The EPA’s Emissions Limits Hit the Accelerator

Accelerated Evolution

The US Environmental Protection Agency, or EPA, proposed rules that could rapidly transform the auto industry. The proposal includes stricter tailpipe emission limits, which the agency estimates would require up to 67% of new vehicles to be all-electric by 2032. These new standards exceed President Biden’s goal that EVs make up 50% of new vehicles by 2030.

Although many US automakers like Ford (F) and General Motors (GM) are already investing billions to go electric, the only company currently meeting the EPA’s standards is Tesla (TSLA).

Many auto companies are pushing back on the EPA’s proposal, citing a variety of headwinds they claim make it unfeasible. Still, states like California already have strict emission limits and EV mandates. By 2035, all new cars sold in the state are required to be zero-emissions vehicles.

Highway Headwinds

Going electric will require a sufficient network of charging stations and a robust mineral supply chain for batteries, according to the Alliance for Automotive Innovation. Sufficient power to fuel the chargers would also need to be available.

Some industry experts say it’s unclear if mining can produce the minerals needed, or if production of batteries can keep up with increasing demand. Others wonder whether Americans will adopt EVs. In 2022, electric vehicles comprised only 5.8% of new vehicle sales in the US.

High Stakes

Still, as the country grapples with extreme weather and air pollution, the EPA says the stakes are high and the payoff significant. Through 2055, the new regulations could reduce carbon emissions by nearly 7.3 billion tons, or the equivalent of four years’ worth of the CO₂ currently produced by the US transportation sector.

More charging stations are being built, though current plans to build 500,000 fall short of the millions experts say are needed. And, while the Inflation Reduction Act provides rebates of up to $7,500 for the purchase of some electric vehicles, they will be available for even fewer EVs in the near future.

Even as proposals like these begin to accelerate, they’re likely to experience a few detours along the way.

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