Industry Updates

Proposed Legislation Will Raise Average U.S. MPG to 58 by 2032

Laurance Yap
August 2, 2023
Current U.S. fuel economy regulations stipulate an average of 49 mpg by 2026. The Department of Transportation has just proposed new legislation to improve that figure to 58 mpg by 2032. If passed, the new legislation will save drivers over $50 billion in fuel costs.
Toyota Prius driving along the coast

Updated Fuel Economy Standards

The U.S. Department of Transportation has issued a proposal to update standards for passengers and light trucks, raising the average fuel economy for manufacturers’ fleets to 58 mpg by 2032. The proposal continues the trend of improving fuel economy of the current standards, which require an industry-wide fleet average of 49 mpg by 2026.

Now open to public comment for 60 days, the proposal includes a 2 percent per year improvement in fuel efficiency for passenger cars, and a 4 percent per year improvement for light trucks, starting with model year 2027 and ramping up through model year 2032. The proposal also includes a 10 percent improvement in fuel economy per year for commercial pickup trucks and work vans with gross vehicle weight ratings of between 8,500 and 14,000 pounds, between model years 2030 and 2035.

New Chevy Silverado EV WT towing a tractor along a farm road

Improved Fuel Economy’s Climate Impact

The National Highway Traffic Safety Administration, a branch of the Department of Transportation, says that the new proposal could:

·      Save drivers more than $50 billion on fuel collectively over their vehicles’ lifetimes

·      Reduce American dependency on oil, saving more than 88 billion gallons of gasoline through 2050

·      Prevent more than 900 million tons of CO2 emissions – equivalent to removing 233 million vehicles from the road between 2022 and 2050

Interestingly, the proposed legislations sets targets to conserve fuel and reduce CO2 emissions, while providing flexibility to the industry on how to achieve the targets. Automakers can use all of the available technologies at their disposal, including advanced internal combustion engines, hybrid or plug-in hybrid technology, or electric vehicles, to achieve their targets.

Economic Benefits Include Reduced Fuel Costs

There are also some potential economic benefits. Presuming that fuel doesn’t become substantially more expensive over the same time frame, the new legislation will help cut costs for Americans while also reducing greenhouse gas emissions and air pollution. The lowest-income households in the U.S. spend nearly 20 percent of their income on transportation fuel – three times the average U.S. household. NHTSA estimates the updated standards would save Americans hundreds of dollars at the gas pump annually.

What happens over the next 60 days? NHTSA and the Department of Transportation will engage with a number of stakeholders, including consumers, unions, automakers, states, environmental groups and others. If approved, NHTSA will then coordinate with the Environmental Protection Agency (EPA) to optimize the standards with the goal of minimizing the costs of complying for automakers. In addition to the 58-mpg average standard, the proposed legislation models a range of different alternatives, from no action to more stringent actions; stakeholders will be invited to comment on combinations of standards not explicitly spelled out in the proposal

“CAFE (Corporate Average Fuel Economy) standards have driven the auto industry to innovate in improving fuel economy in ways that benefit our nation and all Americans,” said NHTSA’s acting administrator, Ann Carlson. “The new standards we’re proposing today would advance our energy security, reduce harmful emissions, and save families and business owners money at the pump. That’s good news for everyone.”

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