1 FAQ on EPA Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles (“GHG Rule”) FAQ on EPA Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles (“GHG Rule”) Q 1. What is the new EPA Rule? A The Environmental Protection Agency (EPA) has finalized regulations targeting carbon dioxide emissions from light and medium-duty vehicle fleets. Starting with the 2027 model year through the 2032 model year, these regulations mandate that manufacturers adhere to progressively stricter emissions limits. Q 2. What does the new rule require? A Under this rule, every manufacturer’s fleet (measured by delivery to dealers) must meet increasingly stringent emissions standards each year. To comply, manufacturers can reduce emissions directly through increased sales of battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and more efficient internal combustion engine (ICE) vehicles. Additionally, adopting eco-friendly refrigerants, enhancing aerodynamics, and optimizing air conditioning systems can contribute to compliance. Q 3. Does this rule regulate what dealers can sell? A While the rule does not explicitly dictate the inventory dealerships can maintain, it significantly influences it. As OEMs evolve their fleets to comply, gradually favoring BEVs and PHEVs over ICE vehicles, this will impact the availability of certain vehicles to dealerships. Q 4. What does this mean for EV sales? A The final rule allows for compliance using a variety of mixes of BEVs, PHEVs, and ICE vehicles. The EPA provided the following compliance pathways. In the pathway where PHEV sales are maximized, new vehicle BEV sales will have to rise from 7.3% for MY2023 to 24% in MY 2027. Table 3: Projected new vehicle technology penetrations for final Light-duty vehicle GHG standards for varying scenarios Technology 2027 2028 2029 2030 2031 2032 Pathway A Higher BEV Pathway (central analysis case) ICE 64% 58% 49% 43% 35% 29% HEV 4% 5% 5% 4% 3% 3% PHEV 6% 6% 8% 9% 11% 13% BEV 26% 31% 39% 44% 51% 56% Pathway B Moderate HEV and PHEV Pathway ICE 62% 56% 49% 39% 28% 21% HEV 4% 4% 3% 6% 7% 6% PHEV 10% 12% 15% 18% 24% 29% BEV 24% 29% 33% 37% 41% 43% Pathway C Higher HEV and PHEV Pathway ICE 61% 41% 35% 27% 19% 17% HEV 4% 15% 13% 16% 15% 13% PHEV 10% 17% 22% 27% 32% 36% BEV 24% 26% 30% 31% 34% 35% 9
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