ The stringency of the MYs 2024-2026 standards were one
reason why NHTSA held non-passenger automobile standards flat in MYs
2027-2028 in the 2024 final rule. See 89 FR 52540, 52848 (June 24,
2024) (``Further stringency increases at a comparable rate,
immediately on the heels of the increases for model years 2024-2026,
may therefore be beyond maximum feasible for model years 2027-
2032.'').
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It is apparent that the existing standards depended upon the
imputed fuel economy performance of EVs and PHEVs that NHTSA assumed
would be manufactured in the relevant model years in contravention of
both section 32902(h) and of the design and purposes of the CAFE
program to avoid setting standards that cannot be met feasibly with
gasoline- and diesel-fueled vehicles as part of a push toward
alternative powertrains. The above results confirm that automakers are
unable to meet the current standards without shifting significant
capacity to EVs or purchasing credits from EV manufacturers, and
without producing at volume the full range of ICE-driven passenger cars
and light trucks that American consumers continue to want and need.
Many of the gasoline- and diesel-powered vehicle models most popular
with American families would be unsustainable for manufacturers to
produce under the existing standards, and it is unlikely that an EV
alternative could provide the same performance, utility, or
recreational value at a comparable price (or at all). Thus, the
existing CAFE standards do not preserve market demand, consumer choice,
and the economic realities of the auto industry. Of course, automakers
are free to invest in the production of EVs in response to market
demand, but they should not be compelled to do so by NHTSA's fuel
economy standards; such industry-transforming regulatory compulsion is
inconsistent with EPCA.
In the analyses supporting the existing standards, NHTSA also
failed to consider countervailing costs to manufacturers, consumers,
and society that may have led the agency to conclude that such
stringent standards were in fact not feasible. NHTSA substantially
underestimated the technological costs the standards are expected to
impose on manufacturers, including the direct expenditures made to
redesign and reconfigure gasoline- and diesel-powered vehicles
attributable to the acceleration in EV production caused by the
regulatory forcing of the CAFE standards.\467\ Nor did the agency's
economic analysis adequately consider the dramatically different supply
chain and manufacturing implications of such an acceleration.\468\
NHTSA also underestimated the costs that the typical American would
incur in owning and operating an EV (including, among others, charging
costs, repair costs, battery-replacement costs, and insurance costs) as
compared to the costs of owning and operating a gasoline- or diesel-
powered vehicle. And NHTSA failed to quantify in its main analysis of
maximum feasible standards costs to consumers from forgone features,
including vehicle performance.
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\467\ See, e.g., Chris Isidore, Ford just reported a massive
loss on every electric vehicle it sold, CNN (Apr. 25, 2024),
available at https://www.cnn.com/2024/04/24/business/ford-earnings-ev-losses; Caleb Miller, GM's Electric Vehicles Finally Earned More
Than They Cost to Make, Car and Driver (Jan. 29, 2025), available at
https://www.caranddriver.com/news/a63608612/gm-stops-losing-money-on-evs/ (noting that GM's ``variable profit positive'' metric does
not include ``fixed costs such as creating new assembly lines, so
GM's massive investments in its EV factories and the engineering of
the new models are taken out of the equation.''). The production
costs of EVs greatly exceed the manufacturers' current EV sales
revenues and are cross-subsidized by the sale of gasoline- and
diesel-powered vehicles. If the production of EVs actually did
increase at the rate previously projected by NHTSA and EPA, which
would require an unrealistic jump in consumer demand for EVs,
automakers would no longer be able to subsidize the full extent of
their losses on EVs through price increases on gasoline- and diesel-
powered vehicles.
\468\ Manufacturers cannot easily add a new production line to
an existing assembly facility to produce an EV, given differences in
manufacturing processes and facility needs. Instead, manufacturers
generally either convert an existing facility away from internal
combustion vehicle assembly or build a new facility--adding to
overall costs and reducing production capacity for internal
combustion vehicles. Similarly, suppliers cannot simply add a
propulsion battery production line to an existing facility, and much
of the expertise and intellectual property for such technologies
exists overseas--especially in China. These all add substantial
expense for manufacturers, which is passed along to consumers in the
form of higher prices.
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Additional costs to society more generally (not borne just by EV
purchasers) include the costs associated with the massive and rapid
national buildout of charging infrastructure and electricity generation
and transmission capacity necessary to accommodate the anticipated ramp
up in EV sales,\469\ and the safety concerns accompanying lithium
battery fires,\470\ specifically including costs incurred by state and
local governments and first responders to prepare for and respond to
the predicted spike in battery-related fires and emergency situations
that will follow from more EVs on the road.\471\ Most importantly,
using the CAFE program to push automakers into producing EVs more
rapidly than market demand would otherwise support undermines the
national security goal behind EPCA because it moves the United States
into a position of greater strategic dependence on foreign suppliers of
critical automotive inputs, including the processed minerals needed for
the manufacture of EV batteries. Such additional societal costs are
avoided in the present proposed rulemaking, which is based on a
faithful implementation of EPCA's text and design without improperly
considering the factors prohibited by section 32902(h).
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\469\ 87 FR 25888 (May 2, 2022). As the agency conceded in the
previous rulemaking, there are massive costs involved with not only
converting the fleets, but also the ``ancillary costs of electric
vehicles, such as building additional charging stations [and]
improving the grid.'' This includes costs borne by utility
companies, and passed on to rate payers, to expand infrastructure to
support an increased number of households charging vehicles at home
or charging locations at private businesses or public locations--
including high-powered DC fast charge equipment.
\470\ While internal combustion vehicles are also susceptible to
fire risks (generally after a very severe high-speed crash), the
risks presented by electric vehicle battery fires is on a
significantly higher scale and can be presented in surprising
situations. See, e.g., IER, Hurricane Ian Is not a Friend of
Electric Vehicles, Institute for Energy Research: Washington, DC,
Last revised: Oct. 20, 2022, available at: https://www.instituteforenergyresearch.org/renewable/hurricane-ian-is-not-a-friend-of-electric-vehicles/ (accessed: Sept. 10, 2025). As happened
in Hurricane Ian, during emergencies, these battery fires can force
``local fire departments to divert resources away from hurricane
recovery to control and contain the fires.'' And these ``fires can
become life-threatening if water-damaged electric cars are parked
near houses or in garages. Some Florida homes were lost to fires
caused by flooded electric vehicles.''
\471\ See Larsson, F. et al., Toxic Fluoride Gas Emissions from
Lithium-Ion Battery Fires, Scientific Reports, Vol. 7: 10018 (2017),
available at: https://doi.org/10.1038/s41598-017-09784-z (accessed:
Sept. 10, 2025). Lithium-ion battery fires are a common occurrence
with EVs, and these fires generate intense heat and toxic fluoride
gas emissions, making them more difficult to extinguish than
conventional vehicle fires and increasing the costs and management
challenges of maintaining effective first responder capabilities.
See also IAFC, IAFC's Fire Department Response to Electric Vehicle
Fire's Bulletin, available at: https://www.iafc.org/topics-and-tools/resources/resource/iafc-s-fire-department-response-to-electric-vehicle-fires-bulletin (accessed: Sept. 10, 2025). The
dangers from these batteries are forcing fire departments around the
country to expend significant resources to purchase equipment that
can deal with unstoppable battery fires.
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For the reasons laid out above, the existing fuel economy standards
promulgated by NHTSA for each of the model years covered by these
proposed rules do not comply with the requirements of EPCA and the
goals in EPCA for the CAFE program. Indeed, the existing standards have
undermined those goals, harming the freedom and economic interests of
America's
[[Page 56595]]
families, significantly degrading highway safety in all regions of the
country, weakening the vitality of the U.S. auto industry, lessening
the Nation's security by increasing America's strategic dependence on
other countries for EV battery materials, and exacerbating the
vulnerabilities of America's electricity grid. NHTSA preliminarily
determines that each of the factors discussed above in isolation would
warrant the amendment of the prior standards. Accordingly, NHTSA
proposes to set aside the previous light-duty fuel economy standards
established for MY 2022 and following. NHTSA proposes to consider anew
the ``maximum feasible'' replacement standards for the model years in
question.
2. Considerations Justifying the Proposed Standards
EPCA conferred on the Secretary of Transportation (and NHTSA by
delegation) the authority to prescribe maximum feasible fuel economy
standards for the light-duty vehicle fleet, and to exercise discretion
in weighing the factors of technological feasibility, economic
practicability, the need of the Nation to conserve energy, and the
effect of other motor vehicle standards of the Government on fuel
economy. In exercising its authority, NHTSA has examined three
regulatory alternatives that represent different ways the agency could
balance the four section 32902(f) factors, consistent with the section
32902(h) prohibition on considering certain factors when setting
maximum feasible standards.
NHTSA has also considered other contextual aspects of the statutory
scheme in formulating the three regulatory alternatives the agency
examined for this proposal. One original aspect of the CAFE program
that was abandoned thematically in the development of existing
standards is the concept of ``steady progress.'' EPCA's original
provision for the MYs 1981-1984 standards included a requirement that
the agency's standards ``will result in steady progress toward
meeting'' the statutorily established ``standard . . . for model year
1985.'' \472\ EISA included a similar provision for MYs 2011-2020
standards to ``increase ratably'' to the statutorily prescribed 2020
level.\473\ While EPCA does not include the same requirement for
standards applicable to MYs 2021-2030, EPCA does not prohibit NHTSA
from providing for the same steady progress in its development of the
maximum feasible standards considering the four factors in 32902(f).
Given this context, and particularly in light of prior standards that
failed to track gasoline- and diesel-fueled vehicle capabilities, NHTSA
believes that small, steady, incremental increases in fuel economy
standards over time, while preserving the ability for manufacturers to
focus on safety, affordability, and consumer choice, are reasonable and
balance EPCA's priorities appropriately. Further, while NHTSA is not
considering the availability of credits or credit trading in
establishing standards, the agency believes that eliminating the credit
trading system beginning with MY 2028 will encourage manufacturers to
provide for steady improvement in fuel economy across their fleets over
time, as opposed to relying upon credits acquired by third-party EV
manufacturers. The following discussion presents NHTSA's tentative
conclusion about why the proposed standards are maximum feasible.
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\472\ Public Law 94-163, sec. 502(a)(3)(B), 89 Stat. 871 (Dec.
22, 1975). https://www.govinfo.gov/content/pkg/STATUTE-89/pdf/STATUTE-89-Pg871.pdf.
\473\ 49 U.S.C. 32902(b)(2).
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a. Technological Feasibility and the Effect of Other Motor Vehicle
Standards of the Government on Fuel Economy
As in all recent fuel economy rules, technological feasibility and
the effect of other motor vehicle standards of the Government on fuel
economy are considered in NHTSA's balancing of the relevant factors,
but they continue to play a less significant role.
Regarding technological feasibility, that factor continues to be
less constraining than in the past: manufacturers can comply with
standards under each regulatory alternative by applying existing
technology to their vehicles. Whether that technology can be applied to
vehicles in the rulemaking timeframe and at what cost is a question of
economic practicability; as NHTSA stated in 2020, all alternatives
could be considered technologically feasible, but that does not mean
that any of them could be maximum feasible.\474\ Put another way,
``[a]ny of the alternatives could thus be achieved on a technical basis
alone if the level of resources that might be required to implement the
technologies is not considered.'' \475\ However, the level of resources
needed to apply those technologies and whether consumers will purchase
vehicles equipped with those technologies are still prescient factors
to consider and are discussed below in more detail with regard to the
economic practicability of the standards.
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\474\ 85 FR 24174, 25174 (Apr. 30, 2020).
\475\ 77 FR 62624, 63037 (Oct. 15, 2012).
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Regarding the effect of other motor vehicle standards of the
Government on fuel economy, NHTSA has considered both the agency's own
safety standards and EPA's criteria pollutant emissions standards in
various aspects of the technical modeling. Neither presents a barrier
nor a reason why the agency would select a different regulatory
alternative than the proposed alternative. In addition, as discussed
above, to the extent that non-Federal vehicle standards played a role
in the agency's prior consideration of the effect of other motor
vehicle standards of the Government on fuel economy, NHTSA now proposes
to reject such consideration. NHTSA also recognizes that EPA has
recently proposed to rescind all greenhouse gas emission standards for
all categories of new motor vehicles and engines, including light-duty
vehicles, to effectuate its reading of CAA section 202(a).\476\ NHTSA
will continue to monitor EPA's actions in this area as this CAFE
rulemaking progresses.
---------------------------------------------------------------------------
\476\ 90 FR 36288 (Aug. 1, 2025).
---------------------------------------------------------------------------
b. Economic Practicability and Safety (Both Independently and as a
Subset of Economic Practicability)
Economic practicability remains a complex yet critical factor to
consider and balance. As discussed above, NHTSA's consideration of
economic practicability encompasses several elements, including the
available technology and cadence for each manufacturer to apply that
technology in the rulemaking timeframe, manufacturers' compliance
shortfalls due to constraints that limit their ability to apply the
required technology, increases in vehicle costs attributable to
technology application that consumers may see, and the resulting
consumer demand for those technologies. As such, NHTSA considered how
manufacturers might weigh offering and improving vehicle attributes
that consumers want against how manufacturers may change different
attributes in response to fuel economy standards. In accordance with
EPCA's purpose and design, and with case law affirming NHTSA's
consideration of consumer demand as an element of economic
practicability,\477\ that consideration is appropriately included in
NHTSA's analysis. The economic practicability factor also encompasses
estimated sales and employment impacts; consumer cost impacts, which
include changes in
[[Page 56596]]
fuel expenditures and other vehicle-related costs like registration and
insurance; and safety impacts. Each of these is evaluated in turn.
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\477\ Ctr. for Auto Safety v. Nat'l Highway Traffic Safety
Admin., 793 F.2d 1322 (D.C. Cir. 1986).
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NHTSA discussed above that technological feasibility is not a
limiting factor for this proposal, as manufacturers can comply with
standards under each regulatory alternative by applying to their
vehicles technology that currently exists. However, ``whether a fuel-
economy-improving technology does or will exist (technological
feasibility) is a different question from what economic consequences
could ensue if NHTSA effectively requires that technology to become
widespread in the fleet and the economic consequences of the absence of
consumer demand for technology that are projected to be required
(economic practicability).'' \478\
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\478\ 85 FR 24174, 25130 (Apr. 30, 2020).
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In the face of increasing fuel economy standards under the existing
rules, vehicle manufacturers have taken different approaches to adding
fuel-economy-improving technology to their vehicles. Some manufacturers
that invested heavily in early deployment of EVs to meet the technology
forcing (rather than performance-based) standards set in 2024 likely
conserved scarce resources by not investing in improvements to their
ICE fleets and will find themselves with gasoline- and diesel-fueled
fleets with lower fleet fuel economy values. Manufacturers that
invested heavily in bridge technologies like non-plug-in hybrid
powertrains and complied only marginally with 2024's technology-forcing
standards presumably have ICE fleets with higher fleet fuel economy
values. EPCA's command--to set maximum feasible fleet average fuel
economy values for vehicles that run on ``fuel'' as defined in the
statute--becomes somewhat more difficult as the fleet bifurcates and
manufacturers find themselves in very different competitive postures.
Analyzing whether technology can feasibly be applied to vehicles during
the rulemaking timeframe, and at what cost, requires careful
consideration of each individual manufacturer's technology levels and
the potential economic consequences resulting from manufacturers
efforts to comply with different levels of standards.
Although, as discussed above, manufacturers have used a range of
technologies to improve the fuel economy of their gasoline and diesel
vehicles, only one manufacturer's gasoline- and diesel-based passenger
automobile fleet met the existing MY 2022 standard (Hyundai's domestic
passenger automobile fleet), and only one manufacturer's gasoline- and
diesel-based non-passenger automobile fleet met that standard (Subaru).
While manufacturers are free to use any available compliance solutions
to meet CAFE standards, NHTSA is subject to statutory constraints when
setting standards, which, therefore, should not drive the use of
particular compliance solutions. Because the prior rules violated
EPCA's prohibition on considering these factors, NHTSA is resetting
standards based only on consideration of what is achievable with
gasoline- and diesel-powered vehicles; necessarily, the starting point
for setting these new standards is the most recently produced fleet of
gasoline- and diesel-powered vehicles for which the agency has data.
The amount of under-compliance in the gasoline- and diesel-based
fleet relative to the standards shown above indicates that the prior
standards exceeded maximum feasibility. While NHTSA is not considering
the availability of dedicated vehicles, dual-fuel vehicles operating
with electric propulsion, or credit transfers or trading, one would
reasonably expect the real-world gasoline- and diesel-powered fleet to
under-comply relative to the standards, to the extent that
manufacturers apply compliance flexibilities the agency cannot consider
when setting standards (e.g., producing alternative fueled vehicles or
using credits earned in other years or fleets). That said, any fuel
economy improvements required by NHTSA's standards must be feasible to
achieve by vehicles powered by ``fuel'' as defined in 49 U.S.C. 32901.
That is what EPCA requires, and the agency is accordingly limiting its
role to ensuring that, whatever technological pathway manufacturers
choose to increase the fuel economy of the vehicle fleet, fleet fuel
economy does in fact increase over time in accordance with EPCA's
design and purpose (including the constraints it imposes on factors
that may be considered in setting standards).
NHTSA does not intend for its proposed reset standards to penalize
manufacturers that increased their fleet fuel economy values using EV
technology. Rather, NHTSA recognizes that resetting standards at a
level where all manufacturers can respond to market demand, consider
affordability, and consider safety, would effectuate EPCA's structure
and purpose by letting technology equalize as a baseline for further
increases that better reflect consumer needs and preferences.
Besides the obvious effects of considering the section 32902(h)
technologies in the prior standards, the stringency and pace of prior
standards may have driven technology application in other ways that the
agency's analysis could not capture. To the extent that NHTSA
previously overestimated manufacturers' abilities to apply technologies
based on incongruent product design cycles and manufacturing
capabilities, or underestimated manufacturers' needs to deploy capital
for necessary reasons unrelated to fuel economy (like safety
technology) the agency believes it is reasonable to reset standards at
levels that do not artificially inflate vehicles' fuel economy
capabilities.
Consistent with the above discussion, NHTSA recognizes that vehicle
manufacturers have had to incur significant costs from adding
technology to vehicles subject to prior standards for MYs 2022-2026;
however, it is impossible for the agency to quantify those costs. What
the agency can quantify is the technology levels present in the fleet
in MY 2022, the first year for which NHTSA is proposing to reset
standards, and MY 2024, the model year for which NHTSA had relatively
complete fuel economy data from which to build the Market Data Input
File used as a starting point for the CAFE Model analysis. The agency
cannot conclude, however, that those levels were economically
practicable such that the no-action standards could be sustained. Table
V-3 shows powertrain technology penetration rates in the MY 2022 and MY
2024 fleet.\479\ The table shows that as basic naturally aspirated
engine technology penetration rates have decreased, there has been a
concurrent increase in rates of advanced powertrain technology, in
addition to increases in the rates of mild and strong hybrid
technology.
---------------------------------------------------------------------------
\479\ Manufacturers might pair multiple powertrain technologies
in a vehicle, such as a turbo engine with a mild hybrid stop/start
technology. This will result in the technology penetration rates
adding up to more than 100 percent.
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[[Page 56597]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.128
The relevant questions for the agency then become whether these
increases in technology penetration rates would have occurred absent
unlawfully stringent vehicle fuel economy standards and what sacrifices
manufacturers and consumers had to make in response. While NHTSA cannot
know whether manufacturers would have, for example, created such things
as 4-cylinder turbocharged pickup trucks absent regulatory obligations,
NHTSA does know that for some vehicle technologies ostensibly applied
solely in response to increasing regulatory requirements, like stop-
start technology (referred to in the agency's analysis as SS12V
technology), consumers frequently opt to deactivate the technology when
able to do so,\480\ negating any potential fuel economy benefit.
Similarly, manufacturers must make trade-offs regarding how to shift
capital investments between safety and fuel economy. Manufacturers have
limited supplies of capital for technological advancement and are
constrained in recovering those investments by what consumers can
afford to pay for technological innovations in new vehicles. Maximum
feasible fuel economy standards, when appropriately weighing economic
practicability, should never incentivize manufacturers to add
technology that consumers reject at the cost of investments in, or
application of, vehicle safety technologies. Instead, when truly
maximum feasible standards apply, manufacturers should be able
continually to develop, and apply, both proven fuel-saving and safety-
enhancing technologies in such a manner that allows consumers both to
desire and to afford the new vehicle.
---------------------------------------------------------------------------
\480\ See Ford, How does Auto Start-Stop Technology Work in My
Ford?, available at: https://www.ford.com/support/how-tos/more-vehicle-topics/engine-and-transmission/how-does-auto-start-stop-technology-work-in-my-ford/ (accessed: Sept. 10, 2025); Autostop
Eliminator, Don't Let the Auto Start-Stop Embarrass You, available
at: https://www.autostopeliminator.com/?srsltid=AfmBOoqNh1ZBMJe-3ZN-DMV9LHsarkgT_Vb4lT4r0l042uq6DdWml59i (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
For MYs 2027-2031, the CAFE Model estimates a significant amount of
technology application in the vehicle fleet in all simulated scenarios
by assuming the prior MYs 2024-2026 standards exist in the regulatory
baseline. The CAFE Model does not remove technology from vehicles in
the face of less stringent standards, meaning that any technology
applied by the model to reach the existing stringent MYs 2024-2026
standards modeled as such in accordance with Circular A-4's definition
of a ``no-action baseline'' will continue to exist in the fleet in the
model for MYs 2027-2031. While manufacturers invest significant capital
in developing new vehicle technologies and may try to recoup their
investments, it is entirely possible that manufacturers may choose to
discontinue employing particular technologies earlier than anticipated
or may price their vehicles in a way that would shift sales from a
vehicle model using one technology to a vehicle model using another
when faced with the proposed standards. NHTSA presents technology
penetration rates for MYs 2027-2031 below but recognizes that
manufacturers' responses to standards will be different in ways that
the simulated analysis likely cannot capture.
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[[Page 56598]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.129
BILLING CODE 4910-59-C
As the table shows, the analysis projects that manufacturers
attempting to meet the No-Action Alternative standards without the use
of EVs or PHEVs in charge-depleting mode results in a significant
penetration of strong hybrid vehicles. Even then, the CAFE Model shows
that manufacturers will fail to comply with the No-Action Alternative
standards at the fleet level by more than 1 mile per gallon. Under all
three alternatives, manufacturers can continue using gasoline engines
throughout the years covered by the standards compared to the baseline,
and the strong hybrid vehicle penetration rate drops by almost 28
percent by 2031 compared to the baseline. There is still some PHEV
penetration by 2031, as those vehicles' gas-only (charge-sustaining)
fuel economy values essentially amount to a strong hybrid vehicles'
fuel economy value, but the penetration rate decreases marginally in
each regulatory alternative compared to the baseline. NHTSA expects
that the penetration of SS12V technology will drop from its high in MY
2024 as more effective hybridization technology can be applied in
response to the standards and as manufacturers respond to revised
standards set without considering OC technologies.
Given that NHTSA's analysis shows significant penetration rates for
strong hybrid vehicles by MY 2031, the agency also believes it is
appropriate to consider not just potential consumer acceptance issues
associated with that technology, but also the technologies that may be
set aside by manufacturers to pursue additional technology that
consumers would prefer. NHTSA has performed this same analysis in prior
rules. Because NHTSA has again determined that no consumer choice model
satisfactorily predicts future behavior for the agency's purposes (see
the detailed discussion of this in Section II.E), the following
analysis remains a qualitative one.
It is important to note that NHTSA's consideration of consumer
demand as relevant to economic practicability has been upheld by the
D.C. Circuit in Center for Auto Safety v. NHTSA,\481\ in which the
court highlighted the broad discretion that Congress granted the agency
in setting fuel economy standards. In the court's assessment,
``Congress clearly contemplated that consumers would benefit from the
flexibility accorded to the manufacturer by a system of fuel economy
standards, which [Senate Report 94-179] predicted `should result in a
more diverse product mix and wide consumer choice.' '' \482\ The court
also identified what might be deemed guardrails to NHTSA's
consideration of consumer demand: ``it would clearly be impermissible
for NHTSA to rely on consumer demand to such an extent that it ignored
the overarching goal of fuel conservation. At the other extreme, a
standard with harsh economic consequences for the auto industry also
would represent an unreasonable balancing of EPCA's policies.'' \483\
---------------------------------------------------------------------------
\481\ Ctr. for Auto Safety v. Nat'l Highway Traffic Safety
Admin., 793 F.2d 1322 (D.C. Cir. 1986).
\482\ Ctr. for Auto Safety v. Nat'l Highway Traffic Safety
Admin., 793 F.2d 1322, 1338 (D.C. Cir. 1986).
\483\ Ctr. for Auto Safety v. Nat'l Highway Traffic Safety
Admin., 793 F.2d 1322, 1340 (D.C. Cir. 1986).
---------------------------------------------------------------------------
NHTSA's last assessment of consumer demand for strong hybrid
vehicles occurred in the 2020 final rule, when the agency determined
that demand for
[[Page 56599]]
strong hybrid vehicles was closely linked to fuel prices.\484\ In 2020,
the agency observed that strong hybrids were able to capture additional
market share when fuel prices were at or above $3.50 per gallon, but
the agency did not expect fuel prices to return to that level for quite
some time pursuant to then-current projections. At that point, the
agency determined that the significant levels of strong hybrid
penetration rates were dependent on consumer acceptance, and for
manufacturers to achieve similar fuel economy levels with non-hybrid
technologies would increase compliance costs. NHTSA concluded that
those higher costs could have implications for the vehicle sales
response, vehicle retirement rates in the existing vehicle population,
and the penetration rates of emerging safety features.
---------------------------------------------------------------------------
\484\ 85 FR 24174, 25181 (Apr. 30, 2020).
---------------------------------------------------------------------------
Since 2020, the production share of strong hybrid vehicles has more
than doubled,\485\ while gasoline prices have also increased. In April
2020, when NHTSA published the 2020 final rule retail gasoline prices
averaged $1.94 a gallon; prices peaked in summer 2022 at $5.03 a gallon
and have stabilized around $3.00 to $3.20 per gallon since October
2024.\486\ NHTSA's fuel price projection assumes that prices will
generally remain around that level through 2050, briefly dipping below
$3.00 per gallon in 2028 but rising again by 2033. Whether those prices
remain correlated with strong hybrid market share in the real world
remains to be seen. NHTSA's central analysis shows strong hybrid
penetration rates more than doubling from MY 2024 to MY 2025 and then
increasing by another 16 percentage points from MY 2025 to MY 2026. As
discussed above, this modeling result is driven by the extremely
aggressive MYs 2024-2026 standards in the baseline that occur prior to
the proposed reset standards beginning in MY 2027. From MYs 2027-2031,
strong hybrid penetration rates increase slightly and essentially
plateau by MY 2031. That said, NHTSA's analysis describes just one
potential pathway that manufacturers could use to comply with the
proposed standards, and the agency expects actual compliance pathways
will likely be different. Data shows that strong hybrid penetration
rates have yet to increase at greater than approximately 5 percentage
points year over year.\487\ Accordingly, NHTSA intends that strong
hybrid vehicles remain an option but not a mandate; while the agency
expects that manufacturers will continue providing strong hybrids to
gasoline-price-conscious consumers, manufacturers should ultimately
comply with standards in the way that they see fit, consistent with
responding to the needs and preferences of consumers.
---------------------------------------------------------------------------
\485\ 2024 EPA Automotive Trends Report, Figure 4.14. Gasoline
Hybrid Engine Production Share Hybrid Type.
\486\ EIA, U.S. All Grades All Formulations Retail Gasoline
Prices (Dollars per Gallon), Last revised: Sept. 16, 2025, available
at: https://www.eia.gov/dnav/pet/hist/leafhandler.ashx?f=m&n=pet&s=emm_epm0_pte_nus_dpg (accessed: Sept.
10, 2025).
\487\ EIA, Hybrid vehicle sales continue to rise as electric and
plug-in vehicle shares remain flat, Last revised: May 30, 2025,
available at: https://www.eia.gov/todayinenergy/
detail.php?id=65384#:~:text=About%2022%25%20of%20light%2Dduty,the%20f
irst%20quarter%20of%202024 (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
While the differences in technology penetration rates between the
alternatives are small compared to changes between the baseline and
alternatives, examining the effect of the technology required by
different regulatory alternatives on manufacturers' compliance
positions is more instructive. In terms of how this technology
application in response to standards influences manufacturer compliance
positions, this action is unique in that the 2022 and 2024 standards
incorporated into the baseline result in excessive fuel economy
technology application in years prior to the standard setting years,
and that technology carries through to MY 2031. This results in over-
compliance for some manufacturers' fleets; however, over-compliance for
some manufacturers' fleets is not indicative that the proposed standard
is not maximum feasible. NHTSA must set industry-wide standards,
considering the capabilities of all manufacturers. All manufacturers
struggle to comply with the baseline MYs 2024-2026 standards that
increase at rates of 8 percent and 10 percent per year with their
gasoline- and diesel-powered vehicle fleets. That is because those
rates of increase are significantly higher than historic rates of
gasoline- and diesel-powered technology improvement and is
significantly higher than the gasoline- and diesel-based fleet can
manage based on the most up-to-date data available for those years. On
an industry-wide basis, NHTSA's MY 2024 analysis fleet used as an input
to the CAFE Model show the MY 2024 gasoline- and diesel-powered
passenger car fleet under-complying by over 6 miles per gallon with the
baseline standard, and the gasoline- and diesel-powered light truck
fleet under-complying by 2.7 miles per gallon with the baseline
standard. NHTSA proposes to reset the CAFE program consistent with EPCA
to address this significant, industry-wide compliance concern. Leaving
in place standards for which compliance is not possible does nothing to
improve the fuel economy of gasoline- and diesel-powered vehicles.
This action is also unique in that, in MY 2028, NHTSA is proposing
to update the regulatory definitions for passenger cars and light
trucks (referred to as passenger automobiles and non-passenger
automobiles in EPCA), which would result in moving many models of what
are currently considered lower fuel economy light trucks into the
passenger car fleet, leaving the light truck fleet to consist of
vehicles with attributes originally contemplated by the statute to be
put towards non-passenger capabilities, thereby reducing the overall
average fuel economy levels of the non-passenger fleet accordingly.
This reclassification will have the effect of significantly lowering
the average fuel economy values of both fleets, leaving all else equal,
but maintaining the overall combined fleet fuel economy standards at
the same level as MY 2027. This will have a dramatic effect on all
manufacturers with both passenger cars and light truck fleets. To
anticipate the reclassification change, NHTSA proposed to set MY 2027
standards in such a way as to bridge the gap between the amended MY
2026 standards (reflecting technology decisions that have been locked
in at the time of publication), and the MY 2028 reclassification.\488\
This transition adjustment is estimated to result in over-compliance in
MY 2027. Manufacturers' estimated compliance positions relative to the
standards are displayed in Table V-5 and Table V-6, which report over-
compliance or shortfall in mpg (cell shading indicates shortfalls):
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\488\ For additional discussion of how NHTSA developed the
regulatory alternatives for this proposal see preamble Section III.
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[[Page 56601]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.131
BILLING CODE 4910-59-C
Consistent with the above discussion, the tables show most
manufacturers under-complying significantly in each fleet under the
baseline standards. And manufacturers that seemingly comply with
baseline standards do so at an extreme cost, as discussed in more
detail below. Under the regulatory alternatives, different
manufacturers would have difficulties complying depending upon fleet.
While NHTSA proposes to amend the baseline standards to a lower level,
several manufacturers fail to meet the standards in particular model
years with their gasoline- and diesel-powered fleets. In somewhat of a
reversal of historical trends, when the proposed fleet reclassification
occurs in MY 2028, the manufacturers' fleets with projected achieved
fuel economy values closest to the standards include Toyota's light
truck fleet, which just complies with the proposed standards in
Alternative 2 yet under-complies in Alternative 3. On the other hand,
the GM, Ford, and Stellantis light truck fleets range from higher over-
compliance to slight over-compliance between the three regulatory
alternatives considered in this proposal.
NHTSA also considered with the MY 2028 reclassification proposal
that manufacturers may comply with the new standards by changing
product offerings or vehicle attributes, which NHTSA's analysis cannot
capture. Manufacturers may choose to optimize their compliance pathway
by making changes to the mix of vehicles they produce in several ways:
instead of adding fuel economy-improving technology, a manufacturer
could instead choose to change their product offerings to sell more
vehicles that meet or exceed the new fuel economy targets while
discontinuing other, less efficient vehicles. Alternatively, they may
change a vehicle's attributes (e.g., to meet off-road vehicle
requirements) such that the vehicle would have a lower fuel economy
target.
The CAFE Model does not simulate changes in product offerings or
changes in particular vehicle attributes in response to CAFE standards
because NHTSA does not intend for manufacturers to need to change those
offerings or attributes to comply with standards. However, to the
extent that NHTSA's standards may disincentivize the production of
particular types of vehicles, NHTSA believes it is appropriate to
consider this factor when considering economic practicability.
Specifically, NHTSA believes that past CAFE standards may have
disincentivized the production of passenger automobiles in favor of
non-passenger automobiles.
EPCA's CAFE framework recognizes that certain automobiles
inherently have features that make them less fuel efficient, such as
high ground clearances for off-highway operation, 4WD, reinforced
frames, suspensions, and axles for transporting heavy loads, or certain
cargo-transporting body styles and configurations, as in cargo vans or
pickup trucks. By separating the automobiles into two categories, CAFE
standards aim to avoid penalizing automobiles with these non-passenger
features, thus preserving consumer choice. However, because non-
passenger automobiles and passenger automobiles are subject to
different fuel
[[Page 56602]]
economy standards, it is possible that NHTSA's standards could
implicitly favor either the production of non-passenger automobiles or
passenger automobiles, creating an incentive for manufacturers to
change their vehicles' characteristics to reclassify them.\489\ The
incentive to reclassify a vehicle would exist if there were a mismatch
between the amount a standard is lower for a non-passenger automobile,
compared to a passenger automobile of the same footprint, and the
additional fuel usage and costs associated with adding a particular
qualifying non-passenger characteristic or feature to the automobile.
---------------------------------------------------------------------------
\489\ In NHTSA's 2012 final rule setting standards for 2017-
2025, NHTSA recognized that ``manufacturers may have an incentive to
classify vehicles as light trucks if the fuel economy target for
light trucks with a given footprint is less stringent than the
target for passenger cars with the same footprint.'' (77 FR 62624,
Oct. 15, 2012).
---------------------------------------------------------------------------
Available information indicates that past CAFE standards have
caused a market distortion by disincentivizing the production of
passenger automobiles relative to non-passenger automobiles.\490\ As
explained in more detail in Section VI, there has been a significant
shift in the proportions of passenger and non-passenger automobiles in
the light-duty fleet. Under NHTSA's proposed changes to vehicle
classification, a significant portion of non-passenger automobiles
would be reclassified as passenger automobiles. These proposed changes,
if finalized, would realign the CAFE program with EPCA and ensure that
vehicles are properly classified based upon their intended real-world
usage. NHTSA believes that these changes, coupled with the proposed
standards, also would remove much of the incentive for manufacturers to
change vehicle attributes to allow a vehicle that primarily functions
as a passenger automobile to be classified as a non-passenger
automobile. Specifically, NHTSA believes the proposed CAFE standards
reset, including a new curve fitting analysis to reshape the
coefficient curves and the small, incremental increases proposed in
this NPRM that increase the passenger automobile and non-passenger
automobile standards at rates sustainable for each respective
regulatory fleet, would further reduce any incentive to change vehicle
attributes or offerings in response to CAFE standards. Such assessment
also reflects the agency's longstanding position that revisiting the
vehicle classification regulations likely would need to be accompanied
by changes to the shapes of the footprint curves or the stringency of
the standards to ensure the standards still reflect maximum feasibility
for the adjusted fleets.\491\
---------------------------------------------------------------------------
\490\ As an example, when NHTSA properly reclassified over 1
million FWD automobiles as passenger automobiles in line with EPCA,
manufacturers opted to discontinue the FWD variant of vehicle lines
to keep more of their products in the non-passenger automobile
fleets (74 FR 14196, Mar. 30, 2009).
\491\ 90 FR 24518, 24524 (June 11, 2025) (citing 77 FR 62624,
63123).
---------------------------------------------------------------------------
While consumer preferences change over time, the CAFE program
should not set standards that drive changes in market offerings,
particularly if it drives changes that decrease market offerings that
are more affordable to consumers. NHTSA tentatively concludes that the
proposed standards would neither limit manufacturers' product offerings
inconsistent with market demand, nor provide a reduction in attributes
that consumers value.
Returning to the results of the analysis, at the individual
manufacturer level, the No-Action Alternative imposes large annual
technology cost increases on manufacturers but still leads to
significant under-compliance with their gasoline- and diesel fueled
fleets. Under each of the action alternatives, all manufacturers see a
significant reduction in vehicle technology costs. Given fierce price
competition in the automotive industry, NHTSA expects these cost
reductions will be passed on to consumers. With a few outliers (e.g.,
Ferrari and INEOS), Figure V-1 shows significant technology cost
decreases for all manufacturers relative to the No-Action Alternative.
These technology cost decreases would have significant ripple effects
in the new vehicle market, including increasing sales and fleet
turnover, as discussed in more detail below.
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One of the most important aspects of resetting CAFE standards is to
reduce the up-front costs that consumers must pay for new vehicles due
to CAFE standards. NHTSA assumes that technology costs due to increased
or decreased CAFE standards are passed on to the consumer in the form
of higher or lower new vehicle prices. For this proposed reset, all
regulatory alternatives considered reduce the technology costs
attributable to CAFE standards by half compared to the baseline. These
technology cost reductions result in reducing the average price of a
vehicle by more than $900 by MY 2031, which represents a significant
up-front cost savings for consumers and results in significant
cascading cost savings for insurance, registration, taxes, and finance
charges. NHTSA believes that vehicle affordability is an important
aspect to consider when setting CAFE standards under the economic
practicability factor; while the agency attempts to quantify multiple
aspects related to vehicle affordability in its analysis both
quantitatively and qualitatively, NHTSA seeks comment on additional
ways that affordability could be included in the agency's assessment of
maximum feasible standards. Aside from the cascading benefits mentioned
above, consumers also would receive a benefit from reset standards in
the form of manufacturers' ability to improve vehicle attributes that
they were not able to improve given the former overly aggressive
imperative to improve vehicle fuel economy. That value is a tangible
monetized benefit for each regulatory alternative compared to the
baseline and is quantified as an opportunity cost in this analysis.
Consumers would see marginally higher fuel costs in all
alternatives relative to the baseline, with a difference of
approximately $200 between the lowest and highest stringency
alternatives, spread out over the life of the vehicle. However, large
up-front vehicle cost savings can make the purchase of a new vehicle
affordable for more consumers in the nearer term, while higher fuel
costs likely are realized over the decades-long life of the vehicle and
depend on future fuel prices, which are uncertain. Manufacturers are
also free to produce more fuel-efficient vehicles for those consumers
who wish to purchase them. Accordingly, NHTSA seeks comment--as
discussed in more detail in Section IV--on alternative presentations of
the fuel savings that accrue to the different owners over a vehicle's
life.
Another intended benefit of the proposed reset standards is that
vehicle sales will increase as a result of lower vehicle prices,
getting Americans into newer, safer, and less polluting vehicles more
quickly. While the regulatory alternatives do not differ meaningfully
in projected sales effects, they all increase vehicle sales relative to
the baseline standards. NHTSA recognizes that there are several
macroeconomic factors that influence vehicle purchasing decisions and
that changes in vehicle prices are based on significantly more factors
than the lowering or increasing of CAFE standards and a subsequent
addition or re-evaluation of technology applications. Regardless, any
standards set by the agency should not impede the ability of
manufacturers and dealers to sell vehicles.
[[Page 56604]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.133
NHTSA also estimates employment effects as a result of the
different regulatory alternatives. The agency's model for estimating
labor impacts in the parts supply space is fairly simplistic: any
reduction in costs translates directly to an assumption of reduced
labor hours into a metric called ``person years.'' The agency's
methodology does not account for a diversion of such labor into
development or production of different technologies. Based on the
agency's method for calculating labor effects, NHTSA's analysis shows a
decrease in cumulative person years from less stringent standards
relative to the baseline, in part because of the decreased need for
development and application of additional fuel-economy-improving
technology. However, as Table V-8 shows, the relative changes between
the No-Action and Action Alternatives are less than 1 percent.
[GRAPHIC] [TIFF OMITTED] TP05DE25.134
While NHTSA's quantitative estimates of changes in employment
effects capture some factors related to how the automotive industry may
respond to lower fuel economy standards, there are a number of
potential employment impacts from lower fuel economy standards that
have not been captured in the analysis. As an example, the analysis
does not capture the effects of manufacturers' shifting vehicle and
powertrain production to the United States in response to factors other
than the agency's CAFE standards.\492\ Given a range of potential
industry responses, not only to new fuel economy standards, but also to
the larger macroeconomic context, NHTSA cannot conclude that its
estimates of changes in employment effects would lead it to changing
its proposed determination on maximum feasible standards.
---------------------------------------------------------------------------
\492\ See The White House, TRUMP EFFECT: Mercedes to Shift More
Vehicle Production to U.S., Last revised: May 1, 2025, available at:
https://www.whitehouse.gov/articles/2025/05/trump-effect-mercedes-to-shift-more-vehicle-production-to-u-s/ (accessed: Sept. 10, 2025);
The White House, Fact Sheet: President Donald J. Trump Incentivizes
Domestic Automobile Production, Last revised: Apr. 29, 2025,
available at: https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-president-donald-j-trump-incentivizes-domestic-automobile-production/ (accessed: Sept. 10, 2025).
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NHTSA also considers safety effects in determining maximum feasible
CAFE standards, both because of its expertise as a safety agency and
also as an element of economic practicability.\493\
[[Page 56605]]
As the Nation's primary vehicle safety regulator, NHTSA, acting in
accordance with EPCA, endeavors to avoid the adoption of fuel economy
standards that are likely to result in a significant increase in
roadway deaths and serious injuries. As new vehicle models become
unaffordable or unappealing, many American families will be left
driving older and older used cars, and the age of the Nation's auto
fleet will persistently rise. Already, the average age of a car on the
road in the United States is approaching 13 years, and many cars are on
their fifth or sixth owners.\494\ The aging of the American fleet has
negative safety consequences, as NHTSA's studies show that older
vehicles are much less safe than newer models in an accident.\495\ In
addition to examining the effects of its proposed standards on fleet
turnover, NHTSA also examines the effects of the proposed standards on
safety due to changes in vehicle-miles traveled (VMT) caused by the
rebound effect and changes in mass disparities in the vehicle fleet, as
discussed in more detail below.
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\493\ See 88 FR 56256 (Aug. 17, 2023) (``As a safety agency,
NHTSA has long considered the potential for adverse or positive
safety consequences when establishing CAFE and fuel efficiency
standards.''). See also Competitive Enterprise Institute v. NHTSA,
901 F.2d 107, 120 n.11 (D.C. Cir. 1990) (``Petitioners have never
clearly identified the precise statutory basis on which safety
concerns should be factored into the CAFE scheme, although they
alluded to occupant safety as part of the `economic practicability'
criterion in their MY 1989 petition to NHTSA and at oral argument.
We do not find this failure fatal, however, because NHTSA has always
examined the safety consequences of the CAFE standards in its
overall consideration of relevant factors since its earliest
rulemaking under the CAFE program (citations omitted). Moreover,
NHTSA itself believes that Congress was cognizant of safety issues
when it enacted the CAFE program. As evidence, NHTSA discusses a
congressional report that dealt with the safety consequences of a
downsized fleet of cars which had been considered by Congress during
its enactment of the CAFE program.'').
\494\ S&P Global Mobility., Average Age of Light Vehicles in the
U.S. Hits Record High 12.5 years, according to S&P Global Mobility,
(2023), available at: https://press.spglobal.com/2023-05-15-Average-Age-of-Light-Vehicles-in-the-US-Hits-Record-High-12-5-years,-according-to-S-P-Global-Mobility (accessed: Sept. 10, 2025).
\495\ See NHTSA, Learn the Facts about New Cars: Why newer cars
are safer than ever before, available at: https://www.nhtsa.gov/sites/nhtsa.gov/files/documents/newer-cars-safer-cars_fact-sheet_010320-tag.pdf (accessed: Sept. 10, 2025).
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Safety issues related to vehicle size and mass existed prior to the
introduction of attribute-based CAFE standards. Manufacturers'
responses to the early one-dimensional mpg-based standards included
dramatic reductions in vehicle size and mass in a way that resulted in
lighter vehicles that failed to protect occupants in crashes as
effectively as larger, heavier vehicles. Under attribute-based
standards, NHTSA's modern CAFE safety assessment has since evolved to
include three elements: changes in vehicle mass, the impacts of vehicle
prices on fleet turnover, and changes in exposure to risks associated
with motor vehicle travel due to changes in VMT because of the
standards, which are associated in this case primarily with changes due
to the rebound effect. NHTSA examines how the proposed standards could
impact fatalities, non-fatal injuries, and property damage from crashes
for both vehicle occupants and non-occupants (e.g., pedestrians and
cyclists) for each of those elements.
Table V-9 and Table V-10 show the following trends relevant to
inform NHTSA's standard-setting decision. First, effects from mass
changes are expected to increase incrementally compared to the No-
Action Alternative, as less MR is expected to be applied in the
heaviest vehicles in response to lower standards, negating some of what
would otherwise result in a lessening of mass disparity between the
smallest and largest vehicles in the fleet. Appropriate caveats about
the safety module's confidence with regards to projecting results are
discussed in Draft TSD Chapter 7 and PRIA Chapter 8 and warrant
discussion here as well. While the mass-safety parameters estimated
from the statistical models used in the CAFE analysis are statistically
indistinguishable from zero, the point estimates are in expected
directions based on the agency's own safety studies and other outside
studies, which helps support the agency's conclusions about the general
levels of effects between the No-Action Alternative standards and the
alternatives. In addition, to the extent vehicle manufacturers can
adopt updated approaches to their product offerings better in line with
market demand, once the proposed reclassification diminishes
manufacturers' incentives to add features to place passenger-oriented
vehicles in the light truck regulatory class (with its lower fuel
economy standards), there may be additional lessening of the mass
disparity between vehicles, and consequently the associated effects, in
the light-duty fleet.
Next, NHTSA acknowledges that, as has been the case for the past
several rulemakings, the magnitude of the rebound effect on vehicle
safety dominates the overall safety picture across the three
alternatives. For this rulemaking, the projected decrease in VMT under
the reset standards leads to a significant projected decrease in
fatalities, injuries, and property damage only (PDO) crashes.
Finally, regarding safety, NHTSA estimates an increase in safety
effects in the action alternatives compared to the No-Action
Alternative as newer, safer vehicles enter the fleet more quickly than
they would have in the No-Action Alternative because of reduced vehicle
prices. As vehicles become safer, many crashes that would otherwise
result in death or injury do not result in such harms, leading to an
increase in PDO crashes and the related sales/scrappage cost estimates
but a decrease in the more severe types of crashes and an overall
safety benefit for the proposal in terms of lives saved and injuries
avoided.
BILLING CODE 4910-59-P
[[Page 56606]]
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[[Page 56607]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.136
BILLING CODE 4910-59-C
To conclude, NHTSA's safety analysis reinforces that the reset
standards (and all regulatory alternatives considered) would improve
safety outcomes relative to the No-Action Alternative. While the
magnitude of positive benefits may be small in terms of measurability
with NHTSA's current modeling capabilities, the directionality is
consistent with what NHTSA's research shows: getting Americans into
newer, safer vehicles is beneficial for safety.\496\
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\496\ NHTSA, How Vehicle Safety Has Improved Over the Decades,
available at: https://www.nhtsa.gov/how-vehicle-safety-has-improved-over-decades (accessed: Sept. 10, 2025); NHTSA, Learn the Facts
About New Cars: Why newer cars are safer than ever before, available
at: https://www.nhtsa.gov/sites/nhtsa.gov/files/documents/newer-cars-safer-cars_fact-sheet_010320-tag.pdf (accessed: Sept. 10,
2025); NHTSA, Learn the Facts About New Cars: Why newer cars are
safer than ever before, Version 2, available at: https://www.nhtsa.gov/sites/nhtsa.gov/files/documents/newer-cars-safer-cars_infographic_010320_2-tag.pdf (accessed: Sept. 10, 2025).
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c. The Need of the United States To Conserve Energy
In the past decade, the consumer costs (via fuel prices), national
balance of payments, and foreign policy implications of the need for
large quantities of petroleum in the United States, especially imported
petroleum, have shaped the consideration of this factor in ways that
Congress could not have foreseen in the 1970s when EPCA was originally
passed. As NHTSA acknowledged in the 2020 final rule, there are two
approaches to increasing petroleum independence: the first is simply to
use less petroleum, and the second is for the United States to produce
more of its own petroleum and to use less petroleum purchased from
abroad. The United States has recently excelled at the second approach;
our Nation became a net exporter of petroleum on an annual basis in
2020 (and on a monthly basis for the first time in September 2019) for
the first time since at least 1949 and continued to export more
petroleum than it imported in 2021, 2022, and 2023.\497\ In fact, the
United States currently produces the most oil (particularly shale oil)
of any country.\498\ The sources of imports to the U.S. have also
changed significantly since EPCA's passage; whereas OPEC nations were
the source of 70 percent of U.S. total petroleum imports in 1977,
Canada now represents the largest source at 52 percent of gross total
petroleum imports, and imports from OPEC nations represent only 16
percent.\499\ This shift helps insulate the U.S. from supply shocks
attributable to imports from the most volatile regions. A concurrent
change in global oil market dynamics has helped steady the fuel prices
that consumers experience in the wake of potential impacts to supply
from foreign oil-producing countries: the oil market is simply less
reactive to global events.\500\ Isolated subnational events, like the
2021 Colonial Pipeline ransomware attack, still have the potential to
cause short-term price spikes in specific areas of the country,\501\
but that national-level gasoline prices have held steady and have even
modestly decreased through
[[Page 56608]]
major global events evidences at least some decoupling of fuel prices
and the concerns that led to EPCA's passage in 1975.
---------------------------------------------------------------------------
\497\ EIA, Oil and Petroleum Products Explained, Last revised:
Jan. 19, 2024, available at: https://www.eia.gov/energyexplained/oil-and-petroleum-products/imports-and-exports.php (accessed: Sept.
10, 2025); EIA, Frequently Asked Questions (FAQs): How Much
Petroleum Does the United States Import and Export?, Last revised:
Mar. 29, 2024, available at https://www.eia.gov/tools/faqs/faq.php?id=727&t=6 (accessed: Sept. 10, 2025).
\498\ EIA, Today in Energy: United States Produces More Crude
Oil Than Any Country, Ever, Last revised: Mar. 11, 2024, available
at: https://www.eia.gov/todayinenergy/detail.php?id=61545#
(accessed: Sept. 10, 2025).
\499\ Id.
\500\ See, e.g., Domonoske, C., Why a War in the Middle East
Hasn't Sparked an Oil Crisis, Last revised: June 25, 2025, available
at: https://www.npr.org/2025/06/25/nx-s1-5444030/oil-prices-iran-israel (accessed: Sept. 10, 2025).
\501\ Thorbecke, C., Gas Hits Highest Price in 6 years, Fuel
Outages Persist Despite Colonial Pipeline Restart, Last revised: May
17, 2021, available at: https://abcnews.go.com/US/gas-hits-highest-price-years-fuel-outages-persist/story?id=77735010 (accessed: Sept.
10, 2025) (gas prices in Southern states jumped 18-21 cents, while
the national average rose eight cents).
---------------------------------------------------------------------------
NHTSA's quantitative analysis of energy security benefits estimates
that the level of standards the agency is proposing as maximum feasible
to change the costs of petroleum market externalities only modestly
relative to the No-Action Alternative. Specifically, the largest
incremental change in energy security externalities is approximately
1.3 percent of the total petroleum market externality costs in the No-
Action Alternative.
At the same time, even though fuel economy standards have increased
dramatically over the past 15 years, fuel use has not decreased
appreciably. Since the agency began setting fuel economy standards in
the early 2010s that increased at significant rates, motor gasoline
consumption in the United States has hovered in the realm of the upper
8 million to low 9 million barrels per day (with a brief decrease in
2020 to just 8 million barrels per day).\502\ There are a number of
reasons why fuel consumption may hold steady as vehicle fuel economy
increases (e.g., vehicle-miles traveled have increased substantially in
response to the economy or the rebound effect), but the fact that even
significantly increased vehicle fuel economy standards have not
decreased fuel consumption at measurable levels in the real world
should be considered by NHTSA in how heavily it weighs the need of the
United States to conserve energy relative to other factors. This is
particularly true given the diminishing effects attributable to fuel
economy improvements: as fuel economy standards increase in stringency,
the benefit of continuing to increase stringency decreases. In mpg
terms, a vehicle owner who drives a light vehicle 15,000 miles per year
(a typical assumption for analytical purposes) and trades in a vehicle
with fuel economy of 15 mpg for one with fuel economy of 20 mpg, will
reduce their annual fuel consumption from 1,000 gallons to 750
gallons--saving 250 gallons annually. If, however, that owner trades in
a vehicle with fuel economy of 30 mpg for one with fuel economy of 40
mpg, then the owner's annual gasoline consumption would drop from 500
gallons/year to 375 gallons/year--a fuel savings of only 125 gallons
even though the mpg improvement is twice as large. Going from 40 to 50
mpg would save only 75 gallons/year. Yet each additional fuel economy
improvement becomes much more expensive as the easiest to achieve low-
cost technological improvement options are exhausted. While fuel
economy standards may support energy conservation, the agency must
moderate its consideration of those impacts in setting maximum feasible
standards, based on real-world effects, with the other three statutory
factors.
---------------------------------------------------------------------------
\502\ EIA, Petroleum & Other Liquids: U.S. Product Supplied of
Finished Motor Gasoline, Last revised: Aug. 29, 2025, available at:
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFUPUS2&f=A (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
Whether CAFE standards remain the most effective way to accomplish
the goal of using less gasoline in the light-duty motor vehicle fleet
to increase energy security is a decision for Congress, but for now,
EPCA's directive to NHTSA is to set CAFE standards in each model year,
and that is what the agency will continue to do. Within this framework,
however, accounting for particular realities--specifically that oil
consumption in the United States has remained steady or increased even
in the face of significantly increased fuel economy standards while the
country has simultaneously become a net petroleum exporter and the
world's largest oil producer--leads the agency to conclude tentatively
that the weight of these three facets of the need of the United States
to conserve energy do not lead the agency to consider higher CAFE
standards as maximum feasible.
Regarding environmental concerns, another factor historically
considered as part of the need of the United States to conserve energy,
the proposed reset standards decrease vehicle costs compared to the
baseline, which results in incrementally more vehicle sales,
particularly of vehicles that are modestly less fuel efficient compared
to vehicles under the baseline standards. This would result in a modest
increase in fuel consumption but also results in less driving demand
than the baseline because the total cost-per-mile of driving is higher.
The net result of these countervailing factors--increased vehicle sales
of less fuel-efficient vehicles but subsequently fewer miles driven in
those vehicles due to decreased rebound driving--is more fuel consumed
from vehicles regulated under the proposed reset standards compared to
the baseline standards. Emissions of various pollutants would increase
relative to the No-Action Alternative as a result of both increased
upstream emissions from the various fuel production processes and
increased downstream emissions from fuel combustion as vehicles are
driven commensurate with the fuel consumption increases. However, in
the context of total emissions compared to the baseline, the
incremental increases would be marginal. In addition, non-criteria
emissions (NCEs) in all three action alternatives decrease over time,
as newer vehicles enter the fleet. Criteria pollutant emissions
similarly increase relative to the No-Action Alternative, but all three
action alternatives result in decreased criteria pollutant emissions
over time. PRIA Chapter 8 provides additional detail on the changes in
emissions and, for criteria emissions specifically, associated
calculated health outcomes. NHTSA's NEPA analysis similarly shows only
marginal differences between the baseline and alternatives considered
in this proposal. The results of that analysis are summarized below and
in the Draft SEIS.
NHTSA does not believe that the magnitude of fuel consumption and
emission increases over the baseline would lead the agency to conclude
that standards set at higher levels than the agency analyzed are
maximum feasible. The fact that the agency's proposed reset standards
are so significantly different than the baseline standards and yet
result in only marginal increases in fuel consumption as shown in Table
V-11 (and associated emissions metrics, as shown in PRIA Chapter 8 and
the Draft SEIS) confirms NHTSA's tentative conclusion that the
environmental elements of the need of the Nation to conserve energy do
not weigh heavily enough against the countervailing factors of
technological feasibility and economic practicability to merit the
adoption of more stringent standards. The following table shows the
difference between the baseline and alternatives for changes in fuel
consumption for the gasoline- and diesel-powered vehicle fleet;
emissions outcomes are generally commensurate with these levels and are
discussed further in PRIA Chapter 8 and the Draft SEIS.
[[Page 56609]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.137
Regardless of the level of standards that NHTSA tentatively
concludes is maximum feasible in this proposal, light-duty vehicle fuel
consumption is still forecast to decline substantially in the long run
as shown above in Table V-11, both as a result of NHTSA's standards and
fleet turnover. The environmental effects related to fuel consumption,
both because of NHTSA's standards and other light-duty transportation
trends, will decrease proportionally based on effect or pollutant.
NHTSA has accordingly determined that, at the time of this proposed
rule, the need of the United States to conserve energy weighs in favor
of fuel economy standards' acting as an insurance policy against risk,
with standards that increase at steady, incremental, manageable rates
for the light-duty gasoline- and diesel-powered fleets following their
reset to align more closely with EPCA.
In sum, NHTSA has tentatively determined that a proper
consideration of ``the need of the United States to conserve energy''
should result in fuel economy standards that become less stringent as
America continues to tap into its proven oil reserves because the
Nation's exposure to oil shocks is inherently diminished. This is
especially true as the remaining petroleum imported into the U.S. has
shifted dramatically away from volatile OPEC nations and toward Mexico
and Canada since the passage of EPCA, and even EISA. The U.S. currently
possesses a superabundance of domestic energy resources, especially
petroleum and natural gas. Following the shale-oil boom, America has
attained energy independence and does not have the same need to
conserve liquid-fuel energy resources that it had in the wake of the
Arab oil embargoes of the 1970s. United States energy independence was
unthinkable when EPCA was enacted. Accordingly, NHTSA believes that it
is both reasonable and congruent with EPCA's energy conservation goals
to weigh the need of the United States to conserve energy such that
vehicle fuel economy standards require continuous improvements over
time, but at sustainable levels for manufacturers, consumers, and
society at large.
Finally, as discussed above, NHTSA considers estimated net benefits
as relevant to determining maximum feasible CAFE standards. The
agency's analysis shows that all three regulatory alternatives would
result in positive net benefits at both 3 percent and 7 percent
discount rates, with the Preferred Alternative, Alternative 2,
resulting in $24.0 billion in estimated net benefits using a 3-percent
discount rate and $22.2 billion in net benefits using a 7-percent
discount rate.\503\ While the difference in net benefits between
regulatory alternatives is small, NHTSA believes that the yearly
stringency increases represented by the Alternative 2 standards best
comport with the technological and economic capabilities of the
gasoline- and diesel-powered vehicle fleets while still resulting in
small, steady incremental increases in fleet fuel economy and positive
benefits for society.
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\503\ As is discussed in Chapter 8 of the PRIA, NHTSA estimates
the benefits and costs of the regulatory alternatives under
consideration from both model year and calendar year perspectives.
The estimates shown here are for the model year approach.
---------------------------------------------------------------------------
Balancing all factors and issues identified above, NHTSA is
proposing to increase fuel economy standards from the newly proposed MY
2022 standards at a rate of 0.5 percent per year through MY 2026
followed by 0.25 percent per year through the remainder of the 10 model
years covered by this proposal. NHTSA's preliminary conclusion is that
this decision to increase the stringency of the standards at annual
rates achievable by gasoline- and diesel-powered vehicles, coupled with
a re-examination of the shape of the fuel economy target functions and
the vehicle classification definitions, best comports with the
substantive textual requirements of EPCA. Moreover, the level, shape,
and applicability of the standards to the passenger and non-passenger
automobile fleets, as reclassified under this proposal, is justified by
the extraordinary distortions the existing regulations have caused in
the marketplace. Imposing such market distortions is inconsistent with
a proper application of EPCA and results only in unnecessary regulatory
burden without insulating the United States from major disruptions in
the global oil market. Consistent with the discussion above, NHTSA
believes that small, steady, incremental increases in fuel economy
standards over time, while preserving the ability of manufacturers to
focus on
[[Page 56610]]
safety, affordability, and consumer choice, are reasonable and
appropriate, and appropriately balance EPCA's priorities, including
energy conservation goals.
3. Draft Supplemental Environmental Impact Statement Analysis Results
NHTSA described above that the agency's NEPA-related obligation is
to ``take a `hard look' at the environmental consequences'' of an
action, as appropriate.\504\ Significantly, ``[i]f the adverse
environmental [impacts] of the proposed action are adequately
identified and evaluated, the agency is not constrained by NEPA from
deciding that other values outweigh the environmental costs.'' \505\
NHTSA considers the impacts reported in the Draft SEIS, in addition to
the other information presented in this preamble, the Draft TSD, and
the PRIA, as part of its decision-making process.
---------------------------------------------------------------------------
\504\ Baltimore Gas & Elec. Co. v. Natural Resources Defense
Council, Inc., 462 U.S. 87, 97 (1983).
\505\ Robertson v. Methow Valley Citizens Council, 490 U.S. 332,
350 (1989).
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Per DOT Order 5610.1D, NHTSA considers a ``no action'' alternative
in its NEPA analyses and presents the environmental impacts of the
proposal and alternatives, including the No-Action Alternative, in
comparative form.\506\ The range of CAFE standard action alternatives,
including the No-Action Alternative, encompasses a spectrum of possible
fuel economy standards that NHTSA could determine is the maximum
feasible based on the different ways NHTSA could weigh the applicable
statutory factors. The agency's Draft SEIS describes the reasonably
foreseeable impacts for all alternatives across a variety of
environmental resources, including energy, air quality, emissions
effects, and historic and cultural resources. The impacts of the
Proposed Action are discussed in proportion to their significance,
qualitatively and quantitatively, as applicable.\507\ The findings of
the analysis are summarized here, and more detailed discussion--in
particular for any qualitative resource assessment--can be found in the
Draft SEIS.
---------------------------------------------------------------------------
\506\ DOT Order 5610.1D, sec. 13.e.
\507\ Section 13.g(2) of DOT Order 5610.1D.
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Reasonably foreseeable energy impacts from the Proposed Action
include changes in vehicle fuel consumption. All three action
alternatives would increase fuel consumption compared to the No-Action
Alternative,\508\ with fuel consumption increases that range from 71
billion gasoline gallon equivalents (GGE) under Alternative 3 to 77
billion GGE under Alternative 1 and Alternative 2 (the Preferred
Alternative).
---------------------------------------------------------------------------
\508\ Total light-duty vehicle fuel consumption from 2024 to
2050 under the No-Action Alternative is projected to be 2,867
billion gasoline gallon equivalents (GGE).
---------------------------------------------------------------------------
The relationship between CAFE standards and criteria pollutant and
air toxics emissions is less straightforward than the relationship
between CAFE standards and energy use, because the criteria pollutant
and air toxics relationship reflects the complex interactions among
many factors. In general, emissions of criteria air pollutants decrease
with increasing stringency. However, the analysis shows that the action
alternatives would result in different levels of emissions when
measured against projected trends under the No-Action Alternative.
These reductions and increases in emissions would vary by pollutant,
calendar year, and action alternative. The differences in national
emissions of criteria air pollutants among the action alternatives
compared to the No-Action Alternative would range from less than 1
percent to about 4 percent. Adverse health outcomes from criteria
pollutant emissions are expected to increase nationwide in 2035 and
2050 under all action alternatives relative to the No-Action
Alternative. This is due primarily to increases in downstream
emissions, particularly of PM2.5. The increases in health
effects would stay the same or get smaller from Alternatives 1 and 2 to
Alternative 3 in 2035 and 2050, reflecting the generally greater
stringency of Alternative 3. However, emissions still decrease over
time with each action alternative.
Toxic air pollutant emissions would remain the same or increase in
2035 and 2050 for all action alternatives relative to the No-Action
Alternative. The increases stay the same or get larger from
Alternatives 1 and 2 to Alternative 3 for acetaldehyde (in 2050),
acrolein (in 2035 and 2050), 1,3-butadiene (in 2035 and 2050), and
formaldehyde (in 2050), but get smaller for acetaldehyde (in 2035),
benzene (in 2035 and 2050), DPM (in 2035 and 2050), and formaldehyde
(in 2035). The largest relative increases in emissions generally would
occur for formaldehyde for which emissions would increase by as much as
3.8 percent under Alternatives 1 and 2 in 2050 compared to the No-
Action Alternative. Percentage increases in emissions of acetaldehyde,
acrolein, 1,3-butadiene, benzene, and DPM would be less. The smaller
increases are not expected to lead to measurable changes in
concentrations of toxic air pollutants in the ambient air. For such
small changes, the impacts of those action alternatives would be
essentially equivalent. The larger increases in emissions could lead to
changes in ambient pollutant concentrations.
Overall changes in health effects due to air pollution are expected
to be consistent with any resulting emissions trends. Higher emissions
would be expected to lead to an overall increase in adverse health
effects while lower emissions would be expected to lead to a decrease
in adverse health effects. The changes in health effects due to changes
in emissions also are dependent on geographic population distribution,
meteorological and topographical conditions, and people's proximity to
roadways and upstream facilities.
The Proposed Action and alternatives would result in slight
increases in CO2 concentrations, surface temperature, sea
level, and precipitation, and a slight decrease in ocean pH compared to
the No-Action Alternative, based on projections using a reduced-
complexity climate model. They also could, to a small degree, increase
the impacts and risks of climate trends. Uncertainty exists regarding
the magnitude of impact on these climate variables, as well as to the
impacts and risks of climate trends. The impacts of the Proposed Action
and alternatives on global mean surface temperature, precipitation, sea
level, and ocean acidification would be small in relation to global
emissions trajectories. This is because of the global and multi-
sectoral nature of climate trends. These impacts also would occur on a
global scale and would not affect the United States disproportionately.
To put these emissions changes in perspective, the emissions increase
from all passenger cars and light trucks in 2035 compared with
emissions under the No-Action Alternative are approximately equivalent
to the annual emissions from 7,727,819 vehicles under Alternatives 1
and 2, and 7,143,671 vehicles under Alternative 3. For reference, a
total of 252,733,312 passenger cars and light trucks are projected to
be on the road in 2035 under the No-Action Alternative.\509\
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\509\ The light-duty vehicle equivalency is based on an average
per[hyphen]vehicle emissions estimate, which includes both tailpipe
CO2 emissions and associated upstream emissions from fuel
production and distribution. The average light-duty vehicle is
projected to account for 4.66 metric tons of CO2
emissions in 2035 based on MOVES, the GREET model, and EPA analysis.
---------------------------------------------------------------------------
In cases where quantitative impacts assessment was not possible,
NHTSA presented the findings of a literature review of scientific
studies for
[[Page 56611]]
informational purposes in the Draft SEIS.
The SEIS is one factor in NHTSA's decision-making process to set
CAFE standards. NHTSA evaluated the range of reasonable alternatives in
the Draft SEIS, along with other factors during the rulemaking process
and tentatively determined that Alternative 2 is the Preferred
Alternative because it is maximum feasible. NHTSA is informed by the
Draft SEIS in arriving at its conclusion that Alternative 2 is maximum
feasible.
D. Severability
For the reasons discussed above, NHTSA believes that its authority
to propose and implement CAFE standards for the MYs 2022-2026 and 2027-
2031 is well-supported in law and practice and should be upheld in any
legal challenge. NHTSA also believes that its exercise of authority
reflects sound policy.
However, in the event that any portion of the proposed rule is
declared invalid, NHTSA intends that the various aspects of the
proposal be severable and, specifically, that each set of proposed
standards, for MYs 2022-2026 and MYs 2027-2031, is severable, as well
as the various compliance proposals discussed in the following section
of this preamble. The proposed standards for MYs 2027-2031 could be
implemented independently if any of the other proposed standards were
struck down, and NHTSA firmly believes that it would be in the best
interests of the Nation for the standards to be applicable to support
EPCA's overarching purpose of energy conservation. Each proposed
standard is justified independently on both legal and policy grounds
and could be implemented effectively by NHTSA.
VI. Compliance and Enforcement
NHTSA is proposing changes to its CAFE enforcement program for
light-duty automobiles. These changes include: (1) modifying the
criteria for classification as a non-passenger automobile; (2) removing
credit trading from the CAFE program beginning with MY 2028; (3)
removing references to EPA's regulations regarding manufacturers'
ability to generate AC efficiency and OC FCIVs; (4) modifying
manufacturer reporting requirements; and (5) making other technical
amendments. To provide context for these changes, Section VI.A first
provides an overview of NHTSA's CAFE enforcement program. Section VI.B
then discusses and explains the proposed changes to the CAFE program.
A. Background and Overview of Compliance and Enforcement
NHTSA's CAFE enforcement program is largely established by EPCA, as
amended by EISA, and is prescriptive regarding enforcement. EPCA and
EISA also establish a number of flexibilities and incentives that are
available to manufacturers to help them comply with the CAFE standards.
The statute also authorizes NHTSA to establish, at its discretion,
additional flexibilities by regulation. The light-duty CAFE program
includes all vehicles with a gross vehicle weight rating (GVWR) of
8,500 pounds or less as well as vehicles between 8,501 and 10,000
pounds that are classified as medium-duty passenger vehicles
(MDPVs).510 511 Table VI-1 provides an overview of the CAFE
program, including statutory and regulatory citations, and an overview
of the changes proposed in this NPRM.
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\510\ As prescribed in 49 U.S.C. 32901(a)(19)(B), an MDPV is
``defined in section 86.1803-01 of title 40, Code of Federal
Regulations, as in effect on the date of the enactment of the Ten-
in-Ten Fuel Economy Act.'' In accordance with the statutory
definition, NHTSA defines MDPV at 49 CFR 523.2 as any complete or
incomplete motor vehicle rated at more than 8,500 pounds GVWR and
less than GVWR that is designed primarily to transport passengers,
but does not include a vehicle that: (1) Is an ``incomplete truck''
meaning any truck that does not have the primary load carrying
device or container attached; or (2) Has a seating capacity of more
than 12 persons; or (3) Is designed for more than 9 persons in
seating rearward of the driver's seat; or (4) Is equipped with an
open cargo area (for example, a pickup truck box or bed) of 72.0
inches in interior length or more. A covered box not readily
accessible from the passenger compartment will be considered an open
cargo area for purposes of this definition.
\511\ See ``heavy-duty vehicle'' definition in 40 CFR 86.1803-
01. MDPVs are classified as either passenger automobiles or light
trucks depending on whether they meet the criteria to be a non-
passenger automobile under 49 CFR 523.5. If the MDPV is classified
as a non-passenger automobile by meeting the requirements in 49 CFR
523.5, it is subject to the requirements in 49 CFR 533. If the MDPV
does not meet the criteria in 49 CFR 523.5 to be a non-passenger
automobile, then it is classified as a passenger automobile and
subject to the requirements in 49 CFR 531.
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BILLING CODE 4910-59-P
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BILLING CODE 4910-59-C
In general, as prescribed by Congress, NHTSA sets fleet average
fuel economy standards for light-duty vehicles on an mpg basis. As
specified in statute, light-duty vehicles are separated into three
separate compliance categories: passenger automobiles manufactured
domestically (referred to as domestic passenger cars), passenger
automobiles not manufactured domestically (referred to as imported
passenger cars), and non-passenger automobiles (which are also referred
to as light trucks).\513\ Each standard applies to a manufacturer's
compliance category as a whole and not to individual vehicles, and a
manufacturer can balance the performance of their vehicles (via the
application of fuel-saving technology) in complying with standards.
NHTSA sets standards based on vehicle footprint (i.e., the area
calculated by multiplying the wheelbase times the track width), and
each manufacturer must comply with the fleet average standard derived
from their vehicles' target standards. These target standards are taken
from a set of mathematical functions for each fleet. While NHTSA sets
the standards for light-duty vehicles, EPA, as authorized and directed
by EPCA, establishes procedures for calculating a manufacturer's
average fuel economy for CAFE compliance. Average fuel economy values
are based on vehicle testing conducted using the FTP (or ``city'' test)
and HFET (or ``highway'' test).\514\
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\512\ Updating the CAFE civil penalties regulations in 49 CFR
578.6(h) to reflect the statutory amendment in Public Law 119-21
(OB3) will occur in the next DOT-wide annual civil penalties update
rulemaking.
\513\ 49 U.S.C. 32903(g)(6)(B).
\514\ 40 CFR part 600.
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At the end of each model year, EPA determines the fleet average
fuel economy performance for the individual fleets as determined by
procedures set forth in 40 CFR part 600. NHTSA then confirms whether a
manufacturer's fleet average fuel economy performance for each of its
compliance categories of light-duty vehicles meets the applicable
target-based fleet standard. NHTSA makes its final determination of
whether a manufacturer has met its CAFE compliance obligation based on
official reported and verified CAFE data received from EPA. Pursuant to
49 U.S.C. 32904(e), EPA is responsible for calculating manufacturers'
CAFE values so that NHTSA can determine compliance with its CAFE
standards. A manufacturer's final model year report must be submitted
to EPA no later than May 1st following the end of the model year.\515\
EPA verifies the data submitted by manufacturers and issues final CAFE
reports that are sent to manufacturers and to NHTSA electronically
between April and October of the calendar year following the end of
model year. NHTSA then assesses each manufacturer's compliance for each
of their fleets and calculates each manufacturer's credit amounts
(credits for vehicles exceeding the applicable CAFE standard) and
shortfalls (amount by which a fleet fails to meet the applicable CAFE
standards). A manufacturer meets NHTSA's fuel economy standard if its
fleet average performance is greater than or equal to its required
standard.
---------------------------------------------------------------------------
\515\ 40 CFR 600.512-12(b).
---------------------------------------------------------------------------
If one of a manufacturer's compliance categories fails to meet its
fuel economy standard, NHTSA will provide written notification to the
manufacturer that it has not met the standard. The written notification
will also include the shortfall amount for each compliance category,
which is calculated using the following equation: (Fuel Economy
Achieved-Fuel Economy Standard) x 10 x Production Volume. To determine
the civil penalty amount, NHTSA multiplies the total shortfall (in
credits) by the applicable civil penalty rate.\516\ When the
manufacturer receives the written notification, it will be required to
confirm the shortfall amount and submit a plan indicating how it will
allocate existing credits or earn, transfer, and/or acquire credits to
apply toward the shortfall, or inform NHTSA of its intention to pay a
civil penalty to resolve the shortfall.517 518 The
manufacturer must submit a plan or applicable civil penalty payment
within
[[Page 56615]]
60 days of receiving the written notification from NHTSA. Credit
allocation plans and carryback plans (i.e., plans to use future earned
or acquired credits to apply toward the shortfall) received from the
manufacturer will be reviewed by NHTSA, and NHTSA will approve a credit
allocation plan unless it finds the proposed credits are unavailable or
that it is unlikely that the plan will result in the manufacturer
earning sufficient credits to offset the shortfall. If a plan is
rejected, NHTSA will notify the manufacturer and request a revised
plan.
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\516\ For MY 2022 and beyond the applicable civil penalty rate
is $0. Public Law 119-21 (OB3), 139 Stat. 72 (July 4, 2025). https://www.congress.gov/119/plaws/publ21/PLAW-119publ21.pdf.
\517\ In accordance with 49 U.S.C. 32903(g)(3)(C), the maximum
increase in any compliance category attributable to transferred
credits is 2.0 mpg.
\518\ In accordance with 49 U.S.C. 32903(f)(2) and (g)(4),
manufacturers are restricted from using traded and transferred
credits to resolve MDPCS shortfalls.
---------------------------------------------------------------------------
B. Proposed Changes to the CAFE Program
Consistent with the overall reset of the CAFE program discussed
earlier in Section V, NHTSA is proposing two changes intended to align
NHTSA's regulations with EPCA in a manner that will better effectuate
the statutory purpose of the CAFE program. First, NHTSA is proposing to
amend the criteria for classification as a non-passenger automobile to
align NHTSA's regulations with the best reading of the statue.\519\
Second, NHTSA is proposing to end credit trading between manufacturers
in MY 2028 (i.e., MY 2027 will be the last year in which manufacturers
may use traded credits to satisfy shortfalls). NHTSA is also proposing
technical amendments to its regulations to remove references to EPA's
regulations for OC FCIVs, and proposing to make modifications to
reporting requirements, and to make a few technical amendments. The
proposed changes are discussed in detail in the following sections.
---------------------------------------------------------------------------
\519\ 90 FR 24524 (June 11, 2025).
---------------------------------------------------------------------------
1. Modification of Vehicle Classification in the CAFE Program
NHTSA is proposing to amend the criteria for non-passenger
automobiles. This proposal is informed by an examination of how NHTSA's
vehicle classification criteria in 49 CFR part 523, Vehicle
Classification, align with and implement the vehicle definitions in 49
U.S.C. 32901.
This is not the first time NHTSA has examined this issue. In its
2010 and 2012 final rules, NHTSA considered amending its vehicle
classification regulations but ultimately decided to monitor and
revisit them in future rulemakings.520 521 Notably, NHTSA
stated that ``no one can predict with certainty how the market will
change between now and 2025'' specifically regarding how vehicle
manufacturers may ``make more deliberate redesign efforts to move
vehicles out of the car fleet and into the truck fleet in order to
obtain the lower target.'' \522\ It is now 2025, and NHTSA has
completed an updated analysis using current data.
---------------------------------------------------------------------------
\520\ 75 FR 25661 (May 7, 2010).
\521\ 77 FR 63124 (Oct. 15, 2012).
\522\ 77 FR 63122 (Oct. 15, 2012).
---------------------------------------------------------------------------
The starting point of NHTSA's analysis was a recognition of the
market shift from passenger automobiles to non-passenger automobiles
(as currently classified) in the light-duty vehicle market. In 1975,
non-passenger automobiles represented 19.3 percent of the light-duty
automobile market,\523\ and today they make up 64.7 percent.\524\
Figure VI-1 below illustrates the year-over-year light-duty fleet
shares of passenger automobiles and non-passenger automobiles over the
last 50 model years (i.e., from 1975 to 2024).
---------------------------------------------------------------------------
\523\ DOE, Composition of New U.S. Light-Duty Vehicles by
Vehicle Type, Last revised: Jan. 2024, available at: https://afdc.energy.gov/data/10306 (accessed: Sept. 10, 2025).
\524\ This is based on MY 2024 mid-model year reporting and
includes dedicated alternative fuel automobiles. Considering only
vehicles that are powered by internal combustion engines, the share
of automobiles classified as non-passenger automobiles is 67.9
percent.
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[[Page 56616]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.141
Leading up to the 2010 and 2012 final rules there was no clear
year-over-year trend in the share of each fleet, but the fleet
composition has since steadily and sharply continued the long-term
trend towards non-passenger automobiles. As discussed in Draft TSD
Chapter 1, multiple factors likely have contributed to this trend,
including, of particular relevance, NHTSA's vehicle classification
criteria. Based on its new analysis, NHTSA believes that the criteria
it uses to delineate between the fleets need to be changed to ensure
that the classification of the fleets meets the intent by Congress when
it enacted EPCA. These changes and the processes by which they were
evaluated are described in detail in the subsequent paragraphs and
sections.
To assess how the current criteria in section 523.5 of NHTSA's
regulations align with the statutory definitions and intent, NHTSA
conducted an analysis beginning with the compiled classification data
from manufacturers' MY 2024 mid-model year fuel economy compliance
reports.\525\ To supplement this information, NHTSA conducted extensive
research using publicly available manufacturer publications, such as
owner's manuals, marketing brochures, and specification sheets,\526\ to
develop a comprehensive dataset of vehicle models and any non-passenger
automobile criteria that each vehicle model meets. This additional
research was necessary, as manufacturers' mid-model year reports
generally only provide the minimum data needed to demonstrate
qualification as a non-passenger automobile. For example, for a three-
row SUV that qualifies as a non-passenger automobile via 49 CFR
523.5(a)(5), the manufacturer may not provide data on off-highway
angles and clearances specified in 49 CFR 523.5(b)(2). Incorporating
this data made it possible for NHTSA to check all possible regulatory
pathways that could qualify a vehicle as a non-passenger automobile. A
detailed discussion of how the MY 2024 analysis fleet dataset was
developed and used can be found in Draft TSD Chapter 2.7.\527\ The
agency seeks comment and supporting material from manufacturers and
stakeholders for any vehicle in the dataset found to contain erroneous
or missing data that would impact the outcome of this analysis.
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\525\ As required in 49 CFR 537.7(c)(5).
\526\ The catalog of reference specification sheets (broken down
by manufacturer, by nameplate) used to populate and confirm missing
information for vehicle reclassification is available on NHTSA's
website. BMW Data, Ferrari Data, FCA Data, Ford Data, Hyundai Data,
Ineos Data, Kia Data, Mazda Data, Mercedes Data, Mullen Data, Nissan
Data, Subaru Data, Toyota Data, Volvo Data, GM Data, Honda Data,
Mitsubishi Data, VW Data, Jaguar Land Rover (JLR) Data, and Vinfast
Data.
\527\ See Non-Passenger_Analysis.xlsx, Docket No. NHTSA-2025-
0491 for the complete dataset used in the analysis.
---------------------------------------------------------------------------
Based on this analysis, NHTSA is proposing to amend the criteria
for non-passenger automobiles to align with the best reading of the
statute. These changes are discussed in detail in the following
sections.
a. Non-Passenger Automobile Definition
EPCA requires NHTSA to set separate maximum feasible standards for
``passenger automobiles'' and ``non-
[[Page 56617]]
passenger automobiles.'' All vehicles in the light-duty fleet are
classified into one of these two categories based on the presence or
lack of certain vehicle characteristics and features. EPCA defines, at
49 U.S.C. 32901(a)(17), a non-passenger automobile to mean ``an
automobile that is not a passenger automobile or a work truck.'' By
statute, the definition of non-passenger automobile is linked to the
definition of passenger automobile found at 49 U.S.C. 32901(a)(18). A
passenger automobile is a vehicle that NHTSA ``decides by regulation is
manufactured primarily for transporting not more than 10 individuals,
but does not include an automobile capable of off-highway operation''
that NHTSA decides by regulation ``has a significant feature (except 4-
wheel drive) designed for off-highway operation'' and ``is a 4-wheel
drive automobile or is rated at more than 6,000 pounds gross vehicle
weight.'' In accordance with the statute, NHTSA has issued regulations
at 49 CFR part 523 to establish criteria for determining whether a
vehicle is a passenger automobile or non-passenger automobile. Under
EPCA and NHTSA's regulations, there are three primary pathways for an
automobile (i.e., a vehicle under 10,000 pounds GVWR that is not a work
truck) to be classified as a non-passenger automobile: (1) the
automobile is designed to carry more than ten individuals; (2) the
automobile is not manufactured primarily for transporting individuals;
or (3) the automobile is capable of off-highway operation. NHTSA is
proposing changes to the criteria used to classify non-passenger
automobiles via the second and third pathways.\528\ These proposed
changes are discussed in detail in the following sections.
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\528\ The first criterion is set in statute and NHTSA thus does
not have authority to change it by regulation. While the third
criterion is also set in statute, EPCA (as amended by EISA) provides
the Secretary of Transportation with the flexibility to decide by
regulation a significant feature (except 4-wheel drive) indicating
that the automobile was designed for off-highway operation.
---------------------------------------------------------------------------
b. Proposed Changes to Criteria for Off-Highway Capability
The third pathway for classification as a non-passenger automobile
includes automobiles ``capable of off-highway operation'' that NHTSA
decides by regulation: (1) ``has a significant feature (except 4-wheel
drive) designed for off-highway operation'' and (2) ``is a 4-wheel
drive automobile or is rated at more than 6,000 pounds gross vehicle
weight.'' \529\ Through rulemaking, NHTSA determined that ``high ground
clearance'' would constitute a feature designed for off-highway
operation and derived a specific list of dimensions that comprise high
ground clearance.\530\ Specifically, the regulation requires
automobiles to meet minimum prescribed values for four out of the
following five dimensions: running clearance, axle clearance, approach
angle, breakover angle, and departure angle. When issuing these
criteria, NHTSA explained that the agency arrived at these values
``[a]fter comparing the ground clearance of automobiles used on
highways only with automobiles used off as well as on the highway.''
\531\ In the final rule, NHTSA noted that Ford and International
Harvester commented that the five ground clearance measurements
proposed in the NPRM would adequately serve to distinguish automobiles
capable of off-highway operation from other automobiles. The agency
also stated that ``[i]f a need arises in the future to establish
additional criteria, the NHTSA will initiate rulemaking.'' \532\ After
almost 50 years, NHTSA is now re-evaluating whether the criteria
appropriately differentiate between vehicles that are and are not
capable of off-highway operation. After conducting a new analysis using
the MY 2024 fleet, NHTSA is proposing two changes to the existing
standard for determining high ground clearance, which are discussed in
detail below. To provide adequate lead time, NHTSA is proposing that
these changes take effect in MY 2028.
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\529\ 49 U.S.C. 32901(a)(18).
\530\ 41 FR 55371 (Dec. 20, 1976).
\531\ 41 FR 55371 (Dec. 20, 1976).
\532\ 42 FR 38367 (July 28, 1977).
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First, beginning in MY 2028, NHTSA proposes to eliminate axle
clearance as a characteristic used to define a vehicle with high ground
clearance, which is currently set 2 centimeters below the running
clearance threshold. The objective of high ground clearance as an off-
highway feature is to describe automobiles capable of off-highway
operation. The axle configuration most impacted by the axle clearance
characteristic is the solid axle, where the differential must be housed
and vertically centered along a linear path between the center of the
wheels on either side of the axle. In contrast, independent axles can
vertically center the differential gears above the same linear path,
effectively making running clearance the only constraining vertical
measurement. Solid axles excel in off-highway operation at the expense
of on-highway ride quality. NHTSA finds that creating an additional
clearance characteristic that typically applies only to this axle type
does not align with the statutory intent that the significant feature
would indicate off-highway capability, and the agency therefore
proposes to remove it.
Second, also beginning with MY 2028, NHTSA proposes that vehicles
classified as non-passenger automobiles under the off-highway criteria
meet the given thresholds for all four of the remaining characteristics
that comprise the high ground clearance feature. NHTSA is not proposing
to change the thresholds themselves, and they would thus remain the
same. Using the MY 2024 fleet classification data, NHTSA determined the
manufacturing volumes of vehicles that qualified as non-passenger
automobiles based on the vehicle's having a high ground clearance, as
determined by meeting at least four of the five factors, as well as the
angle and clearance values of each of those vehicles. Of particular
importance was determining the subset of vehicles that met both the
GVWR or 4WD off-highway criteria described in 49 CFR 523.5(b)(1) and
exactly four of the five existing off-highway criteria described in 49
CFR 523.5(b)(2). NHTSA found that within this subset of current off-
highway classified automobiles: \533\
---------------------------------------------------------------------------
\533\ All percentages described were evaluated using ``Non-
Passenger_Analysis.xlsx'' in Docket No. NHTSA-2025-0491, tab
``Existing Reg Classification.''
---------------------------------------------------------------------------
98.9 percent do not meet the approach angle minimum
threshold of 28 degrees.
The remaining 1.1 percent of vehicles are from a single
nameplate.\534\
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\534\ The Kia Seltos has a running clearance of 7.3 inches
(~18.5 cm), below the 20 cm threshold. It has an approach angle of
28.0 degrees, meeting the minimum threshold.
---------------------------------------------------------------------------
66.2 percent have an approach angle of less than the
required departure angle of 20 degrees.\535\
---------------------------------------------------------------------------
\535\ An approach angle less than the minimum required departure
angle for off-highway capability would mean that the automobiles
represented in this bullet are geometrically more capable off-
highway when driven in reverse.
---------------------------------------------------------------------------
After reviewing this data, NHTSA took a closer look at why so few
vehicles in this category meet the approach angle requirement and
whether this vehicle feature is necessary for off-highway operation.
The vehicle attributes outlined in 49 CFR 523.5(b)(2) include approach
angle, breakover angle, departure angle, and running clearance, which
work together to define what NHTSA believes represents a vehicle
designed with an off-highway capability intent, without having to
define the off-highway environment explicitly. The approach angle
attribute is of particular importance because it is the first feature
of a vehicle to engage
[[Page 56618]]
with an off-highway obstacle or grade and will determine whether the
vehicle can navigate the obstacle. If the vehicle does not have the
ability to approach the obstacle, then the other off-highway attributes
become irrelevant. Because of the varying nature of off-highway
environments and the equally varying ways to navigate them, the
approach angle is set higher to maximize the capability of the other
vehicle attributes. This higher approach angle feature can also be seen
on vehicles in the 2024 fleet that are specifically designed with high
levels of off-highway capability such as the Jeep Wrangler, Ford
Bronco, and Land Rover Defender.\536\ NHTSA determined in its analysis
that manufacturers are significantly reducing the approach angle to as
low as 14 degrees in pursuit of on-road aerodynamic improvements,
ultimately degrading off-highway capability. NHTSA sees the approach
angle as an important off-highway vehicle attribute, which is why it
was originally and continues to be set at 28 degrees. The agency finds
this approach angle observation as a clear indication that regulatory
definitions have caused shifts in vehicle design characteristics, where
manufacturers apply the remaining high ground clearance characteristics
(breakover angle, departure angle, and running clearance) to vehicles
otherwise not intended for off-highway operation. The passenger
automobile fleet's fuel economy stringencies originated and evolved at
a time when high-frontal area automobiles that consumers have shown a
preference for were not present in the light-duty fleet. The gradual
introduction of and accompanying consumer preference for high frontal
area passenger-carrying automobiles made it difficult for manufacturers
to meet the passenger automobile CAFE standards, which had originated
and evolved prior to the widespread proliferation of this type of
light-duty vehicle. Manufacturers, therefore, applied 4 out of the 5
high ground clearance characteristics, retaining aerodynamic (i.e.,
low) approach angles that severely limit off-highway capability for the
sole purpose of placing these vehicles in the non-passenger automobile
fleet. NHTSA is proposing to correct this divergence between fleet
composition and off-highway statutory intent by re-establishing the
standard curves using a fleet allocation that better aligns with the
statute. This proposed reclassification would eliminate the need for
manufacturers to decide between unnecessary high ground clearance
characteristics and achieving passenger automobile fuel economy
standards.
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\536\ See Non-Passenger_Analysis.xlsx, Docket No. NHTSA-2025-
0491, tab ``Existing Reg Classification.''
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As part of its evaluation of the criteria for off-highway
capability, NHTSA also investigated the statute's ``4-wheel drive''
off-highway feature, specifically with regard to the differences
between 4WD (4x4) and AWD drivetrains. Currently, 4WD and AWD
technologies are both considered to meet the 4WD statutory directive in
regulation.\537\ The agency found that there is significant overlap in
present-day 4WD and AWD peripheral technologies, such as axle
differential locks, interaxle locks, low-range gearing and torque
availability, and intelligent traction control systems that make it
difficult, if not impossible, to assess off-highway ability based on
the exclusively differentiating features of 4WD and AWD systems. NHTSA
seeks comment on this assessment but is not currently proposing to
change its position that any drivetrain capable of sending power to all
four wheels, including both 4WD and AWD systems, meets the statute's
intent.
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\537\ 75 FR 25659 (May 7, 2010), Footnote 750.
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c. Proposed Changes to Criteria for Functional Performance
A passenger automobile is defined, in part, as an automobile that
is ``manufactured primarily for transporting not more than 10
individuals.'' \538\ When the agency first issued vehicle
classification regulations for the CAFE program in 1977, the agency
grappled with the meaning of the lone word ``primarily'' in addition to
the meaning of the phrase ``manufactured primarily for transporting not
more than 10 individuals'' in the context of vehicle
classification.\539\ Ultimately, NHTSA determined that the phrase
consisted of two criteria for passenger automobiles: (1) that passenger
automobiles must be designed to carry 10 or fewer persons and (2) that
passenger automobiles are ``chiefly'' for carrying persons. In the 1977
final rule, NHTSA noted that if ``primarily'' were interpreted to mean
``substantially,'' then almost every automobile would be a passenger
automobile, because a substantial function of almost every automobile
is to transport passengers. Because this was clearly not the intent of
Congress, NHTSA instead interpreted the word ``primarily'' to mean
``chiefly'' or ``predominantly'' \540\ and established criteria for the
classification of an automobile as a non-passenger automobile based on
the presence of certain chief characteristics. In the 1977 final rule,
NHTSA stated its belief that Congress clearly intended that ``passenger
automobile'' include only those vehicles traditionally regarded as
passenger cars (i.e., vehicles whose major design features, including
body style, reflect the purpose of carrying persons). NHTSA also
provided examples of design features that, singly or in combination,
would indicate that an automobile is not a passenger automobile: an
open bed for carrying cargo; heavy-duty suspension; and greater cargo-
carrying than passenger-carrying volume.\541\
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\538\ 49 U.S.C. 32901(a)(18).
\539\ 42 FR 38365 (July 28, 1977).
\540\ Id.
\541\ 42 FR 38362, 38365 (July 28, 1977).
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Under this interpretation, NHTSA created five different criteria of
functional performance, any one of which would qualify the vehicle as a
non-passenger automobile. The first, and most obvious type, is an
automobile designed for transporting more than 10 individuals.\542\ The
four other criteria were used to identify automobiles designed
primarily or chiefly for carrying property or a derivative of an
automobile designed primarily for the transportation of property and
included automobiles that: (1) provide temporary living quarters; (2)
transport property on an open bed; (3) provide greater cargo-carrying
than passenger-carrying volume; or (4) permit expanded use of the
automobile for cargo-carrying purposes through the removal of seats by
means installed for that purpose by the manufacturer or with simple
tools, so as to create a flat, floor level surface extending from the
forwardmost point of installation of those seats to the rear of the
automobile's interior.\543\ The first three of these criteria have
remained static over time and are codified at 49 CFR 523.5(a)(2)-(4).
The fourth criteria, for automobiles derived from an automobile
designed primarily for the transportation of property, has expanded
over time. Currently, section 523.5(a)(5) classifies as non-passenger
any automobile with at least three rows of designated seating positions
as standard equipment and has foldable or pivoting seats that can be
removed, stowed, or folded to create a flat, leveled surface extending
from the forward most point of installation (of the third-row seat) to
the rear of the automobile's interior.
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\542\ 49 CFR 523.5(a)(1).
\543\ 42 FR 38367 (July 28, 1977).
---------------------------------------------------------------------------
After conducting an analysis of the fleet and vehicle
characteristics, NHTSA no longer believes that the criteria in
[[Page 56619]]
section 523.5(a)(5) is in accordance with the best reading of the
statute. NHTSA's analysis has indicated that many vehicles that qualify
as non-passenger automobiles solely on this criterion (i.e., the
automobile does not meet any of the other criteria to be a non-
passenger automobile) would be classified more appropriately as
passenger automobiles: the presence of a foldable, stowable, or
removable third row seat is not a significant design characteristic
indicating that a chief purpose for the vehicle is to transport
property. However, NHTSA's analysis also indicates that there is a
subset of vehicles that are currently classified as non-passenger
automobiles based on this criterion for vehicles with three or more
rows of seating that NHTSA believes should remain in the non-passenger
automobile category, as they have some chief design characteristics for
transporting property that are not currently captured by section
523.5(a). To ensure that NHTSA's criteria for automobiles that are
chiefly or significantly for transporting property effectuate the best
reading of the statutory definitions, NHTSA is proposing two changes to
the criteria in section 523.5(a). First, NHTSA is proposing to remove
the current criteria in section 523.5(a)(5) for vehicles with three or
more rows. Second, the agency is proposing to add a new criterion
premised on a performance-based light-duty work factor (LDWF) utility
metric. These proposed changes are discussed in more detail below.
(1) Automobiles With Three or More Rows of Seating
As referenced above, automobiles with at least three rows of
designated seating positions as standard equipment qualify as non-
passenger automobiles under section 523.5(a)(5) if the removal or
stowing of foldable seats creates a flat, leveled cargo surface
extending from the forwardmost point of installation of those seats to
the rear of the automobile's interior. The original version of this
provision in the 1977 final rule was for automobiles that had removable
seats, such that the automobile permits expanded use of the automobile
for cargo-carrying purposes. In explaining the rationale for creating
the criteria, the 1977 preamble stated:
[I]t is not the convertibility factor alone which results in
passenger vans being classified as non-passenger automobiles. It is
that factor together with the derivative nature of those vans . . .
. [S]ince a passenger van is designed with the same chassis,
springs, and suspension system as a cargo van, it is treated in the
same way as a cargo van.\544\
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\544\ 42 FR 38367 (July 28, 1977).
When 49 CFR 523.5(a)(5) was applied to the original CAFE reference
fleet, it achieved its intended objective of identifying those
derivative vehicles, where purchasers could have instead opted for a
``cargo'' version of that vehicle. However, unlike the other
regulations in section 523.5(a), the regulation at 523.5(a)(5) does not
directly describe a chief non-passenger characteristic, but rather a
passenger-based design feature that does not reveal, describe, or
quantify a chief non-passenger characteristic when applied to the
current automobile fleet. The automobile fleet of the late 1970s was
fundamentally different from the automobile fleet being manufactured
and sold today as there are no ``cargo van'' derivatives ``designed
with the same chassis, springs, and suspension system'' in the present-
day light-duty fleet. The regulatory text at 523.5(a)(5) applied to the
late-1970s fleets accommodated the derivative vehicles as they existed
at the time, but that same regulatory text applied to today's fleet
misaligns with the statutory intent and text. Meeting the criterion in
section 523.5(a)(5) is simply not enough to indicate that the
automobile is not ``manufactured primarily'' for carrying passengers.
In fact, the presence of at least three rows of designated seating
positions indicates the opposite, as having three rows of designated
seating positions is a significant feature indicating that a primary
purpose of that automobile is for carrying numerous passengers.
Accordingly, NHTSA is proposing to remove 49 CFR 523.5(a)(5) as a non-
passenger classification criterion beginning with MY 2028.
(2) Light-Duty Work Factor
With the proposal to remove the expanded use criterion for vehicles
with three or more rows of seating, NHTSA recognizes that some
automobiles that have significant functional characteristics for the
transportation of property would be classified as passenger automobiles
unless NHTSA were to make further amendments to the criteria in section
523.5. To address this, NHTSA is proposing a new criterion for
classification as a non-passenger automobile, beginning in MY 2028.
While the criterion NHTSA is proposing to remove for vehicles with
three or more rows of seating is based primarily on a passenger-
carrying design element (three rows of seats), NHTSA is proposing a new
non-passenger automobile pathway that can be described independent of
vehicle construction, platform, equipment, materials, or passenger-
based metrics (such as rated cargo load \545\ or seating arrangements).
This new performance-based utility attribute, which NHTSA is referring
to as the light-duty work factor (LDWF), would be determined based on a
light-duty vehicle's ability to transport property via its payload and
towing capacities. Performance-based standards preclude design or
technology obsolescence by only prescribing a target without guidance
or restriction on how it should be achieved. A complete discussion of
NHTSA's analysis and the process by which the LDWF formula and
threshold were derived can be found in Draft TSD Chapter 2.7.
---------------------------------------------------------------------------
\545\ Per 49 CFR 571.110 S.3, rated cargo load can be calculated
as the vehicle capacity weight (payload capacity) minus 68 kg (150
lbs.) times the vehicle's designated seating capacity.
---------------------------------------------------------------------------
NHTSA developed an analysis fleet specifically for the LDWF
analysis, referred to as the LDWF analysis fleet. Beginning with the
full MY 2024 non-passenger fleet, NHTSA created the LDWF analysis fleet
by removing vehicles that qualified as non-passenger automobiles via
any of the following pathways:
Transport more than 10 persons.
Provide temporary living quarters.
Transport property on an open bed.
Provide, as sold to the first retail purchaser, greater
cargo-carrying than passenger-carrying volume.
Has either 4WD or a GVWR of more than 6000 lbs., and meets
all four of the following criteria: \546\
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\546\ These sub-bullets reflect the proposed changes to criteria
for off-highway capability, which are discussed in detail in NPRM
preamble Section VI.B.1.b and Draft TSD Chapter 2.7.
[cir] Approach angle of not less than 28 degrees
[cir] Breakover angle of not less than 14 degrees
[cir] Departure angle of not less than 20 degrees
[cir] Running clearance of not less than 20 centimeters
The agency opted to omit vehicles that qualified via these
alternative non-passenger pathways due to their designs' containing
other non-passenger characteristics or off-highway features that could
skew the results of an analysis intended to evaluate whether a vehicle
was designed chiefly for enhanced property-transporting utility. The
remaining vehicles were subject to the LDWF analysis to evaluate an
appropriate formula and threshold for the work factor.
In performing the fleet analysis to determine at what threshold of
LDWF a vehicle would qualify as a non-
[[Page 56620]]
passenger vehicle, NHTSA recognized that many vehicles could be
specified with or without a trailering package (also commonly referred
to as a ``tow package'' or ``towing package''). These packages can
range from minor changes, such as the inclusion of trailer wiring and a
tow hitch, to more significant changes, such as higher capacity cooling
packages, enhanced suspensions, or reinforced driveline components.
These changes do not significantly impact the powertrain or fuel
economy of the base vehicle. In other words, trailering packages unlock
utility that the powertrain and vehicle platform are already designed
to provide. Therefore, in establishing the LDWF analysis fleet, NHTSA
assumes that for a vehicle that would qualify as a non-passenger
automobile via the LDWF criterion when specified with its trailering
equipment, manufacturers will in the future not remove trailering
capability as standard equipment on a vehicle that is otherwise
designed to include it. These maximum available towing capacities for
each vehicle in the LDWF analysis fleet were applied to the dataset
used in the analysis.\547\
---------------------------------------------------------------------------
\547\ See Non-Passenger_Analysis.xlsx, Docket No. NHTSA-2025-
0491, tab ``Existing Reg Classification,'' column ``Max Spec Tow
Capacity (lb.).''
---------------------------------------------------------------------------
NHTSA is proposing to calculate LDWF as the weighted sum of a
vehicle's payload and towing capacities and is proposing a minimum
threshold for this non-passenger criterion based on extensive analysis.
In determining appropriate weighting for payload and towing capacity in
the LDWF calculation, NHTSA is considering the vehicle design
considerations and property-transporting capabilities of payload
capacity versus towing capacity. Designing for a higher payload
capacity includes considerations for axle, frame, suspension, wheel,
and tire capacities. These higher capacity components add weight to the
vehicle and, when combined with the additional payload capacity, may
require only modest enhancements to the powertrain and driveline to
maintain performance and utility characteristics. In contrast,
designing for a higher towing capacity includes considerations for
pulling, including frame reinforcements to resist trailer forces acting
opposite the direction of motion, increases to powertrain torque and
power, and reinforcing driveline components to handle the additional
torque. There is also a modest consideration for payload increases when
considering increases to towing capacity due to a trailer's tongue
weight.\548\ In addition to the more expansive design considerations,
towing capacity is a more effective means of providing cargo-
transporting utility. For example, the highest payload capacity in the
LDWF analysis fleet is nearly 2,100 pounds, compared to the highest
towing capacity of 10,000 pounds; the range of payload capacity across
the entire LDWF analysis fleet spans approximately 1,500 pounds
compared to a 10,000-pound spread in towing capacity. Accordingly,
NHTSA is proposing a higher weighting for towing capacity when
determining the LDWF.\549\ Draft TSD Chapter 2.7 provides the complete
analysis and also describes the differences between the LDWF and the
HDPUV work-factor attribute. Both the Draft TSD Chapter 2.7 and NPRM
preamble Section IX Regulatory Text provide the LDWF formula and
threshold.
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\548\ SAE, Performance Requirements for Determining Tow-Vehicle
Gross Combination Weight Rating and Trailer Weight Rating, SAE
Standard J2807_202411, SAE International: Warrendale, PA, available
at: https://doi.org/10.4271/J2807_202411 (accessed: Sept. 10, 2025).
\549\ The proposed weighting is \2/3\ of towing capacity and \1/
3\ of payload capacity, with a threshold of greater than or equal to
5,500, calculated in pounds. See Draft TSD Chapter 2.7.
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In connection with the proposed addition of the LDWF, NHTSA is
proposing to update its definition of curb weight and add two
additional definitions for ``nominal tank capacity'' and ``optional
equipment'' which would be used in determining curb weight. NHTSA is
changing the definition of curb weight and defining the additional
terms to provide clarity regarding how NHTSA would test a vehicle to
determine whether it meets the LDWF or off-road criteria for non-
passenger automobiles. The update to the curb weight definition is
intended to ensure that every vehicle a manufacturer reports as a non-
passenger automobile meets the criteria as configured at the time of
first retail purchase (i.e., it must meet the criteria in any
configuration offered by the manufacturer).
2. Removal of Credit Trading in the CAFE Program
Under EPCA, as amended by EISA, manufacturers are afforded several
compliance flexibilities that can be used to achieve compliance with
CAFE standards. While some of these flexibilities are provided to
manufacturers by statute, such as the ability to carry forward and
backward credits earned from over-complying with a CAFE standard in a
given model year, others are provided by regulations issued at NHTSA's
discretion. Credit trading among manufacturers is one flexibility that
the statute authorizes but does not mandate. Credit trading refers to
the ability of manufacturers or persons to sell credits to, or purchase
credits from, another manufacturer. EISA gave NHTSA discretion to
establish by regulation a CAFE credit trading program to allow credits
to be traded between vehicle manufacturers.\550\ While establishing the
credit trading program is discretionary, it is also limited by statute.
Total oil savings must be preserved when credits are traded, and traded
credits are not permitted to be used to meet the MDPCS.\551\ Under this
discretionary authority, NHTSA established a credit trading program in
its 2009 final rule, permitting manufacturers to trade credits earned
in MY 2011 and later.\552\ Under NHTSA's regulations, traded credits
are subject to an ``adjustment factor'' to ensure total oil
savings.\553\
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\550\ 49 U.S.C. 32903(f).
\551\ 49 U.S.C. 32903(f)(1) and (2).
\552\ 74 FR 14206 (Mar. 30, 2009).
\553\ 49 CFR 536.4(c).
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NHTSA has observed, in recent years, that credit trading
increasingly has been used by manufacturers of ICE vehicles to purchase
credits from manufacturers of alternative fueled vehicles. As fuel
economy standards increase, manufacturers generally look for the most
cost-effective means of compliance. As standards increased to levels
unattainable for ICE vehicles, credit trading has become an
increasingly more attractive means of satisfying CAFE requirements.
This situation is due, in part, to EV manufacturers' earning credits
that are not representative of real-world fuel savings. The fuel
economy values for EVs have been artificially high, resulting from the
multiplier in the PEF \554\ and EV manufacturers' generating FCIVs for
AC efficiency and OC technologies that are not representative of real-
world fuel savings.\555\ As a result, EV manufacturers have been
earning an abundance of credits. Under NHTSA's credit trading program,
EV manufacturers can sell their credits to
[[Page 56621]]
ICE vehicle manufacturers, effectively subsidizing the production of
EVs. This was never NHTSA's intention in establishing a credit trading
program nor Congress's intention in authorizing such a program, as it
creates market distortion that undermines EPCA's overarching purposes.
---------------------------------------------------------------------------
\554\ In DOE's final rule (89 FR 22041, Mar. 29, 2024), DOE
explained that ``by significantly overvaluing the fuel savings
effects of EVs in a mature EV market with CAFE standards in place,
the fuel content factor [in the PEF] will disincentivize both
increased production of EVs and increased deployment of more
efficient ICE vehicles,'' which DOE concludes ``results in higher
petroleum use than would otherwise occur.''
\555\ In EPA's Apr. 18, 2024, final rule (89 FR 27842), EPA
noted that EVs are ``receiving a windfall of credits [for AC
efficiency technologies] that fails to correspond to any real-world
reduction in vehicle emissions'' and that there is ``no technical
basis for providing BEVs with off-cycle credits.''
---------------------------------------------------------------------------
NHTSA is proposing to end credit trading by MY 2028, with MY 2027
being the last year in which manufacturers can use traded credits for
CAFE compliance. Because NHTSA, as required by statute, is proposing
standards in this rulemaking without considering alternative fueled
vehicles or the use of compliance credits, NHTSA believes that
manufacturers of ICE vehicles will be able to meet CAFE standards
without credit trading, thus minimizing any impacts that this would
have on manufacturers' decisions about what vehicles and technologies
to offer in the marketplace. As shown in Section IV.B.1 Effects on
Vehicle Manufacturers, NHTSA's standard-setting analysis indicates that
manufacturers at both the individual fleet level and total fleet level
exceed the standards year over year from MY 2028 to MY 2031. This
demonstrates that NHTSA's proposed CAFE standards are achievable with
ICE technologies without consideration of the factors NHTSA is
prohibited from considering pursuant to 49 U.S.C. 32902(h), namely,
alternative fueled vehicles and the availability of credits. The inputs
for the compliance simulations that inform NHTSA's standard-setting
analysis are discussed further in Section II.C.2. In addition, while
NHTSA's analysis indicates that manufacturers will be able to meet the
proposed standards by applying a diverse set of technologies available
in the market now, manufacturers will continue to be able to transfer
credits between their own fleets, subject to the 2-mpg statutory limit
on how much a manufacturer can improve a fleet's average fuel economy
using transferred credits.\556\ NHTSA is not proposing changes to how
manufacturers may transfer earned credits between different compliance
fleets, such as between their domestic passenger car and non-passenger
car fleets, as this form of credit transfer is permitted explicitly by
statute.
---------------------------------------------------------------------------
\556\ 49 U.S.C. 32903(g)(3)(c).
---------------------------------------------------------------------------
The agency recognizes that manufacturers have made investments in
fuel-saving technologies, which they have factored into their future
design and compliance plans. Or, instead of investing in potential
technology application, NHTSA recognizes that manufacturers may have
reliance interests in the credit trading program to fulfill their
current CAFE compliance obligations. However, NHTSA believes that its
proposal to end credit trading within the CAFE program by MY 2028
provides manufacturers adequate transition time before trading ends.
NHTSA has also proposed standards in this notice that explicitly do not
account for manufacturers' use of credits to comply with standards.
These adjustments to the fuel economy standards also should limit any
potential impacts manufacturers will experience because of NHTSA's
proposed programmatic changes. NHTSA seeks comment on this proposal,
including on its assumptions about manufacturers' compliance pathways
exclusive of credit trading as an compliance option. NHTSA also seeks
comment on the extent to which the presence of credits changed
manufacturer compliance behavior, and on the value of credits now that
the civil penalty rate has been updated by law.
3. Technical Amendments To Remove References to EPA's Regulations for
AC Efficiency and Off-Cycle Fuel Consumption Improvement Values
In its 2012 final rule, NHTSA issued regulations to align with
EPA's provisions that allowed manufacturers to generate FCIVs for the
adoption of AC efficiency and OC technologies beginning in MY 2017. EPA
established the AC efficiency and OC programs to account for
technologies that are not fully captured in the 2-cycle test procedures
(FTP and HFET) that EPA uses to measure fuel economy for the CAFE
program. Under EPA's provisions, FCIVs generated by manufacturers are
factored into each manufacturer's calculation of its average fuel
economy for purposes of CAFE compliance. As explained in Section II,
NHTSA is now proposing to remove FCIVs from its standard-setting
analysis starting in MY 2028. NHTSA is making this change to ensure
that it sets maximum feasible standards that are achievable without
consideration of technology-specific standards. Upon examination of
NHTSA's existing regulations, NHTSA has identified technical changes to
remove references to EPA regulations pertaining to AC efficiency and OC
FCIVs.
AC efficiency technologies are technologies that reduce the
operation of or the loads on the vehicle engine by reducing AC usage.
For example, the less frequently the AC compressor operates or the more
efficiently it operates, the less load the AC compressor places on the
engine, resulting in better fuel efficiency. AC efficiency technologies
can include, but are not limited to, blower motor controls, internal
heat exchangers, and improved condensers/evaporators. OC technologies
are technologies that also reduce the operation of ICE engines, but
they cover other areas of vehicle operation. Examples of OC
technologies include thermal control technologies, high-efficiency
alternators, and high-efficiency exterior lighting.\557\
---------------------------------------------------------------------------
\557\ 40 CFR 86.1869-12(b), Credit available for certain off-
cycle technologies.
---------------------------------------------------------------------------
Under EPA's current regulations, manufacturers are eligible to earn
AC efficiency and OC FCIVs for all types of automobiles equipped with
those technologies in their fleet through MY 2026. Starting in MY 2027,
only automobiles powered by ICEs are eligible to generate FCIVs, and
the OC FCIV program is currently being phased out between MYs 2031-
2033, with manufacturers no longer being able to generate OC FCIVs for
MY 2033 and beyond.
NHTSA is proposing to remove the references to EPA's regulations
regarding FCIVs from 49 CFR 531.6 and 49 CFR 533.6 because such
references are unnecessary and create a potential for confusion. As
noted above, fuel economy is calculated pursuant to testing and
calculation procedures prescribed by EPA. Accordingly, NHTSA is
proposing to remove the references to EPA regulations.
4. Modification of Manufacturer Reporting Requirements
In support of the proposed modifications to vehicle classification,
including the new light-duty work factor (LDWF), NHTSA is proposing to
make gross combined weight rating (GCWR) a required reporting element
for all non-passenger automobiles in the pre-model year and mid-model
year reports beginning in MY 2028. GCWR is the value specified by the
manufacturer as the loaded weight of a combination vehicle. Currently,
GCWR is one option that manufacturers may use to support a vehicle's
classification as a full-sized pickup. NHTSA is proposing to require
GCWR due in part to the proposed introduction of the LDWF, as GCWR
information would be needed to determine whether an automobile
qualifies as a non-passenger automobile under the LDWF criteria. NHTSA
is also proposing to require GCWR for all non-passenger automobiles
because it will allow NHTSA to understand fleet characteristics better,
as non-passenger automobiles may qualify under multiple criteria. NHTSA
is proposing that this
[[Page 56622]]
change would first apply for MY 2028 reporting.
NHTSA is also proposing to remove 49 CFR 523.5(a)(5) and 49 CFR
523.5(b)(2)(v) beginning with MY 2028. Additional details regarding
their removal can be found in Section VI.B.1.b and in Draft TSD Chapter
2.7. Due to these changes, starting in MY 2028 manufacturers will no
longer be required to provide information related to these two
regulations, which are described in 49 CFR 537.7(c)(5), paragraphs
(c)(5)(i)(E) and (c)(5)(ii)(D), respectively.
C. Technical Amendments
NHTSA is proposing to make certain technical amendments through
this rulemaking, which include amendments removing residual mentions of
fuel efficiency standards for trailers; technical amendments removing
reference to civil penalties for non-compliance with fuel economy
standards; removing provisions applicable only to model years before MY
2022; and technical amendments correcting regulatory citations and
incorporating minor spelling, grammatical, and formatting edits to 49
CFR parts 523, 531, 533, 536, and 537. NHTSA has included in the docket
redline text highlighting all of the proposed changes to the
regulations. Instructions for accessing the docket can be found in
Section VII Public Participation.
1. Technical Amendments To Remove Residual Mention of Fuel Efficiency
Standards for Trailers in NHTSA's Vehicle Classification Regulations
In November 2021, the United States Court of Appeals for the
District of Columbia ``vacate[d] all portions of the [2016 joint NHTSA
and EPA] rule that apply to trailers.'' \558\ The underlying statute
authorizes NHTSA to examine the fuel efficiency of and prescribe fuel
economy standards for ``work trucks and commercial medium-duty or
heavy-duty on-highway vehicles.'' 49 U.S.C. 32902(b)(1)(C); 49 U.S.C.
32902(k)(2). The court reasoned that trailers do not qualify as
``vehicles'' when that term is used in the fuel economy context because
trailers are motorless and use no fuel. Truck Trailer Mfrs. Ass'n,
Inc., 17 F.4th at 1200, 1204-08. Accordingly, the court held that NHTSA
does not have the authority to regulate the fuel economy of trailers.
Id. at 1208.\559\
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\558\ Truck Trailer Mfrs. Ass'n, Inc. v. EPA, 17 F.4th 1198,
1200 (D.C. Cir. 2021).
\559\ For similar reasons, the court also held that the statute
authorizing EPA to regulate the emissions of ``motor vehicles'' does
not encompass trailers. Id. at 1200-03. The court affirmed, however,
that both agencies still ``can regulate tractors based on the
trailers they pull.'' Id. at 1208 (emphasis original). Moreover,
NHTSA is still authorized to regulate trailers in other contexts,
such as under 49 U.S.C. chapter 301. See 49 U.S.C. 30102(a)(7)
(defining ``motor vehicle'' to include ``a vehicle . . . drawn by
mechanical power''); Truck Trailer Mfrs. Ass'n, Inc., 17 F.4th at
1207 (``A trailer is `drawn by mechanical power.' '').
---------------------------------------------------------------------------
On March 15, 2024, NHTSA published the final rule titled
``Improvements for Heavy-Duty Engine and Vehicle Fuel Efficiency Test
Procedures, and Other Technical Amendments.'' (89 FR 18808). In that
final rule, NHTSA removed portions of its regulations that were vacated
by that decision. While that final rule removed all the fuel efficiency
standards for trailers and most of the mentions of those standards from
its regulations, a residual mention of those standards remains in
NHTSA's vehicle classification regulations at 49 CFR 523.10(a)(3).
NHTSA is proposing to amend 49 CFR 523.10(a)(3) by deleting the
sentence that mentions fuel efficiency standards for trailers.
2. Technical Amendment To Remove Heavy-Duty Trailers From the List of
Heavy-Duty Vehicle Regulatory Categories
On June 24, 2024, NHTSA published the final rule titled ``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.'' (89 FR
52540, June 24, 2024). In Section VII.C.8.e of that final rule,\560\
NHTSA finalized the removal of ``Heavy-duty trailers'' from the list of
four heavy-duty vehicle regulatory categories in 49 CFR 523.6(a).
However, NHTSA inadvertently excluded the necessary changes from the
final rule's amendatory text. To align with its original intent as
expressed in its 2024 final rule, NHTSA is proposing to amend 49 CFR
523.6(a) introductory text by stipulating that heavy-duty vehicles are
divided into three regulatory categories and removing paragraph
(a)(4)--which lists heavy-duty trailers as a heavy-duty vehicle
regulatory category--from 49 CFR 523.6(a).
---------------------------------------------------------------------------
\560\ 89 FR 52540, 52933 (June 24, 2024).
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3. Technical Amendments To Remove Civil Penalties for Non-Compliance
With Fuel Economy Standards From the CAFE Program
NHTSA is proposing to remove the mention of civil penalty payments
for manufacturers that do not meet their fuel economy standards in the
CAFE program from 49 CFR part 536. These amendments are to remove the
mention of civil penalties from 49 CFR 536.5(d)(2) and (6), Sec.
536.9(e), Sec. 536.10(b); and to remove Sec. 536.7(b) through (d).
4. Additional Technical Amendments
NHTSA is proposing to incorporate minor technical amendments to 49
CFR parts 523, 531, 533, 536, and 537. These amendments are to correct
regulatory citations and incorporate minor spelling, grammatical, and
formatting edits. Specifically, NHTSA is proposing to incorporate the
following technical amendments.
a. Technical Amendments to Part 523
NHTSA is proposing to add and remove text, correct spelling errors,
and incorporate other grammatical edits to clarify several definitions,
including Cargo-carrying volume, Electric vehicle, Transmission
configuration, and Vocational vehicle (or heavy-duty vocational
vehicle) in Sec. 523.2 and Sec. 523.3 and to correct a regulatory
citation in Sec. 523.4.
b. Technical Amendments to Part 531
NHTSA is proposing to correct regulatory citations in Sec.
531.5(b), (c), and (e) and Table 14 to Sec. 531.5(e)(10); to correct
capitalization errors in Sec. 531.5(a) through (c) and Table 16 to
Sec. 531.5(e)(12); to correct spelling errors in Table 8 to Sec.
531.5(e)(4), Table 11 to Sec. 531.5(e)(7), Table 12 to Sec.
531.5(e)(8), Table 13 to Sec. 531.5(e)(9), Table 14 to Sec.
531.5(e)(10), Table 15 to Sec. 531.5(e)(11), Table 16 to Sec.
531.5(e)(12), Table 21 to Sec. 531.5(e)(17), Table 22 to Sec.
531.5(e)(18), Table 23 to Sec. 531.5(e)(19), and Table 24 to Sec.
531.5(e)(20); to add clarifying text to Sec. 531.5(c); to incorporate
other grammatical edits in Table 8 to Sec. 531.5(e)(4), Table 16 to
Sec. 531.5(e)(12), Table 19 to Sec. 531.5(e)(15), Table 20 to Sec.
531.5(e)(16), Table 21 to Sec. 531.5(e)(17), Table 22 to Sec.
531.5(e)(18), Table 23 to Sec. 531.5(e)(19), and Table 24 to Sec.
531.5(e)(20); and to incorporate grammatical edits in Sec.
531.6(b)(4)(ii)(C).
c. Technical Amendments to Part 533
NHTSA is proposing to correct formatting errors in the text
supporting Figure 1 to Sec. 533.5; to correct capitalization errors in
Sec. 533.5(j); and to incorporate a grammatical edit in Sec.
533.6(c)(5)(ii)(C).
d. Technical Amendments to Part 536
NHTSA is proposing to change the title of a section in Part 536
Introductory Text; to remove text and to correct terminology to clarify
a provision in Sec. 536.1; to remove text to clarify a provision in
Sec. 536.2; to add text to
[[Page 56623]]
clarify the definition of Credit holder (or holder) in Sec.
536.3(b)(6); to remove text to clarify the definition of Light truck in
Sec. 536.3(b)(10); to add and remove text to clarify the definition of
Trade in Sec. 536.3(b)(11); add and remove text to clarify the
definition of Transfer in Sec. 536.3(b)(12); to correct a
capitalization error in Sec. 536.4(c); to add and remove text to
clarify provisions in Sec. 536.4(a) through (c) and Figure 1 to Sec.
536.4(c); to correct a table heading in Table 1 to Sec. 536.4(c); to
rename the title of Sec. 536.6; to add a new paragraph (a) to Sec.
536.6; to change the existing paragraph (a) to paragraph (a)(1) in
Sec. 536.6; to change the existing paragraph (b) to paragraph (a)(2)
in Sec. 536.6; to add a new paragraph (b) to Sec. 536.6; to change
the existing paragraph (c) to paragraph (b)(1); to add a new paragraph
(2) to Sec. 536.6(b); to add a new paragraph (3) to Sec. 536.6(b);
and to add text to the title of Sec. 536.8; correct a spelling error
in Sec. 536.8(a) and (f).
e. Technical Amendments to Part 537
NHTSA is proposing to correct a spelling error in Sec. 537.4(b)(3)
and a regulatory citation in Sec. 537.7(c)(7)(i).
VII. Public Participation
NHTSA requests comments on all aspects of this NPRM. This section
describes how you can participate in this process.
How do I prepare and submit comments?
Your comments must be written and in English.\561\ To ensure that
your comments are correctly filed in the docket, please include the
docket number NHTSA-2025-0491 at the top of your comments. Your
comments must not be more than 15 pages long.\562\ NHTSA established
this limit to encourage you to write your primary comments in a concise
fashion. However, you may attach necessary additional documents to your
comments, and there is no limit on the length of the attachments. If
you are submitting comments electronically as a PDF (Adobe) file, NHTSA
asks that the documents be scanned using the Optical Character
Recognition (OCR) process, thus allowing NHTSA to search and copy
certain portions of your submissions.\563\ Please note that pursuant to
the Data Quality Act, for substantive data to be relied upon and used
by NHTSA, it must meet the information quality standards set forth in
the OMB and DOT Data Quality Act guidelines. Accordingly, NHTSA
encourages you to consult the guidelines in preparing your comments.
OMB's guidelines may be accessed at https://www.gpo.gov/fdsys/pkg/FR-2002-02-22/pdf/R2-59.pdf. DOT's guidelines may be accessed at https://www.transportation.gov/dot-information-dissemination-quality-guidelines.
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\561\ 49 CFR 553.21.
\562\ Id.
\563\ OCR is the process of converting an image of text, such as
a scanned paper document or electronic fax file, into computer-
editable text.
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Tips for Preparing Your Comments
When submitting comments, please remember to:
Identify the rulemaking by docket number and other
identifying information (subject heading, Regulation Identifier Number
(RIN), Federal Register date, and page number).
Explain why you agree or disagree, suggest alternatives,
and substitute language for your requested changes.
Describe any assumptions and provide any technical
information either or data that you used.
If you estimate potential costs or burdens, explain how
you arrived at your estimate in sufficient detail to allow for it to be
reproduced.
Provide specific examples to illustrate your concerns and
suggest alternatives.
Explain your views as clearly as possible, avoiding the
use of profanity or personal threats.
Make sure to submit your comments by the comment period
deadline identified in the DATES section above.
How can I be sure that my comments were received?
If you submit your comments to NHTSA's docket by mail and wish DOT
Docket Management to notify you upon receipt of your comments, please
enclose a self-addressed, stamped postcard in the envelope containing
your comments. Upon receiving your comments, Docket Management will
return the postcard by mail.
How do I submit Confidential Business Information (CBI)?
If you wish to submit any information under a claim of
confidentiality, you should submit your complete submission, including
the information you claim to be CBI, to NHTSA's Office of the Chief
Counsel. When you send a comment containing CBI, you should include a
cover letter setting forth the information specified in our CBI
regulation.\564\ In addition, you should submit a copy from which you
have deleted the claimed CBI to the docket by one of the methods set
forth above.
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\564\ See 49 CFR part 512.
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NHTSA is currently treating electronic submission as an acceptable
method for submitting CBI to NHTSA under 49 CFR part 512. Any CBI
submissions sent via email should be sent to an attorney in the Office
of the Chief Counsel at the address given above under FOR FURTHER
INFORMATION CONTACT. Likewise, for CBI submissions via a secure file
transfer application, an attorney in the Office of the Chief Counsel
must be set to receive a notification when files are submitted and have
access to retrieve the submitted files. At this time, regulated
entities should not send a duplicate hardcopy of their electronic CBI
submissions to DOT headquarters. If you have any questions about CBI or
the procedures for claiming CBI, please consult the person identified
in the FOR FURTHER INFORMATION CONTACT section.
Will NHTSA consider late comments?
NHTSA will consider all comments received before the close of
business on the comment closing date indicated above under DATES. To
the extent practicable, NHTSA will also consider comments received
after that date. If interested persons believe that any information
that NHTSA places in the docket after the issuance of the NPRM affects
their comments, they may submit comments after the closing date
concerning how NHTSA should consider that information for the proposed
rule. However, NHTSA's ability to consider any such late comments in
this rulemaking will be limited.
If a comment is received too late for NHTSA to practicably consider
in developing a proposed rule, NHTSA will consider that comment as an
informal suggestion for future rulemaking action.
How can I read the comments submitted by other people?
You may read the materials placed in the dockets for this document
(e.g., the comments submitted in response to this document by other
interested persons) at any time by going to https://www.regulations.gov. Follow the online instructions for accessing the
dockets. You may also read the materials at the DOT Docket Management
Facility by going to the street address given above under ADDRESSES.
How do I participate in the public hearings?
NHTSA will hold one virtual public hearing during the public
comment period. NHTSA will announce the
[[Page 56624]]
specific date and web address for the hearing in a supplemental Federal
Register notification. NHTSA will accept oral and written comments to
the rulemaking documents and will also accept comments to the Draft EIS
at this hearing. The hearing will start at 9 a.m. Eastern time and will
continue until everyone has had a chance to speak.
NHTSA will conduct the hearing informally, and technical rules of
evidence will not apply. NHTSA will arrange for a written transcript of
the hearing to be posted in the dockets as soon as it is available and
keep the official record of the hearing open for 30 days following the
hearing to allow you to submit supplementary information.
How do I comment on the Draft Environmental Impact Statement?
The Draft EIS associated with this proposal has a unique public
docket number and is available at Docket No. NHTSA-2025-0491. Comments
on the Draft EIS can be submitted electronically at https://www.regulations.gov, at this docket number. You may also mail or hand-
deliver comments to Docket Management, U.S. Department of
Transportation, 1200 New Jersey Avenue SE, Room W12-140, Washington, DC
20590 (referencing Docket No. NHTSA-2025-0491), between 9 a.m. and 5
p.m., Monday through Friday, except on Federal holidays. To be sure
that someone is there to help you, please call (202) 366-9322 before
coming. All comments and materials received, including the names and
addresses of the commenters who submit them, will become part of the
administrative record and will be posted on the internet without change
at https://www.regulations.gov.
VIII. Regulatory Notices and Analyses
A. Executive Order 12866, ``Regulatory Planning and Review''; Executive
Order 13563, ``Improving Regulation and Regulatory Review''; Executive
Order 14192, ``Unleashing Prosperity Through Deregulation''; and
Executive Order 14219, ``Ensuring Lawful Governance and Implementing
the President's `Department of Government Efficiency' Deregulatory
Initiative''
E.O. 12866, ``Regulatory Planning and Review'' (58 FR 51735, Oct.
4, 1993), reaffirmed by E.O. 13563, ``Improving Regulation and
Regulatory Review'' (76 FR 3821, Jan. 21, 2011), provides for
determining whether a regulatory action is ``significant'' and
therefore subject to the Office of Management and Budget (OMB) review
process and to the requirements of the Executive order. This action is
a ``significant regulatory action'' under Section 3(f)(1) of E.O. 12866
because it is likely to have an annual effect on the economy of $100
million or more. Accordingly, NHTSA submitted this action to OMB for
review and any changes made in response to interagency feedback
submitted via the OMB review process have been documented in the docket
for this action. The estimated benefits and costs of this proposed rule
are described above and in the PRIA, located in the docket and on
NHTSA's website.
E.O. 14192, ``Unleashing Prosperity Through Deregulation'' (90 FR
9065, Feb. 6, 2025) requires an agency, unless prohibited by law, to
identify at least ten existing regulatory requirements to be repealed
when the agency publicly proposes for notice and comment or otherwise
promulgates a new significant regulatory rule. Section 3(c) of E.O.
14192 also requires that the total incremental costs associated with an
agency's proposed new regulations must, to the extent permitted by law,
be offset by the elimination of costs associated with other previous
regulations of the agency. This proposed rule, if finalized as
proposed, is expected to be an E.O. 14192 deregulatory action and thus
is not expected to generate net new incremental costs. The estimated
cost savings of this proposal are detailed in the PRIA.
E.O. 14219, ``Ensuring Lawful Governance and Implementing the
President's `Department of Government Efficiency' Deregulatory
Initiative'' (90 FR 10583, Feb. 19, 2025) requires agency heads to
review their regulations and identify regulations that, among other
things, are based on anything other than the best reading of the
underlying statutory authority or prohibition or that implicate matters
of social, political, or economic significance that are not authorized
by clear statutory authority. NHTSA has identified its CAFE standards
issued in 2022 and 2024 as falling within an enumerated category of
E.O. 14219. Specifically, as described in an interpretive rule
published on June 11, 2025, NHTSA determined that the CAFE standards
issued in 2022 and 2024 are not authorized by clear statutory
authority. NHTSA is issuing this proposed rule to reset the CAFE
standards and bring the CAFE program into compliance with relevant
statutory requirements. NHTSA discusses compliance with relevant
statutory requirements in Section V above.
B. Environmental Considerations
1. National Environmental Policy Act
To inform its development of the CAFE standards for MYs 2022-2031,
and pursuant to the National Environmental Policy Act (NEPA), 42 U.S.C.
4321 et seq., and DOT Order 5610.1D, 90 FR 29621 (July 3, 2025), NHTSA
prepared a Draft SEIS to evaluate the potential environmental impacts
of the proposed action and a reasonable range of alternatives. In
revising the CAFE standards established in NHTSA's June 2024 final
rule, NHTSA is making substantial changes to the proposed action
examined in the 2024 Final EIS and, as such, prepared this Draft SEIS
to inform its amendment of MYs 2027-2031 CAFE standards. Because the MY
2026 passenger car and light truck fleets will already be produced and
for sale by the time NHTSA issues a final rule to amend MYs 2022-2031
CAFE standards, this Draft SEIS analyzes environmental impacts
associated only with the proposed MYs 2027-2031 CAFE standards. The
Draft SEIS analyzes reasonably foreseeable impacts of the proposed rule
on the potentially affected environment, which are discussed in
proportion to their significance. It also discusses NHTSA's reasonable
range of alternatives, including a No-Action Alternative and a
Preferred Alternative, and other factors used in developing this
proposed rule. The Draft SEIS addresses mitigation measures considered
as part of the environmental analysis.\565\
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\565\ DOT Order 5610.1D, sec. 26.l (``Mitigation means measures
that avoid, minimize, or compensate for environmental impacts caused
by a proposed action or alternatives. . . . While NEPA requires
consideration of mitigation, it does not mandate the form or
adoption of any mitigation.'').
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NHTSA has considered the information contained in the Draft SEIS as
part of developing this proposed rule. As explained in NHTSA's June
2025 interpretive rule, NHTSA ``must not consider the fuel economy of
dedicated automobiles; must consider dual-fueled automobiles to be
operated only on gasoline or diesel fuel; and must not consider, when
prescribing a fuel economy standard, the trading, transferring, or
availability of credits under [49 U.S.C. 32903]''; \566\ NEPA, however,
does not impose such constraints on analysis; instead, NEPA requires
that Federal agencies consider reasonably foreseeable environmental
impacts of their proposed actions.\567\
[[Page 56625]]
NHTSA's Draft SEIS therefore presents results of an ``unconstrained''
analysis that considers manufacturers' potential use of CAFE credits
and application of alternative fuel technologies (including PHEVs using
their charge depleting fuel economy values, BEVs, and FCEVs) in order
to disclose and allow consideration of real-world environmental
consequences of the Proposed Action and alternatives.\568\
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\566\ Resetting the Corporate Average Fuel Economy Program;
Interpretive Rule, 90 FR 24518, 24519 (June 11, 2025).
\567\ 42 U.S.C. 4332(2); DOT Order 5610.1D, sec. 13.f.
\568\ See Appendix C of the Draft SEIS for a discussion of the
full range of modeled electrified technologies.
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The Draft SEIS is available for public comment; instructions for
the submission of comments are included within the document. Afterward,
NHTSA will simultaneously issue the Final SEIS and Record of Decision
(ROD), pursuant to Section 14 of DOT Order 5610.D, unless NHTSA
determines the statutory criteria or practicability considerations
preclude simultaneous issuance. For additional information on NHTSA's
NEPA analysis, please see the Draft SEIS.
2. Clean Air Act as Applied to NHTSA's Proposed Rule
CAA (42 U.S.C. 7401 et seq.) is the primary Federal legislation
that addresses air quality. Under the authority of the CAA and
subsequent amendments, EPA has established National Ambient Air Quality
Standards (NAAQS) for six criteria pollutants, which are reviewed every
5 years.
The air quality of a geographic region is usually assessed by
comparing the levels of criteria air pollutants found in the ambient
air to the levels established by the NAAQS (also considering the other
elements of a NAAQS: averaging time, form, and indicator).
Concentrations of criteria pollutants within the air mass of a region
are measured in parts of a pollutant per million parts (ppm) of air or
in micrograms of a pollutant per cubic meter ([mu]g/m\3\) of air
present in repeated air samples taken at designated monitoring
locations using specified types of monitors. These ambient
concentrations of each criteria pollutant are compared to the levels,
averaging time, and form specified by the NAAQS to assess whether the
region's air quality is in attainment with the NAAQS.
When the measured concentrations of a criteria pollutant within a
geographic region are below those permitted by the NAAQS, EPA
designates the region as an attainment area for that pollutant, while
regions where concentrations of criteria pollutants exceed Federal
standards are called nonattainment areas. Former nonattainment areas
that are now in compliance with the NAAQS are designated as maintenance
areas. Each state with a nonattainment area is required to develop and
implement a State Implementation Plan (SIP) documenting how the region
will reach attainment levels within the time periods specified in the
CAA. For maintenance areas, the SIP must document how the state intends
to maintain compliance with the NAAQS. EPA develops a Federal
Implementation Plan (FIP) if a state fails to submit an approvable plan
for attaining and maintaining the NAAQS. When EPA revises a NAAQS, each
state must revise its SIP to address how it plans to attain the new
standard.
No Federal agency may ``engage in, support in any way or provide
financial assistance for, license or permit, or approve'' any activity
that does not ``conform'' to a SIP or FIP after EPA has approved or
promulgated it.\569\ Further, no Federal agency may ``approve, accept
or fund'' any transportation plan, program, or project developed
pursuant to title 23 or chapter 53 of title 49, U.S.C., unless the
plan, program, or project has been found to ``conform'' to any
applicable implementation plan in effect.\570\ The purpose of these
conformity requirements is to ensure that federally sponsored or
conducted activities do not interfere with meeting the emissions
targets in SIPs or FIPs, do not cause or contribute to new violations
of the NAAQS, and do not impede the ability of a state to attain or
maintain the NAAQS or delay any interim milestones. EPA has issued two
sets of regulations to implement the conformity requirements:
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\569\ 42 U.S.C. 7506(c)(1).
\570\ 42 U.S.C. 7506(c)(2).
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(1) The Transportation Conformity Rule \571\ applies to
transportation plans, programs, and projects that are developed,
funded, or approved under 23 U.S.C. (Highways) or 49 U.S.C. chapter 53
(Public Transportation).
---------------------------------------------------------------------------
\571\ 40 CFR part 51, subpart T, and part 93, subpart A.
---------------------------------------------------------------------------
(2) The General Conformity Rule \572\ applies to all other Federal
actions not covered under the Transportation Conformity Rule. The
General Conformity Rule establishes emissions thresholds, or de minimis
levels, for use in evaluating the conformity of an action that results
in emissions increases.\573\ If the net increases of direct and
indirect emissions exceed any of these thresholds, and the action is
not otherwise exempt, then a conformity determination is required. The
conformity determination can entail air quality modeling studies,
consultation with EPA and state air quality agencies, and commitments
to revise the SIP or to implement measures to mitigate air quality
impacts.
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\572\ 40 CFR part 51, subpart W, and part 93, subpart B.
\573\ 40 CFR 93.153(b).
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The proposed CAFE standards and associated program activities are
not developed, funded, or approved under 23 U.S.C. or 49 U.S.C. chapter
53. Accordingly, this proposed action and associated program activities
would not be subject to transportation conformity. Under the General
Conformity Rule, a conformity determination is required where a Federal
action would result in total direct and indirect emissions of a
criteria pollutant or precursor in a nonattainment or maintenance areas
equaling or exceeding the rates specified in 40 CFR 93.153(b)(1) and
(2). As explained below, NHTSA's proposed action would not result in
direct or indirect emissions as defined in 40 CFR 93.152.
The General Conformity Rule defines direct emissions as ``those
emissions of a criteria pollutant or its precursors that are caused or
initiated by the Federal action and originate in a nonattainment or
maintenance area and occur at the same time and place as the action and
are reasonably foreseeable.'' \574\ NHTSA's proposed action would set
fuel economy standards for passenger cars and light trucks. It
therefore would not cause or initiate direct emissions consistent with
the meaning of the General Conformity Rule.\575\
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\574\ 40 CFR 93.152.
\575\ Dep't of Transp. v. Pub. Citizen, 541 U.S. 752, 772 (2004)
(``[T]he emissions from the Mexican trucks are not `direct' because
they will not occur at the same time or at the same place as the
promulgation of the regulations.''). NHTSA's proposed action would
establish fuel economy standards for MYs 2022-2031 passenger cars
and light trucks; any emissions increases would occur in a different
place and well after promulgation of the proposed rule.
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Indirect emissions under the General Conformity Rule are ``those
emissions of a criteria pollutant or its precursors: (1) [t]hat are
caused or initiated by the Federal action and originate in the same
nonattainment or maintenance area but occur at a different time or
place as the action; (2) [t]hat are reasonably foreseeable; (3) [t]hat
the agency can practically control; and (4) [f]or which the agency has
continuing program responsibility.'' \576\ Each element of the
definition must be met to qualify as indirect emissions. NHTSA has
determined, for purposes of general conformity, that emissions (if any)
that may result from its fuel economy standards would not be caused by
the agency's action, but rather would occur
[[Page 56626]]
because of subsequent activities the agency cannot practically control.
``[E]ven if a Federal licensing, rulemaking or other approving action
is a required initial step for a subsequent activity that causes
emissions, such initial steps do not mean that a Federal agency can
practically control any resulting emissions.'' \577\
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\576\ 40 CFR 93.152.
\577\ 40 CFR 93.152.
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EPCA requires NHTSA to set fleetwide average fuel economy standards
for the CAFE program using performance-based standards. NHTSA is not
authorized to dictate how manufacturers are to comply with the
standards, nor may NHTSA require manufacturers to use specific
technologies to achieve improved fuel economy in their fleets.
Furthermore, NHTSA cannot control consumer purchasing or driving
behavior, both of which can have a considerable effect on vehicle
emissions of criteria pollutants. It is the combination of factors
outside NHTSA's control, such as manufacturers' decisions to apply fuel
economy technologies and consumers' purchasing and driving behaviors,
which determine the aggregate levels of criteria pollutant and
precursor emissions. For purposes of analyzing the environmental
impacts of the alternatives considered under NEPA, NHTSA has
necessarily made assumptions regarding all of these factors.
In addition, NHTSA does not have the statutory authority or
practical ability to control the actual vehicle miles traveled (VMT) by
drivers. As the extent of emissions is directly dependent on the
operation of motor vehicles, changes in any emissions that would result
from NHTSA's proposed CAFE standards are not changes NHTSA can
practically control or for which NHTSA has continuing program
responsibility. Therefore, the proposed CAFE standards and alternative
standards considered by NHTSA would not cause indirect emissions under
the General Conformity Rule, and a general conformity determination is
not required.
3. Endangered Species Act (ESA)
Under Section 7(a)(2) of the ESA, Federal agencies must ensure that
actions they authorize, fund, or carry out are ``not likely to
jeopardize the continued existence'' of any federally listed threatened
or endangered species (collectively, ``listed species'') or result in
the destruction or adverse modification of the designated critical
habitat of these species.\578\ If a Federal agency determines that an
agency action may affect a listed species or designated critical
habitat, it must initiate consultation with the appropriate service--
the U.S. Fish and Wildlife Service (FWS) of the Department of the
Interior (DOI) or the National Oceanic and Atmospheric Administration's
National Marine Fisheries Service of the Department of Commerce
(together, ``the Services''), or both, depending on the species
involved--in order to ensure that the action is not likely to
jeopardize the species or destroy or adversely modify designated
critical habitat.\579\ Under this standard, the Federal agency taking
action evaluates the possible effects of its action and determines
whether to initiate consultation.\580\
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\578\ 16 U.S.C. 1536(a)(2).
\579\ See 50 CFR 402.14.
\580\ See 50 CFR 402.14(a) (``Each Federal agency shall review
its actions at the earliest possible time to determine whether any
action may affect listed species or critical habitat.'').
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The Services have previously provided legal and technical guidance
about whether CO2 emissions associated with a specific
proposed Federal action trigger ESA Section 7(a)(2) consultation. NHTSA
analyzed the Services' history of actions, analysis, and guidance in
Appendix G of the MYs 2012-2016 CAFE standards EIS and now incorporates
by reference that appendix here.\581\ In that appendix, NHTSA looked at
the history of the Polar Bear Special Rule and several guidance
memoranda provided by FWS and the U.S. Geological Survey. Ultimately,
DOI concluded that a causal link could not be made between
CO2 emissions associated with a proposed Federal action and
specific effects on listed species; therefore, no Section 7(a)(2)
consultation would be required.
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\581\ Available on NHTSA's Corporate Average Fuel Economy
website at: NHTSA, Appendix G: Endangered Species Act Consideration,
available at: https://static.nhtsa.gov/nhtsa/downloads/CAFE/2012-2016%20Docs-PCLT/2012-2016%20Final%20Environmental%20Impact%20Statement/Appendix_G_Endangered_Species_Act_Consideration.pdf (accessed: Sept.
10, 2025).
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Subsequent to the publication of that appendix, a court vacated the
Polar Bear Special Rule on NEPA grounds, though it upheld the ESA
analysis as having a rational basis.\582\ FWS then issued a revised
Final Special Rule for the Polar Bear.\583\ In that final rule, FWS
provided for ESA Section 7, that the determination of whether
consultation is triggered is narrow and focused on the discrete effect
of the proposed agency action. FWS wrote, ``[T]he consultation
requirement is triggered only if there is a causal connection between
the proposed action and a discernible effect to the species or critical
habitat that is reasonably certain to occur. One must be able to
`connect the dots' between an effect of proposed action and an impact
to the species and there must be a reasonable certainty that the effect
will occur.'' \584\ The statement in the revised Final Special Rule is
consistent with the prior guidance published by FWS and remains valid
today.\585\ If the consequence is not reasonably certain to occur, it
is not an ``effect of a proposed action'' and does not trigger the
consultation requirement.
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\582\ In re: Polar Bear Endangered Species Act Listing and Sec.
4(D) Rule Litigation, 818 F.Supp.2d 214 (D.D.C. Oct. 17, 2011).
\583\ 78 FR 11766 (Feb. 20, 2013).
\584\ 78 FR 11784-11785 (Feb. 20, 2013).
\585\ See DOI, Guidance on the Applicability of the Endangered
Species Act Consultation Requirements to Proposed Actions Involving
the Emissions of Greenhouse Gases, Solicitor's Opinion No. M-37017,
DOI: Washington, DC (2008), available at: https://www.doi.gov/sites/doi.opengov.ibmcloud.com/files/uploads/M-37017.pdf (accessed: Sept.
10, 2025).
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Pursuant to Section 7(a)(2) of the ESA, NHTSA considered the
effects of the proposed CAFE standards and reviewed applicable ESA
regulations, case law, and guidance to determine what, if any, impact
there might be to listed species or designated critical habitat. Based
on this assessment, the agency has determined that the action of
setting CAFE standards does not require consultation under Section
7(a)(2) of the ESA and has concluded the agency's review of this action
under Section 7 of the ESA.
4. Other Regulatory Analyses Discussed in the Draft SEIS
NHTSA conducted brief qualitative reviews of the impacts of action
alternatives on potentially affected resources, including those related
to the statutory requirements and orders listed below, in the Draft
SEIS, and determined that setting CAFE standards for passenger cars and
light trucks is not the type of activity to have impacts on such
resource categories:
National Historic Preservation Act (NHPA);
Fish and Wildlife Conservation Act (FWCA);
Coastal Zone Management Act (CZMA);
Floodplain Management (E.O. 11988 and DOT Order 5650.2);
Preservation of the Nation's Wetlands (E.O. 11990 and DOT
Order 5660.1a);
Migratory Bird Treaty Act (MBTA), Bald and Golden Eagle
Protection Act (BGEPA), E.O. 13186; and
Department of Transportation Act (Section 4(f)).
[[Page 56627]]
5. Executive Order 13045: ``Protection of Children From Environmental
Health Risks and Safety Risks''
This action is subject to E.O. 13045 (62 FR 19885, Apr. 23, 1997).
Pursuant to E.O. 13045, NHTSA must prepare an evaluation of the
environmental health or safety effects of the planned action on
children and an explanation of why the planned action is preferable to
other potentially effective and reasonably feasible alternatives
considered by NHTSA. Further, this analysis may be included as part of
any other required analysis.
While environmental and health effects associated with criteria
pollutant and toxic air pollutant emissions vary over time and across
alternatives, negative effects, when estimated, are extremely small.
This preamble and the Draft SEIS discuss air quality, climate, and
their related environmental and health effects. In addition, Section V
of this preamble explains why NHTSA believes the proposed CAFE
standards are preferable to other alternatives considered. Together,
this preamble and Draft SEIS satisfy NHTSA's responsibilities under
E.O. 13045.
6. Executive Order 14154: ``Unleashing American Energy''
E.O. 14154, ``Unleashing American Energy'' (90 FR 8353, Jan. 29,
2025), announced the administration's policy regarding energy
resources, specifically to promote the production, distribution, and
use of reliable domestic energy supplies, including oil, natural gas,
and biofuels; to ensure that all regulatory requirements related to
energy are ``grounded in clearly applicable law''; and ``to eliminate
the `electric vehicle (EV) mandate' and promote true consumer choice''
\586\ by ``removing regulatory barriers to motor vehicle access; by
ensuring a level regulatory playing field for consumer choice in
vehicles; by terminating, where appropriate, state emissions waivers
that function to limit sales of gasoline-powered automobiles; and by
considering the elimination of unfair subsidies and other ill-conceived
government-imposed market distortions that favor EVs over other
technologies and effectively mandate their purchase by individuals,
private businesses, and government entities alike by rendering other
types of vehicles unaffordable.'' \587\ E.O. 14154 also directs
agencies to adhere only to relevant legislated requirements for
environmental considerations and to eliminate any considerations beyond
these requirements. Further, the Executive order specifically directed
the Council on Environmental Quality to propose rescinding its NEPA
regulations found at 40 CFR 1500. CEQ rescinded its NEPA regulations in
an interim final rule published on February 25, 2025. That rule went
into effect on April 11, 2025.\588\
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\586\ E.O. 14154, sec. 2, Unleashing American Energy, 90 FR 8353
(Jan. 29, 2025).
\587\ E.O. 14154, sec. 2(e).
\588\ See Removal of National Environmental Policy Act
Implementing Regulations, Docket No. CEQ-2025-0002.
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This proposed rule follows the direction of E.O. 14154 to ensure
that all analysis related to energy is grounded in clearly applicable
law and that only the relevant legislated requirements for
environmental considerations and any considerations beyond these
requirements are eliminated from the assessment of maximum feasible
standards and the Draft SEIS.
7. Executive Order 14173: ``Ending Illegal Discrimination and Restoring
Merit-Based Opportunity''
E.O. 14173, ``Ending Illegal Discrimination and Restoring Merit-
Based Opportunity'' (90 FR 8633, Jan. 31, 2025), removed ``diversity,
equity, and inclusion'' (DEI) and ``diversity, equity, inclusion, and
accessibility'' (DEIA) principles from mandates, policies, programs,
activities, guidance, regulations, and requirements. This Executive
order revoked E.O. 12898, ``Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations'' (59 FR
7629, Feb. 11, 1994), which directed Federal agencies to identify and
address, as appropriate, ``disproportionately high and adverse human
health or environmental effects of its programs, policies, and
activities on minority populations and low-income populations.'' \589\
The proposed rule is in compliance with E.O. 14173, and the Draft SEIS
analyzes the impacts on the quality of life of all Americans
potentially affected by the proposed action.
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\589\ E.O. 12898, sec. 1-101.
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C. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq.,
as amended), whenever an agency is required to publish an NPRM, it must
prepare and make available for public comment a regulatory flexibility
analysis that describes the effect of the rule on small entities (e.g.,
small businesses, small organizations, and small governmental
jurisdictions). No regulatory flexibility analysis is required if the
head of an agency certifies the rule will not have a significant
economic impact on a substantial number of small entities and publishes
with the proposed rule a statement of the factual basis for certifying
that a rule will not have a significant economic impact on a
substantial number of small entities.
NHTSA has considered the impacts of this proposed rule under the
Regulatory Flexibility Act, and the NHTSA Administrator certifies this
proposed rule will not have a significant economic impact on a
substantial number of small entities. NHTSA's statement providing the
factual basis for this certification pursuant to 5 U.S.C. 605(b)
follows.
Small businesses are defined based on the North American Industry
Classification System (NAICS) code.\590\ One of the criteria for
determining size is the number of employees in the firm. For
establishments primarily engaged in manufacturing or assembling
automobiles, the firm must have less than 1,500 employees to be
classified as a small business. This rulemaking would affect motor
vehicle manufacturers. As shown in Table VIII-1, NHTSA has identified
twelve small manufacturers that produce passenger cars, light trucks,
and SUVs. NHTSA acknowledges that some very new manufacturers may
potentially not be listed. However, those new manufacturers tend to
have transportation products that are not part of the light-duty
vehicle fleet and have yet to start production of relevant
vehicles.\591\
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\590\ Classified in NAICS under Subsector 336--Transportation
Equipment Manufacturing for Automobile and Light Duty Motor Vehicle
Manufacturing (336110), available at: https://www.sba.gov/document/support-table-size-standards (accessed: Sept. 10, 2025).
\591\ 5 U.S.C. 605(b).
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[[Page 56628]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.142
NHTSA believes that the proposed rule would not have a significant
economic impact on small vehicle manufacturers. The proposal is
intended to reset the CAFE standards consistent with NHTSA's statutory
authority. In addition, under 49 CFR part 525, passenger car
manufacturers building less than 10,000 vehicles per year can petition
NHTSA to have alternative standards apply to them. The listed
manufacturers producing gasoline- and diesel-powered vehicles do not
currently meet the standard and must already petition NHTSA for relief.
This proposal to amend standards is not expected to have a meaningful
impact on these manufacturers--they are still expected to be required
to go through the same process and petition for relief, as the amended
standards are expected to exceed the maximum feasibility of these small
manufacturers. Accordingly, a regulatory flexibility analysis was not
prepared.
---------------------------------------------------------------------------
\592\ Estimated number of employees as of Jan. 2025, source:
linkedin.com, zoominfo.com, rocketreach.co, and datanyze.com.
\593\ Rough estimate of LDV production for MY 2024.
---------------------------------------------------------------------------
D. Executive Order 13132 (``Federalism'')
E.O. 13132, ``Federalism'' (64 FR 43255, Aug. 10, 1999), requires
Federal agencies to develop an accountable process to ensure
``meaningful and timely input by state and local officials in the
development of regulatory policies that have federalism implications.''
The Executive order defines the term ``[p]olicies that have federalism
implications'' to include regulations that have ``substantial direct
effects on the states, on the relationship between the national
government and the states, or on the distribution of power and
responsibilities among the various levels of government.'' Under the
Executive order, agencies may not issue a regulation that has
federalism implications, which imposes substantial direct compliance
costs, unless the Federal Government provides the funds necessary to
pay the direct compliance costs incurred by the state and local
governments, or the agencies consult with state and local officials
early in the process of developing the proposed rule.
NHTSA has determined that this proposed rule does not implicate
E.O. 13132, because it neither imposes substantial direct compliance
costs on state, local, or tribal governments, nor does it preempt state
law. Thus, this proposed rule does not implicate the consultation
procedures that E.O. 13132 imposes on agency regulations that would
either preempt state law or impose substantial direct compliance costs
on state, local, or tribal governments, because the only entities
subject to this proposed rule are vehicle manufacturers.
NHTSA is not taking any action regarding preemption in this
proposed rule, as this rule's purpose is to propose amended CAFE
standards. Nothing in EPCA or EISA provides that NHTSA must make a
determination or pronouncement on preemption.
E. Executive Order 12988 (``Civil Justice Reform'')
With respect to the review of the promulgation of a new regulation,
Section 3(b) of E.O. 12988, ``Civil Justice Reform'' (61 FR 4729, Feb.
7, 1996), requires that executive agencies make every reasonable effort
to ensure that the regulation: (1) clearly specifies the preemptive
effect; (2) clearly specifies the effect on existing Federal law or
regulation; (3) provides a clear legal standard for affected conduct,
while promoting simplification and burden reduction; (4) clearly
specifies the retroactive effect, if any; (5) specifies whether
administrative proceedings are to be required before parties file suit
in court; (6) adequately defines key terms; and (7) addresses other
important issues affecting clarity and general draftsmanship under any
guidelines issued by the Attorney General. This document is consistent
with these requirements.
NHTSA has examined this proposed rule to reset the CAFE standards
applicable to MYs 2022-2026 and MYs 2027-2031 and determined that it
meets the requirements of the Executive order. In particular, the issue
of preemption is discussed above and the agency's assessment of the
rule's effect on prior model years is discussed in Section V. NHTSA
notes further that there is no requirement that individuals submit a
petition for reconsideration or pursue
[[Page 56629]]
other administrative proceedings before they file suit in court. In
addition, the rule provides a clear legal standard for compliance,
establishing CAFE standards for passenger cars and light trucks for MYs
2022-2026 and MYs 2027-2031.
F. Executive Order 13175 (``Consultation and Coordination With Indian
Tribal Governments'')
This proposed rule does not have tribal implications, as specified
in E.O. 13175, ``Consultation and Coordination with Indian Tribal
Governments'' (65 FR 67249, Nov. 9, 2000). This proposed rule would be
implemented at the Federal level and would directly impact only vehicle
manufacturers. Thus, E.O. 13175, which requires consultation with
tribal officials when agencies are developing policies that have
``substantial direct effects'' on tribes and tribal interests, does not
apply to this proposed rule.
G. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires Federal agencies to prepare a written assessment of the costs,
benefits, and other effects of a proposed or final rule that includes a
Federal mandate likely to result in the expenditure by state, local, or
tribal governments, in the aggregate, or by the private sector, of more
than $100 million in any 1 year (adjusted for inflation with base year
of 1995). Adjusting this amount by the implicit GDP price deflator for
2024 results with $187 million (125.23/66.939 = 1.87).\594\ Before
promulgating a rule for which a written statement is needed, Section
205 of UMRA generally requires NHTSA to identify and consider a
reasonable number of regulatory alternatives and adopt the least
costly, most cost effective, or least burdensome alternative that
achieves the objective of the rule. The provisions of Section 205 do
not apply when they are inconsistent with applicable law. Moreover,
Section 205 allows NHTSA to adopt an alternative other than the least
costly, most cost effective, or least burdensome alternative if NHTSA
publishes with the rule an explanation of why that alternative was not
adopted.
---------------------------------------------------------------------------
\594\ Bureau of Economic Analysis (BEA), National Income and
Product Accounts, NIPA Table 1.1.9: Implicit Price Deflators for
Gross Domestic Product (2025), available at: https://apps.bea.gov/iTable/?reqid=19&step=2&isuri=1&categories=survey (accessed: Sept.
10, 2025).
---------------------------------------------------------------------------
This proposed rule will not result in the expenditure by state,
local, or tribal governments, in the aggregate, of more than $187
million annually, but it will result in cost savings exceeding that
amount for vehicle manufacturers and their suppliers. In developing
this proposed rule, NHTSA considered a range of alternative fuel
economy standards. As explained in detail in Section V of the preamble
above, NHTSA concludes its selected alternatives are the maximum
feasible alternatives that achieve the objectives of this proposed
rule, as required by EPCA/EISA.
H. Regulation Identifier Number
DOT assigns a regulation identifier number (RIN) to each regulatory
action listed in the Unified Agenda of Federal Regulations. The
Regulatory Information Service Center publishes the Unified Agenda in
the spring and fall of each year. The RIN contained in the heading at
the beginning of this document may be used to find this action in the
Unified Agenda.
I. National Technology Transfer and Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act (NTTAA) requires NHTSA to evaluate and use existing voluntary
consensus standards in its regulatory activities unless doing so would
be inconsistent with applicable law (i.e., the statutory provisions
regarding NHTSA's vehicle safety authority) or otherwise
impractical.\595\
---------------------------------------------------------------------------
\595\ 15 U.S.C. 272.
---------------------------------------------------------------------------
Voluntary consensus standards are technical standards developed or
adopted by voluntary consensus standards bodies. Technical standards
are defined by the NTTAA as ``performance-based or design-specific
technical specification and related management systems practices.''
They pertain to ``products and processes, such as the size, strength,
or technical performance of a product, process, or material.'' \596\
---------------------------------------------------------------------------
\596\ 142 Cong. Rec. S1081 (Feb. 7, 1996) (statement of Sen.
Rockefeller).
---------------------------------------------------------------------------
Examples of organizations generally regarded as voluntary consensus
standards bodies include the American Society for Testing and
Materials, International, the SAE, and the American National Standards
Institute (ANSI). If NHTSA does not use available and potentially
applicable voluntary consensus standards, it is required by the act to
provide Congress, through OMB, an explanation of reasons for not using
such standards. There are currently no consensus standards that NHTSA
administers relevant to these proposed CAFE standards.
J. Department of Energy Review
In accordance with 49 U.S.C. 32902(j)(2), NHTSA submitted this
proposed rule to DOE for review. That agency did not make any comments
that NHTSA did not address.\597\
---------------------------------------------------------------------------
\597\ DOE's letter of review for the notice of the proposed
rule.
---------------------------------------------------------------------------
K. Paperwork Reduction Act
Under the procedures established by the Paperwork Reduction Act of
1995 (PRA) (44 U.S.C. 3501 et seq.), Federal agencies must obtain
approval from the OMB for each collection of information they conduct,
sponsor, or require through regulations. A person is not required to
respond to a collection of information by a Federal agency unless the
collection displays a valid OMB control number. The Information
Collection Request (ICR) for a modification to NHTSA's existing
information collection for CAFE Reporting described below is being
forwarded to OMB for review and comment. In compliance with these
requirements, NHTSA asks for public comments on the following proposed
collection of information for which the agency is seeking approval from
OMB.
Title: Corporate Average Fuel Economy Reporting.
OMB Control Number: 2127-0019.
Form Number: NHTSA Form 1474 (CAFE Projections Reporting Template).
Type of Request: Modification of a currently approved collection.
Type of Review Requested: Regular.
Requested Expiration Date of Approval: Three years from date of
approval.
Summary of the Collection of Information: NHTSA is submitting to
OMB, in connection with this NPRM, an information collection request
(ICR) for NHTSA's information collections for the CAFE program. The ICR
covers 11 information collections: two required projection reports
(pre-model year and mid-model year reports), eight additional
compliance submissions that are required to be submitted under certain
circumstances, and one information collection for a petition process
that is required to receive a benefit. NHTSA is requesting approval for
the modification of the ICR to cover proposed changes in this NPRM,
including both additions and removals to required reporting.
Specifically, the modifications include: (1) amending reporting
elements related to vehicle classification on the pre-model year and
mid-model year reports; (2) removing data elements related to AC and OC
fuel consumption incentive values (FCIVs), in line with the AC and OC
FCIV
[[Page 56630]]
program ending in MY 2027; (3) removing reporting requirements for
credit trading in line with NHTSA's proposal to end credit trading in
MY 2027, which includes credit trade contracts, credit allocation
plans, credit transaction requests, and credit value reports; and (4)
updating the pre-model year and mid-model year reporting templates to
align with revised requirements. In addition, NHTSA is removing
information collection requirements that were already ending in the
regulation for reporting requirements related to AC and OC FCIV
petitions, which are set to end in MY 2026 and reporting requirements
related to hybrid/electric full-size pickup truck FCIVs, which end in
MY 2024.
The following table provides a summary of each of the information
collections in the ICR.
BILLING CODE 4910-59-P
[[Page 56631]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.143
[[Page 56632]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.144
Description of the Need for the Information and Proposed Use of the
Information: The following table provides a brief description of the
need and use of each information collection.
[[Page 56633]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.145
BILLING CODE 4910-59-C
Affected Public: Respondents are manufacturers of engines and
vehicles within the North American Industry Classification System
(NAICS) and use the coding structure as defined by NAICS, including
codes 33611, 336111, 336112, 33631, 33632, 336320, 33635, and 336350
for motor vehicle and parts manufacturing.
Estimated Number of Respondents: 28.
The two largest information collections for the pre-model year and
mid-model year reports each have an estimated 25 respondents per year.
These respondents are the vehicle manufacturers that manufacture
automobiles subject to the CAFE standards in 49 CFR parts 531 and 533
and they must report pursuant to 49 CFR part 537. For the remaining
collections, the number of respondents varies each year, as the
information is collected on an as-needed basis from the 25 respondents
each year, except for the small volume petitions. NHTSA estimates that,
on average, three small volume manufacturers will petition NHTSA for
alternative standards in each
[[Page 56634]]
year, and these three respondents will be unique from those 25
respondents who must submit pre-model year and mid-model year reports
annually. Accordingly, NHTSA estimates there will be 28 unique
respondents to the CAFE reporting requirements annually.
Frequency: Varies by collection.
The pre-model year and mid-model year reports are both annual
reports. However, the other collections are submitted when needed and
are generally based on compliance obligations arising in particular
circumstances.
Number of Responses: Varies.
NHTSA estimates that there will be an average of 25 responses for
the pre-model year and mid-model year reporting requirements. For the
other collections, the number of responses varies and NHTSA has
provided annualized averages for each collection in Table VIII-4 below.
Estimated Total Annual Burden Hours: 4,576 hours.
The total number of burden hours associated with this collection is
estimated to be 4,576 hours. The average number of respondents and
responses estimated for each submission type is based on a 3-year
average from MY 2026 through MY 2028. Certain reporting elements will
be discontinued starting in MY 2028, which is reflected in the 3-year
average.
An average of 25 automobile manufacturers submitted CAFE pre-model
year and mid-model year reports over MYs 2017-2025 under 49 CFR part
537. Manufacturers use engineers, managers, legal, and clerical staff
to prepare and submit CAFE reports to NHTSA. All manufacturers use
electronic database systems to produce CAFE reports, and manufacturers
can use those databases to export the compliance data required by Part
537. The template has been updated since the last rulemaking based on
feedback from manufacturers on functionality. The burden hours
associated with producing CAFE reports primarily involve engineers and
managers reviewing the output of these database systems. NHTSA
estimates that each pre-model year and mid-model year report takes each
manufacturer approximately 51 hours. Therefore, NHTSA estimates that
manufacturers spend a total of 1,275 hours (25 respondents x 51 hours)
each year producing pre-model year reports and 1,275 hours (25
respondents x 51 hours) each year producing the required mid-model year
CAFE reports.
Manufacturers may also be required to submit supplementary reports
if the information in their mid-model year report needs to be
corrected. NHTSA receives on average three supplementary reports from
manufacturers each year requesting to make corrections to previously
submitted reports. These revisions account for 93 (3 respondents x 31
hours) additional burden hours.
Starting with the 2017 compliance model year, manufacturers began
incurring additional burden hours for incorporating information
regarding AC technologies, OC technologies, and advanced technology
that is applied to full-sized pickup trucks into pre-model year and
mid-model year reports. However, this reporting burden will cease when
these incentives are no longer applicable, which end in MY 2024 for
advanced technology that is applied to full-sized pickup trucks and in
MY 2026 for AC and OC technologies. This results in a reduction in
burden for submitting pre-model year and mid-model year reports.
Manufacturers may also be required occasionally to submit existing
production information (e.g., what engines are shared across vehicle
models) to NHTSA for its analysis in modeling potential future economy
improvements and standards. The production information is similar to
the information submitted as part of EPA's final model year report
(e.g., final model year vehicle volumes). NHTSA anticipates that each
manufacturer may periodically spend 13 hours for each submission of
information for NHTSA's analysis, which will result in a total burden
of 325 hours annually (25 respondents x 13 hours) for the automotive
industry.
On average, three small volume manufacturers submit petitions for
alternative standards to NHTSA each year. These petitions are seeking
relief from complying with conventional CAFE standards. These small
volume manufacturers primarily include exotic sports car manufacturers
(e.g., Aston Martin and McLaren). The associated burden hours involve
attorneys, engineers, and managers collecting fuel economy performance
and production information on their production vehicles and preparing
petitions for submission to NHTSA. These professionals will spend
approximately 89 hours to prepare each petition. As a result, the
estimated total industry burden will be 267 annual hours (3 respondents
x 89 hours) for preparing and submitting CAFE petitions for alternative
standards to NHTSA.
Very few manufacturers incur burden each year in submitting
documents to NHTSA for corporate relationship changes. On average, only
one manufacturer each model year submits documents to NHTSA for
corporate relationship changes. The burden hours associated with this
activity primarily involve attorneys preparing documents. Minimal
amounts of burden hours are necessary for engineers and managers to
review documents and for clerical staff to submit them to NHTSA. The
estimated total industry burden will be 19 annual hours (1 respondent x
19 hours) for preparing and submitting information on corporate
relationship changes to NHTSA.
Nearly all vehicle manufacturers will incur burden hours in
managing their CAFE credit accounts each year. Credit management is a
significant activity for vehicle manufacturers that are addressing a
current credit shortfall or are preparing to avoid one in the future.
Manufacturers manage their credit accounts using engineers, managers,
and attorneys to prepare documents and then clerical staff to submit
credit allocation plans, credit transaction instructions and trade
documents to NHTSA. Manufacturers submit credit transaction
instructions to NHTSA at various times throughout the model year when
transferring credit trades from one manufacturer to another or when
submitting a credit allocation plan to NHTSA because of a credit
shortfall. On average, based upon compliance data for MYs 2017-2025,
NHTSA receives 25 credit transaction instructions from vehicle
manufacturers each model year. There are an additional 11 credit
shortfalls/credit allocation plans submitted each year. There are an
additional 17 credit trades with accompanying credit trades documents,
which have been reduced due to credit trades no longer being applicable
starting in MY 2028. Both credit allocation plans and credit
transaction requests have their labor hour burdens slightly reduced due
to credit trades no longer being applicable starting in MY 2028.
Therefore, NHTSA estimates that manufacturers will spend a total of
approximately 374 hours for credit trade documents each year (17
respondents x 22 hours), 297 hours for credit allocation plans (11
respondents x 27 hours), and 250 hours for credit transaction requests
(25 respondents x 10 hours).
NHTSA rarely receives carryback plans. A temporary increase in
respondents for carryback plans occurred only for MYs 2019-2021,
maintaining the average at approximately one respondent per year. NHTSA
estimates that on average 27 hours (1 respondent x 27 hours) will be
incurred by any manufacturer preparing a credit carryback plans each
year.
[[Page 56635]]
NHTSA requires all manufacturers engaging in trades to report
credit cost information, so that NHTSA can determine the monetary and
non-monetary values of credit trades. Manufacturers are required to
submit this information every time they fill out a credit trade
contract per 49 CFR 536.5(c)(5). In the 2021 NPRM, NHTSA had proposed a
Credit Value Reporting Template to ease the process of reporting credit
cost information. In response to comments, NHTSA decided to hold off on
requiring the Credit Value Reporting Template. Credit cost information
is still required in the format that manufacturers choose to submit to
meet the requirements of this section, and the hourly burden remains
the same even without a Credit Value Reporting Template. NHTSA
currently receives an average of 25 credit trade contracts annually,
but the average will drop off due to the removal of credit trading
starting in MY 2028, resulting in an estimated average of 17
respondents. Therefore, the total burden hours for submitting credit
value information in conjunction with credit trade contracts is
estimated to be 374 hours (17 reports x 22 hours). The total combined
hours for the industry to manage their credit accounts is estimated to
be 1,322 hours annually (374 hours + 297 hours + 250 hours + 27 hours +
374 hours).
Table VIII-4 provides a summary of the annual burden hours for each
of the 11 information collections.
BILLING CODE 4910-59-P
[GRAPHIC] [TIFF OMITTED] TP05DE25.146
[[Page 56636]]
The estimated total annual labor hour cost associated with 4,576
burden hours for CAFE reporting is $437,468.62. The cost is based upon
the estimated burden hours and current average labor rates for
engineers, managers, attorneys, and clerical staff to prepare and send
CAFE information to NHTSA. Table VIII-4 provides the breakdown of the
associated costs based upon individual hourly mean wage estimates from
the Bureau of Labor Statistics (BLS) for 2024 National Industry-
Specific Occupational Employment and Wage Statistics,\598\ which are
adjusted for employee compensation costs.
---------------------------------------------------------------------------
\598\ Bureau of Labor Statistics, 2024 National Industry-
Specific Occupational Employment and Wage Statistics NAICS 336100--
Motor Vehicle Manufacturing, (2025), available at: https://data.bls.gov/oes/#/industry/336100 (accessed: Sept. 10, 2025).
---------------------------------------------------------------------------
BLS estimates that the hourly mean wage for Engineers (Engineer)
(BLS Occupation code 17-2199) in the Motor Vehicle Manufacturing
Industry is $54.54. BLS estimates that the hourly mean wage for
Administrative Services Managers (Manager) (BLS Occupation code 11-
3012) in the Motor Vehicle Manufacturing Industry is $69.75. BLS
estimates that the hourly mean wage for Lawyers (Legal) (BLS Occupation
code 23-1011) in the Motor Vehicle Manufacturing Industry is $117.96.
BLS estimates that the hourly mean wage for Other Office and
Administrative Support Workers (Clerical) (BLS Occupation code 43-9000)
in the Motor Vehicle Manufacturing Industry is $30.34.
In addition to base hourly wages, respondents also incur costs
associated with employee compensation. The Bureau of Labor Statistics
estimates that private industry workers' wages represent 70.3 percent
of total labor compensation costs.\599\ Therefore, NHTSA estimates the
modified hourly wages used in Table VIII-5 as follows:
---------------------------------------------------------------------------
\599\ Bureau of Labor Statistics, Employer Costs for Employee
Compensation by ownership--March 2025, Last revised: Mar. 2025,
available at: https://www.bls.gov/news.release/archives/ecec_06132025.pdf (accessed: Sept. 10, 2025).
Engineer (17-2199): $77.58
Manager (11-3012): $99.22
Legal (23-1011): $167.80
Clerical (43-9000): $43.16
[GRAPHIC] [TIFF OMITTED] TP05DE25.147
BILLING CODE 4910-59-C
Estimated Total Annual Burden Cost: $0.
NHTSA estimates there are no costs to respondents or record keepers
other
[[Page 56637]]
than the labor costs associated with the burden hours.
Public Comments Invited: You are asked to comment on any aspects of
this information collection, including (a) whether the proposed
collection of information is necessary for the proper performance of
the functions of the Department, including whether the information will
have practical utility; (b) the accuracy of the Department's estimate
of the burden of the proposed information collection; (c) ways to
enhance the quality, utility, and clarity of the information to be
collected; and (d) ways to minimize the burden of the collection of
information on respondents, including the use of automated collection
techniques or other forms of information technology.
Please submit any comments, identified by the docket number in the
heading of this document, by the methods described in the ADDRESSES
section of this document to NHTSA and OMB. Although comments may be
submitted during the entire comment period, comments received within 30
days of publication are most useful.
L. Rulemaking Summary, 5 U.S.C. 553(b)(4)
As required by 5 U.S.C. 553(b)(4), a summary of this rule can be
found in the Abstract section of the Department's Unified Agenda entry
for this rulemaking at www.reginfo.gov.
IX. Regulatory Text
List of Subjects
49 CFR Part 523
Fuel economy.
49 CFR Part 531
Energy conservation, Fuel economy, Gasoline, Imports, Motor
vehicles, Reporting and recordkeeping requirements.
49 CFR Parts 533, 536, and 537
Fuel economy, Reporting and recordkeeping requirements.
For the reasons discussed in the preamble, NHTSA proposes to amend
49 CFR parts 523, 531, 533, 536, and 537 as follows:
0
1. Revise part 523 to read as follows:
PART 523--VEHICLE CLASSIFICATION
Sec.
523.1 Scope.
523.2 Definitions.
523.3 Automobile.
523.4 Passenger automobile.
523.5 Non-passenger automobile.
523.6 Heavy-duty vehicle.
523.7 Heavy-duty pickup trucks and vans.
523.8 Heavy-duty vocational vehicle.
523.9 Truck tractors.
523.10 Heavy-duty trailers.
Authority: 49 U.S.C. 32901; delegation of authority at 49 CFR
1.95.
Sec. 523.1 Scope.
This part establishes categories of vehicles subject to title V of
the Motor Vehicle Information and Cost Savings Act, 15 U.S.C. 2001 et
seq.
Sec. 523.2 Definitions.
As used in this part:
Ambulance has the meaning given in 40 CFR 86.1803.
Approach angle means the smallest angle, in a plane side view of an
automobile, formed by the level surface on which the automobile is
standing and a line tangent to the front tire static loaded radius arc
and touching the underside of the automobile forward of the front tire.
Axle clearance means the vertical distance from the level surface
on which an automobile is standing to the lowest point on the axle
differential of the automobile.
Base tire (for passenger automobiles, non-passenger automobiles,
and medium-duty passenger vehicles) means the tire size specified as
standard equipment by the manufacturer on each unique combination of a
vehicle's footprint and model type. Standard equipment is defined in 40
CFR 86.1803.
Basic vehicle frontal area is used as defined in 40 CFR 86.1803-01
for passenger automobiles, non-passenger automobiles, medium-duty
passenger vehicles and Class 2b through 3 pickup trucks and vans. For
heavy-duty tracts and vocational vehicles, it has the meaning given in
40 CFR 1037.801.
Breakover angle means the supplement of the largest angle, in the
plane side view of an automobile that can be formed by two lines
tangent to the front and rear static loaded radii arcs and intersecting
at a point on the underside of the automobile.
Bus has the meaning given in 49 CFR 571.3.
Cab-complete vehicle means a vehicle that is first sold as an
incomplete vehicle that substantially includes the vehicle cab section
as defined in 40 CFR 1037.801. For example, vehicles known commercially
as chassis-cabs, cab-chassis, box-deletes, bed-deletes, and cut-away
vans are considered cab-complete vehicles. A cab includes a steering
column and a passenger compartment. Note that a vehicle lacking some
components of the cab is a cab-complete vehicle if it substantially
includes the cab.
Cargo-carrying volume means the luggage capacity or cargo volume
index, as appropriate, and as those terms are defined in 40 CFR
600.315-08, in the case of automobiles to which either of these terms
apply. With respect to automobiles to which neither of these terms
apply, ``cargo-carrying volume'' means the total volume in cubic feet,
rounded to the nearest 0.1 cubic feet, of either an automobile's
enclosed non-seating space that is intended primarily for carrying
cargo and is not accessible from the passenger compartment, or the
space intended primarily for carrying cargo bounded in the front by a
vertical plane that is perpendicular to the longitudinal centerline of
the automobile and passes through the rearmost point on the rearmost
seat and elsewhere by the automobile's interior surfaces.
Class 2b vehicles are vehicles with a gross vehicle weight rating
(GVWR) ranging from 8,501 to 10,000 pounds.
Class 3 through Class 8 vehicles are vehicles with a gross vehicle
weight rating (GVWR) of 10,001 pounds or more as defined in 49 CFR
565.15.
Coach bus has the meaning given in 40 CFR 1037.801.
Commercial medium- and heavy-duty on-highway vehicle means an on-
highway vehicle with a gross vehicle weight rating of 10,000 pounds or
more as defined in 49 U.S.C. 32901(a)(7).
Complete vehicle has the meaning given to completed vehicle as
defined in 49 CFR 567.3.
Concrete mixer has the meaning given in 40 CFR 1037.801.
Curb weight means the actual weight of the vehicle in operational
status, including the weight of all standard and all optional equipment
installed on the vehicle as sold to the first retail purchaser, and the
weight of fuel at nominal tank capacity.
Dedicated vehicle has the same meaning as dedicated automobile as
defined in 49 U.S.C. 32901(a)(8).
Departure angle means the smallest angle, in a plane side view of
an automobile, formed by the level surface on which the automobile is
standing and a line tangent to the rear tire static loaded radius arc
and touching the underside of the automobile rearward of the rear tire.
Dual-fueled vehicle (multi-fuel, or flexible-fuel vehicle) has the
same meaning as dual fueled automobile as defined in 49 U.S.C.
32901(a)(9).
Electric vehicle means a vehicle that does not include a combustion
engine and is powered solely by an external source of electricity and/
or solar power. Note that this does not include hybrid-electric or
hydrogen combustion vehicles that use a chemical fuel such as gasoline,
diesel fuel, or hydrogen.
[[Page 56638]]
Electric vehicles may also be referred to as BEVs and fuel cell
electric vehicles to distinguish them from hybrid-electric vehicles.
Emergency vehicle means one of the following:
(1) For passenger automobiles, non-passenger automobiles, and
medium-duty passenger vehicles, emergency vehicle has the meaning given
in 49 U.S.C. 32902(e).
(2) For heavy-duty vehicles, emergency vehicle has the meaning
given in 40 CFR 1037.801.
Engine code has the meaning given in 40 CFR 86.1803.
Final-stage manufacturer has the meaning given in 49 CFR 567.3.
Fire truck has the meaning given in 40 CFR 86.1803.
Footprint is defined as the product of track width (measured in
inches, calculated as the average of front and rear track widths, and
rounded to the nearest tenth of an inch) times wheelbase (measured in
inches and rounded to the nearest tenth of an inch), divided by 144 and
then rounded to the nearest tenth of a square foot. For purposes of
this definition, track width is the lateral distance between the
centerlines of the base tires at ground, including the camber angle.
For purposes of this definition, wheelbase is the longitudinal distance
between front and rear wheel centerlines.
Full-size pickup truck means a non-passenger automobile, including
a medium-duty passenger vehicle, that meets the specifications in 40
CFR 86.1803-01 for a full-size pickup truck.
Gross axle weight rating (GAWR) has the meaning given in 49 CFR
571.3.
Gross combination weight rating (GCWR) has the meaning given in 49
CFR 571.3.
Gross vehicle weight rating (GVWR) has the meaning given in 49 CFR
571.3.
Heavy-duty engine means any engine used for (or for which the
engine manufacturer could reasonably expect to be used for) motive
power in a heavy-duty vehicle. For purposes of this definition in this
part, the term ``engine'' includes internal combustion engines and
other devices that convert chemical fuel into motive power. For
example, a fuel cell and motor used in a heavy-duty vehicle is a heavy-
duty engine. Heavy duty-engines include those engines subject to the
standards in 49 CFR part 535.
Heavy-duty vehicle means a vehicle as defined in Sec. 523.6.
Hitch means a device attached to the chassis of a vehicle for
towing.
Incomplete vehicle has the meaning given in 49 CFR 567.3.
Manufacturer has the meaning given in 49 U.S.C. 32901(a)(14).
Medium-duty passenger vehicle means any complete or incomplete
motor vehicle rated at more than 8,500 pounds GVWR and less than 10,000
pounds GVWR that is designed primarily to transport passengers, but
does not include a vehicle that--
(1) Is an ``incomplete truck,'' meaning any truck that does not
have the primary load carrying device or container attached; or
(2) Has a seating capacity of more than 12 persons; or
(3) Is designed for more than 9 persons in seating rearward of the
driver's seat; or
(4) Is equipped with an open cargo area (for example, a pick-up
truck box or bed) of 72.0 inches in interior length or more. A covered
box not readily accessible from the passenger compartment will be
considered an open cargo area for purposes of this definition. (See
paragraph (1) of the definition of medium-duty passenger vehicle at 40
CFR 86.1803-01.)
Mild hybrid gasoline-electric vehicle means a vehicle as defined by
EPA in 40 CFR 86.1866-12(e).
Motor home has the meaning given in 49 CFR 571.3.
Motor vehicle has the meaning given in 49 U.S.C. 30102.
Nominal tank capacity means a fuel tank's volume as specified by
the manufacturer.
Optional equipment means any equipment or feature not standard on a
vehicle model that is installed by the manufacturer or provided by the
manufacturer for installation prior to a vehicle's first retail
purchase.
Passenger-carrying volume means the sum of the front seat volume
and, if any, rear seat volume, as defined in 40 CFR 600.315-08, in the
case of automobiles to which that term applies. With respect to
automobiles to which that term does not apply, ``passenger-carrying
volume'' means the sum in cubic feet, rounded to the nearest 0.1 cubic
feet, of the volume of a vehicle's front seat and seats to the rear of
the front seat, as applicable, calculated as follows with the head
room, shoulder room, and leg room dimensions determined in accordance
with the procedures outlined in Society of Automotive Engineers
Recommended Practice J1100, Motor Vehicle Dimensions (Report of Human
Factors Engineering Committee, Society of Automotive Engineers,
approved November 2009).
(1) For front seat volume, divide 1,728 into the product of the
following SAE dimensions, measured in inches to the nearest 0.1 inches,
and round the quotient to the nearest 0.001 cubic feet.
(i) H61-Effective head room--front.
(ii) W3-Shoulder room--front.
(iii) L34-Maximum effective leg room-accelerator.
(2) For the volume of seats to the rear of the front seat, divide
1,728 into the product of the following SAE dimensions, measured in
inches to the nearest 0.1 inches, and rounded the quotient to the
nearest 0.001 cubic feet.
(i) H63-Effective head room--second.
(ii) W4-Shoulder room--second.
(iii) L51-Minimum effective leg room--second.
Pickup truck means a non-passenger automobile that has a passenger
compartment and an open cargo area (bed).
Pintle hooks means a type of towing hitch that uses a tow ring
configuration to secure to a hook or a ball combination for the purpose
of towing.
Recreational vehicle or RV means a motor vehicle equipped with
living space and amenities found in a motor home.
Refuse hauler has the meaning given in 40 CFR 1037.801.
Running clearance means the distance from the surface on which an
automobile is standing to the lowest point on the automobile, excluding
unsprung weight.
School bus has the meaning given in 49 CFR 571.3.
Static loaded radius arc means a portion of a circle whose center
is the center of a standard tire-rim combination of an automobile and
whose radius is the distance from that center to the level surface on
which the automobile is standing, measured with the automobile at curb
weight, the wheel parallel to the vehicle's longitudinal centerline,
and the tire inflated to the manufacturer's recommended pressure.
Strong hybrid gasoline-electric vehicle means a vehicle as defined
by EPA in 40 CFR 86.1866-12(e).
Temporary living quarters means a space in the interior of an
automobile in which people may temporarily live that includes sleeping
surfaces, such as beds, and household conveniences, such as a sink,
stove, refrigerator, or toilet.
Transmission class has the meaning given in 40 CFR 600.002.
Transmission configuration has the meaning given in 40 CFR 600.002.
Transmission type has the meaning given in 40 CFR 86.1803.
Truck tractor has the meaning given in 49 CFR 571.3 and 49 CFR
535.5(c). This includes most heavy-duty vehicles specifically designed
for the primary purpose of pulling trailers, but does not include
vehicles designed to carry other loads. For purposes of this definition
``other loads'' would not include loads
[[Page 56639]]
carried in the cab, sleeper compartment, or toolboxes. Examples of
vehicles similar to tractors but not tractors under this part include
dromedary tractors, automobile haulers, straight trucks with trailers
hitches, and tow trucks.
Van means a vehicle with a body that fully encloses the driver and
a cargo carrying or work performing compartment. The distance from the
leading edge of the windshield to the foremost body section of vans is
typically shorter than that of pickup trucks and sport utility
vehicles.
Vocational tractor means a tractor that is classified as a
vocational vehicle according to 40 CFR 1037.630
Vocational vehicle (or heavy-duty vocational vehicle) has the
meaning given in Sec. 523.8 and 49 CFR 535.5(b). This includes any
vehicle that is equipped for a particular industry, trade, or
occupation such as construction, heavy hauling, mining, logging, oil
fields, or refuse and includes vehicles such as school buses,
motorcoaches, and RVs.
Work truck means a vehicle that is rated at more than 8,500 pounds
and less than or equal to 10,000 pounds gross vehicle weight, and is
not a medium-duty passenger vehicle as defined in 49 U.S.C.
32901(a)(19).
Sec. 523.3 Automobile.
An automobile is any 4-wheeled vehicle propelled by fuel, or by
alternative fuel, manufactured primarily for use on public streets,
roads, and highways and rated at less than 10,000 pounds gross vehicle
weight, except:
(a) A vehicle operated only on a rail line;
(b) A vehicle manufactured in different stages by 2 or more
manufacturers, if no intermediate or final-stage manufacturer of that
vehicle manufactures more than 10,000 multi-stage vehicles per year; or
(c) A work truck.
Sec. 523.4 Passenger automobile.
A passenger automobile is any automobile (other than an automobile
capable of off-highway operation) manufactured primarily for use in the
transportation of not more than 10 individuals. A medium-duty passenger
vehicle that does not meet the criteria for non-passenger motor
vehicles in Sec. 523.5 is a passenger automobile.
Sec. 523.5 Non-passenger automobile.
A non-passenger automobile means an automobile that is not a work
truck and possesses one or more of the characteristics described in
paragraph (a) of this section or meets the off-highway features
described in paragraph (b) of this section. A medium-duty passenger
vehicle that meets the criteria in either paragraph (a) or (b) of this
section is a non-passenger automobile.
(a) An automobile not manufactured primarily for transporting 10 or
fewer individuals, determined by the presence of at least one of the
following chief characteristics:
(1) Transports more than 10 individuals;
(2) Provides temporary living quarters, as defined in Sec. 523.2
of this chapter;
(3) Transports property on an open bed;
(4) Provides, as sold to the first retail purchaser, greater cargo-
carrying than passenger-carrying volume, such as in a cargo van; if a
vehicle is sold with two or more rows of seating, its cargo-carrying
volume is determined with those seats installed, regardless of whether
the manufacturer has described that seat as optional; or
(5) Permits expanded use of the automobile for cargo-carrying
purposes or other non-passenger-carrying purposes through:
(i) For automobiles manufactured in model year 2022 through model
year 2027, for vehicles equipped with at least 3 rows of designated
seating positions as standard equipment, permit expanded use of the
automobile for cargo-carrying purposes or other non-passenger-carrying
purposes through the removal or stowing of foldable or pivoting seats
so as to create a flat, leveled cargo surface extending from the
forwardmost point of installation of those seats to the rear of the
automobile's interior.
(ii) [Reserved]
(6) For automobiles manufactured in model year 2028 and beyond, as
sold to the first retail purchaser, has a light-duty work factor (LDWF)
value greater than or equal to 5500, calculated according to Figure 1
to this paragraph (a).
Figure 1 to Sec. 523.5(a)
[GRAPHIC] [TIFF OMITTED] TP05DE25.148
Where:
GVWR is the gross vehicle weight rating;
Cw is the curb weight;
GCWR is the gross combined weight rating;
GVWR minus Cw is the payload capacity;
GCWR minus GVWR is the towing capacity.
(b) An automobile capable of off-highway operation, as indicated by
the presence of the significant features contained in this paragraph
(b):
(1) (i) Has 4-wheel drive; or
(ii) Is rated at more than 6,000 pounds gross vehicle weight; and
(2) For automobiles manufactured through model year 2027, has at
least four of the following high ground clearance feature
characteristics measured when the automobile is at curb weight, on a
level surface, with the front wheels parallel to the automobile's
longitudinal centerline, and the tires inflated to the manufacturer's
recommended pressure--
(i) Approach angle of not less than 28 degrees.
(ii) Breakover angle of not less than 14 degrees.
(iii) Departure angle of not less than 20 degrees.
(iv) Running clearance of not less than 20 centimeters.
(v) Front and rear axle clearances of not less than 18 centimeters
each.
(3) For automobiles manufactured in model year 2028 and beyond, has
all four of the following high ground clearance feature characteristics
measured when the automobile is at curb weight, on a level surface,
with the front wheels parallel to the automobile's longitudinal
centerline, and the tires inflated to the manufacturer's recommended
pressure--
(i) Approach angle of not less than 28 degrees.
(ii) Breakover angle of not less than 14 degrees.
(iii) Departure angle of not less than 20 degrees.
(iv) Running clearance of not less than 20 centimeters.
Sec. 523.6 Heavy-duty vehicle.
(a) A heavy-duty vehicle is any commercial medium- or heavy-duty
on-highway vehicle or a work truck, as defined in 49 U.S.C. 32901(a)(7)
and (19). For the purpose of this section, heavy-duty vehicles are
divided into three regulatory categories as follows:
(1) Heavy-duty pickup trucks and vans;
(2) Heavy-duty vocational vehicles; and
[[Page 56640]]
(3) Truck tractors with a GVWR above 26,000 pounds.
(b) The heavy-duty vehicle classification does not include vehicles
excluded as specified in 49 CFR 535.3.
Sec. 523.7 Heavy-duty pickup trucks and vans.
(a) Heavy-duty pickup trucks and vans are pickup trucks and vans
with a gross vehicle weight rating between 8,501 pounds and 14,000
pounds (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. See references in 40 CFR
86.1801-12, 40 CFR 86.1819-17, 40 CFR 1037.150, and 49 CFR 535.5(a).
(b) Heavy duty vehicles above 14,000 pounds GVWR may be optionally
certified as heavy-duty pickup trucks and vans and comply with fuel
consumption standards in 49 CFR 535.5(a), if properly included in a
test group with similar vehicles at or below 14,000 pounds GVWR. Fuel
consumption standards apply to these vehicles as if they were Class 3
heavy-duty vehicles. The work factor for these vehicles may not be
greater than the largest work factor that applies for vehicles in the
test group that are at or below 14,000 pounds GVWR (see 40 CFR 86.1819-
14).
(c) Incomplete heavy-duty vehicles at or below 14,000 pounds GVWR
may be optionally certified as heavy-duty pickup trucks and vans and
comply with the fuel consumption standards in 49 CFR 535.5(a).
Sec. 523.8 Heavy-duty vocational vehicle.
Heavy-duty vocational vehicles are vehicles with a gross vehicle
weight rating (GVWR) above 8,500 pounds excluding:
(a) Heavy-duty pickup trucks and vans defined in Sec. 523.7;
(b) Medium-duty passenger vehicles; and
(c) Truck tractors, except vocational tractors, with a GVWR above
26,000 pounds.
Sec. 523.9 Truck tractors.
Truck tractors for the purpose of this part are considered as any
truck tractor as defined in 49 CFR part 571 having a GVWR above 26,000
pounds.
Sec. 523.10 Heavy-duty trailers.
(a) A trailer means a motor vehicle with or without motive power,
designed for carrying cargo and for being drawn by another motor
vehicle as defined in 49 CFR 571.3. For the purpose of this part,
heavy-duty trailers include only those trailers designed to be drawn by
a truck tractor excluding non-box trailers other than flatbed trailers,
tanker trailers, and container chassis, and those that are coupled to
vehicles exclusively by pintle hooks or hitches instead of a fifth
wheel. Heavy-duty trailers may be divided into different types and
categories as follows:
(1) Box vans are trailers with enclosed cargo space that is
permanently attached to the chassis, with fixed sides, nose, and roof.
Tank trailers are not box vans.
(2) Box vans with front-mounted HVAC systems are refrigerated vans.
Note that this includes systems that provide cooling, heating, or both.
All other box vans are dry vans.
(3) Trailers that are not box vans are non-box trailers.
(4) Box vans with a length greater than 50 feet are long box vans.
Other box vans are short box vans.
(5) The following types of equipment are not trailers:
(i) Containers that are not permanently mounted on chassis.
(ii) Dollies used to connect tandem trailers.
(iii) Equipment that serves similar purposes but are not intended
to be pulled by a tractor.
(b) Heavy-duty trailers do not include trailers excluded in 49 CFR
535.3.
0
2. Revise part 531 to read as follows:
PART 531--PASSENGER AUTOMOBILE AVERAGE FUEL ECONOMY STANDARDS
Sec.
531.1 Scope.
531.2 Purpose.
531.3 Applicability.
531.4 Definitions.
531.5 Fuel economy standards.
531.6 Measurement and calculation procedures.
Appendix A to Part 531--Example of Calculating a Fleet Average Fuel
Economy Standard for a Passenger Automobile Fleet Under Sec.
531.5(a)
Authority: 49 U.S.C. 32902, delegation of authority at 49 CFR
1.95.
Sec. 531.1 Scope.
This part establishes average fuel economy standards pursuant to 49
U.S.C. 32902 for passenger automobiles.
Sec. 531.2 Purpose.
The purpose of this part is to increase the fuel economy of
passenger automobiles by establishing minimum levels of average fuel
economy for those vehicles.
Sec. 531.3 Applicability.
This part applies to manufacturers of passenger automobiles.
Sec. 531.4 Definitions.
(a) Statutory terms. (1) The terms average fuel economy,
manufacture, manufacturer, and model year are used as defined in 49
U.S.C. 32901.
(2) The terms automobile and passenger automobile are used as
defined in 49 U.S.C. 32901 and in accordance with the determination in
part 523 of this chapter.
(b) Other terms. As used in this part, unless otherwise required by
the context--
(1) The term domestically manufactured passenger automobile means
the vehicle is deemed to be manufactured domestically under 49 U.S.C.
32904(b)(3) and 40 CFR 600.511-08.
(2) [Reserved]
Sec. 531.5 Fuel economy standards.
(a) Except as provided in paragraph (c) of this section, for model
years 2022 through 2031, a manufacturer's passenger automobile fleet
shall comply with the fleet average fuel economy level calculated for
that model year according to Figure 1 to this paragraph (a) and the
appropriate values in Table 1 to this paragraph (a).
Figure 1 to Paragraph (a)
[GRAPHIC] [TIFF OMITTED] TP05DE25.149
Where:
CAFErequired is the fleet average fuel economy standard for a given
fleet (domestic passenger automobiles or imported passenger
automobiles);
Subscript i is a designation of multiple groups of automobiles,
where each group's designation, i.e., i = 1, 2, 3, etc., represents
automobiles that share a unique model type and footprint within the
applicable fleet, either domestic passenger automobiles or imported
passenger automobiles;
Productioni is the number of passenger automobiles produced for sale
in the United States within each ith designation, i.e., which share
the same model type and footprint; and
TARGETi is the fuel economy target in miles per gallon (mpg)
applicable to the footprint of passenger automobiles within each ith
designation, i.e., which share the same model type and footprint,
calculated according to Figure 2 to this paragraph (a) and rounded
to the nearest hundredth of a mpg, i.e., 35.455 = 35.46 mpg, and the
summations in the numerator and denominator are both performed over
all models in the fleet in question.
Figure 2 to Paragraph (a)
[[Page 56641]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.150
Where:
TARGET is the fuel economy target (in mpg) applicable to vehicles of
a given footprint (FOOTPRINT, in square feet);
Parameters a, b, c, and d are defined in Table 1 to this paragraph
(a); and
The MIN and MAX functions take the minimum and maximum,
respectively, of the included values.
[GRAPHIC] [TIFF OMITTED] TP05DE25.151
(b) In addition to the requirements of paragraph (a) of this
section, each manufacturer, other than manufacturers subject to
standards in paragraph (c) of this section, shall also meet the minimum
fleet standard for domestically manufactured passenger automobiles
expressed in Table 2 to this paragraph (b):
[GRAPHIC] [TIFF OMITTED] TP05DE25.152
(c) The following manufacturers shall comply with the standards
indicated in paragraphs (c)(1) through (4) of this section for the
specified model years:
(1) Aston Martin Lagonda Limited.
[[Page 56642]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.153
(2) Koenigsegg.
[GRAPHIC] [TIFF OMITTED] TP05DE25.154
(3) McLaren.
[GRAPHIC] [TIFF OMITTED] TP05DE25.155
(4) Pagani.
[GRAPHIC] [TIFF OMITTED] TP05DE25.156
Sec. 531.6 Measurement and calculation procedures.
The fleet average fuel economy performance of all passenger
automobiles manufactured for sale in the United States for a model year
shall be determined in accordance with procedures established by the
Administrator of the Environmental Protection Agency (EPA) under 49
U.S.C. 32904 and set forth in 40 CFR part 600.
Appendix A to Part 531--Example of Calculating a Fleet Average Fuel
Economy Standard for a Passenger Automobile Fleet Under Sec. 531.5(a)
Assume a hypothetical manufacturer (Manufacturer X) produces a
fleet of passenger automobiles as follows:
BILLING CODE 4910-59-P
[[Page 56643]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.157
[[Page 56644]]
BILLING CODE 4910-59-C
Appendix A Figure 1--Calculation of Manufacturer X's Fleet Average Fuel
Economy Standard Using Table I
[GRAPHIC] [TIFF OMITTED] TP05DE25.158
0
3. Revise part 533 to read as follows:
PART 533--NON-PASSENGER AUTOMOBILE FUEL ECONOMY STANDARDS
Sec.
533.1 Scope.
533.2 Purpose.
533.3 Applicability.
533.4 Definitions.
533.5 Requirements.
533.6 Measurement and calculation procedures.
Appendix A to Part 533--Example of Calculating a Fleet Average Fuel
Economy Standard for a Non-Passenger Automobile Fleet Under Sec.
533.5(a)
Authority: 49 U.S.C. 32902; delegation of authority at 49 CFR
1.95.
Sec. 533.1 Scope.
This part establishes average fuel economy standards pursuant to 49
U.S.C. 32902 for non-passenger automobiles.
Sec. 533.2 Purpose.
The purpose of this part is to increase the fuel economy of non-
passenger automobiles by establishing minimum levels of average fuel
economy for those vehicles.
Sec. 533.3 Applicability.
This part applies to manufacturers of non-passenger automobiles.
Sec. 533.4 Definitions.
(a) Statutory terms. (1) The terms average fuel economy, average
fuel economy standard, fuel economy, import, manufacture, manufacturer,
and model year are used as defined in 49 U.S.C. 32901.
(2) The term automobile is used as defined in 49 U.S.C. 32901 and
in accordance with the determinations in part 523 of this chapter.
(b) Other terms. As used in this part, unless otherwise required by
the context--
(1) Non-passenger automobile is used in accordance with the
determinations in part 523 of this chapter.
(2) Captive import means, with respect to a non-passenger
automobile, one that is not domestically manufactured, as defined in
section 502(b)(2)(E) of the Motor Vehicle Information and Cost Savings
Act, but that is imported in the 1980 model year or thereafter by a
manufacturer whose principal place of business is in the United States.
(3) 4-wheel drive, general utility vehicle means a 4-wheel drive,
general purpose automobile capable of off-highway operation that has a
wheelbase of not more than 280 centimeters, and that has a body shape
similar to 1977 Jeep CJ-5 or CJ-7, or the 1977 Toyota Land Cruiser.
(4) Basic engine means a unique combination of manufacturer, engine
displacement, number of cylinders, fuel system (as distinguished by
number of carburetor barrels or use of fuel injection), and catalyst
usage.
(5) Limited product line non-passenger automobile means a non-
passenger automobile manufactured by a manufacturer whose light truck
fleet is powered exclusively by basic engines that are not also used in
passenger automobiles.
Sec. 533.5 Requirements.
(a) Each manufacturer of non-passenger automobiles shall comply
with the following fleet average fuel economy standards, expressed in
miles per gallon, in the model year (MY) specified as applicable:
(1) For model years 2022-2031, a manufacturer's non-passenger
automobile fleet shall comply with the fleet average fuel economy
standard calculated for that model year according to Figures 1 and 2 to
this paragraph (a) and the appropriate values in Table 1 to this
paragraph (a).
Figure 1 to Sec. 533.5(a)
[GRAPHIC] [TIFF OMITTED] TP05DE25.159
Where:
CAFErequired is the fleet average fuel economy standard for a given
non-passenger automobile fleet;
Subscript i is a designation of multiple groups of non-passenger
automobiles, where each group's designation, i.e., i = 1, 2, 3,
etc., represents non-passenger automobiles that share a unique model
type and footprint within the applicable fleet;
Productioni is the number of non-passenger automobiles produced for
sale in the United States within each ith designation, i.e., which
share the same model type and footprint; and
TARGETi is the fuel economy target in miles per gallon (mpg)
applicable to the footprint of non-passenger automobiles within each
ith designation, i.e., which share the same model type and
footprint, calculated according to Figure 2 to this paragraph (a)
and rounded to the nearest hundredth of a mpg, i.e., 35.455 = 35.46
mpg, and the summations in the numerator and denominator are both
performed over all models in the fleet in question.
Figure 2 to Sec. 533.5(a)
[[Page 56645]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.160
Where:
TARGET is the fuel economy target (in mpg) applicable to vehicles of
a given footprint (FOOTPRINT, in square feet);
Parameters a, b, c, and d are defined in Table 1 to this paragraph
(a); and
The MIN and MAX functions take the minimum and maximum,
respectively, of the included values.
[GRAPHIC] [TIFF OMITTED] TP05DE25.161
(2) [Reserved]
(b) [Reserved]
Sec. 533.6 Measurement and calculation procedures.
(a) Any reference to a class of non-passenger automobiles
manufactured for sale in the United States in a model year shall be
deemed--
(1) To include all non-passenger automobiles in that class
manufactured by persons who control, are controlled by, or are under
common control with, such manufacturer;
(2) To include only automobiles that qualify as non-passenger
vehicles in accordance with Sec. 523.5 of this chapter; and
(3) To exclude all non-passenger automobiles in that class
manufactured (within the meaning of paragraph (a)(1) of this section)
during a model year by such manufacturer that are exported prior to the
expiration of 30 days following the end of such model year.
(b) The fleet average fuel economy performance of all non-passenger
automobiles manufactured for sale in the United States in a model year
shall be determined in accordance with procedures established by the
Administrator of the Environmental Protection Agency (EPA) under 49
U.S.C. 32904 and set forth in 40 CFR part 600.
Appendix A to Part 533--Example of Calculating a Fleet Average Fuel
Economy Standard for a Non-Passenger Automobile Fleet Under Sec.
533.5(a)
Assume a hypothetical manufacturer (Manufacturer X) produces a
fleet of non-passenger automobiles as follows:
BILLING CODE 4910-59-P
[[Page 56646]]
[GRAPHIC] [TIFF OMITTED] TP05DE25.162
[[Page 56647]]
Appendix A Figure 1--Calculation of Manufacturer X's Fleet Average Fuel
Economy Standard Using Table I
[GRAPHIC] [TIFF OMITTED] TP05DE25.163
BILLING CODE 4910-59-C
0
4. Revise part 536 to read as follows:
PART 536--TRANSFER AND TRADING OF FUEL ECONOMY CREDITS
Sec.
536.1 Scope.
536.2 Application.
536.3 Definitions.
536.4 Credits.
536.5 Trading infrastructure.
536.6 Credit flexibilities in the CAFE program.
536.7 Treatment of carryback credits.
536.8 Conditions for the trading of credits.
536.9 Use of credits with regard to the domestically manufactured
passenger automobile minimum standard.
536.10 Treatment of dual-fuel and alternative fuel vehicles--
consistency with 49 CFR part 538.
Authority: 49 U.S.C. 32903; delegation of authority at 49 CFR
1.95.
Sec. 536.1 Scope.
This part establishes regulations governing the use and application
of corporate average fuel economy (CAFE) credits up to three model
years before and five model years after the model year in which the
credit was earned. It also specifies requirements for manufacturers
wishing to transfer fuel economy credits between their compliance
categories. It also establishes regulations that allow manufacturers
and other persons to trade fuel economy credits through model year
2027.
Sec. 536.2 Application.
This part applies to all credits earned for exceeding applicable
average fuel economy standards in a given model year for domestically
manufactured passenger automobiles, imported passenger automobiles, and
non-passenger automobiles.
Sec. 536.3 Definitions.
(a) Statutory terms. All terms defined in 49 U.S.C. 32901(a) are
used pursuant to their statutory meaning.
(b) Other terms. (1) Above standard fuel economy means, with
respect to a compliance category, that the automobiles manufactured by
a manufacturer in that compliance category in a particular model year
have greater average fuel economy (calculated in a manner that reflects
the incentives for alternative fuel automobiles per 49 U.S.C. 32905)
than that manufacturer's fuel economy standard for that compliance
category and model year.
(2) Adjustment factor means a factor used to adjust the value of a
traded or transferred credit for compliance purposes to ensure that the
compliance value of the credit when used reflects the total volume of
oil saved when the credit was earned.
(3) Below standard fuel economy means, with respect to a compliance
category, that the automobiles manufactured by a manufacturer in that
compliance category in a particular model year have lower average fuel
economy (calculated in a manner that reflects the incentives for
alternative fuel automobiles per 49 U.S.C. 32905) than that
manufacturer's fuel economy standard for that compliance category and
model year.
(4) Compliance means a manufacturer achieves compliance in a
particular compliance category when:
(i) The average fuel economy of the vehicles in that category
exceed or meet the fuel economy standard for that category; or
(ii) The average fuel economy of the vehicles in that category do
not meet the fuel economy standard for that category, but the
manufacturer proffers a sufficient number of valid credits, adjusted
for total oil savings, to cover the gap between the average fuel
economy of the vehicles in that category and the required average fuel
economy. A manufacturer achieves compliance for its fleet if the
conditions in paragraph (b)(4)(i) of this section or this paragraph
(b)(4)(ii) are simultaneously met for all compliance categories.
(5) Compliance category means any of three categories of
automobiles subject to Federal fuel economy regulations in this
chapter. The three compliance categories recognized by 49 U.S.C.
32903(g)(6) are domestically manufactured passenger automobiles,
imported passenger automobiles, and non-passenger automobiles.
(6) Credit holder (or holder) means a legal person or entity that
has valid possession of credits, either because they are a manufacturer
who has earned credits by exceeding an applicable fuel economy standard
in this chapter, or because they are a designated recipient who has
received credits from another holder. Credit holders need not be
manufacturers, although all manufacturers may be credit holders.
(7) Credits (or fuel economy credits) means an earned or purchased
allowance recognizing that the average fuel economy of a particular
manufacturer's vehicles within a particular compliance category and
model year exceeds that manufacturer's fuel economy standard for that
compliance category and model year. One credit is equal to \1/10\ of a
mile per gallon above the fuel economy standard per one vehicle within
a compliance category. Credits are denominated according to model year
in which they are earned (vintage), originating manufacturer, and
compliance category.
(8) Expiry date means the model year after which fuel economy
credits may no longer be used to achieve compliance with fuel economy
regulations in this chapter. Expiry dates are calculated in terms of
model years: For example, if a manufacturer earns credits for model
year 2011, these credits may be used for compliance in model years
2008-2016.
(9) Fleet means all automobiles manufactured by a manufacturer in a
particular model year and are subject to fuel economy standards under
parts 531 and 533 of this chapter. For the purposes of this part, a
manufacturer's fleet means all domestically
[[Page 56648]]
manufactured and imported passenger automobiles and non-passenger
automobiles. ``Work trucks'' and medium and heavy trucks are not
included in this definition for purposes of this part.
(10) Originating manufacturer means the manufacturer that
originally earned a particular credit. Each credit earned will be
identified with the name of the originating manufacturer.
(11) Trade means the movement of credits from the account of a
credit holder to the account of another credit holder within the same
compliance category in which the credits were originally earned, in
accordance with all applicable provisions under this part.
(12) Transfer means the movement of credits from one compliance
category to another in accordance with all applicable provisions under
this part. Subject to the credit transfer limitations of 49 U.S.C.
32903(g)(3), credits can also be transferred across compliance
categories and banked or saved in that category to be carried forward
or backwards later to address a credit shortfall.
(13) Vintage means, with respect to a credit, the model year in
which the credit was earned.
Sec. 536.4 Credits.
(a) Type and vintage. In each credit account, credits are
identified and distinguished by the manufacturer that earned the
credits, the compliance category in which they were earned, and the
model year in which they were earned (vintage).
(b) Application of credits. All credits earned and applied (i.e.,
used to resolve an existing credit shortfall) are calculated, per 49
U.S.C. 32903(c), in tenths of a mile per gallon by which the average
fuel economy of vehicles in a particular compliance category
manufactured by a manufacturer in the model year in which the credits
are earned exceeds the applicable average fuel economy standard,
multiplied by the number of vehicles sold in that compliance category.
However, credits that have been traded between credit holders or
transferred between compliance categories are valued for compliance
purposes using the adjustment factor specified in paragraph (c) of this
section, pursuant to the ``total oil savings'' requirement of 49 U.S.C.
32903(f)(1).
(c) Adjustment factor. When traded or transferred fuel economy
credits are applied, they are adjusted to ensure fuel oil savings is
preserved. For traded credits, the user (or buyer) must multiply the
calculated adjustment factor by the number of shortfall credits it
plans to offset in order to determine the number of equivalent credits
to acquire from the earner (or seller). For transferred credits, the
user of credits must multiply the calculated adjustment factor by the
number of shortfall credits it plans to offset to determine the number
of equivalent credits to transfer from the compliance category holding
the available credits. The adjustment factor is calculated according to
the following equation in Figure 1 to this paragraph (c):
Figure 1 to Sec. 536.4(c)--Equation for Calculating Adjustment Factor
[GRAPHIC] [TIFF OMITTED] TP05DE25.164
Where:
A = Adjustment factor applied to traded and transferred credits. The
quotient shall be rounded to 4 decimal places;
VMTe = Lifetime vehicle miles traveled as provided in the following
Table 1 to this paragraph (c) for the model year and compliance
category in which the credit was earned;
VMTu = Lifetime vehicle miles traveled as provided in the following
Table 1 to this paragraph (c) for the model year and compliance
category in which the credit is used for compliance;
MPGse = Required fuel economy standard for the originating (earning)
manufacturer, compliance category, and model year in which the
credit was earned;
MPGae = Actual fuel economy for the originating manufacturer,
compliance category, and model year in which the credit was earned;
MPGsu = Required fuel economy standard for the user (buying)
manufacturer, compliance category, and model year in which the
credit is used for compliance; and
MPGau = Actual fuel economy for the user manufacturer, compliance
category, and model year in which the credit is used for compliance.
[GRAPHIC] [TIFF OMITTED] TP05DE25.165
Sec. 536.5 Trading infrastructure.
(a) Accounts. NHTSA maintains ``accounts'' for each credit holder.
The account consists of a balance of credits in each compliance
category and vintage held by the holder.
(b) Who may hold credits. Every manufacturer subject to fuel
economy standards under part 531 or 533 of this chapter is
automatically an account holder. If the manufacturer earns credits
pursuant to this part, or receives credits from another party, so that
the manufacturer's account has a non-zero balance, then the
manufacturer is also a credit holder. Any party designated as a
recipient of credits by a current credit holder will receive an account
from NHTSA and become a credit holder, subject to the following
conditions:
(1) A designated recipient must provide name, address, contact
information, and a valid taxpayer identification number or Social
Security number;
(2) NHTSA does not grant a request to open a new account by any
party other than a party designated as a recipient of credits by a
credit holder; and
[[Page 56649]]
(3) NHTSA maintains accounts with zero balances for a period of
time, but reserves the right to close accounts that have had zero
balances for more than 1 year.
(c) Automatic debits and credits of accounts. (1) To carry credits
forward, backward, transfer credits, or trade credits into other credit
accounts, a manufacturer or credit holder must submit a credit
instruction to NHTSA. A credit instruction must detail and include:
(i) The credit holder(s) involved in the transaction.
(ii) The originating credits described by the amount of the
credits, compliance category, and the vintage of the credits.
(iii) The recipient credit account(s) for banking or applying the
originating credits described by the compliance category(ies), model
year(s), and if applicable the adjusted credit amount(s) and adjustment
factor(s).
(iv) For trades, a contract authorizing the trade signed by the
manufacturers or credit holders or by managers legally authorized to
obligate the sale and purchase of the traded credits.
(2) Upon receipt of a credit instruction from an existing credit
holder, NHTSA verifies the presence of sufficient credits in the
account(s) of the credit holder(s) involved as applicable and notifies
the credit holder(s) that the credits will be debited from and/or
credited to the accounts involved, as specified in the credit
instruction. NHTSA determines if the credits can be debited or credited
based upon the amount of available credits, accurate application of any
adjustment factors and the credit requirements prescribed by this part
that are applicable at the time the transaction is requested.
(3) After notifying the credit holder(s), all accounts involved are
either credited or debited, as appropriate, in line with the credit
instruction. Traded credits identified by a specific compliance
category are deposited into the recipient's account in that same
compliance category and model year. If a recipient of credits as
identified in a credit instruction is not a current account holder,
NHTSA establishes the credit recipient's account, subject to the
conditions described in paragraph (b) of this section, and adds the
credits to the newly opened account.
(4) NHTSA will automatically delete unused credits from holders'
accounts when those credits reach their expiry date.
(5) Starting January 1, 2022, all parties trading credits must also
provide NHTSA the price paid for the credits including a description of
any other monetary or non-monetary terms affecting the price of the
traded credits, such as any technology exchanged or shared in exchange
for the credits, any other non-monetary payment for the credits, or any
other agreements related to the trade.
(6) Starting September 1, 2022, manufacturers or credit holders
issuing credit instructions or providing credit allocation plans as
specified in paragraph (d) of this section, must use and submit the
NHTSA Credit Template fillable form (Office of Management and Budget
(OMB) Control No. 2127-0019, NHTSA Form 1475). In the case of a trade,
manufacturers or credit holders buying traded credits must use the
credit transactions template to submit trade instructions to NHTSA.
Manufacturers or credit holders selling credits are not required to
submit trade instructions. The NHTSA Credit Template must be signed by
managers legally authorized to obligate the sale and/or purchase of the
traded credits from both parties to the trade. The NHTSA Credit
Template signed by both parties to the trade serves as an
acknowledgement that the parties have agreed to trade a certain amount
of credits, and does not dictate terms, conditions, or other business
obligations of the parties.
(7) NHTSA will consider claims that information submitted to the
agency under this section is entitled to confidential treatment under 5
U.S.C. 552(b) and under the provisions of part 512 of this chapter if
the information is submitted in accordance with the procedures of part
512. The NHTSA Credit Template is available for download on the CAFE
Public Information Center website. Manufacturers must submit the cost
information to NHTSA in a PDF document along with the Credit Template
through the CAFE email, [email protected]. NHTSA reserves the right to
request additional information from the parties regarding the terms of
the trade.
(d) Compliance. (1) NHTSA assesses compliance with fuel economy
standards each year, utilizing the certified and reported CAFE data
provided by the Environmental Protection Agency (EPA) for enforcement
of the CAFE program pursuant to 49 U.S.C. 32904(e). Credit values are
calculated based on the CAFE data from EPA. If a particular compliance
category within a manufacturer's fleet has above standard fuel economy,
NHTSA adds credits to the manufacturer's account for that compliance
category and vintage in the appropriate amount by which the
manufacturer has exceeded the applicable standard.
(2) If a manufacturer's vehicles in a particular compliance
category have below standard fuel economy, NHTSA will provide written
notification to the manufacturer that it has failed to meet a
particular fleet target standard. The manufacturer will be required to
confirm the shortfall and may also submit a plan indicating how it will
allocate existing credits or earn, transfer and/or acquire credits to
achieve compliance. If the manufacturer submits a plan, the plan must
be submitted within 60 days of receiving agency notification.
(3) Credits used to offset shortfalls are subject to the three- and
five-year limitations as described in Sec. 536.6.
(4) Transferred credits are subject to the limitations specified by
49 U.S.C. 32903(g)(3) and this part.
(5) The value, when used for compliance, of any credits received
via trade or transfer is adjusted, using the adjustment factor
described in Sec. 536.4(c), pursuant to 49 U.S.C. 32903(f)(1).
(6) Credit allocation plans received from a manufacturer will be
reviewed and approved by NHTSA. Starting in model year 2022, credit
holders must use the NHTSA Credit Template (OMB Control No. 2127-0019,
NHTSA Forms 1475) to record the credit transactions. The template is a
fillable form that has an option for recording and calculating credit
transactions for credit allocation plans. The template calculates the
required adjustments to the credits. The credit allocation plan and the
completed transaction templates must be submitted to NHTSA. NHTSA will
approve the credit allocation plan unless it finds that the proposed
credits are unavailable or that it is unlikely that the plan will
result in the manufacturer earning sufficient credits to offset the
subject credit shortfall. If the plan is approved, NHTSA will revise
the respective manufacturer's credit account accordingly. If the plan
is rejected, NHTSA will notify the respective manufacturer and may
request a revised plan.
(e) Reporting. (1) NHTSA periodically publishes the names and
credit holdings of all credit holders. NHTSA does not publish
individual transactions, nor respond to individual requests for updated
balances from any party other than the account holder.
(2) NHTSA issues an annual credit status letter to each party that
is a credit holder at that time. The letter to a credit holder includes
a credit accounting record that identifies the credit status of the
credit holder including any activity
[[Page 56650]]
(earned, expired, transferred, traded, carry-forward and carry-back
credit transactions/allocations) that took place during the identified
activity period.
Sec. 536.6 Credit flexibilities in the CAFE program.
(a) Carrying back and carrying forward of credits.
(1) Credits earned in a compliance category may be applied by the
manufacturer that earned them to carryback plans for that compliance
category approved up to three years prior to the year in which the
credits were earned, or may be held or applied for up to five model
years after the year in which the credits were earned.
(2) [Reserved]
(b) Transferring and trading of credits.
(1) Credits earned in a compliance category in model years 2022
through 2027 may be transferred or traded in accordance with all
applicable provisions under this part.
(2) Credits earned in a compliance category in model year 2028 and
beyond may be transferred in accordance with all applicable provisions
under this part. Credits earned in a compliance category in model year
2028 and beyond may not be traded.
Sec. 536.7 Treatment of carryback credits.
(a) Carryback credits earned in a compliance category in any model
year may be used in carryback plans approved by NHTSA, pursuant to 49
U.S.C. 32903(b), for up to three model years prior to the year in which
the credit was earned.
(b) No credits from any source (earned, transferred, and/or traded)
will be accepted in lieu of compliance if those credits are not
identified as originating within one of the three model years after the
model year of the confirmed shortfall.
Sec. 536.8 Conditions for the trading of credits.
(a) Trading of credits. If a credit holder wishes to trade credits
to another party, the current credit holder and the receiving party
must jointly issue an instruction to NHTSA, identifying the quantity,
vintage, compliance category, and originator of the credits to be
traded. If the recipient is not a current account holder, the recipient
must provide sufficient information for NHTSA to establish an account
for the recipient. Once an account has been established or identified
for the recipient, NHTSA completes the trade by debiting the
transferor's account and crediting the recipient's account. NHTSA will
track the quantity, vintage, compliance category, and originator of all
credits held or traded by all account holders.
(b) Using traded credits to comply with fuel economy standards. For
credits earned in model years 2022 through 2027, and used to satisfy
compliance obligations for model years 2019 through 2027 in accordance
with all applicable provisions under this part:
(1) Manufacturers may use credits originally earned by another
manufacturer in a particular compliance category to satisfy compliance
obligations within the same compliance category.
(2) Once a manufacturer acquires by trade credits originally earned
by another manufacturer in a particular compliance category, the
manufacturer may transfer the credits to satisfy its compliance
obligations in a different compliance category, but only to the extent
that the CAFE increase attributable to the transferred credits does not
exceed the limits in 49 U.S.C. 32903(g)(3). For any compliance
category, the sum of a manufacturer's transferred credits earned by
that manufacturer and transferred credits obtained by that manufacturer
through trade must not exceed that limit.
(c) Changes in corporate ownership and control. Manufacturers must
inform NHTSA of corporate relationship changes to ensure that credit
accounts are identified correctly and credits are assigned and
allocated properly.
(1) In general, if two manufacturers merge in any way, they must
inform NHTSA how they plan to merge their credit accounts. NHTSA will
subsequently assess corporate fuel economy and compliance status of the
merged fleet instead of the original separate fleets.
(2) If a manufacturer divides or divests itself of a portion of its
automobile manufacturing business, it must inform NHTSA how it plans to
divide the manufacturer's credit holdings into two or more accounts.
NHTSA will subsequently distribute holdings as directed by the
manufacturer, subject to provision for reasonably anticipated
compliance obligations.
(3) If a manufacturer is a successor to another manufacturer's
business, it must inform NHTSA how it plans to allocate credits and
resolve liabilities per part 534 of this chapter.
(d) No short or forward sales. NHTSA will not honor any
instructions to trade or transfer more credits than are currently held
in any account. NHTSA will not honor instructions to trade or transfer
credits from any future vintage (i.e., credits not yet earned). NHTSA
will not participate in or facilitate contingent trades.
(e) Cancellation of credits. A credit holder may instruct NHTSA to
cancel its currently held credits, specifying the originating
manufacturer, vintage, and compliance category of the credits to be
cancelled. These credits will be permanently null and void; NHTSA will
remove the specific credits from the credit holder's account and will
not reissue them to any other party.
(f) Error or fraud in earning credits. If NHTSA determines that a
manufacturer has been credited, through error or fraud, with earning
credits, NHTSA will cancel those credits if possible. If the
manufacturer credited with having earned those credits has already
traded them when the error or fraud is discovered, NHTSA will hold the
receiving manufacturer responsible for returning the same or equivalent
credits to NHTSA for cancellation.
(g) Error or fraud in trading. In general, all trades are final and
irrevocable once executed, and may only be reversed by a new, mutually
agreed transaction. If NHTSA executes an erroneous instruction to trade
credits from one holder to another through error or fraud, NHTSA will
reverse the transaction if possible. If those credits have been traded
away, the recipient holder is responsible for obtaining the same or
equivalent credits for return to the previous holder.
Sec. 536.9 Use of credits with regard to the domestically
manufactured passenger automobile minimum standard.
(a) Each manufacturer is responsible for compliance with both the
minimum standard and the attribute-based standard set out in the
chapter.
(b) In any particular model year, the domestically manufactured
passenger automobile compliance category credit excess or shortfall is
determined by comparing the actual CAFE value against either the
required standard value or the minimum standard value, whichever is
larger.
(c) Transferred or traded credits may not be used, pursuant to 49
U.S.C. 32903(g)(4) and (f)(2), to meet the domestically manufactured
passenger automobile minimum standard specified in 49 U.S.C.
32902(b)(4) and in 49 CFR 531.5(b).
(d) If a manufacturer's average fuel economy level for domestically
manufactured passenger automobiles is lower than the attribute-based
standard, but higher than the minimum standard, then the manufacturer
may achieve compliance with the attribute-based standard by applying
credits.
[[Page 56651]]
(e) If a manufacturer's average fuel economy level for domestically
manufactured passenger automobiles is lower than the minimum standard,
then the difference between the minimum standard and the manufacturer's
actual fuel economy level may only be relieved by the use of credits
earned by that manufacturer within the domestic passenger automobile
compliance category that have not been transferred or traded. If the
manufacturer does not have available earned credits to offset a credit
shortage below the minimum standard, then the manufacturer can submit a
carry-back plan that indicates sufficient future credits will be earned
in its domestic passenger automobile compliance category.
Sec. 536.10 Treatment of dual-fuel and alternative fuel vehicles--
consistency with 49 CFR part 538.
(a) The fuel economy of alternative fueled and dual fueled
automobiles is calculated pursuant to EPA's regulations at 40 CFR
600.510-12 and included as part of EPA's calculation of a
manufacturer's fleet average fuel economy for the model year and
compliance category to which the alternative fueled or dual fueled
automobile belongs, in accordance with 49 U.S.C. 32905 and limited by
49 U.S.C. 32906.
(b) If a manufacturer's calculated fuel economy for a particular
compliance category, including any alternative fueled and dual fueled
automobiles, is higher or lower than the applicable fuel economy
standard, manufacturers will earn credits or must apply credits equal
to the difference between the calculated fuel economy level in that
compliance category and the applicable standard. Credits earned are the
same as any other credits, and may be held, transferred, or traded by
the manufacturer subject to the limitations of the statute and this
part.
0
5. Revise part 537 to read as follows:
PART 537--AUTOMOTIVE FUEL ECONOMY REPORTS
Sec.
537.1 Scope.
537.2 Purpose.
537.3 Applicability.
537.4 Definitions.
537.5 General requirements for reports.
537.6 General content of reports.
537.7 Pre-model year and mid-model year reports.
537.8 Supplementary reports.
537.9 Determination of fuel economy values and average fuel economy.
537.10 Incorporation by reference by manufacturers.
537.11 Public inspection of information.
537.12 Confidential information.
Authority: 49 U.S.C. 32907; delegation of authority at 49 CFR
1.95.
Sec. 537.1 Scope.
This part establishes requirements for automobile manufacturers to
submit reports to the National Highway Traffic Safety Administration
regarding their efforts to improve automotive fuel economy.
Sec. 537.2 Purpose.
The purpose of this part is to obtain information to aid the
National Highway Traffic Safety Administration in evaluating automobile
manufacturers' plans for complying with average fuel economy standards
and in preparing an annual review of the average fuel economy
standards.
Sec. 537.3 Applicability.
This part applies to automobile manufacturers, except for
manufacturers subject to an alternate fuel economy standard under 49
U.S.C. 32902(d).
Sec. 537.4 Definitions.
(a) Statutory terms. (1) The terms average fuel economy standard,
fuel, manufacture, and model year are used as defined in 49 U.S.C.
32901.
(2) The term manufacturer is used as defined in 49 U.S.C. 32901 and
in accordance with part 529 of this chapter.
(3) The terms average fuel economy, fuel economy, and model type
are used as defined in subpart A of 40 CFR part 600.
(4) The terms automobile, automobile capable of off-highway
operation, and passenger automobile are used as defined in 49 U.S.C.
32901 and in accordance with the determinations in part 523 of this
chapter.
(b) Other terms. (1) The term loaded vehicle weight is used as
defined in subpart A of 40 CFR part 86.
(2) The terms axle ratio, base level, body style, car line,
combined fuel economy, engine code, equivalent test weight, gross
vehicle weight, inertia weight, transmission class, and vehicle
configuration are used as defined in subpart A of 40 CFR part 600.
(3) The terms approach angle, axle clearance, breakover angle,
cargo carrying volume, departure angle, passenger carrying volume,
running clearance, and temporary living quarters are used as defined in
part 523 of this chapter.
(4) The term incomplete automobile manufacturer is used as defined
in part 529 of this chapter.
(5) As used in this part, unless otherwise required by the context:
(i) Administrator means the Administrator of the National Highway
Traffic Safety Administration or the Administrator's delegate.
(ii) Current model year means:
(A) In the case of a pre-model year report, the full model year
immediately following the period during which that report is required
by Sec. 537.5(b) to be submitted.
(B) In the case of a mid-model year report, the model year during
which that report is required by Sec. 537.5(b) to be submitted.
(iii) Average means a production-weighted harmonic average.
(iv) Total drive ratio means the ratio of an automobile's engine
rotational speed (in revolutions per minute) to the automobile's
forward speed (in miles per hour).
Sec. 537.5 General requirements for reports.
(a) For each current model year, each manufacturer shall submit a
pre-model year report, a mid-model year report, and, as required by
Sec. 537.8, supplementary reports.
(b)(1) The pre-model year report required by this part for each
current model year must be submitted during the month of December
(e.g., the pre-model year report for the 1983 model year must be
submitted during December 1982).
(2) The mid-model year report required by this part for each
current model year must be submitted during the month of July (e.g.,
the mid-model year report for the 1983 model year must be submitted
during July 1983).
(3) Each supplementary report must be submitted in accordance with
Sec. 537.8(c).
(c) Each report required by this part must:
(1) Identify the report as a pre-model year report, mid-model year
report, or supplementary report as appropriate;
(2) Identify the manufacturer submitting the report;
(3) State the full name, title, and address of the official
responsible for preparing the report;
(4) Be submitted electronically to [email protected]. For each report,
manufacturers should submit a confidential version and a non-
confidential (i.e., redacted) version. The confidential report should
be accompanied by a request letter that contains supporting
information, pursuant to Sec. 512.8 of this chapter. Your request must
also include a certificate, pursuant to Sec. 512.4(b) of this chapter
and part 512, appendix A, of this chapter. The word ``CONFIDENTIAL''
must appear on the top of each page containing information claimed to
be confidential. If an entire page is claimed to be confidential, the
submitter must
[[Page 56652]]
indicate clearly that the entire page is claimed to be confidential. If
the information for which confidentiality is being requested is
contained within a page, the submitter shall enclose each item of
information that is claimed to be confidential within brackets: ``[
].'' Confidential portions of electronic files submitted in other than
their original format must be marked ``Confidential Business
Information'' or ``Entire Page Confidential Business Information'' at
the top of each page. If only a portion of a page is claimed to be
confidential, that portion shall be designated by brackets. Files
submitted in their original format that cannot be marked as described
above must, to the extent practicable, identify confidential
information by alternative markings using existing attributes within
the file or means that are accessible through use of the file's
associated program. A representative from NHTSA's Office of Chief
Counsel, as designated by NHTSA, should be copied on any submissions
with confidential business information;
(5) Identify the current model year;
(6) Be written in the English language; and
(7) (i) Specify any part of the information or data in the report
that the manufacturer believes should be withheld from public
disclosure as trade secret or other confidential business information.
(ii) With respect to each item of information or data requested by
the manufacturer to be withheld under 5 U.S.C. 552(b)(4) and 15 U.S.C.
2005(d)(1), the manufacturer shall:
(A) Show that the item is within the scope of sections 552(b)(4)
and 2005(d)(1);
(B) Show that disclosure of the item would result in significant
competitive damage;
(C) Specify the period during which the item must be withheld to
avoid that damage; and
(D) Show that earlier disclosure would result in that damage.
(d) Beginning with model year 2023, each manufacturer shall
generate reports required by this part using the NHTSA CAFE Projections
Reporting Template (Office of Management and Budget (OMB) Control No.
2127-0019, NHTSA Form 1474). The template is a fillable form.
(1) Manufacturers must select the option to identify the report as
a pre-model year report, mid-model year report, or supplementary report
as appropriate.
(2) Manufacturers must complete all required information for the
manufacturer and for all vehicles produced for the current model year
required to comply with corporate average fuel economy (CAFE)
standards. The manufacturer must identify the manufacturer submitting
the report, including the full name, title, and address of the official
responsible for preparing the report and a point of contact to answer
questions concerning the report.
(3) Manufacturers must use the template to generate confidential
and non-confidential reports for each of the compliance fleets (i.e.,
domestic passenger automobile, imported passenger automobile, non-
passenger automobile) produced by the manufacturer for the current
model year. Manufacturers must submit a request for confidentiality in
accordance with part 512 of this chapter to withhold projected
production sales volume estimates from public disclosure. If the
request is granted, NHTSA will withhold the projected production sales
volume estimates from public disclosure until all the vehicles produced
by the manufacturer have been made available for sale (usually 1 year
after the current model year).
(4) Manufacturers must submit confidential reports and requests for
confidentiality to NHTSA on CD-ROM in accordance with Sec. 537.12.
Email copies of non-confidential (i.e., redacted) reports to NHTSA's
secure email address: [email protected]. Requests for confidentiality must
be submitted in a PDF or MS Word format. Submit 2 copies of the CD-ROM
to: Administrator, National Highway Traffic Administration, 1200 New
Jersey Avenue SE, Washington, DC 20590, and submit emailed reports
electronically to the following secure email address: [email protected].
(5) Manufacturers can withhold information on projected production
sales volumes under 5 U.S.C. 552(b)(4) and 15 U.S.C. 2005(d)(1). In
accordance, the manufacturer must:
(i) Show that the item is within the scope of sections 552(b)(4)
and 2005(d)(1);
(ii) Show that disclosure of the item would result in significant
competitive damage;
(iii) Specify the period during which the item must be withheld to
avoid that damage; and
(iv) Show that earlier disclosure would result in that damage.
(e) Each report required by this part must be based upon all
information and data available to the manufacturer 30 days before the
report is submitted to the Administrator.
Sec. 537.6 General content of reports.
(a) Pre-model year and mid-model year reports. Except as provided
in paragraph (c) of this section, each pre-model year report and the
mid-model year report for each model year must contain the information
required by Sec. 537.7(a).
(b) Supplementary report. Except as provided in paragraph (c) of
this section, each supplementary report for each model year must
contain the information required by Sec. 537.7(a)(1) and (2), as
appropriate for the vehicle fleets produced by the manufacturer, in
accordance with Sec. 537.8(b)(1) through (4) as appropriate.
(c) Exceptions. The pre-model year report, mid-model year report,
and supplementary report(s) submitted by an incomplete automobile
manufacturer for any model year are not required to contain the
information specified in Sec. 537.7(c)(4)(xv) through (xviii) and
(c)(5). The information provided by the incomplete automobile
manufacturer under Sec. 537.7(c) shall be according to base level
instead of model type or carline.
Sec. 537.7 Pre-model year and mid-model year reports.
(a) Report submission requirements. (1) Manufacturers must provide
a report with the information required by paragraphs (b) and (c) of
this section for each domestic and imported passenger automobile fleet,
as specified in part 531 of this chapter, for the current model year.
(2) Manufacturers must provide a report with the information
required by paragraphs (b) and (c) of this section for each non-
passenger automobile fleet, as specified in part 533 of this chapter,
for the current model year.
(3) For model year 2023 and later, for passenger automobiles
specified in part 531 and non-passenger automobiles specified in part
533 of this chapter, manufacturers must provide the information for
pre-model and mid-model year reports in accordance with the NHTSA CAFE
Projections Reporting Template (OMB Control No. 2127-0019, NHTSA Form
1474). The required reporting template can be downloaded from NHTSA's
website.
(i) Manufacturers are only required to provide the actual
information on vehicles and technologies in production at the time the
pre- and mid-model year reports are required. Otherwise, manufacturers
must provide reasonable estimates or updated estimates where possible
for pre-and mid-model year reports.
(ii) Manufacturers should attempt not to omit data, which should
only be the
[[Page 56653]]
done for products pending production and with unknown information at
the time CAFE reports are prepared.
(b) Projected average and required fuel economy.
(1) Manufacturers must state the projected average fuel economy for
the manufacturer's automobiles determined in accordance with Sec.
537.9 and based upon the fuel economy values and projected sales
figures provided under paragraph (c)(2) of this section.
(2) Manufacturers must state the projected final average fuel
economy that the manufacturer anticipates having if changes implemented
during the model year will cause that average to be different from the
average fuel economy projected under paragraph (b)(1) of this section.
(3) Manufacturers must state the projected required fuel economy
for the manufacturer's passenger automobiles and non-passenger
automobiles determined in accordance with Sec. Sec. 531.5(a) and 533.5
of this chapter and based upon the projected sales figures provided
under paragraph (c)(2) of this section. For each unique model type and
footprint combination of the manufacturer's automobiles, the
manufacturer must provide the information specified in paragraphs
(b)(3)(i) and (ii) of this section in tabular form. The manufacturer
must list the model types in order of increasing average inertia weight
from top to bottom down the left side of the table and list the
information categories in the order specified in paragraphs (b)(3)(i)
and (ii) of this section from left to right across the top of the
table. Other formats, such as those accepted by the Environmental
Protection Agency (EPA), which contain all the information in a readily
identifiable format, are also acceptable. For model year 2023 and
later, for each unique model type and footprint combination of the
manufacturer's automobiles, the manufacturer must provide the
information specified in paragraphs (b)(3)(i) and (ii) of this section
in accordance with the CAFE Projections Reporting Template (OMB Control
No. 2127-0019, NHTSA Form 1474).
(i) In the case of passenger automobiles, manufacturers must report
the following:
(A) Beginning model year 2013, base tire as defined in Sec. 523.2
of this chapter;
(B) Beginning model year 2013, front axle, rear axle, and average
track width as defined in Sec. 523.2 of this chapter;
(C) Beginning model year 2013, wheelbase as defined in Sec. 523.2
of this chapter;
(D) Beginning model year 2013, footprint as defined in Sec. 523.2
of this chapter; and
(E) The fuel economy target value for each unique model type and
footprint entry listed in accordance with the equation provided in part
531 of this chapter.
(ii) In the case of non-passenger automobiles, manufacturers must
report the following:
(A) Beginning model year 2013, base tire as defined in Sec. 523.2
of this chapter;
(B) Beginning model year 2013, front axle, rear axle, and average
track width as defined in Sec. 523.2 of this chapter;
(C) Beginning model year 2013, wheelbase as defined in Sec. 523.2
of this chapter;
(D) Beginning model year 2013, footprint as defined in Sec. 523.2
of this chapter; and
(E) The fuel economy target value for each unique model type and
footprint entry listed in accordance with the equation provided in part
533 of this chapter.
(4) Manufacturers must state the projected final required fuel
economy that the manufacturer anticipates having if changes implemented
during the model year will cause the targets to be different from the
target fuel economy projected under paragraph (b)(3) of this section.
(5) Manufacturers must state whether the manufacturer believes that
the projections it provides under paragraphs (b)(2) and (4) of this
section, or if it does not provide an average or target under
paragraphs (b)(2) and (4), the projections it provides under paragraphs
(b)(1) and (3) of this section, sufficiently represent the
manufacturer's average and target fuel economy for the current model
year for purposes of the Act. In the case of a manufacturer that
believes that the projections are not sufficiently representative for
the purpose of determining the projected average fuel economy for the
manufacturer's automobiles, the manufacturers must state the specific
nature of any reason for the insufficiency and the specific additional
testing or derivation of fuel economy values by analytical methods
believed by the manufacturer necessary to eliminate the insufficiency
and any plans of the manufacturer to undertake that testing or
derivation voluntarily and submit the resulting data to EPA under 40
CFR 600.509-12.
(c) Model type and configuration fuel economy and technical
information.
(1) For each model type of the manufacturer's automobiles, the
manufacturers must provide the information specified in paragraph
(c)(2) of this section in tabular form. List the model types in order
of increasing average inertia weight from top to bottom down the left
side of the table and list the information categories in the order
specified in paragraph (c)(2) of this section from left to right across
the top of the table. For model year 2023 and later, CAFE reports
required by this part shall for each model type of the manufacturer's
automobiles provide the information specified in paragraphs (c)(2) and
(4) of this section using the NHTSA CAFE Projections Reporting Template
(OMB Control No. 2127-0019, NHTSA Form 1474) and list the model types
in order of increasing average inertia weight from top to bottom.
(2) (i) Combined fuel economy; and
(ii) Projected sales for the current model year and total sales of
all model types.
(3) For pre-model year reports not subject to Sec. 537.5(d) of
this chapter, for each vehicle configuration whose fuel economy was
used to calculate the fuel economy values for a model type under
paragraph (c)(2) of this section, manufacturers must provide the
information specified in paragraph (c)(4) of this section.
(4) (i) Loaded vehicle weight;
(ii) Equivalent test weight;
(iii) Engine displacement, liters;
(iv) Society of Automotive Engineers (SAE) net rated power,
kilowatts;
(v) SAE net horsepower;
(vi) Engine code;
(vii) Fuel system (number of carburetor barrels or, if fuel
injection is used, so indicate);
(viii) Emission control system;
(ix) Transmission class;
(x) Number of forward speeds;
(xi) Existence of overdrive (indicate yes or no);
(xii) Total drive ratio (N/V);
(xiii) Axle ratio;
(xiv) Combined fuel economy;
(xv) Projected sales for the current model year;
(xvi) (A) In the case of passenger automobiles:
(1) Interior volume index, determined in accordance with subpart D
of 40 CFR part 600; and
(2) Body style;
(B) In the case of non-passenger automobiles:
(1) All functional ability characteristic metrics described in
(c)(5)(i) of this subpart; and
(2) All off-highway characteristic metrics described in (c)(5)(ii)
of this subpart;
(xvii) Frontal area;
(xviii) Road load power at 50 miles per hour, if determined by the
manufacturer for purposes other than compliance with this part to
differ from
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the road load setting prescribed in 40 CFR 86.177-11(d); and
(xix) Optional equipment that the manufacturer is required under 40
CFR parts 86 and 600 to have actually installed on the vehicle
configuration, or the weight of which must be included in the curb
weight computation for the vehicle configuration, for fuel economy
testing purposes.
(5) For each model type of automobile classified as a non-passenger
automobile under part 523 of this chapter, manufacturers must provide
the following for each unique trim or configuration of the model type
that alters any characteristic or feature described in the sections
contained in paragraphs (c)(5)(i) and (ii) of this section:
(i) For an automobile not manufactured primarily for transporting
10 or fewer passengers, determined by the presence of at least one
chief non-passenger characteristic in accordance with Sec. 523.5(a) of
this chapter, provide:
(A) A yes or no confirmation for whether the number of designated
seating positions is greater than ten. If yes, provide the number of
designated seating positions;
(B) A yes or no confirmation for the presence of temporary living
accommodations, such as a bed, sink, stove, refrigerator, or toilet. If
yes, list the provided accommodations;
(C) A yes or no confirmation for the ability to transport property
on an open bed. If yes, provide bed width and length in inches,
measured to the nearest tenth of inch;
(D) Maximum passenger carrying volume and minimum cargo carrying
volume, as defined in Sec. 523.2 of this chapter, with all seats, as
sold to the first retail purchaser, installed and in their passenger-
carrying position; and
(E) For automobiles manufactured in model year 2022 through model
year 2027:
(1) A yes or no confirmation for the presence of three or more rows
of designated seating positions;
(2) A yes or no confirmation that the 2nd and 3rd row seating can
be removed, stowed, or folded as described in Sec. 523.5(a)(5) of this
chapter;
(3) A yes or no confirmation that the 2nd and 3rd rows create a
flat, level surface when in their cargo-carrying configuration as
described in Sec. 523.5(a)(5) of this chapter.
(F) For automobiles manufactured in 2028 and beyond, curb weight,
gross vehicle weight rating (GVWR), and gross combined weight rating
(GCWR) for the calculation of the light duty work factor (LDWF).
(ii) For an automobile capable of off-highway operation, provide
the features in paragraphs (c)(5)(ii)(A) through (D) of this section in
accordance with Sec. 523.5(b) of this chapter:
(A) A yes or no confirmation for the presence of 4-wheel drive;
(B) The gross vehicle weight rating (GVWR) in pounds;
(C) Measured in accordance with Sec. 523.5(b)(2), provide the
value of:
(1) Approach angle rounded to the nearest 0.1 degrees;
(2) Breakover angle rounded to the nearest 0.1 degrees;
(3) Departure angle rounded to the nearest 0.1 degrees; and
(4) Running clearance rounded to the nearest 0.1 centimeters.
(D) For automobiles manufactured through model year 2027, measured
in accordance with Sec. 523.5(b)(2), provide the value of:
(1) Front axle clearance rounded to the nearest 0.1 centimeters;
and
(2) Rear axle clearance rounded to the nearest 0.1 centimeters.
(6) Manufacturers must determine the fuel economy values provided
under paragraphs (c)(2) and (4) of this section in accordance with
Sec. 537.9.
(7) For the model years specified in paragraphs (c)(7)(i) through
(iii) of this section, manufacturers must identify any air-conditioning
(AC), off-cycle and full-size pick-up truck technologies used each
model year to calculate the average fuel economy specified in 40 CFR
600.510-12.
(i) For automobiles manufactured in years in which a manufacturer
may generate fuel consumption improvement values pursuant to 40 CFR
part 600, each manufacturer must provide a list of each air
conditioning (AC) efficiency improvement technology utilized in its
fleet(s) of vehicles for each model year for which the manufacturer
qualifies for fuel consumption improvement values . For each technology
identify vehicles by make and model types that have the technology,
which compliance category those vehicles belong to, and the number of
vehicles for each model equipped with the technology. For each
compliance category (domestic passenger automobile, imported passenger
automobile, and non-passenger automobile), report the AC fuel
consumption improvement value in gallons/mile in accordance with the
applicable equation specified in 40 CFR part 600.
(ii) For automobiles manufactured in model years in which a
manufacturer may generate fuel consumption improvement values pursuant
to 40 CFR part 600, each manufacturer must provide a list of off-cycle
efficiency improvement technologies utilized in its fleet(s) of
vehicles for each model year that is pending or approved by EPA for
which the manufacturer qualifies for fuel consumption improvement
values. For each technology, manufacturers must identify vehicles by
make and model types that have the technology, which compliance
category those vehicles belong to, the number of vehicles for each
model equipped with the technology, and the associated off-cycle
credits (grams/mile) available for each technology. For each compliance
category (domestic passenger automobile, imported passenger automobile,
and non-passenger automobile), manufacturers must calculate the fleet
off-cycle fuel consumption improvement value in gallons/mile in
accordance with the applicable equation specified in 40 CFR part 600.
(iii) For model years up to 2024, each manufacturer must provide a
list of full-size pickup trucks in its fleet that meet the mild and
strong hybrid vehicle definitions. For each mild and strong hybrid
type, manufacturers must identify vehicles by make and model types that
have the technology, the number of vehicles produced for each model
equipped with the technology, the total number of full-size pickup
trucks produced with and without the technology, the calculated
percentage of hybrid vehicles relative to the total number of vehicles
produced, and the associated full-size pickup truck credits (grams/
mile) available for each technology. For the non-passenger automobile
compliance category, manufacturers must calculate the fleet pickup
truck fuel consumption improvement value in gallons/mile in accordance
with the applicable equation specified in 40 CFR part 600.
Sec. 537.8 Supplementary reports.
(a)(1) Except as provided in paragraph (d) of this section, each
manufacturer whose most recently submitted mid-model year report
contained an average fuel economy projection under Sec. 537.7(b)(2)
or, if no average fuel economy was projected under that section, under
Sec. 537.7(b)(1) that was not less than the applicable average fuel
economy standard in this chapter and who now projects an average fuel
economy that is less than the applicable standard in this chapter shall
file a supplementary report containing the information specified in
paragraph (b)(1) of this section.
(2) Except as provided in paragraph (d) of this section, each
manufacturer that determines that its average fuel economy for the
current model year as
[[Page 56655]]
projected under Sec. 537.7(b)(2) or, if no average fuel economy was
projected under Sec. 537.7(b)(2), as projected under Sec.
537.7(b)(1), is less representative than the manufacturer previously
reported it to be under Sec. 537.7(b)(3), this section, or both, shall
file a supplementary report containing the information specified in
paragraph (b)(2) of this section.
(3) For model years through 2022, each manufacturer whose mid-model
year report omits any of the information specified in Sec. 537.7(b) or
(c) shall file a supplementary report containing the information
specified in paragraph (b)(3) of this section.
(4) Starting model year 2023, each manufacturer whose mid-model
year report omits any of the information shall resubmit the information
with other information required in accordance with the NHTSA CAFE
Projections Reporting Template (OMB Control No. 2127-0019, NHTSA Form
1474).
(b) (1) The supplementary report required by paragraph (a)(1) of
this section must contain:
(i) Such revisions of and additions to the information previously
submitted by the manufacturer under this part regarding the automobiles
whose projected average fuel economy has decreased as specified in
paragraph (a)(1) of this section as are necessary--
(A) To reflect the change and its cause; and
(B) To indicate a new projected average fuel economy based upon
these additional measures.
(ii) An explanation of the cause of the decrease in average fuel
economy that led to the manufacturer's having to submit the
supplementary report required by paragraph (a)(1) of this section.
(2) The supplementary report required by paragraph (a)(2) of this
section must contain:
(i) A statement of the specific nature of and reason for the
insufficiency in the representativeness of the projected average fuel
economy;
(ii) A statement of specific additional testing or derivation of
fuel economy values by analytical methods believed by the manufacturer
necessary to eliminate the insufficiency; and
(iii) A description of any plans of the manufacturer to undertake
that testing or derivation voluntarily and submit the resulting data to
the Environmental Protection Agency under 40 CFR 600.509-12.
(3) The supplementary report required by paragraph (a)(3) of this
section must contain:
(i) All of the information omitted from the mid-model year report
under Sec. 537.6(c); and
(ii) Such revisions of and additions to the information submitted
by the manufacturer in its mid-model year report regarding the
automobiles produced during the current model year as are necessary to
reflect the information provided under paragraph (b)(3)(i) of this
section.
(4) The supplementary report required by paragraph (a)(4) of this
section must contain:
(i) All information omitted from the mid-model year reports under
Sec. 537.6(c); and
(ii) Such revisions of and additions to the information submitted
by the manufacturer in its pre-model or mid-model year reports
regarding the automobiles produced during the current model year as are
necessary to reflect the information provided under paragraph (b)(4)(i)
of this section.
(c) (1) Each report required by paragraph (a)(1), (2), (3), or (4)
of this section must be submitted in accordance with Sec. 537.5(c) not
more than 45 days after the date on which the manufacturer determined,
or could have determined with reasonable diligence, that the report was
required.
(2) [Reserved]
(d) A supplementary report is not required to be submitted by the
manufacturer under paragraph (a)(1) or (2) of this section:
(1) With respect to information submitted under this part before
the most recent mid-model year report submitted by the manufacturer
under this part; or
(2) When the date specified in paragraph (c) of this section occurs
after the day by which the pre-model year report for the model year
immediately following the current model year must be submitted by the
manufacturer under this part.
(e) For model years 2008, 2009, and 2010, each manufacturer of non-
passenger automobiles, as that term is defined in Sec. 523.5 of this
chapter, shall submit a report, not later than 45 days following the
end of the model year, indicating whether the manufacturer is opting to
comply with Sec. 533.5(f) or (g) of this chapter.
Sec. 537.9 Determination of fuel economy values and average fuel
economy.
(a) Vehicle subconfiguration fuel economy values. (1) For each
vehicle subconfiguration for which a fuel economy value is required
under paragraph (c) of this section and has been determined and
approved under 40 CFR part 600, the manufacturer shall submit that fuel
economy value.
(2) For each vehicle subconfiguration specified in paragraph (a)(1)
of this section for which a fuel economy value approved under 40 CFR
part 600, does not exist, but for which a fuel economy value determined
under 40 CFR part 600 exists, the manufacturer shall submit that fuel
economy value.
(3) For each vehicle subconfiguration specified in paragraph (a)(1)
of this section for which a fuel economy value has been neither
determined nor approved under 40 CFR part 600, the manufacturer shall
submit a fuel economy value based on tests or analyses comparable to
those prescribed or permitted under 40 CFR part 600 and a description
of the test procedures or analytical methods used.
(4) For each vehicle configuration for which a fuel economy value
is required under paragraph (c) of this section and has been determined
and approved under 40 CFR part 600, the manufacturer shall submit that
fuel economy value.
(b) Base level and model type fuel economy values. For each base
level and model type, the manufacturer shall submit a fuel economy
value based on the values submitted under paragraph (a) of this section
and calculated in the same manner as base level and model type fuel
economy values are calculated for use under subpart F of 40 CFR part
600.
(c) Average fuel economy. Average fuel economy must be based upon
fuel economy values calculated under paragraph (b) of this section for
each model type and must be calculated in accordance with subpart F of
40 CFR part 600, except that fuel economy values for running changes
and for new base levels are required only for those changes made or
base levels added before the average fuel economy is required to be
submitted under this part.
Sec. 537.10 Incorporation by reference by manufacturers.
(a) A manufacturer may incorporate by reference in a report
required by this part any document other than a report, petition, or
application, or portion thereof submitted to any Federal department or
agency more than two model years before the current model year.
(b) A manufacturer that incorporates by reference a document not
previously submitted to the National Highway Traffic Safety
Administration shall append that document to the report.
(c) A manufacturer that incorporates by reference a document shall
clearly identify the document and, in the case of a document previously
submitted to the National Highway Traffic Safety Administration,
indicate the date on
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which and the person by whom the document was submitted to this agency.
Sec. 537.11 Public inspection of information.
Except as provided in Sec. 537.12, any person may inspect the
information and data submitted by a manufacturer under this part in the
docket section of the National Highway Traffic Safety Administration.
Any person may obtain copies of the information available for
inspection under this section in accordance with the regulations of the
Secretary of Transportation in part 7 of this title.
Sec. 537.12 Confidential information.
(a) Treatment of confidential information. Information made
available under Sec. 537.11 for public inspection does not include
information for which confidentiality is requested under Sec.
537.5(c)(7), is granted in accordance with section 505 of the Act and 5
U.S.C. 552(b) and is not subsequently released under paragraph (c) of
this section in accordance with section 505 of the Act.
(b) Denial of confidential treatment. When the Administrator denies
a manufacturer's request under Sec. 537.5(c)(7) for confidential
treatment of information, the Administrator gives the manufacturer
written notice of the denial and reasons for it. Public disclosure of
the information is not made until after the 10-day period immediately
following the giving of the notice.
(c) Release of confidential information. After giving written
notice to a manufacturer and allowing 10 days, when feasible, for the
manufacturer to respond, the Administrator may make available for
public inspection any information submitted under this part that is
relevant to a proceeding under the Act, including information that was
granted confidential treatment by the Administrator pursuant to a
request by the manufacturer under Sec. 537.5(c)(7).
Issued on December 2, 2025, under authority delegated in 49 CFR
1.95. The Paperwork Reduction Act of 1995; 44 U.S.C. Chapter 35, as
amended; 49 CFR 1.49; and DOT Order 1351.29A.
Jonathan Morrison,
Administrator.
[FR Doc. 2025-22014 Filed 12-4-25; 8:45 am]
BILLING CODE 4910-59-P