The new rules are the toughest ever set for passenger cars and trucks (which are predominantly utes) and overturns former US president Donald Trump’s plans for a 32mpg (7.4L/100km) fleet average by the same year.

To meet the new fuel economy standards, sales of EVs and plug-in hybrids will have to rise to 17 per cent of all new vehicles sold in 2026. This is up from the forecast seven per cent share of new vehicle sales in 2023.

The government’s decision was based on a joint submission by the US Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA).

It starts with all cars and utes in the 2023-26 model years to reduce their greenhouse gas emissions by 10 per cent in the first year, and by five per cent for each following year. That totals 25 per cent by model year 2026.

US president Joe Biden said the new rules were a key component to slash vehicle emissions and push for greater EV sales. Transport is the biggest source of US greenhouse gas emissions, making up 29 per cent of all emissions. 

Within the transportation sector, passenger cars and utes are the largest contributor, accounting for 58 per cent of all transportation-related emissions and 17 per cent of overall US carbon emissions.

President Biden has said he wants to then expand that further, with a target for 50 per cent of new vehicle sales to be EVs by 2030. 

Further impetus to EVs has been talk that emission credits – which allow one EV manufacturer to sell credits to a non-EV vehicle maker to avoid emission fines – would be scrapped. However, there is currently no indication that this will go ahead.

In addition, a government bill related to the economy includes a $US7500 rebate for EV buyers. This would further increase the attraction for buyers to switch to EVs. Currently, the bill has been stalled by one senator. At one stage a subsidy of $US12,000 a vehicle was being considered.

In the US, Automotive News (AutoNews) reported that environmental and public health groups mostly hailed the new rules, while the trade association representing most major automakers reacted cautiously.

The president and CEO of the Alliance for Automotive Innovation, John Bozzella, told AutoNews that car-makers were “committed to achieving a cleaner, safer, and smarter future,” but the EPA’s final rule for greenhouse gas emissions is more aggressive than originally proposed, “requiring a substantial increase in electric vehicle sales, well above the four per cent of all light-duty sales today.”

The Alliance for Automotive Innovation represents manufacturers producing nearly 99 per cent of new cars and light trucks sold in the US.

“Achieving the goals of this final rule will undoubtedly require enactment of supportive governmental policies, including consumer incentives … and support for US manufacturing and supply chain development,” Mr Bozella said in a statement.

Meanwhile, spokesman for advocacy group Environment America, Morgan Folger, said: “We can all breathe a collective sigh of relief now that a strong federal clean car rule is restored.”

EPA administrator Michael Regan said: “We are setting robust and rigorous standards that will aggressively reduce the pollution that is harming people and our planet, and save families money at the same time.”

He termed it “a giant step forward” in delivering on President Joe Biden’s climate agenda “while paving the way toward an all-electric, zero-emissions transportation future.”

The EPA said the rule would not only slow climate change, but also improve public health by reducing air pollution and lower costs for drivers through improved fuel efficiency.

In launching the new rules, President Biden Biden reiterated his call for components needed to make the change to electrified vehicles – from batteries to semiconductors – to be made in the US and has promised new jobs and billions of dollars in federal electric vehicle investments.

By Neil Dowling