Feds Finalize Major Increase In Fuel Economy Standards By 2026

Earlier this week, the National Highway Traffic Safety Administration (NHTSA) announced that it would double the fines imposed on automakers who fail to meet minimum Company Average Fuel Economy (CAFE) standards. Today, the agency has announced that those standards will become more stringent over the next few years. Standards will gradually increase from 2024 until CAFE standards reach 49 miles per gallon by 2026.

The agency notes that this will also not be a gradual upgrade. The standard will jump by 8 percent for cars and light trucks in 2024 and 2025 before increasing by 10 percent in 2026. According to the agency, the new rules will not only reduce US gas consumption, but will also reduce fuel costs – 220 billion gallons of gas and 192 billion dollars, respectively. A new standard will arrive for the 2027 model year.

The new rules replace the much less relaxed Trump administration restrictions announced in March 2020. The rules call for a 1.5 percent annual increase in CAFE standards through 2025, which will reach 40.1 mpg by 2026. Previous standards under Obama had called for 5 percent annual increase with a goal of reaching 46.7 mpg by 2025.

The new CAFE standard arrives two months after the US EPA finalized exhaust emission rules, which call for a 28.3 percent reduction in emissions between 2023 and 2026.

Automakers will use a combination of technologies to achieve this goal. While the industry is turning to electric vehicles, automakers are still years away from offering a full lineup of electric cars, with many pushing such goals into the next decade. Instead, automakers will likely use hybrids to achieve higher fuel economy ratings and increase their CAFE.

Vehicles like the new Ford Maverick pickup, which offers a hybrid powertrain that starts at just over $20,000 while producing a combined 37 mpg, will help the automaker reach new standards. The rules have changed quite a bit in recent years, which has not made it easy for automakers, though an industry embracing electrification will help make it happen.