US proposes to cut EV mileage to meet fuel economy rules

WASHINGTON, April 10 (Reuters) – The U.S. Department of Energy (DOE) proposed on Monday to reduce the range of electric vehicles (EVs) to meet government fuel economy requirements, a move that could force automakers to sell more low-emission vehicles or improve conventional models.

DOE wants to significantly revise how it calculates the petroleum equivalent fuel economy rating for electric and plug-in electric hybrids for use in the National Highway Traffic Safety Administration̵[ads1]7;s (NHTSA) Corporate Average Fuel Economy (CAFE) program.

The current system has not been updated in more than two decades.

“Encouraging EV adoption may reduce petroleum consumption, but giving too much credit to this adoption may lead to increased net petroleum use because it enables lower fuel economy among conventional vehicles, which represent the vast majority of vehicles sold,” DOE said in its proposal regulation.

Miles Per Gallon Equivalents (MPGe) are determined using values ​​for national electricity, petroleum production and distribution efficiency, and driving patterns.

Environmental groups note that fuel economy ratings for electric vehicles are far higher for determining CAFE compliance than those listed on the government’s consumer website fueleconomy.gov.

The Alliance for Automotive Innovation, which represents major car manufacturers, warned last year that lowering the values ​​could have far-reaching implications and would discourage the use of electric cars.

The group said Monday that it was unclear how the proposed DOE calculation would be incorporated into future CAFE standards.

A Volkswagen (VOWG_p.DE) ID.4 EV with a current 380.6 MPGe under CAFE would get 107.4 MPGe under the DOE proposal, while a Ford (FN) F-150 EV drops from 237.1 to 67.1 MPGe and the Chrysler Pacifica plug-in hybrid drop from 88.2 to 59.5 MPGe.

The Natural Resources Defense Council and the Sierra Club petitioned for the change in 2021, arguing that “excessively high calculated fuel economy values ​​for electric vehicles mean that a relatively small number of electric vehicles will mathematically guarantee compliance without meaningful improvements in the real average fuel economy of automakers’ overall fleets.”

Tesla ( TSLA.O ) supported the environmental group’s petition.

The Environmental Protection Agency will propose new rules on Wednesday to incentivize sweeping cuts in vehicle emissions that will push automakers toward a big increase in sales of electric vehicles, sources told Reuters last week.

The pollution cuts from 2027 to 2032 are expected to result in at least half of the new US car fleet by 2030 being electric or plug-in hybrids, sources said, in line with a goal outlined by President Joe Biden in 2021.

NHTSA is expected to soon propose parallel new stringent CAFE requirements. In 2022, NHTSA sharply increased CAFE standards for vehicles, reversing former President Donald Trump’s rollback.

Automakers buy credits or pay fines if they can’t meet CAFE requirements. Stellantis ( STLAM.MI ), then known as Fiat Chrysler, paid $152.3 million in total CAFE fines for 2016 and 2017 and faces additional civil penalties. By 2022, NHTSA more than doubled CAFE penalties.

Reporting by David Shepardson; Editing by Jamie Freed

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