Home » New U.S. Emissions Regulations Are The ‘Strictest-Ever,’ Cement An Electric Future

New U.S. Emissions Regulations Are The ‘Strictest-Ever,’ Cement An Electric Future

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I’m definitely having one of those “Lemon, it’s Wednesday” sort of weeks. Today, that’s because we’re about to see a hard reset on U.S. vehicle emissions regulations, and while that doesn’t sound interesting or sexy on its face, this is a proposal that’s about to hit a hard reset on the whole automotive industry.

We’re still parsing what all of this means, and I suspect we will be for a while (maybe even years—how exciting!) but that item leads today’s morning roundup. Also on tap: some news about CarMax and used car prices, and Mercedes-Benz is up and Tesla is down. Let’s dig in.

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New EPA Rules Basically Set The Sun On Internal Combustion As An Electric Day Dawns

“ram Brand Confirms Name Of First Electric Pickup: Ram 1500 Rev”

Clearly the Biden Administration’s Environmental Protection Agency didn’t come to play. The new (proposed) U.S. vehicle emissions regulations are here, and they demand dramatically more efficient internal combustion cars, light-duty trucks and heavy trucks in the coming years. But they also will command a much bigger jump in electric vehicle adoption than even Biden’s previous “50% by 2030” goal.

According to Reuters, we’re talking maybe 67%—that’s two out of three new cars—EV adoption by the early 2030s. This is, by far, the strictest emissions ruleset the U.S. has ever proposed and will eventually end internal combustion on the scale that we know it now.

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Some highlights from that story:

The proposal, if finalized, represents the most aggressive U.S. vehicle emissions reduction plan to date, requiring 13% annual average pollution cuts and a 56% reduction in projected fleet average emissions over 2026 requirements. The EPA is also proposing new stricter emissions standards for medium-duty and heavy-duty trucks through 2032.

The EPA projects the 2027-2032 model year rules would cut more than 9 billion tons of CO2 emissions through 2055 – equivalent to more than twice total U.S. CO2 emissions last year.

[…] Under the EPA proposal, automakers are forecast to produce 60% EVs by 2030 and 67% by 2032 to meet requirements – compared with just 5.8% of U.S. vehicles sold in 2022 that were EVs. The National Highway Traffic Safety Administration plans to propose parallel economy standards in the coming weeks.

[…] The EPA estimates 50% of new vocational vehicles like buses and garbage trucks could be EVs by 2032, along with 35% of new short-haul freight tractors and 25% of new long-haul freight tractors. Medium-duty vehicle rules are projected to cut emissions by 44% over 2026.

Yeah, it’s not just cars; it’s everything. This is pretty huge, all of it. I say it cements an electric future because right now, that’s the leading vehicle technology that’s also responsible for zero tailpipe emissions. Hydrogen cars do the same thing, but do you drive a Toyota Mirai? I didn’t think so. Like, two people in California do and you know they’re itching to dump them when the lease ends. So here we are.

Note that this isn’t an outright ICE ban like the Europeans (and many U.S. states) are doing. The U.S. government isn’t doing that. Politically, I’m not sure it ever can. But this does put the writing on the wall in a major way. Here’s Automotive News:

The plan also is key to U.S. commitments on reducing emissions by at least 50 percent below 2005 levels by mid-decade, reaching 100 percent carbon pollution-free electricity by 2035 and achieving net-zero emissions economywide by 2050.

To be sure, neither Biden nor his administration has called for a ban on sales of new combustion-engine vehicles by a certain date — actions that are underway in places such as California and the European Union.

For the U.S. auto industry, the EPA’s vehicle emission rules could be a major regulatory push — and challenge — to speed electrification plans.

 
“Challenge” is the right word. And as generally pro-EV as I am, I get it here. Historically, automakers kick and scream and call their lobbyists when they have to make cars cleaner, and then they get the job done and make things that enhance performance as well as efficiency.
 
But this is different. EVs are still in their relative adolescence. The battery manufacturing and mining industries are in their infancy. Same with our EV charging infrastructure. Costs remain super high. And your average car owner is still driving something like a 2014 Honda CR-V; they have no idea what’s coming next.
 
Environmental advocates will say the world can’t wait and that transportation emissions—our largest pollution source in the U.S.—have to be brought down before we cook ourselves into a Hell-on-earth situation. The scientific consensus says they aren’t wrong.
 
But that’s about to run up against the cold, hard logistics of transforming a century of gasoline vehicle infrastructure—in a country that came up alongside the car—into an electric one. It’s crazy to think that can be done in about a decade; it’s moon landing stuff.
 
And keep in mind, next year is an election year. If the Republicans take the White House, it’s hard to see these requirements surviving on the level they are, or at all.
 
The next few years in this business are about to get really, really interesting.

CarMax Posts Another Rough Quarter

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Photo: Carmax
 
But for now, back to your regularly scheduled programming: economic weirdness and how it’s impacting new and used car sales. Poor CarMax, still hampered by the scarcity of used cars, posted some rough Q4 2022 results on Tuesday. Here’s Automotive News:

CarMax reported net income of $69 million in the quarter ended Feb. 28, down 57 percent year-over-year. The company’s net revenue in the quarter was $5.72 billion, down 26 percent from the year-earlier period. Its retail gross profit per used vehicle rose 3.7 percent to $2,277.

It retailed 169,884 used vehicles in the quarter, down 13 percent from the year-earlier period. Comparable store used-vehicle sales fell 14 percent. CarMax said it believed prolonged affordability challenges continued to impact its fourth-quarter vehicle sales, with headwinds remaining due to inflationary pressures, higher interest rates, tight lending standards and a continued drop-off in consumer confidence.

“Our deliberate steps to navigate the pressures facing the used-car industry are driving sequential improvements in our business, and we will continue to prioritize initiatives to increase efficiencies and create better experiences for our associates and customers across our diversified business model,” CarMax CEO Bill Nash said in a statement.

I picture CarMax CEO Bill Nash frantically trying to steal a couple of Hyundais and Kias with a USB cable while he fired off that word salad just so they have something, anything to sell.

Tesla Down (Maybe)

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In Q1 of this year, Tesla delivered about 422,00 cars globally (it doesn’t break out that data geographically or by model) which beat investor expectations. So how does that net out in America? Maybe not great, reports Automotive News. For the first two months of this year, there are indications that U.S. Tesla growth is slowing—despite the many price cuts that have happened. From this story:

Tesla had 95,829 new U.S. registrations for the two months, a 35 percent increase over January-February 2022 — but just a 3.7 percent increase from November and December, when it had 92,414, Experian data shows. Tesla’s deepest price cuts occurred in mid-January.

At the start of 2022, Tesla reached a growth rate of 74 percent in the January-February period and had the nation’s top three EV models and four of the top 10. But over the next 12 months, growth cooled, competition increased and the Model S fell out of the top 10, Experian numbers show.

“The market forces surrounding Tesla have undeniably shifted in the past 12 months and most of them for the worse,” said Karl Brauer, executive analyst at iSeeCars.com. “Tesla’s longtime role as the only premium EV has shifted to one of many options, with additional EVs arriving in showrooms every month.”

This isn’t super surprising. We knew that demand for the Model 3 and Model Y was tapering off at the end of last year and the start of this one, leading to the original price cuts. And we know that the competition is heating up from basically every brand these days.
 
Now, Tesla can still beat every other automaker (except maybe BYD, which doesn’t mean anything to us) in EV manufacturing scale. And its U.S.-built cars qualify for varying degrees of tax incentives. But as I’ve written before, that Tesla lineup is getting old; the automaker needs some true model overhauls soon and not just more OTA updates. And no, I don’t mean the Cybertruck. Like, actual cars.

Mercedes Up, Though

Mercedes Eqe

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Speaking of the competition: Mercedes-Benz is seeing a bit of an EV boom right now. I can’t say I love the too-smooth looks of those EQ cars—they lack the brutal, capitalistic presence a big Benz ought to have—but they’re clearly catching on. Here’s Reuters on Mercedes’ Q1 results:
 
EVs were the main growth driver in the quarter, with sales almost doubling to 51,600 units. The top-end segment – which includes models such as AMG, Maybach and G-class – also demonstrated solid growth of 18%, reaching 91,800 for the period.
Britta Seeger, a Mercedes board member, said both segments posted strong results “despite ongoing supply chain disruptions, economic headwinds and geopolitical uncertainties”.
 
BMW did even better on EV sales in Q1, moving more than 64,000 of them globally. Again, Tesla still has the edge in a lot of ways—give credit where it’s due there. But it doesn’t own the whole market anymore.

Your Turn

Hoo boy, let’s talk about these new EPA regulations. What do you think of them? Are they even feasible? What would it take to pull them off and get to a projected 67% EV new car market in America by the early 2030s?
 
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Hondaimpbmw 12
Hondaimpbmw 12
6 months ago

“It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.” ~ Thomas Sowell

Unelected bureaucrats and grandpa Joe declaring that we are gonna plunge headlong into ruining our economy for an unattainable goal, basically on the word of fat Al Gore.

“The kinds of people we need in government are precisely the kinds of people who are most reluctant to go into government — people who understand the inherent dangers of power and feel a distaste for using it, but who may do so for a few years as a civic duty. The worst kind of people to have in government are those who see it as a golden opportunity to impose their own superior wisdom and virtue on others.” ~ Thomas Sowell

“It is so easy to be wrong-and to persist in being wrong-when the costs of being wrong are paid by others.” ~ Thomas Sowell

Personal transportation emissions are very low, particularly when compared to 50 years ago. When the EPA set standards back when, it was to solve all our problems. When the automakers approached the goals, the bureaucrats moved the goalposts, again and again.

Wildfires (which destroy thousands of acres/year) throw particulates into the air and release literally tons of carbon into the atmosphere. they also remove carbon sinks and reduce the available greenery that absorb CO2. Volcanos do the same, and underwater volcanoes heat the oceans, raising the intensity of hurricanes. In the face of that, transportation emissions are literally spit in the ocean.

“Would you bet your paycheck on a weather forecast for tomorrow? If not, then why should this country bet billions on global warming predictions that have even less foundation?” ~ Thomas Sowell

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