implementing their statutory authority to achieve their intended policy
goals. NEPA requires agencies to compare the potential environmental
impacts of their actions to a reasonable range of alternatives. E.O.
12866 and 13563, as well as OMB Circular A-4, also request that
agencies evaluate regulatory alternatives in their rulemaking analyses.
    Alternatives analysis begins with a ``No-Action'' Alternative,
typically described as what would occur in the absence of any further
regulatory action by the agency. OMB Circular A-4 states that the
``baseline should be the best assessment of the way the world would
look absent the regulatory action. The choice of an appropriate
baseline may require consideration of a wide range of potential
factors, including:
     Evolution of the market,
     Changes in external factors affecting expected benefits
and costs,
     Changes in regulations promulgated by the agency or other
government entities, and
     The degree of compliance by regulated entities with other
regulations.'' \443\
---------------------------------------------------------------------------

    \443\ OMB Circular A-4. General Issues, 2. Developing a
Baseline. Available at: https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/. (Accessed: May 31, 2023).
---------------------------------------------------------------------------

    This proposal includes a No-Action Alternative for passenger cars
and light trucks and a No-Action alternative for HDPUVs, both described
below; four ``action alternatives'' for passenger cars and light
trucks; and three action alternatives for HDPUVs. The proposed
standards may, in places, be referred to as the ``Preferred
Alternative,'' which is NEPA parlance, but NHTSA intends ``proposed
standards'' and ``Preferred Alternative'' to be used interchangeably
for purposes of this proposal. NHTSA believes this appropriately
comports with the Council on Environmental Quality's (CEQ) directive
that ``agencies shall . . . limit their consideration to a reasonable
number of alternatives.'' \444\
---------------------------------------------------------------------------

    \444\ 40 CFR 1502.14(f).
---------------------------------------------------------------------------

    The different regulatory alternatives for passenger cars and light
trucks are defined in terms of percent-increases in CAFE stringency
from year to year. Readers should recognize that those year-over-year
changes in stringency are not measured in terms of mile per gallon
differences (as in, 1 percent more stringent than 30 mpg in one year
equals 30.3 mpg in the following year), but rather in terms of shifts
in the footprint functions that form the basis for the actual CAFE
standards (as in, on a gallon per mile basis, the CAFE standards change
by a given percentage from one MY to the next). One action alternative
is less stringent than the Preferred Alternative for passenger cars and
light trucks and two action alternatives are more stringent. The
alternatives considered in this proposal for passenger cars and light
trucks represent a reasonable range of possible agency actions.\445\
---------------------------------------------------------------------------

    \445\ See Draft TSD Chapter 1.2.1 for a complete discussion
about the footprint curve functions and how they are calculated.
---------------------------------------------------------------------------

    In a departure from recent CAFE rulemaking trends, we have applied
different rates of increase to the passenger car and the light truck
fleets. Rather than have both fleets increase their respective
standards at the same rate, light truck standards will increase at a
faster rate than passenger car standards. Each action alternative
evaluated for this proposal has a passenger car fleet rate-of-increase
of fuel economy lower than the rate-of-increase of fuel economy for the
light truck fleet. NHTSA has discretion, by law, to set CAFE standards
that increase at different rates for cars and trucks, because NHTSA
must set maximum feasible CAFE standards separately for cars and
trucks.\446\ We have selected

this approach for the current proposal for several reasons.
---------------------------------------------------------------------------

    \446\ See, e.g., the 2012 final rule establishing CAFE standards
for MYs 2017 and beyond, in which rates of stringency increase for
passenger cars and light trucks were different. 77 FR 62623, 62638-
39 (Oct. 15, 2012).
---------------------------------------------------------------------------

    First, NHTSA believes that manufacturers will deploy considerable
amounts of technology to reach the existing passenger car fuel economy
standards adopted for MYs 2024-26. This is not to say that NHTSA now
concludes those standards set in 2022 are beyond maximum feasible, but
simply to note that as manufacturers continue to improve fuel economy
in response to those standards, in the absence of further technological
innovation, less technology will remain on the table to be used for
additional stringent increases in subsequent years, particularly for
passenger cars. Because the CAFE statute prohibits us from considering
BEVs and full PHEVs' combined fuel economy, we believe manufacturers
will find it difficult to improve fuel economy with ICE engine
technologies beyond what we are proposing for passenger cars and
maintain a reasonable cost. This is supported by feedback we have
received from industry stakeholders, suggesting that consumers are less
willing and able to absorb significant additional regulatory costs for
passenger cars than they are for light trucks. This phenomenon is more
pronounced for smaller cars, where manufacturers have already
significantly increased fuel economy in response to existing standards,
leaving only the most expensive fuel saving technology options and
where additional regulatory costs may represent a larger percentage of
the overall vehicle cost. Our (statutorily constrained) analysis also
suggests that costs for improvements in fuel economy for passenger cars
are increasingly no longer offset by the value of the fuel saved (or
other benefits to the purchaser), which makes ongoing rapid increases
less feasible.\447\ We do not believe this is a trend that is in the
best interests of American consumers, particularly those who are
seeking affordable new cars.
---------------------------------------------------------------------------

    \447\ This is true specifically because of the statutory
restrictions on considering the fuel economy of BEVs and the full
fuel economy of PHEVs for new CAFE standards, and especially for
passenger cars given their technology levels.
---------------------------------------------------------------------------

    Second, as discussed in Draft TSD Chapter 1.2.4, NHTSA carefully
considered the existing curve shapes in light of ongoing trends in the
fleet, and determined, as in the 2022 TSD, that changing our approach
to standard stringency made more sense for CAFE standards than changing
the curve shapes at this point. We believe the ongoing trend \448\ to
also be driven by new types of vehicles classified as light trucks
simply on the basis of having AWD that would otherwise be subject to
the generally-more-stringent passenger car curve. Consumers appear
receptive to these offerings, but they may end up with less fuel
savings than if the vehicles had been classified as passenger cars
instead, which appears to run counter to EPCA's overarching purpose of
energy conservation. Attribute-based standards and separate standards
for cars and trucks are statutorily required and are designed to
accommodate these market trends but have resulted in less fuel savings
which would otherwise accrue to American consumers. Additionally, we
believe light trucks have significantly more opportunity for fuel
economy improvements due to lower baseline technology levels, and
greater average VMT values. Our analysis shows that for light truck
stringency increases, the value of fuel savings alone outweighs the
increased regulatory cost. In short, there appears to be more room to
improve the light truck fleet, and thus NHTSA has considered larger
ongoing increases in stringency for this fleet compared to passenger
cars, though still generally smaller increases than those finalized for
MYs 2024-2026.
---------------------------------------------------------------------------

    \448\ See trends discussion in TSD Chapter <IP_ADDRESS>.
---------------------------------------------------------------------------

    For HDPUVs, the different regulatory alternatives are also defined
in terms of percent-increases in stringency from year to year, but in
terms of fuel consumption reductions rather than fuel economy
increases, so that increasing stringency appears to result in standards
going down (representing a direct reduction in fuel consumed) over time
rather than up. Also, unlike for the passenger car and light truck
standards, because HDPUV standards are in fuel consumption space, year-
over-year percent changes actually do represent gallon/mile differences
across the work-factor range. Under each action alternative, the
stringency changes at the same percentage rate in each MY in the
rulemaking time frame. One action alternative is less stringent than
the Preferred Alternative for HDPUVs, and one action alternative is
more stringent. The alternatives considered in this proposal for HDPUVs
represent a reasonable range of possible agency actions.

B. Regulatory Alternatives Under Consideration in This Proposal

    The regulatory alternatives considered by the agency in this
proposal are presented here as the percent-increases-per-year that they
represent. The sections that follow will present the alternatives as
the literal coefficients that define standards curves increasing at the
given percentage rates. NHTSA requests comment on the full range of
standards encompassed between the No-Action Alternative and Alternative
PC6LT8 for MYs 2027-2032 passenger cars and light trucks, including the
possibility of setting standards in between the considered
alternatives. NHTSA also requests comment on the full range of
standards encompassed between the No-Action Alternative and Alternative
HDPUV14 for MYs 2030-2035 HDPUVs, including the possibility of setting
standards in between the considered alternatives.

 Table III-1--Regulatory Alternatives Under Consideration for MYs 2027-
                  2032 Passenger Cars and Light Trucks
------------------------------------------------------------------------
                                        Passenger car      Light truck
                                         stringency        stringency
         Name of alternative          increases,  year- increases,  year-
                                        over-year (%)     over-year (%)
------------------------------------------------------------------------
No-Action Alternative...............               N/A               N/A
Alternative PC1LT3..................                 1                 3
Alternative PC2LT4 (Preferred                        2                 4
 Alternative).......................
Alternative PC3LT5..................                 3                 5
Alternative PC6LT8..................                 6                 8
------------------------------------------------------------------------

 Table III-2--Regulatory Alternatives Under Consideration for MYs 2030-
                               2035 HDPUVs
------------------------------------------------------------------------
                                                              HDPUV
                                                           stringency
                  Name of alternative                   increases,  year-
                                                          over-year (%)
------------------------------------------------------------------------
No-Action Alternative.................................               N/A
Alternative HDPUV4....................................                 4
Alternative HDPUV10 (Preferred Alternative)...........                10
Alternative HDPUV14...................................                14
------------------------------------------------------------------------

    A variety of factors will be at play simultaneously as
manufacturers seek to comply with the eventual standards that NHTSA
promulgates. Foreseeably, NHTSA, EPA, and CARB will all be regulating
simultaneously; manufacturers will be responding to those regulations
as well as to foreseeable shifts in market demand during the rulemaking
time frame (both due to cost/price changes for different types of
vehicles over time, fuel price changes, and the recently-passed tax
credits for BEVs and PHEVs). Many costs and benefits that will accrue
as a result of manufacturer actions during the rulemaking time frame
will be occurring for reasons other than CAFE standards, and NHTSA
believes it is important to try to reflect many of those factors in
order to present a more accurate picture of the effects of different
potential CAFE and HDPUV standards to decision-makers and to the
public.
    The following sections define each regulatory alternative,
including the No-Action Alternative, for each program, and explain
their derivation.
1. No-Action Alternative
    As with the 2022 final rule, our No-Action Alternative is fairly
nuanced. In this analysis, the No-Action Alternative assumes:
     The existing national CAFE and GHG standards are met, and
that the CAFE and GHG standards for MY 2026 finalized in 2022 continue
in perpetuity.
     Manufacturers who committed to the California Framework
Agreements met their contractual obligations for MY 2022.
     The HDPUV MY 2027 standards finalized in the Phase 2
program continue in perpetuity.
     Manufacturers will comply with the ZEV/ACC2/ACT standards
that California has adopted, and other states have agreed to follow
through 2035.
     Manufacturers will make production decisions in response
to estimated market demand for fuel economy or fuel efficiency,
considering estimated fuel prices, estimated product development
cadence, the estimated availability, applicability, cost, and
effectiveness of fuel-saving technologies, and available tax credits.
    NHTSA continues to believe that to properly estimate fuel
economies/efficiencies (and achieved CO2 emissions) in the
No-Action Alternative, it is necessary to simulate all of these legal
requirements (extant and foreseeable) affecting automakers and vehicle
design simultaneously.\449\ Consequently, the CAFE Model evaluates each
requirement in each MY, for each manufacturer/fleet. Differences among
fleets and compliance provisions often creates over-compliance in one
program, even if a manufacturer is able to exactly comply (or under-
comply) in another program. This is similar to how manufacturers
approach the question of concurrent compliance in the real world--when
faced with multiple regulatory programs, the most cost-effective path
may be to focus efforts on meeting one or two sets of requirements,
even if that results in ``more effort'' than would be necessary for
another set of requirements, in order to ensure that all regulatory
obligations are met. We elaborate on those model capabilities below.
Generally speaking, the model treats each manufacturer as applying the
following logic when making technology decisions, both for simulating
passenger car and light truck compliance, and HDPUV compliance, with a
given regulatory alternative:
---------------------------------------------------------------------------

    \449\ To be clear, this is for purposes of properly estimating
the No-Action Alternative, which represents what NHTSA believes is
likely to happen in the world in the absence of future NHTSA
regulatory action. NHTSA does not attempt to simulate further
application of BEVs, for example, in determining amongst the action
alternatives for passenger cars and light trucks which one would be
maximum feasible, because the statute prohibits NHTSA from
considering the fuel economy of BEVs in determining maximum feasible
CAFE standards.
---------------------------------------------------------------------------

    1. What do I need to carry over from last year?
    2. What should I apply more widely in order to continue sharing
(of, e.g., engines) across different vehicle models?
    3. What new BEVs do I need to build in order to satisfy anticipated
manufacturer compliance with state ZEV mandates?
    4. What further technology, if any, could I apply that would enable
buyers to recoup additional costs within 30 months after buying new
vehicles?
    5. What additional technology, if any, should I apply to respond to
potential new CAFE and CO2 standards for passenger cars and
light trucks, or to potential new HDPUV standards?
    Additionally, within the context of 4 and 5, the CAFE Model may
consider, as appropriate and allowed by statutory restrictions on
technology application for a given MY, the applicability of recently-
passed tax credits for battery-based vehicle technologies, which
improve the attractiveness of those technologies to consumers and thus
the model's likelihood of choosing them as part of a compliance
solution. The model can also apply over-compliance credits if
applicable and not legally prohibited. The CAFE Model simulates all of
these simultaneously. As mentioned above, this means that when
manufacturers make production decisions in response to actions other
than CAFE or HDPUV standards, those costs and benefits are not
attributable to possible future CAFE or HDPUV standards. This approach
allows the analysis to isolate the effects of the decision being made
on the appropriate CAFE standards, as opposed to the effects of many
things that will be occurring simultaneously.
    Existing NHTSA standards during the rulemaking time frame are
modeled as follows:
    To account for the existing CAFE standards finalized in MY 2026 for
passenger cars and light trucks, the No-Action Alternative includes the
following coefficients defining those standards, which (for purposes of
this analysis) are assumed to persist without change in subsequent MYs:

                              Table III-3--Passenger Car CAFE Target Function Coefficients for No-Action Alternative \450\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
a (mpg).................................................           66.95           66.95           66.95           66.95           66.95           66.95
b (mpg).................................................           50.09           50.09           50.09           50.09           50.09           50.09
c (gpm per s.f).........................................         0.00034         0.00034         0.00034         0.00034         0.00034         0.00034
d (gpm).................................................         0.00120         0.00120         0.00120         0.00120         0.00120         0.00120
--------------------------------------------------------------------------------------------------------------------------------------------------------

                               Table III-4--Light Truck CAFE Target Function Coefficients for No-Action Alternative \451\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
a (mpg).................................................           53.73           53.73           53.73           53.73           53.73           53.73
b (mpg).................................................           32.30           32.30           32.30           32.30           32.30           32.30
c (gpm per s.f).........................................         0.00037         0.00037         0.00037         0.00037         0.00037         0.00037
d (gpm).................................................         0.00327         0.00327         0.00327         0.00327         0.00327         0.00327
--------------------------------------------------------------------------------------------------------------------------------------------------------

    These coefficients are used to create the graphic below, where the
x-axis represents vehicle footprint and the y-axis represents fuel
economy, showing that in ``CAFE space,'' targets are higher in fuel
economy for smaller footprint vehicles and lower for larger footprint
vehicles.
---------------------------------------------------------------------------

    \450\ The Passenger Car Function Coefficients `a', `b', `c', and
`d' are defined in Draft TSD Chapter 1.2.1, Equation 1-1.
    \451\ The Light Truck Function Coefficients `a', `b', `c', and
`d' are defined in Draft TSD Chapter 1.2.1, Equation 1-1.
---------------------------------------------------------------------------

BILLING CODE 4910-59-P
[GRAPHIC] [TIFF OMITTED] TP17AU23.051

    Additionally, EPCA, as amended by EISA, requires that any
manufacturer's domestically-manufactured passenger car fleet must meet
the greater of either 27.5 mpg on average, or 92 percent of the average
fuel economy projected by the Secretary for the combined domestic and
non-domestic passenger automobile fleets manufactured for sale in the
United States by all manufacturers in the MY. NHTSA retains the 1.9
percent offset to the Minimum Domestic Passenger Car Standard (MDPCS),
first used in the 2020 final rule, to account for recent projection
errors as part of estimating the total passenger car fleet fuel
economy, and used in rulemakings since.452 453 The
projection shall be published in the Federal Register when the standard
for that MY is promulgated in accordance with 49 U.S.C.
32902(b).454 455 For purposes of the No-Action Alternative,
the MDPCS is as it was established in the 2022 final rule for MY 2026,
as shown in Table III-5 below:
---------------------------------------------------------------------------

    \452\ Section V.A.2 (titled ``Separate Standards for Passenger
Cars, Light Trucks, and Heavy-Duty Pickups and Vans, and Minimum
Standards for Domestic Passenger Cars'') of the NPRM discusses the
basis for the offset.
    \453\ 87 FR 25710 (May 2, 2022).
    \454\ 49 U.S.C. 32902(b)(4).
    \455\ The offset will be applied to the final regulation
numbers, but was not used in this analysis. The values for the MDPCS
for the proposed action alternatives are nonadjusted values.

                                   Table III-5--No-Action Alternative--Minimum Domestic Passenger Car Standard (MDPCS)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                2027                                       2028             2029             2030             2031             2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
53.5...............................................................            53.5             53.5             53.5             53.5             53.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

    To account for the existing HDPUV standards finalized in the Phase
2 rule, the No-Action Alternative for HDPUVs includes the following
coefficients defining those standards, which (for purposes of this
analysis) are assumed to persist without change in subsequent MYs:
---------------------------------------------------------------------------

    \456\ In the CAFE Model, these are Linear work-factor-based
function where coefficients e and f are for diesels, BEVs and FCEVs,
see TSD Chapter 1.2.1.
    \457\ In the CAFE Model, these are Linear work-factor-based
function where coefficients c and d are for gasoline, CNG, strong
hybrid vehicles and PHEVs, see TSD Chapter 1.2.1.

                               Table III-6--HDPUV CI Vehicle Target Function Coefficients for No-Action Alternative \456\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2030            2031            2032            2033            2034            2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
e (gal/100 miles per WF)................................       0.0003418       0.0003418       0.0003418       0.0003418       0.0003418       0.0003418
f (gal/100 miles per WF)................................           2.633           2.633           2.633           2.633           2.633           2.633
--------------------------------------------------------------------------------------------------------------------------------------------------------

                               Table III-7--HDPUV SI Vehicle Target Function Coefficients for No-Action Alternative \457\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2030            2031            2032            2033            2034            2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
c (gal/100 miles per WF)................................       0.0004152       0.0004152       0.0004152       0.0004152       0.0004152       0.0004152
d (gal/100 miles per WF)................................           3.196           3.196           3.196           3.196           3.196           3.196
--------------------------------------------------------------------------------------------------------------------------------------------------------

    These equations are represented graphically below:
    [GRAPHIC] [TIFF OMITTED] TP17AU23.052

[GRAPHIC] [TIFF OMITTED] TP17AU23.053

BILLING CODE 4910-59-C
    As the baseline scenario, the No-Action Alternative also includes
the following additional actions that NHTSA believes will occur in the
absence of further regulatory action by NHTSA:
    To account for the existing national GHG emissions standards, the
No-Action Alternative for passenger cars and light trucks includes the
following coefficients defining the GHG standards set by EPA in 2022
for MY 2026, which (for purposes of this analysis) are assumed to
persist without change in subsequent MYs:

                                  Table III-8--Passenger Car CO2 Target Function Coefficients for No-Action Alternative
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
a (g/mi)................................................           114.3           114.3           114.3           114.3           114.3           114.3
b (g/mi)................................................           160.9           160.9           160.9           160.9           160.9           160.9
c (g/mi per s.f)........................................            3.11            3.11            3.11            3.11            3.11            3.11
d (g/mi)................................................          -13.10          -13.10          -13.10          -13.10          -13.10          -13.10
e (s.f.)................................................            41.0            41.0            41.0            41.0            41.0            41.0
f (s.f.)................................................            56.0            56.0            56.0            56.0            56.0            56.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                   Table III-9--Light Truck CO2 Target Function Coefficients for No-Action Alternative
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
a (g/mi)................................................           141.8           141.8           141.8           141.8           141.8           141.8
b (g/mi)................................................           254.4           254.4           254.4           254.4           254.4           254.4
c (g/mi per s.f)........................................            3.41            3.41            3.41            3.41            3.41            3.41
d (g/mi)................................................            1.90            1.90            1.90            1.90            1.90            1.90
e (s.f.)................................................            41.0            41.0            41.0            41.0            41.0            41.0
f (s.f.)................................................            74.0            74.0            74.0            74.0            74.0            74.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Coefficients a, b, c, d, e, and f define the existing MY 2026
Federal CO2 standards for passenger cars and light trucks,
respectively, in Table III-8 and Table III-9 above. Analogous to
coefficients defining CAFE standards, coefficients a and b specify
minimum and maximum CO2 targets in each MY. Coefficients c
and d specify the slope and intercept of the linear portion of the
CO2 target function, and coefficients e and f bound the
region within which CO2 targets are defined by this linear
form.
    To account for the existing national GHG emission standards, the
No-Action Alternative for HDPUVs includes the following coefficients
defining the WF based standards set by EPA for MY 2027 and beyond. The
four-wheel drive coefficient is maintained at 500 (coefficient `a') and
the weighting multiplier coefficient is maintained at 0.75 (coefficient
`b'). The CI and SI coefficients are in the tables below:

   Table III-10--HDPUV CI Vehicle Target Function Coefficients for No-
                           Action Alternative
------------------------------------------------------------------------
                                                          2027 and later
------------------------------------------------------------------------
e.......................................................          0.0348
f.......................................................             268
------------------------------------------------------------------------

   Table III-11--HDPUV SI Vehicle Target Function Coefficients for All
                              Alternatives
------------------------------------------------------------------------
                                                          2027 and later
------------------------------------------------------------------------
C.......................................................          0.0369
D.......................................................             284
------------------------------------------------------------------------

    Coefficients c, d, e, and f define the existing MY2027 and beyond
CO2 standards from Phase 2 rule for HDPUVs, in Table III-10
and Table III-11 above. The coefficients are linear work-factor based
function with c and d representing gasoline, CNG vehicles, SHEVs and
PHEVS and e and f representing diesels, BEVS and FCEVs. For this
rulemaking, this is identical to the NHTSA's fuel efficiency standards
No Action alternative.
    The No-Action Alternative also includes NHTSA's estimates of ways
that each manufacturer could introduce new PHEVs and BEVs in response
to state ZEV mandates. To account for the ZEV programs, NHTSA has
included the main provisions of the ACC II and ACT programs in the CAFE
Model's analysis of compliance pathways. Incorporating these programs
into the model includes converting vehicles that have been identified
as potential ZEV candidates into battery-electric vehicles (BEVs) so
that a manufacturer's fleet meets the calculated ZEV credit
requirements.\458\ The two programs have different requirements per MY,
so they are modeled separately in the CAFE analysis. Chapter 2.3 of the
Draft TSD discusses, in detail, how NHTSA developed these estimates.
---------------------------------------------------------------------------

    \458\ NHTSA made the decision to focus on BEVs for ZEV
compliance based on several factors: first, because CARB only allows
partial compliance with PHEVs; second, because NHTSA had
conversations with manufacturers that indicated an interest in
focusing on BEV development over developments of PHEV systems in the
rulemaking time frame; and third, because including PHEVs in the ZEV
modeling would have introduced unnecessary complication. See Docket
Submission of Ex Parte Meetings Prior to Publication of the
Corporate Average Fuel Economy Standards for Passenger Cars and
Light Trucks for Model Years 2027-2032 and Fuel Efficiency Standards
for Heavy-Duty Pickup Trucks and Vans for Model Years 2030-2035
Notice of Proposed Rulemaking memorandum, which can be found under
References and Supporting Material in the rulemaking Docket No.
NHTSA-2023-0022.
---------------------------------------------------------------------------

    The No-Action Alternative also includes NHTSA estimates of ways
that manufacturers could take advantage of recently-passed tax credits
for battery-based vehicle technologies. NHTSA explicitly models
portions of two provisions of the IRA when simulating the behavior of
manufacturers and consumers. The first is the Advanced Manufacturing
Production Tax Credit (AMPC). This provision of the IRA provides a $35
per kWh tax credit for manufacturers of battery cells and an additional
$10 per kWh for manufacturers of battery modules (all applicable to
manufacture in the United States).\459\ These credits, with the
exception of the critical minerals credit, phase out from 2030 to 2032.
The second provision explicitly modeled is the CVC,\460\ which provides
up to $7,500 toward the purchase of clean vehicles with critical
minerals and battery components manufactured in North America.\461\ The
AMPC and CVC provide tax credits for PHEVs, BEVs, and FCVs. Chapter 2.2
in the Draft TSD discusses, in detail, how NHTSA has modeled these tax
credits. These credits likely make the use of BEVs and PHEVs more
attractive in complying with the California ZEV mandate and EPA's GHG
standards.
---------------------------------------------------------------------------

    \459\ 26 U.S.C. 45X. If a manufacturer produces a battery module
without battery cells, they are eligible to claim up to $45 per kWh
for the battery module. The provision includes other provisions
related to vehicles such as a credit equal to 10 percent of the
manufacturing cost of electrode active materials, and another 10
percent for the manufacturing cost of critical minerals. We are not
modeling these credits directly because of how we estimate battery
costs and to avoid the potential to double count the tax credits if
they are included into other analyses that feed into our inputs.
    \460\ 26 U.S.C. 30D.
    \461\ There are vehicle price and consumer income limitations on
the CVC as well, see Congressional Research Service. Tax Provisions
in the Inflation Reduction Act of 2002 (H.R. 5376). Aug. 10, 2022.
---------------------------------------------------------------------------

    The No-Action Alternative for the passenger car, light truck and
HDPUV fleets also includes NHTSA's assumption, for purposes of
compliance simulations, that manufacturers will add fuel economy- or
fuel efficiency-improving technology voluntarily, if the value of
future undiscounted fuel savings fully offsets the cost of the
technology within 30 months. This assumption is often called the ``30-
month payback'' assumption, and NHTSA has used it for many years and in
many CAFE rulemakings.\462\ It is used to represent consumer demand for
fuel economy. It can be a source of apparent ``over-compliance'' in the
No-Action Alternative, especially when technology is estimated to be
extremely cost-effective, as occurs later in the analysis time frame
when learning has significant effects on some technology costs.
---------------------------------------------------------------------------

    \462\ Even though NHTSA uses the 30-month payback assumption to
assess how much technology manufacturers would add voluntarily in
the absence of new standards, the benefit-cost analysis accounts for
the full lifetime fuel savings that would accrue to vehicles
affected by the proposed standards.
---------------------------------------------------------------------------

    NHTSA staff believe that manufacturers do at times improve fuel
economy even in the absence of new standards, for several reasons.
First, overcompliance is not uncommon in the historical data, both in
the absence of new standards, and with new standards--NHTSA's analysis
in the 2022 TSD included CAFE compliance data showing that from 2004-
2017, while not all manufacturers consistently over-complied, a number
did. Of the manufacturers who did over-comply, some did so by 20
percent or more, in some fleets, over multiple MYs.\463\ Others have
similarly observed the auto industry's secular march toward higher fuel
economy over time, even in the absence of standards.\464\
---------------------------------------------------------------------------

    \463\ See 2022 TSD, at 68.
    \464\ Meyer, R. 2020. Trump's New Auto Rollback Is an Economic
Disaster. Last revised: Apr. 13, 2020. Available at: https://www.theatlantic.com/science/archive/2020/04/trumps-auto-rollback-will-eliminate-13500-jobs-cafe/609748. (Accessed: May 31, 2023).
---------------------------------------------------------------------------

    Second, manufacturers have consistently told NHTSA that they do
make fuel economy improvements where the cost can be fully recovered in
the first 2-3 years of ownership. The 2015 NAS report discussed this
assumption explicitly, stating: ``There is also empirical evidence
supporting loss aversion as a possible cause of the energy paradox.
Greene (2011) showed that if consumers accurately perceived the upfront
cost of fuel economy improvements and the uncertainty of fuel economy
estimates, the future price of fuel, and other factors affecting the
present value of fuel savings, the loss-averse consumers among them
would appear to act as if they had very high DRs or required payback
periods of about 3 years.'' \465\ Furthermore, the 2020 NAS HD report
states: ''The
---------------------------------------------------------------------------

    \465\ National Research Council. 2015. Cost, Effectiveness, and
Deployment of Fuel Economy Technologies for Light-Duty Vehicles. The
National Academies Press: Washington, DC. Page 31. Available at:
https://doi.org/10.17226/21744. (Accessed: May 31, 2023) and
available for review in hard copy at DOT headquarters). (hereinafter
``2015 NAS report'').

---------------------------------------------------------------------------

committee has heard from manufacturers and purchasers that they look
for 1.5- to 2-year paybacks or, in other cases, for a payback period
that is half the expected ownership period of the first owner of the
vehicle.'' \466\ Naturally, there are heterogenous preferences for
vehicle attributes in the marketplace: at the same time that we are
observing record sales of electrified vehicles, we are also seeing
sustained demand for pickup trucks with higher payloads and towing
capacity and hence lower fuel economy. This analysis, like all the CAFE
analyses preceding it, uses an average value to represent these
preferences for the CAFE fleet and the HDPUV fleet. The analysis
balances the risks of estimating too low of a payback period, which
would preclude most technologies from consideration regardless of
potential cost reductions due to learning, against the risk of allowing
too high of a payback period, which would allow an unrealistic cost
increase from technology addition in the baseline fleet.
---------------------------------------------------------------------------

    \466\ National Academies of Sciences, Engineering, and Medicine.
2020. Reducing Fuel Consumption and Greenhouse Gas Emissions of
Medium- and Heavy-Duty Vehicles, Phase Two: Final Report. The
National Academies Press: Washington, DC. p. 296. Available at:
https://doi.org/10.17226/25542. (Accessed: May 31, 2023).
---------------------------------------------------------------------------

    Third, as in previous CAFE analyses, our fuel price projections
assume sustained increases in real fuel prices over the course of the
rule (and beyond). As readers are certainly aware, fuel prices have
changed over time--sometimes quickly, sometimes slowly, generally
upward:
[GRAPHIC] [TIFF OMITTED] TP17AU23.054

    In the 1990s, when fuel prices were historically low (as shown
above), manufacturers did not tend to improve their fuel economy,
likely in part because there simply was very little consumer demand for
improved fuel economy and CAFE standards remained flat. In subsequent
decades, when fuel prices were higher, many of them have exceeded their
standards in multiple fleets, and for multiple years. Our current fuel
price projections look more like the last two decades, where prices
have been more volatile, but also closer to $3/gallon on average. In
recent years, when fuel prices have generally declined on average and
CAFE standards have continued to increase, fewer manufacturers have
exceeded their standards. However, our compliance data show that at
least some manufacturers do improve their fuel economy if fuel prices
are high enough, even if they are not able to respond perfectly to
fluctuations precisely when they happen. This highlights the importance
of fuel price assumptions both in the analysis and in the real world on
the future of fuel economy improvements.
2. Action Alternatives for MYs 2027-2032 Passenger Cars and Light
Trucks
    In addition to the No-Action Alternative, NHTSA has considered four
``action'' alternatives for passenger cars and light trucks, each of
which is more stringent than the No-Action Alternative during the
rulemaking time frame. These action alternatives are specified below
and demonstrate different possible approaches to balancing the
statutory factors applicable for passenger cars, light trucks, and
HDPUVs. Section V discusses in more detail how the different
alternatives reflect different possible balancing approaches.

a. Alternative PC1LT3

    Alternative PC1LT3 would increase CAFE stringency by 1 percent per
year, year over year, for MYs 2027-2032 passenger cars, and by 3
percent per year, year over year, for MYs 2027-2032 light trucks.
---------------------------------------------------------------------------

    \467\ The Passenger Car Function Coefficients `a', `b', `c', and
`d' are defined in Draft TSD Chapter 1.2.1.
    \468\ The Light Truck Function Coefficients `a', `b', `c', and
`d' are defined in Draft TSD Chapter 1.2.1.

                               Table III-12--Passenger Car CAFE Target Function Coefficients for Alternative PC1LT3 \467\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
a (mpg).................................................           67.63           68.31           69.00           69.70           70.40           71.11
b (mpg).................................................           50.60           51.11           51.63           52.15           52.68           53.21
c (gpm per s.f).........................................         0.00033         0.00033         0.00033         0.00032         0.00032         0.00032
d (gpm).................................................         0.00118         0.00117         0.00116         0.00115         0.00114         0.00113
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                Table III-13--Light Truck CAFE Target Function Coefficients for Alternative PC1LT3 \468\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
a (mpg).................................................           55.39           57.10           58.87           60.69           62.56           64.50
b (mpg).................................................           33.30           34.33           35.39           36.48           37.61           38.78
c (gpm per s.f).........................................         0.00036         0.00035         0.00034         0.00033         0.00032         0.00031
d (gpm).................................................         0.00317         0.00308         0.00299         0.00290         0.00281         0.00273
--------------------------------------------------------------------------------------------------------------------------------------------------------

    These equations are represented graphically below:
BILLING CODE 4910-59-P
[GRAPHIC] [TIFF OMITTED] TP17AU23.055

[GRAPHIC] [TIFF OMITTED] TP17AU23.056

    Under this alternative, the MDPCS is as follows:

                Table III-14--Alternative PC1LT3--Minimum Domestic Passenger Car Standard (MDPCS)
----------------------------------------------------------------------------------------------------------------
       2027               2028               2029               2030               2031               2032
----------------------------------------------------------------------------------------------------------------
           54.6               55.2               55.7               56.3               56.9               57.4
----------------------------------------------------------------------------------------------------------------

b. Alternative PC2LT4--Preferred Alternative
---------------------------------------------------------------------------

    \469\ The Passenger Car Function Coefficients `a', `b', `c', and
`d' are defined in Draft TSD Chapter 1.2.1.
    \470\ The Light Truck Function Coefficients `a', `b', `c', and
`d' are defined in Draft TSD Chapter 1.2.1.

    Alternative PC2LT4 would increase CAFE stringency by 2 percent per
year, year over year, for MYs 2027-2032 passenger cars, and by 4
percent per year, year over year, for MYs 2027-2032 light trucks.

                               Table III-15--Passenger Car CAFE Target Function Coefficients for Alternative PC2LT4 \469\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
a (mpg).................................................           68.32           69.71           71.14           72.59           74.07           75.58
b (mpg).................................................           51.12           52.16           53.22           54.31           55.42           56.55
c (gpm per s.f).........................................         0.00033         0.00032         0.00032         0.00031         0.00030         0.00030
d (gpm).................................................         0.00117         0.00115         0.00113         0.00110         0.00108         0.00106
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                Table III-16--Light Truck CAFE Target Function Coefficients for Alternative PC2LT4 \470\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
a (mpg).................................................           55.96           58.30           60.73           63.26           65.89           68.64
b (mpg).................................................           33.64           35.05           36.51           38.03           39.61           41.26
c (gpm per s.f).........................................         0.00036         0.00034         0.00033         0.00032         0.00031         0.00029
d (gpm).................................................         0.00314         0.00302         0.00289         0.00287         0.00267         0.00256
--------------------------------------------------------------------------------------------------------------------------------------------------------

    These equations are represented graphically below:
    [GRAPHIC] [TIFF OMITTED] TP17AU23.057

    [GRAPHIC] [TIFF OMITTED] TP17AU23.058

    Under this alternative, the MDPCS is as follows:

                 Table III-17--Alternative PC2LT4--Minimum Domestic Passenger Car Standard (MPG)
----------------------------------------------------------------------------------------------------------------
       2027               2028               2029               2030               2031               2032
----------------------------------------------------------------------------------------------------------------
           55.2               56.3               57.5               58.6               59.8               61.1
----------------------------------------------------------------------------------------------------------------

c. Alternative PC3LT5

    Alternative PC3LT5 would increase CAFE stringency by 3 percent per
year, year over year, for MYs 2027-2032 passenger cars, and by 5
percent per year, year over year, for MYs 2027-2032 light trucks.
---------------------------------------------------------------------------

    \471\ The Passenger Car Function Coefficients `a',`b',`c',and
`d' are defined in Draft TSD Chapter 1.2.1.
    \472\ The Light Truck Function Coefficients
``a'',``b'',``c'',and ``d'' are defined in Draft TSD Chapter 1.2.1.

                               Table III-18--Passenger Car CAFE Target Function Coefficients for Alternative PC3LT5 \471\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
a (mpg).................................................           69.02           71.16           73.36           75.63           77.97           80.38
b (mpg).................................................           51.64           53.24           54.89           56.58           58.33           60.14
c (gpm per s.f).........................................         0.00033         0.00032         0.00031         0.00030         0.00029         0.00028
d (gpm).................................................         0.00116         0.00113         0.00109         0.00106         0.00103         0.00100
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                Table III-19--Light Truck CAFE Target Function Coefficients for Alternative PC3LT5 \472\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
a (mpg).................................................           56.55           59.53           62.66           65.96           69.43           73.09
b (mpg).................................................           34.00           35.79           37.67           39.65           41.74           43.94
c (gpm per s.f).........................................         0.00036         0.00034         0.00032         0.00030         0.00029         0.00028
d (gpm).................................................         0.00311         0.00295         0.00280         0.00266         0.00253         0.00240
--------------------------------------------------------------------------------------------------------------------------------------------------------

    These equations are represented graphically below:
    [GRAPHIC] [TIFF OMITTED] TP17AU23.059

[GRAPHIC] [TIFF OMITTED] TP17AU23.060

    Under this alternative, the MDPCS is as follows:

                 Table III-20--Alternative PC3LT5--Minimum Domestic Passenger Car Standard (MPG)
----------------------------------------------------------------------------------------------------------------
       2027               2028               2029               2030               2031               2032
----------------------------------------------------------------------------------------------------------------
           55.8               57.5               59.3               61.1               63.0               64.9
----------------------------------------------------------------------------------------------------------------

d. Alternative PC6LT8

    Alternative PC6LT8 would increase CAFE stringency by 6 percent per
year, year over year, for MYs 2027-2032 passenger cars, and by 8
percent per year, year over year, for MYs 2027-2032 light trucks.

                               Table III-21--Passenger Car CAFE Target Function Coefficients for Alternative PC6LT8 \473\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
a (mpg).................................................           71.23           75.77           80.61           85.75           91.23           97.05
b (mpg).................................................           53.29           56.69           60.31           64.16           68.26           72.61
c (gpm per s.f).........................................         0.00032         0.00030         0.00028         0.00026         0.00025         0.00023
d (gpm).................................................         0.00112         0.00106         0.00099         0.00093         0.00088         0.00083
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                Table III-22--Light Truck CAFE Target Function Coefficients for Alternative PC6LT8 \474\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
a (mpg).................................................           58.40           63.48           69.00           74.99           81.52           88.60
b (mpg).................................................           35.11           38.16           41.48           45.09           49.01           53.27
c (gpm per s.f).........................................         0.00034         0.00032         0.00029         0.00027         0.00025         0.00023
d (gpm).................................................         0.00301         0.00277         0.00255         0.00234         0.00216         0.00198
--------------------------------------------------------------------------------------------------------------------------------------------------------

    These equations are represented graphically below:
---------------------------------------------------------------------------

    \473\ The Passenger Car Function Coefficients `a',`b',`c',and
`d' are defined in Draft TSD Chapter 1.2.1.
    \474\ The Light Truck Function Coefficients `a',`b',`c',and `d'
are defined in Draft TSD Chapter 1.2.1.

---------------------------------------------------------------------------

[GRAPHIC] [TIFF OMITTED] TP17AU23.061

[GRAPHIC] [TIFF OMITTED] TP17AU23.062

    Under this alternative, the MDPCS is as follows:

                 Table III-23--Alternative PC6LT8--Minimum Domestic Passenger Car Standard (MPG)
----------------------------------------------------------------------------------------------------------------
       2027               2028               2029               2030               2031               2032
----------------------------------------------------------------------------------------------------------------
           57.5               61.2               65.1               69.3               73.7               78.4
----------------------------------------------------------------------------------------------------------------

3. Action Alternatives for MYs 2030-2035 Heavy-Duty Pickups and Vans
    In addition to the No-Action Alternative, NHTSA has considered
three action alternatives for HDPUVs, each of which is more stringent
than the No-Action Alternative during the rulemaking time frame. While
each of the Action Alternatives described below would establish
increases in stringency from MY 2030 through MY 2035, NHTSA also
requests comment on a scenario where these Action Alternatives would
extend only through MY 2032, which coincides with the timeframe of the
EPA proposed GHG standards for this vehicle segment.\475\ These action
alternatives are specified below.
---------------------------------------------------------------------------

    \475\ See 87 FR 29242-29243 (May 5, 2023). NHTSA recognizes that
the Draft EIS accompanying this proposal examines only regulatory
alternatives for HDPUVs in which standards cover MYs 2030-2035.
---------------------------------------------------------------------------

a. Alternative HDPUV4
    Alternative HDPUV4 would increase HDPUV standard stringency by 4
percent per year for MYs 2030-2035 HDPUVs. NHTSA included this
alternative in order to evaluate a possible balancing of statutory
factors in which cost-effectiveness outweighed all other factors. The
four-wheel drive coefficient is maintained at 500 (coefficient `a') and
the weighting multiplier coefficient is maintained at 0.75 (coefficient
`b').
---------------------------------------------------------------------------

    \476\ In the CAFE Model, these are linear work-factor-based
functions where coefficients e and f are for diesels, BEVs and
FCEVs. See Draft TSD Chapter 1.2.1.

                               Table III-24--HDPUV (CI Vehicle) Target Function Coefficients for Alternative HDPUV4 \476\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2030            2031            2032            2033            2034            2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
e.......................................................       0.0003281       0.0003150       0.0003024       0.0002903       0.0002787       0.0002675
f.......................................................           2.528           2.427           2.330           2.236           2.147           2.061
--------------------------------------------------------------------------------------------------------------------------------------------------------

                               Table III-25--HDPUV (SI Vehicle) Target Function Coefficients for Alternative HDPUV4 \477\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2030            2031            2032            2033            2034            2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
c.......................................................       0.0003986       0.0003826       0.0003673       0.0003526       0.0003385       0.0003250
d.......................................................           3.068           2.945           2.828           2.715           2.606           2.502
--------------------------------------------------------------------------------------------------------------------------------------------------------

    These equations are represented graphically below:
---------------------------------------------------------------------------

    \477\ In the CAFE Model, these are linear work-factor-based
functions where coefficients c and d are for gasoline, CNG, strong
hybrid vehicles and PHEVs. See Draft TSD Chapter 1.2.1.

---------------------------------------------------------------------------

[GRAPHIC] [TIFF OMITTED] TP17AU23.063

[GRAPHIC] [TIFF OMITTED] TP17AU23.064

b. Alternative HDPUV10--Preferred Alternative
    Alternative HDPUV10 would increase HDPUV standard stringency by 10
percent per year for MYs 2030-2035 HDPUVs. The four-wheel drive
coefficient is maintained at 500 (coefficient `a') and the weighting
multiplier coefficient is maintained at 0.75 (coefficient `b').

                               Table III-26--HDPUV (CI Vehicle) Target Function Coefficients for Alternative HDPUV10 \478\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2030            2031            2032            2033            2034            2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
e.......................................................       0.0003076       0.0002769       0.0002492       0.0002243       0.0002018       0.0001816
f.......................................................           2.370           2.133           1.919           1.728           1.555           1.399
--------------------------------------------------------------------------------------------------------------------------------------------------------

                               Table III-27--HDPUV (SI Vehicle) Target Function Coefficients for Alternative HDPUV10 \479\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2030            2031            2032            2033            2034            2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
c.......................................................       0.0003737       0.0003363       0.0003027       0.0002724       0.0002452       0.0002207
d.......................................................           2.876           2.589           2.330           2.097           1.887           1.698
--------------------------------------------------------------------------------------------------------------------------------------------------------

    These equations are represented graphically below:
---------------------------------------------------------------------------

    \478\ In the CAFE Model, these are linear work-factor-based
functions where coefficients e and f are for diesels, BEVs and
FCEVs. See Draft TSD Chapter 1.2.1.
    \479\ In the CAFE Model, these are linear work-factor-based
functions where coefficients c and d are for gasoline, CNG, strong
hybrid vehicles and PHEVs. See Draft TSD Chapter 1.2.1.
[GRAPHIC] [TIFF OMITTED] TP17AU23.065

[GRAPHIC] [TIFF OMITTED] TP17AU23.066

c. Alternative HDPUV14
    Alternative HDPUV14 would increase HDPUV standard stringency by 14
percent per year for MYs 2030-2035 HDPUVs. The four-wheel drive
coefficient is maintained at 500 (coefficient `a') and the weighting
multiplier coefficient is maintained at 0.75 (coefficient `b').
---------------------------------------------------------------------------

    \480\ In the CAFE Model, these are linear work-factor-based
functions where coefficients e and f are for diesels, BEVs and
FCEVs. See Draft TSD Chapter 1.2.1.
    \481\ In the CAFE Model, these are linear work-factor-based
functions where coefficients c and d are for gasoline, CNG, strong
hybrid vehicles and PHEVs. See Draft TSD Chapter 1.2.1.

                               Table III-28--HDPUV (CI Vehicle) Target Function Coefficients for Alternative HDPUV14 \480\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2030            2031            2032            2033            2034            2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
e.......................................................       0.0002939       0.0002528       0.0002174       0.0001870       0.0001608       0.0001383
f.......................................................           2.264           1.947           1.675           1.440           1.239           1.065
--------------------------------------------------------------------------------------------------------------------------------------------------------

                               Table III-29--HDPUV (SI Vehicle) Target Function Coefficients for Alternative HDPUV14 \481\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2030            2031            2032            2033            2034            2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
c.......................................................       0.0003571       0.0003071       0.0002641       0.0002271       0.0001953       0.0001680
d.......................................................           2.749           2.364           2.033           1.748           1.503           1.293
--------------------------------------------------------------------------------------------------------------------------------------------------------

    These equations are represented graphically below:
    [GRAPHIC] [TIFF OMITTED] TP17AU23.067

[GRAPHIC] [TIFF OMITTED] TP17AU23.068

BILLING CODE 4910-59-C

IV. Effects of the Regulatory Alternatives

A. Effects on Vehicle Manufacturers

1. Passenger Cars and Light Trucks
    Each regulatory alternative considered in this proposal, aside from
the No-Action Alternative, would increase the stringency of both
passenger car and light truck CAFE standards during MYs 2027-2032 (with
MY 2032 being an augural standard). To estimate the potential effects
of each of these alternatives, NHTSA has, as with all recent
rulemakings, assumed that standards would continue unchanged after the
last model year to be covered by proposed CAFE targets (in this case an
augural MY, 2032). NHTSA recognizes that it is possible that the size
and composition of the fleet (i.e., in terms of distribution across the
range of vehicle footprints) could change over time, affecting the
average fuel economy requirements under both the passenger car and
light truck standards, and for the overall fleet. If fleet changes
ultimately differ from NHTSA's projections, average requirements would
differ from NHTSA's projections.
    Following are the estimated required average fuel economy values
for the passenger car, light truck, and total fleets for each action
alternative that NHTSA considered alongside values for the No-Action
alternative.

                                     Table IV-1--Estimated Required Average Fuel Economy (MPG), by Regulatory Fleet
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Model year                      2022            2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Passenger Car
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................            44.1            58.8            58.8            58.8            58.8            58.8            58.8
PC1LT3..................................            44.1            59.4            60.0            60.6            61.2            61.8            62.4
PC2LT4..................................            44.1            60.0            61.2            62.5            63.7            65.1            66.4
PC3LT5..................................            44.1            60.6            62.5            64.4            66.4            68.5            70.6
PC6LT8..................................            44.1            62.5            66.5            70.8            75.3            80.1            85.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Light Truck
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................            32.1            42.6            42.6            42.6            42.6            42.6            42.6
PC1LT3..................................            32.1            43.9            45.3            46.7            48.1            49.6            51.2
PC2LT4..................................            32.1            44.4            46.2            48.2            50.2            52.2            54.4
PC3LT5..................................            32.1            44.9            47.2            49.7            52.3            55.1            58.0
PC6LT8..................................            32.1            46.3            50.3            54.7            59.5            64.6            70.3
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                    Table IV-2--Estimated Required Average Fuel Economy (MPG), Total Light-Duty Fleet
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Model year                      2022            2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................            35.8            46.7            46.7            46.7            46.7            46.7            46.7
PC1LT3..................................            35.8            47.9            49.1            50.3            51.6            53.0            54.3
PC2LT4..................................            35.8            48.4            50.1            51.9            53.8            55.7            57.8
PC3LT5..................................            35.8            48.9            51.2            53.5            56.1            58.7            61.5
PC6LT8..................................            35.8            50.5            54.5            58.9            63.7            68.9            74.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Manufacturers do not always comply exactly with each CAFE standard
in each MY. To date, some manufacturers have tended to regularly exceed
one or both requirements.\482\ Many manufacturers make use of EPCA's
provisions allowing CAFE compliance credits to be applied when a
fleet's CAFE level falls short of the corresponding requirement in a
given MY.\483\ Some manufacturers have paid civil penalties (i.e.,
fines) required under EPCA when a fleet falls short of a standard in a
given MY and the manufacturer lacks compliance credits sufficient to
address the compliance shortfall. As discussed in the accompanying PRIA
and Draft TSD, NHTSA simulates manufacturers' responses to each
alternative given a wide range of input estimates (e.g., technology
cost and efficacy, fuel prices), and, per EPCA requirements, setting
aside the potential that any manufacturer would respond to CAFE
standards in MYs 2027-2032 by applying CAFE compliance credits or
considering the fuel economy attributable to alternative fuel
sources.\484\ Many of these inputs are subject to uncertainty, and, in
any event, as in all CAFE rulemakings, NHTSA's analysis simply
illustrates one set of ways manufacturers could potentially respond to
each regulatory alternative. For this proposal, NHTSA estimates that
manufacturers' responses to standards defining each alternative could
lead average fuel economy levels to increase through MY 2032, as shown
in the following tables.
---------------------------------------------------------------------------

    \482\ Overcompliance can be the result of multiple factors
including projected ``inheritance'' of technologies (e.g., changes
to engines shared across multiple vehicle model/configurations)
applied in earlier MYs, future technology cost reductions (e.g.,
decreased techology costs due to learning), and changes in fuel
prices that affect technology cost effectiveness. As in all past
rulemakings over the last decade, NHTSA assumes that beyond fuel
economy improvements necessitated by CAFE standards, EPA-GHG
standards, and ZEV mandates, manufacturers may also improve fuel
economy via technologies that would pay for themselves within the
first 30 months of vehicle operation.
    \483\ For additional detail on the creation and use of
compliance credits, see Chapters 1.1 and <IP_ADDRESS> of the accompanying
Draft TSD.
    \484\ In the case of battery-electric vehicles, this means BEVs
will not be built in response to the proposed standards. For plug-in
hybrid vehicles, this means only the gasoline-powered operation
(i.e., non-electric fuel economy, or charge sustaining mode
operation only) is considered when selecting technology to meet the
proposed standards.

                                     Table IV-3--Estimated Achieved Average Fuel Economy (MPG), by Regulatory Fleet
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Model year                      2022            2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Passenger Car
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................            47.1            63.0            64.4            65.8            67.5            69.1            70.3
PC1LT3..................................            47.1            63.2            64.8            66.7            68.4            70.3            71.5
PC2LT4..................................            47.1            63.5            65.3            67.5            69.3            71.3            72.8
PC3LT5..................................            47.1            63.5            65.8            68.1            70.5            73.0            74.8
PC6LT8..................................            47.1            63.6            67.5            71.1            74.8            78.9            83.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Light Truck
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................            31.9            43.4            44.1            45.2            46.2            47.3            48.1
PC1LT3..................................            31.9            44.2            45.5            47.2            48.4            50.2            51.5
PC2LT4..................................            31.9            44.2            45.7            47.5            49.0            50.9            52.4
PC3LT5..................................            31.9            44.3            46.0            47.9            49.6            51.7            53.5
PC6LT8..................................            31.9            44.3            46.1            48.3            50.3            52.6            55.2
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                    Table IV-4--Estimated Achieved Average Fuel Economy (MPG), Total Light-Duty Fleet
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Model year                      2022            2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................            36.4            48.2            49.0            50.2            51.3            52.6            53.6
PC1LT3..................................            36.4            48.9            50.2            51.9            53.3            55.2            56.5
PC2LT4..................................            36.4            49.0            50.5            52.4            54.0            56.0            57.6
PC3LT5..................................            36.4            49.0            50.8            52.8            54.7            57.0            58.9
PC6LT8..................................            36.4            49.0            51.2            53.7            56.1            58.9            62.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    While these increases in average fuel economy reflect currently
estimated changes in the composition of the fleet (i.e., the relative
shares of passenger cars and light trucks), they result almost wholly
from the projected application of fuel-saving technology. As mentioned
above, NHTSA's analysis merely illustrates one set of ways
manufacturers could potentially respond to each regulatory alternative.
Manufacturers' actual responses will almost assuredly differ from
NHTSA's current simulations.
    The SHEV share of the LD fleet initially (i.e., in MY 2022) is
relatively low, but increases to approximately 25 percent by the
beginning of the proposed regulatory period. Across action
alternatives, SHEV penetration rates increase as alternatives become
more stringent, in both the passenger car and light truck fleets. SHEVs
are estimated to make up a larger portion of light truck fleet than
passenger car fleet across MYs 2027-2032. While their market shares do
not increase to the

levels of SHEVs, PHEVs make up approximately 10 percent of the
estimated light truck fleet in the three most stringent action
alternatives.

                            Table IV-5--Estimated Strong Hybrid Electric Vehicle (SHEV) Penetration Rate, by Regulatory Fleet
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Model year                      2022            2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Passenger Car
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................             5.4            13.0            13.5            13.5            13.0            12.7            12.8
PC1LT3..................................             5.4            14.3            15.7            16.0            15.4            16.1            16.1
PC2LT4..................................             5.4            15.5            17.5            20.7            20.6            20.6            20.6
PC3LT5..................................             5.4            15.5            18.6            22.1            23.2            24.8            25.1
PC6LT8..................................             5.4            15.5            27.0            33.2            37.8            44.1            49.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Light Truck
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................             7.8            30.1            30.8            31.6            30.8            26.9            26.2
PC1LT3..................................             7.8            33.3            39.3            41.4            41.4            40.0            40.7
PC2LT4..................................             7.8            33.1            39.5            42.2            43.4            42.6            44.6
PC3LT5..................................             7.8            33.1            41.3            44.1            46.6            45.9            48.2
PC6LT8..................................             7.8            33.4            41.4            46.0            47.1            46.8            51.6
--------------------------------------------------------------------------------------------------------------------------------------------------------

                          Table IV-6--Estimated Strong Hybrid Electric Vehicle (SHEV) Penetration Rate, Total Light-Duty Fleet
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Model year                      2022            2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................             6.9            24.6            25.3            25.9            25.1            22.3            21.9
PC1LT3..................................             6.9            27.3            31.9            33.5            33.2            32.3            32.8
PC2LT4..................................             6.9            27.5            32.6            35.5            36.2            35.6            36.9
PC3LT5..................................             6.9            27.5            34.1            37.2            39.2            39.2            40.7
PC6LT8..................................             6.9            27.7            36.9            42.0            44.2            45.9            51.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

                           Table IV-7--Estimated Plug-in Hybrid-Electric Vehicle (PHEV) Penetration Rate, by Regulatory Fleet
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Model year                      2022            2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Passenger Car
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................             1.2             0.0             0.0             0.0             0.0             0.0             0.0
PC1LT3..................................             1.2             0.0             0.0             0.0             0.0             0.0             0.0
PC2LT4..................................             1.2             0.0             0.0             0.0             0.0             0.0             0.0
PC3LT5..................................             1.2             0.0             0.0             0.0             0.1             0.1             0.1
PC6LT8..................................             1.2             0.0             0.0             0.2             0.9             1.1             1.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Light Truck
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................             2.0             0.6             0.6             1.1             1.1             4.3             4.3
PC1LT3..................................             2.0             2.6             2.9             4.3             4.6             7.7             9.1
PC2LT4..................................             2.0             2.9             3.6             5.7             6.1             9.4            11.0
PC3LT5..................................             2.0             2.9             2.9             5.3             5.6             9.3            11.6
PC6LT8..................................             2.0             2.9             3.0             6.4             9.4            13.6            16.8
--------------------------------------------------------------------------------------------------------------------------------------------------------

                          Table IV-8--Estimated Plug-in Hybrid-Electric Vehicle (PHEV) Penetration Rate, Total Light-Duty Fleet
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Model year                      2022            2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................             1.7             0.4             0.4             0.8             0.8             2.9             2.9
PC1LT3..................................             1.7             1.8             2.0             2.9             3.1             5.2             6.2
PC2LT4..................................             1.7             2.0             2.5             3.9             4.1             6.4             7.5
PC3LT5..................................             1.7             2.0             2.0             3.6             3.9             6.3             7.9
PC6LT8..................................             1.7             2.0             2.1             4.5             6.8             9.6            11.8
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Due to the statutory constraints imposed on the analysis by EPCA
that exclude consideration of AFVs, BEVs are not a compliance option
during the standard setting years. As seen in Table IV-9 and Table IV-
10, BEV penetration increases across MYs in the No-Action Alternative.
During the standard setting years, BEVs are only added to account for
manufacturers' expected response to state ZEV mandates. In MYs outside
of the standard setting years, BEVs may be added to the No-Action
Alternative if they are profit-maximizing for manufacturers to produce
for reasons other than the CAFE standards; however, the number of
vehicles added in the non-standard-setting years on this basis are very
minimal and expected compliance with state ZEV mandates remains
responsible for the majority of

BEVs produced during those years. The action alternatives show nearly
the same BEV penetration rates as the No-Action Alternative, although
in some cases there is a slight deviation, despite no new BEVs entering
the fleet, due to rounding in some MYs where fewer vehicles are being
sold in response to the proposed standards and altering fleet shares.

                               Table IV-9--Estimated Battery Electric Vehicle (BEV) Penetration Rate, by Regulatory Fleet
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Model year                      2022            2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Passenger Car
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................            12.4            32.0            33.4            35.5            38.1            40.4            42.2
PC1LT3..................................            12.4            32.0            33.4            35.6            38.1            40.5            42.2
PC2LT4..................................            12.4            32.0            33.4            35.6            38.1            40.5            42.2
PC3LT5..................................            12.4            32.0            33.4            35.6            38.1            40.5            42.2
PC6LT8..................................            12.4            32.0            33.4            35.6            38.1            40.5            42.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Light Truck
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................             0.7            17.1            18.5            20.4            22.9            25.5            27.5
PC1LT3..................................             0.7            17.2            18.5            20.4            23.0            25.5            27.5
PC2LT4..................................             0.7            17.2            18.5            20.4            23.0            25.5            27.5
PC3LT5..................................             0.7            17.2            18.5            20.5            23.0            25.5            27.5
PC6LT8..................................             0.7            17.2            18.5            20.5            23.0            25.5            27.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

                             Table IV-10--Estimated Battery Electric Vehicle (BEV) Penetration Rate, Total Light-Duty Fleet
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Model year                      2022            2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................             5.2            21.9            23.2            25.2            27.7            30.3            32.3
PC1LT3..................................             5.2            21.9            23.2            25.2            27.8            30.3            32.3
PC2LT4..................................             5.2            21.9            23.2            25.2            27.8            30.3            32.3
PC3LT5..................................             5.2            21.9            23.2            25.2            27.8            30.3            32.3
PC6LT8..................................             5.2            21.9            23.2            25.2            27.7            30.3            32.3
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The PRIA provides a longer summary of NHTSA's estimates of
manufacturers' potential application of fuel-saving technologies
(including other types of technologies, such as advanced transmissions,
aerodynamic improvements, and reduced vehicle mass) in response to each
regulatory alternative. Appendices I and II of the accompanying PRIA
provide more detailed and comprehensive results, and the underlying
CAFE Model output files provide all the information used to construct
these estimates, including the specific combination of technologies
estimated to be applied to every vehicle model/configuration in each of
MYs 2022-2050.
    NHTSA's analysis shows manufacturers' regulatory costs for
compliance with the proposed CAFE standards, combined with existing EPA
GHG standards \485\ and state ZEV mandates,\486\ not surprisingly
increasing more under the more stringent alternatives as more fuel-
saving technologies would be required. NHTSA estimates manufacturers'
cumulative regulatory costs across MYs 2027-2032 could total $187b
under the No-Action Alternative, and an additional $45b, $63b, $91b,
and $177b under alternatives PC1LT3, PC2LT4, PC3LT5, and PC6LT8,
respectively, when accounting for fuel-saving technologies added under
the simulation for each regulatory alternative (including AC
improvements and other off-cycle technologies), and also accounting for
CAFE civil penalties that NHTSA estimates some manufacturers could
elect to pay rather than achieving full compliance with the proposed
CAFE targets in some MYs in some fleets. The table below shows how
these costs are estimated to vary among manufacturers, accounting for
differences in the quantities of vehicles produced for sale in the U.S.
Appendices I and II of the accompanying PRIA present results separately
for each manufacturer's passenger car and light truck fleets in each MY
under each regulatory alternative, and the underlying CAFE Model output
files also show results specific to manufacturers' domestic and
imported car fleets.
---------------------------------------------------------------------------

    \485\ EPA's proposed MY 2027-2032 CO2 standards were
not modeled for this NPRM combined with CAFE and FE new standards.
    \486\ NHTSA does not model state GHG programs outside of ZEV.
See Chapter <IP_ADDRESS> of the accompanying Draft TSD for details about
how NHTSA models anticipated manufacturer compliance with
California's ZEV program.

                        Table IV-11--Estimated Cumulative Costs ($b) During MYs 2027-2032
----------------------------------------------------------------------------------------------------------------
                                                                       Relative to no action
          Manufacturer               No action   ---------------------------------------------------------------
                                                      PC1LT3          PC2LT4          PC3LT5          PC6LT8
----------------------------------------------------------------------------------------------------------------
BMW.............................             4.2             0.2             0.5             0.9             2.9
Ford............................            28.3             8.2            11.1            13.0            24.3
General Motors..................            26.7            15.1            17.5            22.3            33.3
Honda...........................            13.5             1.1             1.7             4.9            12.8
Hyundai.........................             9.5             8.6            10.4            11.8            17.5

Kia.............................             4.2             3.3             6.3             8.6            12.9
Jaguar--Land Rover..............             0.9             0.3             0.5             0.6             1.1
Karma...........................             0.0             0.0             0.0             0.0             0.0
Lucid...........................             0.0             0.0             0.0             0.0             0.0
Mazda...........................             2.6             0.0             0.1             5.7             8.7
Mercedes-Benz...................             3.8             0.3             0.6             1.0             2.7
Mitsubishi......................             1.2             0.3             0.4             0.8             1.5
Nissan..........................            14.8             1.2             2.7             3.9             9.2
Stellantis......................            31.5             4.8             8.5            11.3            25.0
Subaru..........................            11.3             0.0             0.0             0.0             2.9
Tesla...........................             0.0             0.0             0.0             0.0             0.0
Toyota..........................            25.3            -0.1             0.1             2.6            14.6
Volvo...........................             0.8             0.3             0.4             0.6             1.5
VWA.............................             8.6             1.2             2.0             2.9             6.7
                                 -------------------------------------------------------------------------------
    Industry Total..............           187.3            44.9            62.9            90.8           177.4
----------------------------------------------------------------------------------------------------------------

    As discussed in the TSD, these estimates reflect technology cost
inputs that, in turn, reflect a ``markup'' factor that includes
manufacturers' profits. In other words, if costs to manufacturers are
reflected in vehicle price increases, NHTSA estimates that the average
costs to new vehicle purchasers could increase through MY 2032 as
summarized in Table IV-12 and Table IV-13.

                                   Table IV-12--Estimated Average Per-Vehicle Regulatory Cost ($), by Regulatory Fleet
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Model year                      2022            2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Passenger Car
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................             159           1,462           1,412           1,389           1,386           1,383           1,312
PC1LT3..................................             159           1,782           1,861           1,867           1,847           1,817           1,731
PC2LT4..................................             159           1,847           1,966           2,087           2,069           2,033           1,966
PC3LT5..................................             159           1,964           2,136           2,373           2,391           2,441           2,517
PC6LT8..................................             159           2,166           2,616           3,175           3,671           4,039           4,393
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Light Truck
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................             125           2,248           2,239           2,270           2,302           2,484           2,438
PC1LT3..................................             125           2,555           2,696           2,805           2,886           3,078           3,125
PC2LT4..................................             125           2,609           2,826           2,992           3,122           3,369           3,502
PC3LT5..................................             125           2,732           2,990           3,213           3,441           3,740           4,232
PC6LT8..................................             125           2,896           3,360           3,922           4,628           5,281           6,118
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                 Table IV-13--Estimated Average Per-Vehicle Regulatory Cost ($), Total Light-Duty Fleet
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Model year                      2022            2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................             138           1,998           1,977           1,993           2,012           2,132           2,077
PC1LT3..................................             138           2,309           2,432           2,510           2,558           2,676           2,678
PC2LT4..................................             138           2,367           2,555           2,708           2,790           2,942           3,008
PC3LT5..................................             138           2,488           2,720           2,950           3,110           3,326           3,679
PC6LT8..................................             138           2,664           3,126           3,689           4,328           4,886           5,562
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Table IV-14 shows how these costs could vary among manufacturers,
suggesting that disparities could increase as the stringency of
standards increases.

       Table IV-14--Average Manufacturer Per-Vehicle Costs by Alternative, Total Light-Duty Fleet, MY 2032
                                                       [$]
----------------------------------------------------------------------------------------------------------------
          Manufacturer               No action        PC1LT3          PC2LT4          PC3LT5          PC6LT8
----------------------------------------------------------------------------------------------------------------
BMW.............................           2,066           2,150           2,357           2,646           4,529
Ford............................           2,384           3,165           3,720           4,183           6,327
General Motors..................           2,422           4,095           4,469           5,528           7,398

Honda...........................           1,467           1,565           1,701           2,069           3,967
Hyundai.........................           1,786           3,312           3,703           5,390           7,632
Kia.............................           1,151           2,165           3,387           5,888           7,856
Jaguar--Land Rover..............           1,819           2,657           3,189           3,741           5,697
Karma...........................          -3,543          -3,543          -3,543          -3,543          -3,543
Lucid...........................             -62             -62             -62             -62             -62
Mazda...........................           2,303           2,330           2,366           7,266          11,798
Mercedes-Benz...................           2,470           2,653           2,836           3,247           5,262
Mitsubishi......................           1,421           1,969           2,057           3,201           5,088
Nissan..........................           2,363           2,558           2,902           3,203           5,010
Stellantis......................           2,956           3,807           4,388           4,892           7,459
Subaru..........................           2,384           2,384           2,384           2,389           3,292
Tesla...........................              13              13              13              13              13
Toyota..........................           1,794           1,794           1,867           2,166           3,679
Volvo...........................           1,202           1,517           1,768           2,172           4,068
VWA.............................           2,249           2,635           2,913           3,360           5,346
                                 -------------------------------------------------------------------------------
    Industry Average............           2,077           2,678           3,008           3,679           5,562
----------------------------------------------------------------------------------------------------------------

    NHTSA estimates that although projected fuel savings under the more
stringent regulatory alternatives could tend to increase new vehicle
sales, this tendency could be outweighed by the opposing response to
higher prices, such that new vehicle sales could decline slightly under
the more stringent alternatives. The magnitude of these fuel savings
and vehicle price increases depends on manufacturer compliance
decisions, especially technology application. In the event that
manufacturers select technologies with lower prices and/or higher fuel
economy improvements, vehicle sales effects could differ. Draft TSD
Chapter <IP_ADDRESS> discusses NHTSA's approach to estimating new vehicle
sales, including NHTSA's estimate that new vehicle sales could recover
from 2020's aberrantly low levels.
[GRAPHIC] [TIFF OMITTED] TP17AU23.069

    While these slight reductions in new vehicle sales tend to reduce
projected automobile industry labor by small margins, NHTSA estimates
that the cost increases could reflect an underlying increase in
employment to produce additional fuel-saving technology, such that
automobile industry labor could remain about the same under each of the
four regulatory alternatives.

[GRAPHIC] [TIFF OMITTED] TP17AU23.070

    The accompanying TSD discusses NHTSA's approach to estimating
automobile industry employment, and the accompanying PRIA Chapter 8.2
(and its Appendices I and II) and CAFE Model output files provide more
detailed results of NHTSA's LD analysis.
2. Heavy-Duty Pickups and Vans
    NHTSA is proposing an increase in HDPUV fuel efficiency standards
for MYs 2030-2035 relative to the existing standards set in 2016.
Unlike the LD CAFE program, NHTSA may consider AFVs when setting
maximum feasible average standards for HDPUVs. Additionally, for
purposes of calculating average fuel efficiency for HDPUVs, NHTSA
considers EVs, fuel cell vehicles, and the proportion of electric
operation of EVs and PHEVs that is derived from electricity that is
generated from sources that are not onboard the vehicle to have a fuel
efficiency value of 0 grams/mile. Each of the regulatory alternatives
that NHTSA is considering in this proposal would increase the
stringency of fuel efficiency standards for HDPUVs starting in MY 2030,
with increases each year through MY 2035.
    NHTSA recognizes that it is possible that the size and composition
of the fleet (i.e., in terms of vehicle attributes that impact
calculation of standards for averaging sets) could change over time,
affecting the currently-estimated average fuel efficiency requirements.
If fleet changes ultimately differ from NHTSA's projections, average
requirements could, therefore, also differ from NHTSA's projections.
The table below includes the estimated required average fuel efficiency
values for the HDPUV fleet in each of the regulatory alternatives
considered in this proposal.

                                 Table IV-15--Estimated Required Average Fuel Efficiency (gal/100mi), Total HDPUV Fleet
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Model year                      2022            2030            2031            2032            2033            2034            2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................           5.497           4.920           5.003           5.002           4.962           4.962           4.965
HDPUV4..................................           5.497           4.723           4.610           4.425           4.214           4.046           3.886
HDPUV10.................................           5.497           4.427           4.051           3.646           3.255           2.930           2.638
HDPUV14.................................           5.497           4.231           3.684           3.167           2.702           2.324           1.999
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As with the LD program, manufacturers do not always comply exactly
with each fuel efficiency standard in each MY. Manufacturers may bank
credits from overcompliance in one year that may be used to cover
shortfalls in up to five future MYs. Manufacturers may also carry
forward credit deficits for up to three MYs. If a manufacturer is still
unable to address the shortfall, NHTSA may assess civil penalties. As
discussed in the accompanying PRIA and Draft TSD, NHTSA simulates
manufacturers' responses to each alternative given a wide range of
input estimates (e.g., technology cost and effectiveness, fuel prices,
electrification technologies). For this proposed rule, NHTSA estimates
that manufacturers' responses to standards defining each alternative
could lead average fuel efficiency levels to improve through MY 2035,
as shown in the following tables.

                                 Table IV-16--Estimated Achieved Average Fuel Efficiency (gal/100mi), Total HDPUV Fleet
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Model year                      2022            2030            2031            2032            2033            2034            2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Action...............................           5.528           3.270           2.771           2.766           2.229           2.229           2.225
HDPUV4..................................           5.528           3.269           2.769           2.764           2.227           2.227           2.223
HDPUV10.................................           5.528           3.266           2.764           2.759           2.160           2.157           2.153
HDPUV14.................................           5.528           3.265           2.632           2.627           1.972           1.972           1.878
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Table IV-16 displays the projected achieved FE levels for the HDPUV
fleet through MY 2035. Estimates of achieved levels are very similar
between the No-Action Alternative and the least stringent Action
Alternative. The narrow band of estimated average achieved levels in
Table IV-16 is primarily due to several factors. Relative to the LD
fleet, the HDPUV fleet (i) represents a smaller number of vehicles,
(ii) includes fewer manufacturers, and (iii) is composed of a smaller
number of manufacturer product lines. Technology choices for an
individual manufacturer or individual product line can therefore have a
large effect on fleet-wide average fuel efficiency. Second, Table IV-17
shows that in the No-Action Alternative a substantial portion of the
fleet converts to an electrified powertrain (e.g., SHEV, PHEV, BEV)
between MY 2022 and MY 2030. This reduces the availability of, and need
for,\487\ additional fuel efficiency improvement to meet more stringent
standards.
---------------------------------------------------------------------------

    \487\ The need for further improvements in response to more
stringent HDPUV standards is further reduced by the fact that NHTSA
regulations currently grant BEVs (and the electric-only operation of
PHEVs) an HDPUV compliance value of 0 gallons/100 miles, a
significant adjustment on which NHTSA seeks comment elsewhere in
this document.

                                 Table IV-17: Application Levels of Selected Technologies by Model Year for HDPUV Fleet
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  2022     2030     2031     2032     2033     2034     2035     2036     2037     2038
                                                                  (%)      (%)      (%)      (%)      (%)      (%)      (%)      (%)      (%)      (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Technology Application Levels in the No-Action Alternative
--------------------------------------------------------------------------------------------------------------------------------------------------------
Strong Hybrid (all types).....................................        0       26       36       36       26       26       26       26       26       26
PHEV (all types)..............................................        0        0        4        4       13       13       13       13        9        9
BEV (all types)...............................................        6       31       35       35       41       41       41       41       45       45
Advanced Engines..............................................       40       21        7        6        3        3        3        3        3        3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                           Technology Application Levels Relative to the No-Action Alternative
--------------------------------------------------------------------------------------------------------------------------------------------------------
HDPUV4:
Strong Hybrid (all types).....................................  .......        0        0        0        0        0        0        0        0        0
PHEV (all types)..............................................  .......        0        0        0        0        0        0        0        0        0
BEV (all types)...............................................  .......        0        0        0        0        0        0        0        0        0
Advanced Engines..............................................  .......        0        0        0        0        0        0        0        0        0
HDPUV10:
Strong Hybrid (all types).....................................  .......        0        0        0        0        0        0        0        0        0
PHEV (all types)..............................................  .......        0        0        0        1        1        1        1        1        1
BEV (all types)...............................................  .......        0        0        0        0        0        0        0        0        0
Advanced Engines..............................................  .......        0        0        0        1        2        2        2        2        2
HDPUV14:
Strong Hybrid (all types).....................................  .......        0        0        0        0        0        0        0        0        0
PHEV (all types)..............................................  .......        0        0        0        2        2        4        4        4        4
BEV (all types)...............................................  .......        0        3        3        3        3        3        3        3        3
Advanced Engines..............................................  .......        0       -2       -2        4        4       10       10       10       10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: ``advanced engines'' represents the combined penetration of advanced cylinder deactivation, advanced turbo, variable compression ratio, high
  compression ratio, and diesel engines.\488\

    In line with the technology application trends above, regulatory
costs do not differ by large amounts between the No-Action Alternative
and the proposed action alternatives. Most of the differences in
regulatory costs occur in the HDPUV14 alternative and are concentrated
in a few manufacturers (e.g., Ford, GM), where the compliance modeling
projects increases in PHEV, BEV, and advanced engine technologies.
---------------------------------------------------------------------------

    \488\ Specifically, this includes technologies with the
following codes in the CAFE Model: TURBO0, TURBOE, TURBOD, TURBO1,
TURBO2, ADEACD, ADEACS, HCR, HRCE, HCRD, VCR, VTG, VTGE, TURBOAD,
ADSL, DSLI.

                 Table IV-18--Total Regulatory Cost by Manufacturer, MY 2022-2038 (in billions)
----------------------------------------------------------------------------------------------------------------
                                                                               Relative to no action
                  Manufacturer                       No action   -----------------------------------------------
                                                                      HDPUV4          HDPUV10         HDPUV14
----------------------------------------------------------------------------------------------------------------
Ford............................................           11.99            0.03            0.07            0.71
GM..............................................            0.66            0.00            0.86            4.02
Mercedes-Benz...................................            0.67            0.00            0.00            0.00

Nissan..........................................            1.17            0.00            0.00            0.00
Rivian..........................................            0.00            0.00            0.00            0.00
Stellantis......................................            4.61            0.00            0.00            0.00
                                                 ---------------------------------------------------------------
    Total.......................................           19.11            0.03            0.93            4.72
----------------------------------------------------------------------------------------------------------------

    On a per-vehicle basis, costs are minimal in HDPUV4 and increase
with stringency and across MYs in HDPUV10 and HDPUV14.

                Table IV-19--Estimated Average Per-Vehicle Regulatory Cost ($), Total HDPUV Fleet