This week, the federal government released new rules that would reduce the number of gas-powered cars sold over the next decade. Although drafted with good intentions, the move could very well backfire.
On Wednesday, the Environmental Protection Agency (EPA) announced pollution standards for new vehicles produced for the 2027-2032 model years. The final rule requires “more stringent emissions standards” for passenger cars, SUVs and light trucks, with the explicit goal of making the transition to electric vehicles (EVs). By 2032, the rule predicts, 56% of all vehicles sold in the United States will be fully electric, 16% will be hybrids, and less than 30% will rely solely on an internal combustion engine.
The rule was actually relaxed a bit in its final form: When the EPA first announced plans to issue new vehicle standards in April 2023, the proposal would require that 60% of all vehicles sold by 2030 were electric, rising to 67% by 2032. .
However, the rule risks failing, either by asking too much too soon, or by prioritizing a particular technology at the expense of viable alternatives.
“A record 1.2 million electric vehicles rolled off dealerships last year, but these represented just 7.6% of total U.S. auto sales,” Coral Davenport wrote in The New York Times. This number represents an increase from 5.9% a year earlier, and electric vehicle sales in the fourth quarter of 2023 were 52% higher than the same period in 2022, representing 8.1% of all cars sold.
But even taking this increase into account, these numbers are nowhere near enough to reach the Biden administration’s promised goal of more than half of cars sold within the next decade being electric. S&P Global estimates that by 2030, only one in four vehicles sold will be an electric vehicle, significantly less than the 44% predicted by the EPA.
Overall demand is also slowing, as consumers worry about issues such as driving range, the availability of public chargers and the higher prices of electric vehicles. Without sufficiently addressing these concerns, motorists will not make the switch in sufficient numbers to meet the EPA’s timeline.
Last week, the National Automobile Dealers Association (NADA) called the administration’s original timeline “too far, too fast,” saying that “buyers of new vehicles are not buying electric vehicles in the quantities needed for automakers to meet requirements of the EPA”.
In November 2023, more than 3,000 auto dealers signed an open letter to President Joe Biden, asking him to “put the brakes on” the mandate and give the market time to catch up and the “American consumer to get comfortable with technology and “. make the choice to purchase an electric vehicle.”
In particular, the rule also favors battery electric vehicles, which do not use petrol and recharge when they are exhausted, compared to hybrids. The EPA projects that its emissions standards will ensure that 56% of vehicles sold in 2032 will be battery electric vehicles, while 13% will be plug-in hybrids and only 3% will be traditional hybrids.
This is also short-sighted: as consumers become increasingly wary of an all-electric future, hybrids represent an ideal transition between gas and electricity.
Traditional hybrids use a mixture of gasoline and electricity, with an electric motor and a gas engine sharing the task. Plug-in hybrids work the same way, but the electric motor is much larger and can run solely on electricity for short periods of time, providing 20-50 miles of gasoline-free driving before the engine kicks over.
According to the Department of Transportation, the average American motorist drove 37 miles per day in 2021. While any electrified vehicle could handle that trip, hybrids could do so while still allowing drivers the freedom to take longer trips when needed. Although hybrids generate even more carbon emissions than electric vehicles, they represent a significant improvement over all-gas vehicles.
In fact, automakers have already learned this lesson. While companies like Ford and General Motors (GM) have pledged billions of dollars to build their electric vehicle fleets, Toyota has stuck with it, remaining dedicated to hybrids. Last year, as electric vehicle sales slowed, Toyota outpaced every single competitor, with hybrids making up a third of its sales. Meanwhile, Ford and GM have since scaled back their planned investments in electric vehicles, and CNBC reported in December that automakers are increasingly following Toyota’s lead.
Yet the EPA’s new rule not only de-prioritizes hybrids, it could very well skew the market against them. “EPA’s insistence on mandating electric vehicles, to the exclusion of other alternatively fueled vehicles, significantly reduces consumer choice,” NADA wrote. “This policy will likely lead manufacturers to produce fewer of these alternative vehicles and increase their costs, thereby dissuading consumers from considering purchasing them.”
While the shift from gasoline to a more environmentally friendly energy source is laudable, perhaps even necessary, the transition should be driven by the free market. Implementing a mandate based on an arbitrary timeline is doomed to fail, especially because the mandate ignores that hybrids offer a plausible intermediate technology.