U.S. agency plans to propose new fuel economy standards in April

WASHINGTON, Jan 10 (Reuters) – The National Highway Traffic Safety Administration (NHTSA) plans to propose new fuel economy standards for the 2027 model year and beyond in April which could dramatically reshape new cars on America’s roads.

Acting NHTSA Administrator Ann Carlson told reporters on Tuesday the agency aims to release its proposal by late April and finalize it within a year. The proposal will include regulatory alternatives.

The Environmental Protection Agency (EPA) has said it plans to introduce companion stringent vehicle greenhouse gas emissions standards from 2027 through at least the 2030 model year by March.

One big question is whether the new rules will be consistent with California’s aggressive efforts to ramp up zero emission vehicles and phase out new gasoline-powered vehicles by 2035.

California Air Resources Board Executive Officer Steven Cliff, who was NHTSA administrator until September, told Reuters in a recent interview that the federal government should “look at stringency that’s equivalent to our rules.”

“We’re 68% zero emissions in 2030 so modeling that and looking at that as an option for 2030 is absolutely critical,” he said.

U.S. President Joe Biden wants 50% of all new vehicles sold in 2030 to be electric or plug-in hybrid models but has not endorsed California’s 2035 plans.

In March 2020, Trump’s Republican administration rolled back then-President Barack Obama’s standards to only 1.5% annual increases in efficiency through 2026. That was much less than the 5% annual increases required by Obama. The Biden administration in 2021 reversed Trump’s action and told the relevant agencies to begin work on the next round of tougher rules.

In March, NHTSA reinstated a sharp increase in penalties for automakers whose vehicles do not meet Corporate Average Fuel Economy (CAFE) requirements for model years 2019 and beyond.

NHTSA has not collected penalties for model years 2019 through 2021 while the issue was under review and subject of court challenges.

“We’re in the process of evaluating and gathering the data necessary,” Carlson said, declining to say when it might impose fines. “We haven’t forgotten about it.”

The auto industry previously said penalty hikes could cost them at least $1 billion annually, both for failures to meet the rules and higher prices for credits sold by companies like Tesla Inc (TSLA.O) used to meet requirements.

Chrysler-parent Stellantis (STLA.MI)said last year it booked an incremental provision of 660 million euros ($708.44 million) resulting from the 2019-2021 CAFE penalty rate increase. The company then known as Fiat Chrysler paid $152.3 million in total CAFE fines for 2016 and 2017 model years.

($1 = 0.9316 euros)

Reporting by David Shepardson; Editing by Richard Chang