Even if the clean air rules announced in Washington on Wednesday are less powerful than some environmentalists would have liked, they should still have a powerful effect on the types of cars that appear in showrooms in the coming years, experts say.
The rules will strengthen market forces pushing the industry toward battery power, giving automakers a strong incentive to sell a broader, more affordable variety of electric cars — not just the expensive SUVs that have dominated sales so far .
“It probably means more models and lower prices,” said Craig Segall, former deputy director of the California Air Resources Board, an agency that played a key role in promoting electric vehicles in that state. “The way you win,” he said, referring to automakers, “is to make sure you have an electric car in every segment.”
Despite rumors of a slowdown, sales of electric vehicles are growing much faster than sales of fossil fuel vehicles. Electric vehicle prices have fallen significantly and are likely to fall further as automakers get better at making them and the costs of batteries and raw materials plummet.
The Environmental Protection Agency’s rules announced Wednesday “certainly will not slow the pace at which our members scale up production,” said Albert Gore III, executive director of the Zero Emission Transportation Association. The association’s members include Tesla and other electric car manufacturers, as well as battery manufacturers, charging companies and suppliers.
The Inflation Reduction Act, passed by Democrats in 2022, led to a boom in investment in battery factories and electric vehicle factories. Since then, companies have announced investments of more than $110 billion in battery factories and electric vehicle assembly plants, according to the Environmental Defense Fund. These are long-term financial obligations that companies will likely adhere to regardless of what the federal government does.
Within a few years, electric cars that can drive more than 500 kilometers on a single charge will likely cost less than gasoline cars, not to mention the fuel savings. Electricity is usually much cheaper than gasoline. This will give more car buyers strong economic reasons to drive electric.
The average price of a new electric car has fallen substantially. According to Kelley Blue Book, it was $52,314 in February, still about $5,000 more than the average for all vehicles. But electric vehicle prices fell 13 percent in February from a year earlier, and by more than $2,500 from January alone. The cost of used battery powered vehicles has fallen much more.
Prices will continue to fall sharply as batteries, the most important and expensive component, become much cheaper, analysts say. The average cost of a battery pack is expected to drop by more than 40 percent in 2030 compared to 2022, according to estimates from the International Council on Clean Transportation, a research organization.
Electric vehicles “are moving closer to parity with gasoline cars,” said Katherine García, a transportation expert at the Sierra Club. “We will see that sooner than originally predicted.”
During the first years of the EPA rules announced Wednesday, automakers will face slightly less pressure to reduce emissions than under an earlier proposal from the agency. The EPA does not dictate to automakers how to meet the standards. They can also reduce emissions by improving the efficiency of gasoline engines or by selling more hybrid cars that augment gasoline engines with batteries and electric motors.
Plug-in hybrids, which can travel short distances on battery power alone and are becoming increasingly popular, could proliferate in the coming years. According to EPA estimates, they will account for as much as 9 percent of new car sales by 2030, up from about 2 percent last year.
But automakers will get most of the credit for fully electric cars that have no tailpipe emissions. According to the EPA, they will make up 44 percent of new cars by 2030
Longer term, most automakers recognize that they need to sell attractive electric vehicles to survive.
“EVs are clearly the future and what consumers want and what will be cheapest to produce,” said Stephanie Searle, chief program officer at the International Council on Clean Transportation. “Car manufacturers must invest in this to keep up.”
Tesla has already shaken up the car market and become the world’s most valuable automaker. New competitors from China are looming as Beijing seeks to capitalize on the technological shift to become a major auto exporter.
Tariffs and other restrictions have so far limited Chinese exports to the United States. But automakers like BYD, which sells an electric car for less than $12,000 in China, could find a way out by manufacturing in Mexico or even building factories in the United States.
For automakers, the rise of Chinese rivals is a powerful motivator. It brings back unpleasant memories of how Toyota, Honda and other Japanese automakers broke the dominance of Ford Motor, General Motors and Chrysler in the 1970s with cheap, fuel-efficient cars. Tesla, Ford and Volkswagen are among the major automakers working on low-cost electric vehicles clearly inspired by the threat from China.
Experience shows that technology often moves faster than regulations require. Under EPA rules that went into effect in 2017, electric vehicles were expected to make up 3 percent of new car sales by 2025. But battery-powered cars already make up about 8 percent of the U.S. new car market.
In California, which long had the strictest pollution limits, electric cars made up 25 percent of new cars sold last year. And under rules adopted in 2022, the state will phase out fossil fuel-powered cars by 2035.
“California has more than its share of electric cars because we asked for them,” said Mr. Segall, the former state official who is now vice president of Evergreen, an activist group.
Another twelve states, including New York and New Jersey, model their rules after California’s and won’t be much affected by the EPA regulations because their rules are already stricter. The federal rules will have the most impact on states like Texas, Florida and Connecticut that do not follow California.
The rules will also put pressure on automakers like Toyota and Stellantis, owners of Chrysler, Dodge, Ram and Jeep, which have been slow to sell all-electric vehicles.
The EPA rules are among the Biden administration’s numerous policies aimed at promoting electric vehicles. Tax credits of up to $7,500 are available for vehicles manufactured in the United States, Canada or Mexico that meet other requirements intended to promote a domestic supply chain. The number of eligible vehicles is small but is expected to grow as automakers like Hyundai produce more vehicles in the United States.
The government is also subsidizing the construction of fast-charging stations, which along with investments by automakers like Mercedes-Benz and charging companies like Electrify America, will soon remove a major bottleneck for many car buyers.
Surveys show that many people are interested in electric cars, but worry about finding a charging point during road trips. If governments and companies implement all the plans they have announced, according to a study Published this month by the International Council on Clean Transportation, there will be more than enough fast chargers by 2030.