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Electric Vehicles

The New EPA Car Standards Could Mean Even More Hybrids

It all comes down to math.

An EV and tailpipes.
Heatmap Illustration/Getty Images

Last week, the Biden administration announced its final car emission standards, aimed at pushing the auto industry to create more zero-emission vehicles. While there’s plenty in the 1,200-page document for policy wonks, politicians, environmental advocates, and automakers to hem and haw over, there’s at least one thing no one seems too bothered about: The new emissions rules stand to boost plug-in and conventional hybrid sales, thanks in part to some small changes to how their emissions are considered within the mix of an automaker’s fleet.

To recap: The biggest headline change from the proposed rule to the final one is that automakers now have a slower ramp toward reducing their fleet-wide emissions by roughly 50% come 2032. A handful of sensational headlines notwithstanding, the new rules do not mandate that automakers build and sell only EVs. The point is to reduce tailpipe emissions. How automakers go about it is their business.

“Automakers may see it fit to introduce more hybrids and plug-in hybrids, along with some electrics,” Thomas Boylan, regulatory director at the Zero Emissions Transportation Association, told me. “Or if they can find the engineering capacity to create an internal combustion engine that doesn't produce tailpipe emissions, that's a viable pathway to these standards,” he added. That said, how automakers account for the emissions from their fleets — and specifically from hybrids and plug-in hybrids — is not open to interpretation.

When plug-in hybrids are running on battery power, the Environmental Protection Agency counts those as zero-emission miles. Historically, the EPA has assumed that everyone with a PHEV plugs it in every day and is therefore maximizing its battery-powered mileage, however more recent studies have shown that is probably not actually the case.

“There's some mixed data out there in terms of how frequently people who own these [PHEV] vehicles plug them in, and that's a big factor in how much compliance they should get,” Chris Harto, the senior policy analyst for transportation and energy at Consumer Reports, told me.

“How much compliance they should get” became a key question in how the new car emissions standards would account for PHEVs. The draft rule issued last year had proposed reducing the amount of compliance credit automakers would get for plug-ins starting in model year 2027 to account for the discrepancy in battery miles traveled. But the final rule delayed that phase-in until model year 2031, in order “to provide additional stability for the program, and to give manufacturers ample time to transition to the new compliance calculation.”

Hybrid and PHEV vehicle sales have been surprisingly robust over the past few years, as Jesse Jenkins pointed out on Heatmap’s Shift Key podcast. Hybrid electric sales were about on par with battery electric sales in 2023, at around 1.1 million vehicles each, Jenkins said, which is “way higher than what we expected.”

As of February, plug-in and traditional hybrid sales were growing five times faster than EV sales, Morgan Stanley reported. The Argonne National Laboratory also found that during the same month, PHEV and hybrid sales rose to more than 130,000 all together. To put that in perspective, last year's record EV sales alone averaged just about 100,000 per month across all brands. These robust sales numbers, combined with the new EPA tailpipe emission rules, could continue to drive growth in hybrid and PHEV sales, even as EV sales growth cools.

“I think a lot of automakers underappreciated the big bump in hybrid sales that many people have rightly celebrated in 2023. That huge jump in hybrid sales coincides directly with a huge jump in EPA emission standards from 2022 to 2023,” Harto told me. In 2021, the Biden administration revised a Trump-era rule that sought to weaken vehicle emission standards. Those revised rules, which took effect for the 2023 model year, were 10% tighter than the year prior.

“These standards have a history of pushing automakers to deliver vehicles that save consumers money on fuel,” Harto said. “I don't think we would have seen the jump in hybrid sales that we saw last year without the jump in emission standards in 2023.”

Still, he noted, “The more hybrids (or other gasoline efficiency improvements) and PHEVs automakers build, the fewer BEVs they will have to build to comply.”

This will likely slow the EV adoption curve, but if it leads to more and cheaper plug-in hybrids than we would have had otherwise, it could help U.S. consumers get more comfortable with the idea of plugging in rather than filling up their cars.

“I think the final rule reflects more of an understanding that there will be more hybrid electric vehicle penetration rates over the next few years,” Boylan told me. While the true cost and emissions savings are in fully battery electric vehicles, it might take consumers a minute to get there. “I think, ultimately, a PHEV offers an opportunity to educate a consumer on what an electric vehicle might be able to do to meet their personal needs, and that creates a pathway to a true BEV purchase, on the next vehicle.”

Yellow

Abigail Bassett

Abigail Bassett is a freelance journalist and content manager, a former CNN Senior Producer, a writer, an editorial manager, a producer, and a conference and television host. Her work has appeared in publications like Fast Company, Inc. Magazine, TechCrunch, The Verge, Forbes, Fortune, Automobile Magazine, Autoweek, Ars Technica, CNET, and on CNN. She has also hosted large scale conference events for Reuters , the United States Small Business Administration, the Electrify Expo, and JBL. She is the owner of CNTRL Media, LLC. Read More

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