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 fines levied at automakers that failed to meet minimum Corporate Average Fuel Economy (CAFE) standards. Today, the agency has announced that those standards will become much stricter over the next few years. The standards will increase incrementally starting in 2024 until CAFE standards hit 49 miles per gallon in 2026.

The agency noted that this wouldn’t be a gradual increase, either. The standard will jump by 8 percent for cars and lights trucks in 2024 and 2025 before increasing by 10 percent for 2026. According to the agency, the new rules won’t only reduce US gas consumption, but they’ll also reduce fuel costs – 220 billion gallons of gas and $192 billion, respectively. New standards will arrive for the 2027 model year.

The new rules replace the Trump administration’s much looser restrictions announced in March 2020. Those rules called for a yearly 1.5-percent increase in CAFE standards through 2025, which would have reached 40.1 mpg in 2026. Previous standards under Obama have called for a 5 percent annual increase with the goal of reaching 46.7 mpg in 2025.

The new CAFE standards arrive two months after the US EPA finalized tailpipe emissions rules, which call for a 28.3 percent reduction in emissions between 2023 and 2026.

Automakers will use a combination of technologies to reach this goal. While the industry is shifting toward electric vehicles, automakers are years away from offering complete all-electric lineups, with many pushing such a goal to the next decade. Instead, automakers will likely use hybrids to achieve higher fuel economy ratings and raise their CAFE.

Vehicles like the new Ford Maverick pickup, which offers a hybrid powertrain that starts at just over $20,000 while returning 37 mpg combined, will help automakers achieve the new standards. The rules have changed quite a bit in the last few years, which doesn’t make it easy for automakers, though the industry embracing electrification will help make it achievable.

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