States,'' June 1, 2020. Available at https://www.usgs.gov/data/cobalt-deposits-united-states.
    \653\ U.S. Geological Survey, ``Mineral Commodity Summaries
2022--Lithium'', January 2022. Available at https://pubs.usgs.gov/periodicals/mcs2022/mcs2022-lithium.pdf.
    \654\ U.S. Geological Survey, ``Lithium Deposits in the United
States,'' June 1, 2020. Available at https://www.usgs.gov/data/lithium-deposits-united-states.
    \655\ Investing News, ``Which Lithium Juniors Have Supply Deals
With EV Makers?,'' February 8, 2023. Accessed on March 24, 2023 at
https://investingnews.com/lithium-juniors-ev-supply-deals/ deals/.
    \656\ U.S. Geological Survey, ``USGS Updates Mineral Database
with Graphite Deposits in the United States,'' February 28, 2022.
---------------------------------------------------------------------------

    As described in the following sections, the development of mining
and processing capacity in the U.S. is a primary focus of efforts on
the part of both industry and the Administration toward building a
robust domestic supply chain for electrified vehicle production and
will be greatly facilitated by the provisions of the BIL and the IRA as
well as large private business investments that are already underway
and continuing.
ii. Battery and Mineral Production Capacity
    Although much of the content needed for electrified vehicle
manufacture is currently imported from other countries, a number of
prominent examples of rapid U.S. manufacturing growth and supply chain
development already indicate that this is rapidly changing. For
example, even though most global battery manufacturing capacity is
currently located outside the U.S., most of the batteries and cells
present in the domestic PEV fleet were manufactured in the U.S.
Specifically, about 57 percent of cells and 84 percent of assembled
packs sold in the U.S. from 2010 to 2021 were produced in the
U.S.657 658 This indicates that U.S. PEV production has not
been exclusively reliant on foreign manufacture of batteries and cells,
and suggests that it need not become so as PEV penetration increases.
Many manufacturers are rapidly building battery and cell manufacturing
facilities in the U.S. and are also taking steps to secure domestically
sourced minerals and related commodities to supply production for these
plants. Highlights of these developments and what they mean for the
domestic supply chain going forward are described in this section.
---------------------------------------------------------------------------

    \657\ Argonne National Laboratory, ``Lithium-Ion Battery Supply
Chain for E-Drive Vehicles in the United States: 2010-2020,'' ANL/
ESD-21/3, March 2021.
    \658\ U.S. Department of Energy, ``Vehicle Technologies Office
Transportation Analysis Fact of the Week #1278, Most Battery Cells
and Battery Packs in Plug-in Vehicles Sold in the United States From
2010 to 2021 Were Domestically Produced,'' February 20, 2023.
---------------------------------------------------------------------------

    Battery manufacturing, in terms of constructed and planned plant
capacity for assembly of cells and packs, does not appear to pose a
critical constraint to expected uptake of PEVs, either globally or
domestically. A 2021 report from Argonne National Laboratory (ANL)
\659\ examined the state of the global supply

chain for electrified vehicles and included a comparison of recent
projections of future global battery manufacturing capacity and
projections of future global battery demand from various analysis firms
out to 2030, as seen in Figure 30. The three most recent projections of
capacity (from BNEF, Roland Berger, and S&P Global in 2020-2021) that
were collected by ANL exceed the corresponding projections of demand by
a significant margin in every year for which they were projected,
suggesting that global battery manufacturing capacity is generally
expected to respond strongly to increasing demand.
---------------------------------------------------------------------------

    \659\ Argonne National Laboratory, ``Lithium-Ion Battery Supply
Chain for E-Drive Vehicles in the United States: 2010-2020,'' ANL/
ESD-21/3, March 2021.
[GRAPHIC] [TIFF OMITTED] TP05MY23.034

    Global demand for zero-emission vehicles has led to widespread and
ongoing investment in manufacturing capacity for the vehicles and their
components, including electric machines, power electronics, and
batteries. The need to further develop a robust domestic supply chain
for these components has accordingly received broad attention in the
industry. As described in Section I.A.2.ii of this Preamble,
manufacturers are increasingly adopting product plans with high levels
of electrification and are continuing to make very large investments
toward increasing manufacturing capacity and securing sources and
suppliers for critical minerals, materials, and components.
---------------------------------------------------------------------------

    \660\ Argonne National Laboratory, ``Lithium-Ion Battery Supply
Chain for E-Drive Vehicles in the United States: 2010-2020,'' ANL/
ESD-21/3, March 2021.
    \661\ Federal Consortium for Advanced Batteries, ``National
Blueprint for Lithium Batteries 2021-2030,'' June 2021 (Figure 2).
Available at https://www.energy.gov/sites/default/files/2021-06/FCAB%20National%20Blueprint%20Lithium%20Batteries%200621_0.pdf.
---------------------------------------------------------------------------

    As also noted, one analysis indicates that 37 of the world's
automakers are planning to invest a total of almost $1.2 trillion by
2030 toward electrification,\662\ a large portion of which will be used
for construction of manufacturing facilities for vehicles, battery
cells and packs, and materials, supporting up to 5.8 terawatt-hours of
battery production and 54 million BEVs per year globally.\663\
Similarly, an analysis by the Center for Automotive Research shows that
a significant shift in North American investment is occurring toward
electrification technologies, with $36 billion of about $38 billion in
total automaker manufacturing facility investments

announced in 2021 being slated for electrification-related
manufacturing in North America, with a similar proportion and amount on
track for 2022.\664\
---------------------------------------------------------------------------

    \662\ Reuters, ``A Reuters analysis of 37 global automakers
found that they plan to invest nearly $1.2 trillion in electric
vehicles and batteries through 2030,'' October 21, 2022. Accessed on
November 4, 2022 at https://graphics.reuters.com/AUTOS-INVESTMENT/ELECTRIC/akpeqgzqypr/.
    \663\ Reuters, ``Exclusive: Automakers to double spending on
EVs, batteries to $1.2 trillion by 2030,'' October 25, 2022.
Accessed on November 4, 2022 at https://www.reuters.com/technology/exclusive-automakers-double-spending-evs-batteries-12-trillion-by-2030-2022-10-21/.
    \664\ Center for Automotive Research, ``Automakers Invest
Billions in North American EV and Battery Manufacturing
Facilities,'' July 21, 2022. Retrieved on November 10, 2022 at
https://www.cargroup.org/automakers-invest-billions-in-north-american-ev-and-battery-manufacturing-facilities/.
---------------------------------------------------------------------------

    According to the Department of Energy, at least 13 new battery
plants, most of which will include cell manufacturing, are expected to
become operational in the U.S. in the next four years.\665\ Among
these, in partnership with SK Innovation, Ford is building three large
new battery plants in Kentucky and Tennessee \666\ and a fourth in
Michigan.\667\ General Motors is partnering with LG Chem to build
another three plants in Tennessee, Michigan, and Ohio, and considering
another in Indiana. LG Chem has also announced plans for a cathode
material production facility in Tennessee, said to be sufficient to
supply 1.2 million high-performance electric vehicles per year by
2027.\668\ Contemporary Amperex (CATL) is considering construction of
plants in Arizona, Kentucky, and South Carolina. Panasonic, already
partnering with Tesla for its factories in Texas and Nevada, are
planning two new factories in Oklahoma and Kansas. Toyota plans to be
operational with a plant in Greensboro, North Carolina in 2025, and
Volkswagen in Chattanooga, Tennessee at about the same time. According
to a May 2022 forecast by S&P Global, announcements such as these could
result in a U.S. annual manufacturing capacity of 382 GWh by 2025,\669\
or 580 GWh by 2027,\670\ up from roughly 60 GWh671
672 today. A more recent forecast by the Department of
Energy, as shown in Figure 31, illustrates the rapid recent growth in
new plant announcements, estimating that announcements for North
America to date will enable an estimated 838 GWh of annual capacity by
2025, 896 GWh by 2027, and 998 GWh by 2030, the vast majority of which
is cell manufacturing capacity, enough to supply from 10 to 13 million
BEVs per year.\673\
---------------------------------------------------------------------------

    \665\ Department of Energy, Fact of the Week #1217, ``Thirteen
New Electric Vehicle Battery Plants Are Planned in the U.S. Within
the Next Five Years,'' December 20, 2021.
    \666\ Ford Media Center, ``Ford to Lead America's Shift to
Electric Vehicles with New Mega Campus in Tennessee and Twin Battery
Plants in Kentucky; $11.4B Investment to Create 11,000 Jobs and
Power New Lineup of Advanced EVs,'' Press Release, September 27,
2021.
    \667\ Ford Media Center, ``Ford Taps Michigan for New LFP
Battery Plant; New Battery Chemistry Offers Customers Value,
Durability, Fast Charging, Creates 2,500 More New American Jobs,''
Press Release, February 13, 2023.
    \668\ LG Chem, ``LG Chem to Establish Largest Cathode Plant in
US for EV Batteries,'' Press Release, November 22, 2022.
    \669\ S&P Global Market Intelligence, ``US ready for a battery
factory boom, but now it needs to hold the charge,'' October 3,
2022. Accessed on November 22, 2022 at https://www.spglobal.com/
marketintelligence/ en/news-insights/latest-news-headlines /us-
ready-for-a-battery-factory-boom- but-now-it-needs-to- hold-the-
charge-72262329.
    \670\ S&P Global Mobility, ``Growth of Li-ion battery
manufacturing capacity in key EV markets,'' May 20, 2022. Accessed
on November 22, 2022 at https://www.spglobal.com/mobility/en/research- analysis/growth-of-liion-battery- manufacturing-
capacity.html.
    \671\ Federal Consortium for Advanced Batteries, ``National
Blueprint for Lithium Batteries 2021-2030,'' June 2021.
    Available at https://www.energy.gov/sites/default /files/2021-
06/FCAB%20National %20Blueprint%20Lithium %20Batteries%200621_0.pdf.
    \672\ S&P Global Mobility, ``Growth of Li-ion battery
manufacturing capacity in key EV markets,'' May 20, 2022. Accessed
on November 22, 2022 at https://www.spglobal.com/mobility/en/research-analysis/growth-of-liion-battery-manufacturing-capacity.html.
    \673\ Argonne National Laboratory, ``Assessment of Light-Duty
Plug-in Electric Vehicles in the United States, 2010-2021,'' ANL-22/
71, November 2022.
[GRAPHIC] [TIFF OMITTED] TP05MY23.035

    For comparison, Figure 32 shows the annual gross battery production
needed for BEVs in the U.S. new vehicle fleet in the central case of
the Proposal analysis. The annual battery production required for the
compliant fleet generated by OMEGA is about 925 GWh in 2030, less than
the 998 GWh of North American capacity projected for the same year in
Figure 31. Demand reaches about 1,050 GWh per year in 2032. These
figures compare to a maximum of about 620 GWh under the No Action case.
[GRAPHIC] [TIFF OMITTED] TP05MY23.036

    In order to produce at the levels indicated when fully built out,
the North American battery plants represented in Figure 31 will require
access to sufficient inputs in the form of cathode and anode powders,
foils, separators, parts, and other commodities. In conjunction with
these construction plans, manufacturers are also moving to secure
supplies of the minerals and components necessary to produce batteries
at these facilities. For example, Ford has recently moved to secure
sources of raw materials for its battery needs; 674
675 General Motors has signed similar supply chain
agreements, for battery materials 676 677
678 as well as for rare-earth metals for electric machines;
\679\ and Tesla has also moved to secure a domestic lithium
supply.\680\ Announcements in this general vein occur frequently and
are evidence of widespread industry attention to this business need.
---------------------------------------------------------------------------

    \674\ Green Car Congress, ``Ford sources battery capacity and
raw materials for 600K EV annual run rate by late 2023, 2M by end of
2026; adding LFP,'' July 22, 2022.
    \675\ Ford Motor Company, ``Ford Releases New Battery Capacity
Plan, Raw Materials Details to Scale EVs; On Track to Ramp to 600K
Run Rate by '23 and 2M+ by '26, Leveraging Global Relationships,''
Press Release, July 21, 2022.
    \676\ Green Car Congress, ``GM signs major Li-ion supply chain
agreements: CAM with LG Chem and lithium hydroxide with Livent,''
July 26, 2022.
    \677\ Grzelewski, J., ``GM says it has enough EV battery raw
materials to hit 2025 production target,'' The Detroit News, July
26, 2022.
    \678\ Hall, K., ``GM announces new partnership for EV battery
supply,'' The Detroit News, April 12, 2022.
    \679\ Hawkins, A., ``General Motors makes moves to source rare
earth metals for EV motors in North America,'' The Verge, December
9, 2021.
    \680\ Piedmont Lithium, ``Piedmont Lithium Signs Sales Agreement
With Tesla,'' Press Release, September 28, 2020.
---------------------------------------------------------------------------

    In addition, the Inflation Reduction Act (IRA) and the Bipartisan
Infrastructure Law (BIL) are providing significant support to
accelerate these efforts to build out a U.S. supply chain for mineral,
cell, and battery production. The IRA offers sizeable incentives and
other support for further development of domestic and North American
manufacture of these vehicles and components. According to the
Congressional Budget Office, an estimated $30.6 billion will be
realized by manufacturers through the Advanced Manufacturing Production
Credit, which includes a tax credit to manufacturers for battery
production in the U.S. According to one third party estimate based on
information from Benchmark Mineral Intelligence, the recent increase in
U.S. battery manufacturing plant announcements could increase this
figure to $136 billion or more.\681\ Another $6.2 billion or more may
be realized through expansion of the Advanced Energy Project Credit, a
30 percent tax credit for investments in projects that reequip, expand,
or establish certain energy manufacturing facilities.\682\ The IRA also
provides for Clean Vehicle Credits of up to $7,500 toward the purchase
or lease of clean vehicles with significant critical mineral and
battery component content

manufactured in North America. Together, these provisions create a
strong motivation for manufacturers to support the continued
development of a North American supply chain and already appear to be
proving influential on the plans of manufacturers to procure domestic
or North American mineral and component sources and to construct
domestic manufacturing facilities to claim the benefits of the
act.683 684
---------------------------------------------------------------------------

    \681\ Axios.com, ``Axios What's Next,'' February 1, 2023.
Accessed on March 1, 2023 at https://www.axios.com/newsletters/axios-whats-next-1185bdcc-1b58-4a12-9f15-8ffc8e63b11e.html?chunk=0&utm_term=emshare#story0.
    \682\ Congressional Research Service, ``Tax Provisions in the
Inflation Reduction Act of 2022 (H.R. 5376),'' August 10, 2022.
    \683\ Subramanian, P., ``Why Honda's EV battery plant likely
wouldn't happen without new climate credits,'' Yahoo Finance, August
29, 2022.
    \684\ LG Chem, ``LG Chem to Establish Largest Cathode Plant in
US for EV Batteries,'' Press Release, November 22, 2022.
---------------------------------------------------------------------------

    In addition, the BIL provides $7.9 billion to support development
of the domestic supply chain for battery manufacturing, recycling, and
critical minerals.\685\ Notably, it supports the development and
implementation of a $675 million Critical Materials Research,
Development, Demonstration, and Commercialization Program administered
by the Department of Energy (DOE),\686\ and has created numerous other
programs in related areas, such as for example, critical minerals data
collection by the U.S. Geological Survey (USGS).\687\ Provisions extend
across several areas including critical minerals mining and recycling
research, USGS energy and minerals research, rare earth elements
extraction and separation research and demonstration, and expansion of
DOE loan programs in critical minerals and zero-carbon
technologies.688 689 The Department of Energy is working to
facilitate and support further development of the supply chain, by
identifying weaknesses for prioritization and rapidly funding those
areas through numerous programs and funding
opportunities.690 691 692 According to
a final report from the Department of Energy's Li-Bridge alliance,\693\
``the U.S. industry can double its value-added share by 2030 (capturing
an additional $17 billion in direct value-add annually and 40,000 jobs
in 2030 from mining to cell manufacturing), dramatically increase U.S.
national and economic security, and position itself on the path to a
near-circular economy by 2050.'' \694\ The $7.9 billion provided by the
BIL for U.S. battery supply chain projects \695\ represents a total of
about $14 billion when industry cost matching is
considered.696 697 Other recently announced
projects will utilize another $40 billion in private funding.\698\
According to DOE's Li-Bridge alliance, the total of these commitments
already represents more than half of the capital investment that Li-
Bridge considers necessary for supply chain investment to 2030.\699\
---------------------------------------------------------------------------

    \685\ Congressional Research Service, ``Energy and Minerals
Provisions in the Infrastructure Investment and Jobs Act (Pub. L.
117-58)'', February 16, 2022. https://crsreports.congress.gov/product/pdf/R/R47034.
    \686\ Department of Energy, ``Biden-Harris Administration
Launches $675 Million Bipartisan Infrastructure Law Program to
Expand Domestic Critical Materials Supply Chains,'' August 9, 2022.
Available at https://www.energy.gov/articles/biden-harris-administration-launches-675-million-bipartisan-infrastructure-law-program.
    \687\ U.S. Geological Survey, ``Bipartisan Infrastructure Law
supports critical-minerals research in central Great Plains,''
October 26, 2022. Available at https://www.usgs.gov/news/state-news-release/bipartisan-infrastructure-law-supports-critical-minerals-research-central.
    \688\ Congressional Research Service, ``Energy and Minerals
Provisions in the Infrastructure Investment and Jobs Act (Pub. L.
117-58)'', February 16, 2022. https://crsreports.congress.gov/product/pdf/R/R47034.
    \689\ International Energy Agency, ``Infrastructure and Jobs
act: Critical Minerals,'' October 26, 2022. https://www.iea.org/policies/14995-infrastructure-and-jobs-act-critical-minerals.
    \690\ Department of Energy, Li-Bridge, ``Building a Robust and
Resilient U.S. Lithium Battery Supply Chain,'' February 2023.
    \691\ The White House, ``Building Resilient Supply Chains,
Revitalizing American Manufacturing, and Fostering Broad-Based
Growth,'' 100-Day Reviews under Executive Order 14017, June 2021.
    \692\ Federal Consortium for Advanced Batteries, ``National
Blueprint for Lithium Batteries 2021-2030,'' June 2021.
    Available at https://www.energy.gov/sites/default/files/2021-06/FCAB%20National%20Blueprint%20Lithium%20Batteries%200621_0.pdf.
    \693\ https://www.anl.gov/li-bridge.
    \694\ Department of Energy, Li-Bridge, '' Building a Robust and
Resilient U.S. Lithium Battery Supply Chain,'' February 2023.
    \695\ Congressional Research Service, ``Energy and Minerals
Provisions in the Infrastructure Investment and Jobs Act (Pub. L.
117-58)'', February 16, 2022. https://crsreports.congress.gov/product/pdf/R/R47034.
    \696\ Department of Energy, Li-Bridge, ``Building a Robust and
Resilient U.S. Lithium Battery Supply Chain,'' February 2023 (p. 9).
    \697\ Department of Energy, EERE Funding Opportunity Exchange,
EERE Funding Opportunity Announcements. Accessed March 4, 2023 at
https://eere-exchange.energy.gov/Default.aspx#FoaId0596def9-c1cc-478d-aa4f-14b472864eba.
    \698\ Federal Reserve Bank of Dallas, ``Automakers' bold plans
for electric vehicles spur U.S. battery boom,'' October 11, 2022.
Accessed on March 4, 2023 at https://www.dallasfed.org/research/economics/2022/1011.
    \699\ Department of Energy, Li-Bridge, ``Building a Robust and
Resilient U.S. Lithium Battery Supply Chain,'' February 2023 (p. 9).
---------------------------------------------------------------------------

    Further, the DOE Loan Programs Office is administering a major
loans program focusing on extraction, processing and recycling of
lithium and other critical minerals that will support continued market
growth,\700\ through the Advanced Technology Vehicles Manufacturing
(ATVM) Loan Program and Title 17 Innovative Energy Loan Guarantee
Program. This program includes over $20 billion of available loans and
loan guarantees to finance critical materials projects. Some examples
of recent projects, amounting to $3.4 billion in loan support, are
outlined in DRIA <IP_ADDRESS>.
---------------------------------------------------------------------------

    \700\ Department of Energy Loan Programs Office, ``Critical
Materials Loans & Loan Guarantees,'' https://www.energy.gov/sites/default/files/2021-06/DOE-LPO_Program_Handout_Critical_Materials_June2021_0.pdf.
---------------------------------------------------------------------------

    Although predicting mineral supply and demand into the future is
highly uncertain, it is possible to identify general trends likely to
occur in the future. As seen in Figure 33 and Figure 34, preliminary
projections prepared by Li-Bridge for DOE,\701\ and presented to the
Federal Consortium for Advanced Batteries (FCAB) \702\ in November
2022, indicate that global supplies of cathode active material (CAM)
and lithium chemical product are expected to be sufficient through
2035.
---------------------------------------------------------------------------

    \701\ Slides 6 and 7 of presentation by Li-Bridge to Federal
Consortium for Advanced Batteries (FCAB), November 17, 2022.
    \702\ https://www.energy.gov/eere/vehicles/federal-consortium-advanced-batteries-fcab.
---------------------------------------------------------------------------

BILLING CODE 6560-50-P

[GRAPHIC] [TIFF OMITTED] TP05MY23.037

[GRAPHIC] [TIFF OMITTED] TP05MY23.038

BILLING CODE 6560-50-C
    Similarly, the International Energy Agency (IEA) published its
Global EV Outlook 2022 which examined the outlook for supply and demand
for lithium, cobalt, and nickel between 2020 and 2030 under several
demand scenarios.\703\ As shown in Figure 35, it found that the supply
should be sufficient for their ``Stated Policies'' (STEPS) scenario, in
which the projected demand represents ``existing policies and measures,
as well as policy ambitions and targets that have been legislated by
governments around the world,'' and includes ``current EV-related
policies and regulations and future developments based on the expected
impacts of announced deployments and plans from industry

stakeholders.'' Under their ``Announced Pledges'' (APS) scenario, a
higher demand scenario which ``assumes that the announced ambitions and
targets made by governments around the world, including the most recent
ones, are met in full and on time,'' nickel and cobalt would still be
at sufficient supply, but lithium would begin to fall short after 2025.
---------------------------------------------------------------------------

    \703\ International Energy Agency, ``Global EV Outlook 2022,''
p. 185, May 2022.
[GRAPHIC] [TIFF OMITTED] TP05MY23.039

    Although the IEA Global EV Outlook 2022 was published in May 2022,
more recent information indicates that the market is responding
robustly to demand \704\ and lithium supplies are expanding as new
resources are characterized, projects continue through engineering
economic assessments, and others begin permitting or construction. For
example, in October 2022, the IEA projected that global Lithium
Carbonate Equivalent (LCE) production from operating mines and those
under construction would sufficiently meet primary demand until at
least 2028 under the Stated Policies Scenario.\705\ Even 2028 is likely
a very conservative estimate. In March 2023, DOE communicated to EPA
that an ongoing DOE assessment of U.S. lithium resource development
projects had identified additional resources not represented in leading
assessments. For example, DOE determined that a December 2022 BNEF
projection that lithium mine production could meet end-use demand until
at least 2028 did not include additional U.S. resources later
identified by DOE and Argonne National Laboratory.\706\ Specifically,
the BNEF data included only three U.S. projects: Silver Peak (phase I
and II), Rhyolite Ridge (phase I), and Carolina Lithium (phase I). As
depicted in Figure 36, adding to the BNEF assessment, DOE and Argonne
National Laboratory had identified 19 additional lithium production
projects in the United States in addition to the three identified in
the December 2022 BNEF data. Some of these projects are likely to ramp
in before 2030 and if considered in the other projections likely would
advance lithium sufficiency well beyond 2028. For example, the 19 U.S.
projects potentially represent an additional 1,000 kilotons per year
LCE not accounted for in the BNEF analysis,\707\ which would be enough
to meet the BNEF Net-Zero demand projection, as depicted in Figure 36.
Note that these do not include recycling projects, which could increase
domestic lithium supply beyond that shown, nor an additional five U.S.
projects for which potential LCE production capacity is not yet
established. The identification of these additional projects exemplify
the dynamic nature of the industry and the likely conservative aspect
of existing assessments.
---------------------------------------------------------------------------

    \704\ Bloomberg New Energy Finance, ``Lithium-ion Battery Pack
Prices Rise for First Time to an Average of $151/kWh,'' December 6,
2022. Accessed on December 6, 2022 at: https://about.bnef.com/blog/lithium-ion-battery-pack-prices-rise-for-first-time-to-an-average-of-151-kwh/.
    \705\ International Energy Agency, ``Committed mine production
and primary demand for lithium, 2020-2030,'' October 26, 2022.
Accessed on March 9, 2023 at https://www.iea.org/data-and-statistics/charts/committed-mine-production-and-primary-demand-for-lithium-2020-2030.
    \706\ Department of Energy, communication to EPA titled
``Lithium Supplies--additional datapoints and research,'' March 8,
2023. See memorandum to Docket ID No. EPA-HQ-OAR-2022-0829 titled
``DOE Communication to EPA Regarding Critical Mineral Projects.''
    \707\ Department of Energy, communication to EPA titled
``Lithium Supplies--additional datapoints and research,'' March 8,
2023. See Memo to Docket ID No. EPA-HQ-OAR-2022-0829, titled ``DOE
Communication to EPA Regarding Critical Mineral Projects.''

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

[GRAPHIC] [TIFF OMITTED] TP05MY23.040

    Recent unexpected drops (as of March 2023) in lithium prices are
believed to have been the result of robust growth in lithium supply
from developments similar to these,\708\ and further supports the
expectation of a stabilization in commodity prices, which in turn
supports an expectation that sufficient supply will be developed.
---------------------------------------------------------------------------

    \708\ New York Times, ``Falling Lithium Prices Are Making
Electric Cars More Affordable,'' March 20, 2023. Accessed on March
23, 2023 at https://www.nytimes.com/2023/03/20/business/lithium-prices-falling-electric-vehicles.html.
---------------------------------------------------------------------------

    In addition, the Inflation Reduction Act's requirement that
qualification for $3,750 of the Clean Vehicle Credit depends in part on
sourcing of critical minerals from the U.S. or countries with which the
U.S. has a free trade agreement has spurred other countries to consider
action that would expand lithium supply. For example, the European
Union is seeking to promote rapid development of Europe's battery
supply chains by considering targeted measures such as accelerating
permitting processes and encouraging private investment. To these ends
the European Parliament proposed a Critical Raw Materials Act on March
16, 2023, which includes these and other measures to encourage the
development of new supplies of critical minerals not currently
anticipated in market projections.709 710 711
---------------------------------------------------------------------------

    \709\ European Union, ``7th High-Level Meeting of the European
Battery Alliance: main takeaways by the Chair Maro[scaron]
[Scaron]ef[ccaron]ovi[ccaron] and the Council Presidency,'' March 1,
2023. Accessed on March 9, 2023 at https://single-market-economy.ec.europa.eu/system/files/2023-03/Main%20takeaways_7th%20High-Level%20Meeting%20of%20EBA.pdf.
    \710\ New York Times, ``U.S. Eyes Trade Deals With Allies to
Ease Clash Over Electric Car Subsidies,'' February 24, 2023.
    \711\ European Parliament, ``Proposal for a regulation of the
European Parliament and of the Council establishing a framework for
ensuring a secure and sustainable supply of critical raw
materials,'' March 16, 2023. https://single-market-economy.ec.europa.eu/publications/european-critical-raw-materials-act_en.
---------------------------------------------------------------------------

    In DRIA <IP_ADDRESS> and <IP_ADDRESS> we detail these and many other examples
that demonstrate how momentum has picked up in the lithium market since
IEA's May 2022 report. For more discussion, please see DRIA Chapters
<IP_ADDRESS> and <IP_ADDRESS>.
    In the critical mineral analysis outlined in DRIA Chapter <IP_ADDRESS>,
we selected lithium supply as the primary mineral-based limiting factor
in constraining the potential rate of BEV penetration for modeling
purposes. Of the IEA scenarios considered, in those that anticipated a
potential shortfall in any mineral, lithium demand was the first to
show potential for exceeding supply in some scenarios. In addition,
with respect to other cathode and anode minerals, we note that there is
some flexibility in choice of these minerals, as in many cases,
opportunity will exist to reduce cobalt and manganese content or to
substitute with iron-phosphate chemistries that do not utilize nickel,
cobalt or manganese, or use other forms of carbon in the anode, or in
conjunction with silicon. However, all currently produced chemistries
require lithium in the electrolyte and the cathode, and these have no
viable

substitute at this time.\712\ Accordingly, in DRIA <IP_ADDRESS> we focused
on lithium availability as a potential limiting factor on the rate of
growth of PEV production, and thus the most appropriate basis for
establishing a modeling constraint on the rate of PEV penetration into
the fleet over the time frame of the proposed rule. In that analysis,
we conclude that lithium supply is likely to be adequate to meet
anticipated demand as demand increases and supply grows.
---------------------------------------------------------------------------

    \712\ In DRIA <IP_ADDRESS> we discuss the outlook for alternatives to
lithium in battery chemistries that are under development.
---------------------------------------------------------------------------

    Despite recent short-term fluctuations in price, the price of
lithium is expected to stabilize at or near its historical levels by
the mid-2020s.713 714 This perspective is also supported by
proprietary battery price forecasts by Wood Mackenzie that include the
predicted effect of temporarily elevated mineral prices and show
battery costs falling again past 2024.715 716 This is
consistent with the BNEF battery price outlook 2022 which expects
battery prices to start dropping again in 2024, and BNEF's 2022 Battery
Price Survey which predicts that average pack prices should fall below
$100/kWh by 2026.\717\ Taken together these outlooks support the
perspective that lithium is not likely to encounter a critical shortage
as supply responds to meet growing demand. For more discussion of the
mineral supply outlook for the time frame of the proposed rule, see
Chapter <IP_ADDRESS> of the DRIA.
---------------------------------------------------------------------------

    \713\ Sun et al., ``Surging lithium price will not impede the
electric vehicle boom,'' Joule, doi:10.1016/j.joule. 2022.06.028
(https://dx.doi.org/10.1016/j.joule.2022.06.028).
    \714\ Green Car Congress, ``Tsinghua researchers conclude
surging lithium price will not impede EV boom,'' July 29, 2022.
    \715\ Wood Mackenzie, ``Battery & raw materials--Investment
horizon outlook to 2032,'' September 2022 (filename: brms-q3-2022-
iho.pdf). Available to subscribers.
    \716\ Wood Mackenzie, ``Battery & raw materials--Investment
horizon outlook to 2032,'' accompanying data set, September 2022
(filename: brms-data-q3-2022.xlsx). Available to subscribers.
    \717\ Bloomberg New Energy Finance, ``Lithium-ion Battery Pack
Prices Rise for First Time to an Average of $151/kWh,'' December 6,
2022. Accessed on December 6, 2022 at: https://about.bnef.com/blog/lithium-ion-battery-pack-prices-rise-for-first-time-to-an-average-of-151-kwh/.
---------------------------------------------------------------------------

    EPA has considered this information on the development of the
supply chain to meet future PEV production needs and has represented
this information in developing modeling constraints for use by the
OMEGA model that represent limitations on annual rate of growth of PEV
production imposed by the rate of growth of the global supply chain for
batteries and minerals. Specifically, in our compliance modeling we
imposed an upper limit on Gigawatt-hours (GWh) of gross battery energy
capacity that can be produced and made available for production of BEVs
that enter the new U.S. vehicle market in a given year of the analysis.
The development of this constraint used by the OMEGA model is discussed
in Chapter <IP_ADDRESS> of the DRIA.
    EPA requests comment on the GWh constraint described in that DRIA
chapter, and on alternative methods for representing constraints on
future PEV production that may result from limitations on the supply
chain for batteries and the critical minerals and other components that
are used in their manufacture.
iii. Mineral Security
    As stated at the beginning of this section, it is our assessment
that increased automotive electrification in the U.S. does not
constitute a vulnerability to national security, for several reasons
supported by the discussion in this Section IV.C.6 and in DRIA <IP_ADDRESS>.
    A domestic supply chain for battery and cell manufacturing is
rapidly forming by the actions of stakeholders including automakers and
suppliers who wish to take advantage of the business opportunities that
this need presents, and by automakers who recognize the need to remain
competitive in a global market that is shifting to electrification. It
is, therefore, already a goal of the U.S. manufacturing industry to
create a robust supply chain for these products, in order to supply not
only the domestic vehicle market, but also all of the other
applications for these products in global markets as the world
decarbonizes.
    Further, the Inflation Reduction Act and the Bipartisan
Infrastructure Law are proving to be a highly effective means by which
Congress and the Administration have provided support for the building
of a robust supply chain, and to accelerate this activity to ensure
that it forms as rapidly as possible. An example is the work of Li-
Bridge, a public-private alliance committed to accelerating the
development of a robust and secure domestic supply chain for lithium-
based batteries. It has set forth a goal that by 2030 the United States
should capture 60 percent of the economic value associated with the
U.S. domestic demand for lithium batteries. Achieving this target would
double the economic value expected in the U.S. under ``business as
usual'' growth.\718\ More evidence of recent growth in the supply chain
is found in a February 2023 report by Pacific Northwest National
Laboratory (PNNL), which documents robust growth in the North American
lithium battery industry.\719\
---------------------------------------------------------------------------

    \718\ Department of Energy, Li-Bridge, ``Building a Robust and
Resilient U.S. Lithium Battery Supply Chain,'' February 2023.
    \719\ Pacific Northwest National Laboratory, ``North American
Lithium Battery Materials V 1.2,'' February 2023. Available at
https://www.pnnl.gov/projects/north-american-lithium-battery-materials-industry-report.
---------------------------------------------------------------------------

    Finally, it is important to note that utilization of critical
minerals is different from the utilization of foreign oil, in that oil
is consumed as a fuel while minerals become a constituent of
manufactured vehicles. That is, mineral security is not a perfect
analogy to energy security. Supply disruptions and fluctuating prices
are relevant to critical minerals as well, but the impacts of such
disruptions are felt differently and by different parties. Disruptions
in oil supply or gasoline price has an immediate impact on consumers
through higher fuel prices, and thus constrains the ability to travel.
In contrast, supply disruptions or price fluctuations of minerals
affect only the production and price of new vehicles. In practice,
short-term price fluctuations do not always translate to higher
production cost as most manufacturers purchase minerals via long-term
contracts that insulate them to a degree from changes in spot prices.
Moreover, critical minerals are not a single commodity but a number of
distinct commodities, each having its own supply and demand dynamics,
and some being capable of substitution by other minerals. Importantly,
while oil is consumed as a fuel and thus requires continuous supply,
minerals become part of the vehicle and have the potential to be
recovered and recycled. Thus, even when minerals are imported from
other countries, their acquisition adds to the domestic mineral stock
that is available for domestic recycling in the future.
    Over the long term, battery recycling will be a critical component
of the PEV supply chain and will contribute to mineral security and
sustainability, effectively acting as a domestically produced mineral
source that reduces overall reliance on foreign-sourced products. While
growth in the return of end-of-life PEV batteries will lag the market
penetration of PEVs, it is important to consider the development of a
battery recycling supply chain during the time frame of the rule and
beyond.
    By 2050, battery recycling could be capable of meeting 25 to 50
percent of total lithium demand for battery

production.720 721 To this end, battery recycling is a very
active area of research. The Department of Energy coordinates much
research in this area through the ReCell Center, described as ``a
national collaboration of industry, academia and national laboratories
working together to advance recycling technologies along the entire
battery life-cycle for current and future battery chemistries.'' \722\
Funding is also being disbursed as directed by the Bipartisan
Infrastructure Law.\723\ A growing number of private companies are
entering the battery recycling market as the rate of recyclable
material becoming available from battery production facilities and
salvaged vehicles has grown, and manufacturers are already reaching
agreements to use these recycled materials for domestic battery
manufacturing. For example, Panasonic has contracted with Redwood
Materials Inc. to supply domestically processed cathode material, much
of which will be sourced from recycled batteries.\724\ Ford and Volvo
have also partnered with Redwood to collect end-of-life batteries for
recycling and promote a circular, closed-loop supply chain utilizing
recycled materials.\725\ Redwood has also announced a battery active
materials plant in South Carolina with capacity to supply materials for
100 GWh per year of battery production, and is likely to provide these
materials to many of the ``battery belt'' factories that are developing
in a corridor between Michigan and Georgia.\726\ General Motors and LG
Energy Solution have also partnered with Li-Cycle to provide recycling
of GM's Ultium cells.\727\
---------------------------------------------------------------------------

    \720\ Sun et al., ``Surging lithium price will not impede the
electric vehicle boom,'' Joule, doi:10.1016/j.joule. 2022.06.028
(https://dx.doi.org/10.1016/j.joule.2022.06.028).
    \721\ Ziemann et al., ``Modeling the potential impact of lithium
recycling from EV batteries on lithium demand: a dynamic MFA
approach,'' Resour. Conserv. Recycl. 133, pp. 76-85. https://doi.org/10.1016/j.resconrec. 2018.01.031.
    \722\ https://recellcenter.org/about/.
    \723\ Department of Energy, ``Biden-Harris Administration
Announces Nearly $74 Million To Advance Domestic Battery Recycling
And Reuse, Strengthen Nation's Battery Supply Chain,'' Press
Release, November 16, 2022.
    \724\ Randall, T., ``The Battery Supply Chain Is Finally Coming
to America,'' Bloomberg, November 15, 2022.
    \725\ Automotive News Europe, ``Ford, Volvo join Redwood in EV
battery recycling push in California,'' February 17, 2022. https://europe.autonews.com/automakers/ford-volvo-join-redwood-ev-battery-recycling-push-california.
    \726\ Wards Auto, ``Battery Recycler Redwood Plans $3.5 Billion
South Carolina Plant,'' December 27, 2022. https://www.wardsauto.com/industry-news/battery-recycler-redwood-plans-35-billion-south-carolinaplant.
    \727\ General Motors, ``Ultium Cells LLC and Li-Cycle
Collaborate to Expand Recycling in North America,'' Press Release,
May 11, 2021. https://news.gm.com/newsroom.detail.html/Pages/news/us/en/2021/may/0511-ultium.html.
---------------------------------------------------------------------------

    Recycling infrastructure is one of the targets of several
provisions of the BIL. It includes a Battery Processing and
Manufacturing program, which grants significant funds to promote U.S.
processing and manufacturing of batteries for automotive and electric
grid use, by awarding grants for demonstration projects, new
construction, retooling and retrofitting, and facility expansion. It
will provide a total of $3 billion for battery material processing, $3
billion for battery manufacturing and recycling, $10 million for a
lithium-ion battery recycling prize competition, $60 million for
research and development activities in battery recycling, an additional
$50 million for state and local programs, and $15 million to develop a
collection system for used batteries. In addition, the Electric Drive
Vehicle Battery Recycling and Second-Life Application Program will
provide $200 million in funds for research, development, and
demonstration of battery recycling and second-life applications.\728\
---------------------------------------------------------------------------

    \728\ Environmental Defense Fund and ERM, ``Electric Vehicle
Market Update: Manufacturer Commitments and Public Policy
Initiatives Supporting Electric Mobility in the U.S. and
Worldwide,'' September 2022.
---------------------------------------------------------------------------

    The efforts to fund and build a mid-chain processing supply chain
for active materials and related products will also be important to
reclaiming minerals through domestic recycling. While domestic
recycling can recover minerals and other materials needed for battery
cell production, they commonly are recovered in elemental forms that
require further midstream processing into precursor substances and
active material powders that can be used in cell production. The DOE
ReCell Center coordinates extensive research on development of a
domestic lithium-ion recycling supply chain, including direct
recycling, in which materials can be recycled for direct use in cell
production without destroying their chemical structure, and advanced
resource recovery, which uses chemical conversion to recover raw
minerals for processing into new constituents.\729\
---------------------------------------------------------------------------

    \729\ Department of Energy, ``The ReCell Center for Advanced
Battery Recycling FY22 Q4 Report,'' October 20, 2022. Available at:
https://recellcenter.org/2022/12/15/recell-advanced-battery-recycling-center-fourth-quarter-progress-report-2022/.
---------------------------------------------------------------------------

    Currently, pilot-scale battery recycling research projects and
private recycling startups have access to only limited amounts of
recycling stock that originate from sources such as manufacturer waste,
crashed vehicles, and occasional manufacturer recall/repair events. As
PEVs are currently only a small portion of the U.S. vehicle stock, some
time will pass before vehicle scrappage can provide a steady supply of
end-of-life batteries to support large-scale battery recycling. During
this time, we expect that the midchain processing portion of the supply
chain will continue to develop and will be able to capture much of the
resources made available by the recycling of used batteries coming in
from the fleet.

D. Projected Compliance Costs and Technology Penetrations

1. CO2 Targets and Compliance Levels
i. Light-Duty Vehicle Targets and Compliance Levels
    The proposed footprint standards curve coefficients for light-duty
vehicles were presented in Section III.B.2.iv. Here we present the
projected industry average fleet targets for both the Proposal and the
No Action case for reference. These average targets (for the proposed
standards and the No Action case,\730\ respectively) are presented for
both the car and truck regulatory classes in Table 66 and Table 67, and
then for three different modeled body styles: Sedans, crossovers and
SUVs, and pickup trucks,\731\ in Table 68 and Table 69. The projected
targets for each are based on the industry sales weighted average of
vehicle models (and their respective footprints) within the regulatory
class or body style.\732\
---------------------------------------------------------------------------

    \730\ The No-Action case continues MY 2026 flexibilities for the
off-cycle and A/C credits available to OEMs as defined in the 2021
Final Rule.
    \731\ All sedans are of the car regulatory class; crossovers and
SUVs include both cars and trucks; and all pickups are of the truck
regulatory class.
    \732\ Note that these targets are projected based on both
projected future sales in applicable MYs and our proposed standards;
after the standards are finalized the targets will change depending
on each manufacturer's actual sales.

                   Table 66--Projected Targets for Proposed LDV Standards, by Regulatory Class
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Cars..............................          134          116           99           91           82           73
Trucks............................          163          142          120          110          100           89
                                   -----------------------------------------------------------------------------
    Total.........................          152          131          111          102           93           82
----------------------------------------------------------------------------------------------------------------

                     Table 67--Projected Targets for LDV No-Action Case, by Regulatory Class
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Cars..............................          131          132          132          132          131          131
Trucks............................          183          182          183          183          183          183
                                   -----------------------------------------------------------------------------
    Total.........................          162          162          163          162          162          161
----------------------------------------------------------------------------------------------------------------

                      Table 68--Projected Targets for Proposed LDV Standards, by Body Style
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Sedans............................          134          117           99           91           82           73
Crossovers/SUVs...................          149          130          110          101           92           81
Pickups...........................          195          166          141          129          118          105
                                   -----------------------------------------------------------------------------
    Total.........................          152          131          111          102           93           82
----------------------------------------------------------------------------------------------------------------

                        Table 69--Projected Targets for LDV No-Action Case, by Body Style
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Sedans............................          132          132          133          132          132          131
Crossovers/SUVs...................          161          161          162          161          161          161
Pickups...........................          222          219          220          222          222          223
                                   -----------------------------------------------------------------------------
    Total.........................          162          162          163          162          162          161
----------------------------------------------------------------------------------------------------------------

    The modeled achieved CO2 levels for the proposed
standards and the No Action case are shown for both the car and truck
regulatory class in Table 70 and Table 71 and then by body style in
Table 72 and Table 73, respectively. These values were produced by the
modeling analysis and represent the projected certification emissions
values for possible compliance approaches with the proposed standards,
grouped by body style. These achieved values, shown as sales weighted
averages over the respective sedan, crossover/SUV, and pickup truck
body styles, include the 2-cycle tailpipe emissions based on the
modeled application of emissions-reduction technologies minus the
modeled application of off-cycle credit technologies and A/C efficiency
credits.

                      Table 70--Proposed LDV Standards--Achieved Levels by Regulatory Class
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Cars..............................          115          100           84           72           68           60
Trucks............................          176          149          123          113          106           95
                                   -----------------------------------------------------------------------------
    Total.........................          151          129          107           97           91           81
----------------------------------------------------------------------------------------------------------------

                        Table 71--LDV No-Action Case--Achieved Levels by Regulatory Class
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Cars..............................          117          111          104          102          109          113
Trucks............................          183          169          155          153          158          160
                                   -----------------------------------------------------------------------------

    Total.........................          157          146          135          132          138          141
----------------------------------------------------------------------------------------------------------------

                         Table 72--Proposed LDV Standards--Achieved Levels by Body Style
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Sedans............................          108           93           78           63           57           47
Crossovers/SUVs...................          140          123          102           97           97           95
Pickups...........................          276          220          181          160          131           91
                                   -----------------------------------------------------------------------------
    Total.........................          151          129          107           97           91           81
----------------------------------------------------------------------------------------------------------------

                           Table 73--LDV No Action Case--Achieved Levels by Body Style
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Sedans............................          106          101           96           95          103          108
Crossovers/SUVs...................          149          139          129          130          139          141
Pickups...........................          279          251          227          211          204          203
                                   -----------------------------------------------------------------------------
    Total.........................          157          146          135          132          138          141
----------------------------------------------------------------------------------------------------------------

    Comparing the target and achieved values it can be seen that the
achieved values are over target (higher emissions) for the average
pickup truck, and under target (lower emissions) for the average sedan.
This is a feature of the unlimited credit transfer provision, which
results in a compliance determination that is based on the combined car
and truck fleet credits for each manufacturer, rather than a separate
determination of each fleet's compliance. The application of
technologies is influenced by the relative cost-effectiveness of
technologies among each manufacturer's vehicles. For the combined
fleet, the achieved values are typically close to or slightly under the
target values, which would represent the banking of credits that can be
carried over into other model years. This indicates that overall, the
modeled fleet tracks the standards very closely from year-to-year. Note
that an achieved value for a manufacturer's combined fleet that is
above the target in a given model year does not indicate a likely
failure to comply with the standards, since the model includes the GHG
program credit banking provisions that allow credits from one year to
be carried into another year.
    The modeling predicts that the industry will over comply against
the MY 2027-2032 standards in the No Action scenario, driven by the
projected significant increase in BEVs. This is in part due to the
economic opportunities provided for BEVs to both manufacturers and
consumers by the IRA. Figure 37 shows a plot of industry average
achieved tailpipe g/mi compared to the projected targets for both the
No Action case and the proposed standards. The modeling shows that the
industry as a whole should be able to achieve the proposed standards
over the MY 2027-2032 time frame.

[GRAPHIC] [TIFF OMITTED] TP05MY23.041

ii. Medium-Duty Vehicle Targets and Compliance Levels
    Based on the proposed work-factor based standards curve
coefficients described in Section III.B.3, we present the projected
industry average medium-duty vehicle fleet targets for both the
proposed standards and the No Action case in Table 74 and Table 75.
These average targets are shown for two different modeled body styles:
Vans and pickup trucks. The projected targets for each case are based
on the industry sales weighted average of vehicle models (and their
respective work factors) within each body style.\733\
---------------------------------------------------------------------------

    \733\ Note that these targets are projected based on both
projected future sales in applicable MYs and our proposed standards;
the targets will change each MY depending on each manufacturer's
actual sales.

                      Table 74--Projected Targets for Proposed MDV Standards, by Body Style
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Vans..............................          393          379          345          309          276          243
Pickups...........................          462          452          413          374          331          292
                                   -----------------------------------------------------------------------------
    Total.........................          438          427          389          352          312          275
----------------------------------------------------------------------------------------------------------------

                   Table 75--Projected Targets for MD Vehicles, No-Action Case, by Body Style
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Vans..............................          410          410          410          410          410          410
Pickups...........................          517          517          517          518          518          518
                                   -----------------------------------------------------------------------------
    Total.........................          480          480          480          481          481          481
----------------------------------------------------------------------------------------------------------------

    The modeled achieved CO2 levels for the proposed
standards are shown for both vans and pickups in Table 76. These values
were produced by the modeling analysis and represent the projected
certification emissions values for possible compliance approaches with
the proposed standards, grouped by body style.

              Table 76--Proposed Standards for MD Vehicles--Projected Achieved Levels by Body Style
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Vans..............................          292          202          119           36           12           10
Pickups...........................          515          546          534          512          466          410
                                   -----------------------------------------------------------------------------
    Total.........................          437          426          390          347          310          272
----------------------------------------------------------------------------------------------------------------

2. Compliance Costs per Vehicle for the Proposed Standards
i. Light-Duty Projected Compliance Costs
    EPA has performed an assessment of the estimated per-vehicle costs
for manufacturers to meet the proposed MY 2027-2032 GHG and criteria
air pollutant standards. The fleet average costs per vehicle, again
grouped by both regulatory class and body style, are shown in Table 77
and Table 78. As shown, the combined cost for cars and trucks increases
gradually from MY 2027 through MY 2032. Incremental costs for pickups
(shown in Table 78) decrease slightly in MY 2029 and 2030 before
increasing again as the incentives in the IRA begin to phase out.

       Table 77--Average Incremental Vehicle Cost by Regulatory Class, Relative to the No Action Scenario
                                                 [2020 dollars]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Cars..............................         $249         $102          $32         $100         $527         $844
Trucks............................          891          767          653          821        1,100        1,385
                                   -----------------------------------------------------------------------------
    Total.........................          633          497          401          526          866        1,164
----------------------------------------------------------------------------------------------------------------

          Table 78--Average Incremental Vehicle Cost by Body Style, Relative to the No Action Scenario
                                                 [2020 dollars]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Sedans............................         $181          $79          $51         $194         $625       $1,015
Crossovers/SUVs...................          657          448          332          487          804          962
Pickups...........................        1,374        1,478        1,333        1,324        1,574        2,266
                                   -----------------------------------------------------------------------------
    Total.........................          633          497          401          526          866        1,164
----------------------------------------------------------------------------------------------------------------

    Overall, EPA estimates the average costs of today's proposal at
approximately $1,200 per vehicle in MY 2032 relative to meeting the No
Action scenario in MY 2032. However, these estimates represent the
incremental costs to manufacturers; for consumers, these costs are
offset by savings in the reduced fuel costs, maintenance and repair
costs, as discussed in Section VIII. Additionally, consumers may also
benefit from IRA purchase incentives for PEVs.
ii. Medium-Duty Projected Compliance Costs
    EPA's assessment of the estimated per-vehicle costs for
manufacturers to meet the proposed MY 2027-2032 GHG and criteria air
pollutant standards for medium-duty vehicles is presented here. The
fleet average costs per vehicle, grouped by body style, are shown in
Table 79. As shown, the combined cost for vans and pickups generally
increases from MY 2027 through MY 2032.

                 Table 79--Average Incremental Vehicle Cost by Body Style, Medium-Duty Vehicles
                                                 [2020 dollars]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Vans..............................         $322         $658         $711       $1,184       $1,592       $1,932
Pickups...........................          386           31           67          374          603        1,706
                                   -----------------------------------------------------------------------------
    Total.........................          364          249          290          654          944        1,784
----------------------------------------------------------------------------------------------------------------

    Overall, EPA estimates the average costs of today's proposal at
approximately $1,800 per medium-duty vehicle in MY 2032 relative to
meeting the No Action scenario in MY 2032. Similar to our light-duty
costs, these estimates represent the incremental costs to
manufacturers; for consumers, these costs are offset by savings in the

reduced fuel costs, maintenance and repair costs, as discussed in
Section VIII. Additionally, consumers may also benefit from IRA
purchase incentives for PEVs.
3. Technology Penetration Rates
i. Light-Duty Technology Penetrations
    In this section, we discuss the projected new sales technology
penetration rates from EPA's analysis for the proposed standards. Table
80 and Table 81 show the EPA projected penetration rates of BEV
technology under the proposed standards and No Action case,
respectively, by body style. It is important to note that this is a
projection and represents one out of many possible compliance pathways
for the industry. The proposed standards are performance-based and do
not mandate any specific technology for any manufacturer or any vehicle
type. Each manufacturer is free to choose its own set of technologies
with which it will demonstrate compliance with the standards. In our
projection, as the proposed standards become more stringent over MYs
2027 to 2032, the penetration of BEVs increases by almost 30 percentage
points over this 6-year period, from 36 percent in MY 2027 up to 67
percent of overall vehicle production in MY 2032.
    It is important to note that EPA's current analysis does not
include PHEVs, though we recognize that many manufacturers' product
plans include PHEVs. EPA recognizes that the inclusion of PHEVs could
potentially increase the combined ZEV share projection beyond the BEV
penetration levels shown in Table 81. EPA plans to incorporate PHEVs
into our analysis for the final rule. In DRIA Chapter 2.6.4, we present
information on the potential costs for PHEVs. We seek comment on this
information and on any other data and information we should consider in
developing the technical approach to incorporating PHEVs as a
compliance technology option in our assessment for the final rule.

               Table 80--Fleet BEV Penetration Rates, by Body Style, Under the Proposed Standards
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................           45           53           61           69           73           78
Crossovers/SUVs...................           38           46           56           59           61           62
Pickups...........................           11           23           37           45           55           68
                                   -----------------------------------------------------------------------------
    Total.........................           36           45           55           60           63           67
----------------------------------------------------------------------------------------------------------------

                 Table 81--Fleet BEV Penetration Rates, by Body Style, Under the No Action Case
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................           39           41           45           46           44           43
Crossovers/SUVs...................           26           32           37           40           39           39
Pickups...........................            7           16           24           29           31           33
                                   -----------------------------------------------------------------------------
    Total.........................           27           32           37           40           40           39
----------------------------------------------------------------------------------------------------------------

    Table 82 and Table 83 show the projected market penetrations for
strong HEVs in the proposed standards and the No Action case. While a
relatively small percentage of HEVs is projected in the early years of
the proposed standards, HEVs were generally not projected in the
compliance modeling for the No Action case. While manufacturers may in
fact choose HEVs, the modeling indicates they are less cost effective
than the BEVs which have been subsidized by the IRA and emit 0 g/mi
tailpipe CO2. Moreover, in the No Action case, the modeling
indicates that the industry is already overachieving the standards,
resulting in less need for HEVs. In the proposed standards case, the
steady decline in projected HEVs is primarily a result of continued
projected reductions in battery costs which make BEVs increasingly more
cost effective relative to HEVs.

                    Table 82--Fleet Strong HEV Penetration Rates Under the Proposed Standards
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................            4            3            2            2            1            0
Crossovers/SUVs...................            2            2            2            1            1            0
Pickups...........................            6            2            1            1            1            0
                                   -----------------------------------------------------------------------------
    Total.........................            3            2            2            1            1            0
----------------------------------------------------------------------------------------------------------------

                     Table 83--Fleet Strong HEV Penetrations Rates Under the No Action Case
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................            6            6            4            4            0            0
Crossovers/SUVs...................            3            3            3            1            0            0
Pickups...........................            4            0            0            0            0            0
                                   -----------------------------------------------------------------------------

    Total.........................            4            3            3            2            0            0
----------------------------------------------------------------------------------------------------------------

    Consistent with past rulemakings, EPA has evaluated a range of
advanced technologies for ICE vehicles. Two of these technologies were
noteworthy in the modeling results: Advanced turbocharged downsized
engines (TURB12) and advanced Atkinson (ATK) engines.\734\ Further
details on EPA's modeling of engine technologies can be found in DRIA
Chapters <IP_ADDRESS> and 3.5.1. Turbocharged engines and Atkinson engines
are some of the most cost-effective ICE technologies for GHG
compliance, however, like HEVs, are still not as cost-effective as BEVs
subsidized by the IRA. Similar to the trends in projected HEV
penetration, the advanced ICE technologies are projected to decline as
BEVs become more cost effective over the period of the proposed
standards; however, for the No Action case, penetrations of TURB12 and
ATK increase. Table 84 and Table 85 show the projected market
penetrations for downsized turbocharged engines in the proposed
standards and the No Action case, while Table 86 and Table 87 show the
projections for Atkinson engines.
---------------------------------------------------------------------------

    \734\ As summarized in Table 86 and Table 87, the Atkinson
engines also include a turbocharged variant (Miller cycle), however
this is a very small portion of the technology penetrations shown.

                         Table 84--TURB12 Penetration Rates Under the Proposed Standards
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................           22           20           17           16           18           14
Crossovers/SUVs...................            3            3            5            6            8            8
Pickups...........................            6            0            0            0            0            0
                                   -----------------------------------------------------------------------------
    Total.........................            8            7            7            8           10            9
----------------------------------------------------------------------------------------------------------------

                          Table 85--TURB12 Penetrations Rates Under the No Action Case
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................           28           29           29           31           39           40
Crossovers/SUVs...................            3            3            5            9           13           13
Pickups...........................            6            0            0            0            0            0
                                   -----------------------------------------------------------------------------
    Total.........................           10            9           11           14           18           19
----------------------------------------------------------------------------------------------------------------

                          Table 86--ATK Penetration Rates Under the Proposed Standards
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................           28           23           19           13            8            7
Crossovers/SUVs...................           55           49           37           34           30           29
Pickups...........................           35           75           61           54           44           31
                                   -----------------------------------------------------------------------------
    Total.........................           45           46           36           31           26           23
----------------------------------------------------------------------------------------------------------------

                            Table 87--ATK Penetrations Rates Under the No Action Case
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................           25           24           21           18           16           17
Crossovers/SUVs...................           68           63           54           49           48           48
Pickups...........................           42           84           76           71           68           66
                                   -----------------------------------------------------------------------------
    Total.........................           53           55           49           44           42           42
----------------------------------------------------------------------------------------------------------------

ii. Medium-Duty Technology Penetrations
    In this section we discuss the projected new MDV \735\ sales
technology penetration rates from EPA's analysis for the proposed
standards. Table 88 shows the EPA projected penetration rates of BEV
technology under the proposed standards by body style. It is important
to note that this is a projection and represents one out of many
possible compliance pathways for the industry. The proposed standards
are performance-based and do not mandate any specific technology for
any manufacturer or any vehicle type. Each manufacturer is free to
choose its own set of technologies with which it will demonstrate
compliance with the standards. As the proposed standards become more
stringent over MYs 2027 to 2032, the projected penetration of BEVs
(driven mostly by electrification of vans) increases from 17 percent in
MY 2027 up to 46 percent of overall vehicle production in MY 2032.
---------------------------------------------------------------------------

    \735\ MDVs were not broken down into separate Class 2b and Class
3 categories in the analysis for the proposal. The proposed GHG and
criteria pollutant emissions standards regulate Class 2b and Class 3
as a single MDV class. The analysis did include a breakdown between
MDV vans and MDV pickups due to differences in use-case and
applicable technologies between MDV vans and MDV pickups.

           Table 88--Fleet BEV Penetration Rates, by Body Style, Under the Proposed Standards for MDVs
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Vans..............................           35           55           73           92           97           98
Pickups...........................            7            1            3            4           15           19
                                   -----------------------------------------------------------------------------
    Total.........................           17           20           28           34           43           46
----------------------------------------------------------------------------------------------------------------

4. Alternative Light-Duty GHG Standards: Projected CO2 Fleet
Targets, Costs and Technology Penetrations
    In Section III.E, we describe three alternative sets of standards
that we considered in developing the level of stringency of the
proposed program--Alternative 1 (more stringent than the proposed
program), Alternative 2 (less stringent), and Alternative 3 (a slower
phase-in of the 2032 MY stringency level in the proposed standards).
All four potential programs would incorporate fairly linear year-over-
year increases in GHG stringency from MY 2027 through MY 2032, with
stringencies that vary by (on average) 10 g/mi between the alternatives
and the proposed standards. The alternatives are projected to result in
reductions in average GHG emissions targets ranging from 51 percent to
67 percent from the MY 2026 standards, compared to a projected 56
percent reduction for the proposed standards.
    Alternative 1 projected fleet-wide CO2 targets are 10 g/
mi lower on average than the proposed targets; Alternative 2 projected
fleet-wide CO2 targets averaged 10 g/mi higher than the
proposed targets.\736\ Alternative 3 projected targets in MY 2032 match
those of the proposed standards. Table 89, Table 90 and Table 91 show
the projected sales weighted averaged targets (MY 2027-2032) for cars,
trucks, and the fleet total for the three alternatives. Similarly,
Table 92, Table 93, and Table 94 show targets for sedans, crossovers/
SUVs and pickups for the three alternatives. Table 95 provides a
comparison for the projected industry-wide targets for the alternatives
compared to the proposed standards.
---------------------------------------------------------------------------

    \736\ For reference, the targets at a footprint of 50 square
feet were exactly 10 g/mi lower and greater for the alternatives.

                 Table 89--Projected Targets by Regulatory Class [CO2 grams/mile]--Alternative 1
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Cars..............................          124          106           89           81           72           63
Trucks............................          153          131          110          100           90           78
                                   -----------------------------------------------------------------------------
    Total.........................          141          121          101           92           83           72
----------------------------------------------------------------------------------------------------------------

                 Table 90--Projected Targets by Regulatory Class [CO2 grams/mile]--Alternative 2
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Cars..............................          144          126          108          100           92           83
Trucks............................          173          152          130          121          111           99
                                   -----------------------------------------------------------------------------
    Total.........................          162          141          122          112          103           92
----------------------------------------------------------------------------------------------------------------

                 Table 91--Projected Targets by Regulatory Class [CO2 grams/mile]--Alternative 3
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Cars..............................          139          126          112           99           86           73

Trucks............................          183          163          144          126          107           89
                                   -----------------------------------------------------------------------------
    Total.........................          165          148          132          115           99           82
----------------------------------------------------------------------------------------------------------------

                            Table 92--Projected Targets by Body Style--Alternative 1
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Sedans............................          124          107           89           81           73           63
Crossovers/SUVs...................          139          120          100           91           82           71
Pickups...........................          182          154          129          117          105           91
                                   -----------------------------------------------------------------------------
    Total.........................          141          121          101           92           83           72
----------------------------------------------------------------------------------------------------------------

                            Table 93--Projected Targets by Body Style--Alternative 2
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Sedans............................          144          126          108          101           92           83
Crossovers/SUVs...................          158          139          120          111          101           91
Pickups...........................          207          179          153          142          130          116
                                   -----------------------------------------------------------------------------
    Total.........................          162          141          122          112          103           92
----------------------------------------------------------------------------------------------------------------

                            Table 94--Projected Targets by Body Style--Alternative 3
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Sedans............................          139          126          112           99           87           73
Crossovers/SUVs...................          165          148          131          115           98           81
Pickups...........................          216          190          169          148          126          104
                                   -----------------------------------------------------------------------------
    Total.........................          165          148          132          115           99           82
----------------------------------------------------------------------------------------------------------------

                     Table 95--Comparison of Proposed Combined Fleet Targets to Alternatives
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                 Model year                    Proposed stds    Alternative 1    Alternative 2    Alternative 3
----------------------------------------------------------------------------------------------------------------
2026 adjusted...............................              186              186              186              186
2027........................................              152              141              162              165
2028........................................              131              121              141              148
2029........................................              111              101              122              132
2030........................................              102               92              112              115
2031........................................               93               83              103               99
2032 and later..............................               82               72               92               82
----------------------------------------------------------------------------------------------------------------

    Table 96, Table 97 and Table 98 provide the modeled fleet BEV
penetration rates, by body style, for MY 2027-2032 for the three
alternatives. Table 98 compares the projected BEV penetration rates for
the alternatives compared to the proposed standards.

                    Table 96--Fleet BEV Penetration Rates, by Body Style, Under Alternative 1
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................           46           52           59           68           75           75
Crossovers/SUVs...................           39           49           57           65           65           71
Pickups...........................           12           27           38           47           45           52
                                   -----------------------------------------------------------------------------

    Total.........................           37           46           54           63           65           69
----------------------------------------------------------------------------------------------------------------

                    Table 97--Fleet BEV Penetration Rates, by Body Style, Under Alternative 2
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................           44           49           60           62           69           72
Crossovers/SUVs...................           34           41           53           54           56           63
Pickups...........................           12           21           33           45           53           52
                                   -----------------------------------------------------------------------------
    Total.........................           33           40           52           55           59           64
----------------------------------------------------------------------------------------------------------------

                    Table 98--Fleet BEV Penetration Rates, by Body Style, Under Alternative 3
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................           43           49           52           60           69           75
Crossovers/SUVs...................           33           40           47           53           59           64
Pickups...........................           10           20           32           43           55           68
                                   -----------------------------------------------------------------------------
    Total.........................           32           39           46           54           62           68
----------------------------------------------------------------------------------------------------------------

            Table 99--Comparison of Projected BEV Penetrations for Alternatives vs Proposed Standards
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                               Proposed stds    Alternative 1    Alternative 2    Alternative 3
               Model year (%)                       (%)              (%)              (%)              (%)
----------------------------------------------------------------------------------------------------------------
2027........................................               36               37               33               32
2028........................................               45               46               40               39
2029........................................               55               54               52               46
2030........................................               60               63               55               54
2031........................................               63               65               59               62
2032........................................               67               69               64               68
----------------------------------------------------------------------------------------------------------------

    As shown in Table 100 for Alternative 1, Table 101 for Alternative
2, and Table 102 for Alternative 3, the 2032 MY industry average
vehicle cost increase (compared to the No Action case) ranges from
approximately $1,000 to $1,800 per vehicle for the alternatives,
compared to $1,200 per vehicle for the proposed standards.

          Table 100--Fleet Average Cost Per Vehicle Relative to the No Action Scenario [2020 dollars]--
                                                  Alternative 1
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Sedans............................         $204         $276         $480         $601       $1,143       $1,301
Crossovers/SUVs...................          704          740        1,228        1,422        1,788        2,056
Pickups...........................        1,382        2,033        1,871        1,866        1,469        1,544
                                   -----------------------------------------------------------------------------
    Total.........................          668          804        1,120        1,262        1,565        1,775
----------------------------------------------------------------------------------------------------------------

          Table 101--Fleet Average Cost per Vehicle Relative to the No Action Scenario [2020 dollars]--
                                                  Alternative 2
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Sedans............................         $106         -$74          $16           $8         $556         $827
Crossovers/SUVs...................          391          233          263          250          599        1,029
Pickups...........................        1,406        1,656        1,353        1,328        1,511        1,503
                                   -----------------------------------------------------------------------------
    Total.........................          462          355          353          337          718        1,041
----------------------------------------------------------------------------------------------------------------

          Table 102--Fleet Average Cost per Vehicle Relative to the No Action Scenario [2020 dollars]--
                                                  Alternative 3
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Sedans............................         -$21         -$28        -$208         -$65         $562       $1,030
Crossovers/SUVs...................          251          122           58          288          786        1,142
Pickups...........................          320          421          467          698        1,311        2,148
                                   -----------------------------------------------------------------------------
    Total.........................          189          125           45          250          800        1,256
----------------------------------------------------------------------------------------------------------------

             Table 103--Comparison of Projected Incremental Costs Relative to the No Action Scenario
                                        [CO2 grams/mile)] [2020 Dollars]
----------------------------------------------------------------------------------------------------------------
                 Model year                    Proposed stds    Alternative 1    Alternative 2    Alternative 3
----------------------------------------------------------------------------------------------------------------
2027........................................             $633             $668             $462             $189
2028........................................              497              804              355              125
2029........................................              401            1,120              353               45
2030........................................              526            1,262              337              250
2031........................................              866            1,565              718              800
2032........................................            1,164            1,775            1,041            1,256
----------------------------------------------------------------------------------------------------------------

E. Sensitivities--LD GHG Compliance Modeling

    EPA often conducts sensitivity analyses to help assess key areas of
uncertainty in both underlying data and modeling assumptions,
consistent with OMB Circular No. A-94 which establishes guidelines for
conducting benefit-cost analysis of Federal programs. In the analysis
for this proposal, EPA has evaluated the feasibility and
appropriateness of the proposed standards using the central case
assumptions for technology, market acceptance, and various other
assumptions described throughout this Preamble and DRIA. For a select
number of these key assumptions, we have conducted sensitivity analyses
for the proposed and alternative policies using alternative sets of
assumptions. We believe that together with the central case
assumptions, these sensitivities span ranges of values that reasonably
cover the uncertainty in the critical areas of battery costs and the
market for BEVs.
1. State-Level ZEV Policies (ACC II)
    We have provided an analysis that accounts for state-level zero-
emissions vehicle (ZEV) policies as described by California's ACC II
program and other participating states under CAA Section 177. At the
time this analysis was conducted, California had not yet submitted to
EPA a request for a waiver for its ACC II program and EPA is not
prejudging the outcome of any waiver process or whether or not certain
states are able to adopt California's regulations under the criteria of
section 177.\737\ Nevertheless, it is an important question to analyze
what the potential effect of state adoption of ZEV policies might be in
the context of the No Action case, particularly since manufacturers may
be adjusting product plans to account for ACC II, and thus we are
providing this sensitivity analysis to explore this question. As shown
in Table 104, state adoption of ACC II is projected to amount to about
30 percent of total U.S. light-duty sales in 2027 and beyond. Within
the states adopting ACC II, manufacturers are required to sell a
certain portion of vehicles that meet the ZEV definition, which
includes BEVs, FCEVs, and a limited number of PHEVs that satisfy a
minimum requirement for charge depleting range. The required ZEV shares
increase by model year, reaching 100 percent in 2035 as shown in Table
105.
---------------------------------------------------------------------------

    \737\ If California were to submit a waiver request for the ACC
II program and EPA were to subsequently grant the waiver, then it
may be appropriate to update the No Action case in the final
rulemaking to reflect the ACC II program.

    Table 104--Sales Share of U.S. New Light-Duty Vehicles in States
                     Adopting ACC II, by Model Year
------------------------------------------------------------------------
                               Portion of U.S. new   States adopting ACC
         Model years          light-duty sales (%)           II
------------------------------------------------------------------------
2018 to 2025................                  12.6  CA.
2026........................                  22.6  CA, MA, NY, OR, VT,
                                                     WA.
2027 and later..............                  30.4  CA, CO, CT, MA, MD,
                                                     ME, NJ, NY, OR, RI,
                                                     VT, WA.
------------------------------------------------------------------------

                                Table 105--ZEV Percentage Sales Requirements Within States Adopting ACC II, by Model Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
   2022       2023       2024       2025       2026       2027       2028       2029       2030       2031       2032       2033       2034       2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
   14.5       17.0       19.5       22.0       35.0       43.0       51.0       59.0       68.0       76.0       82.0       88.0       94.0      100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    EPA's analysis of state-level ZEV mandates was conducted by
separating the base year fleet into two regions. We applied a minimum
BEV sales share constraint to the portion of new vehicles in the ACC
II-adopting states, using the

values in Table 105. For the remainder of new vehicles, a minimum BEV
sales share value of zero was specified. In both ZEV and non-ZEV
regions, the OMEGA modeling allowed manufacturers to exceed the minimum
BEV shares if it resulted in lower producer generalized cost, while
still meeting other modeling constraints including compliance with the
National GHG standards for the particular policy case and satisfying
the consumer demand for BEVs. The results of the analysis for this
state-level ZEV mandate sensitivity are summarized in Table 106 through
Table 109.

    Table 106--Projected Targets With ACC II, for No Action Case, Proposed and Alternatives--Cars and Trucks
                                                    Combined
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          164          164          165          165          164          164
Proposed..........................          151          131          111          102           93           82
Alternative 1.....................          141          121          102           92           83           72
Alternative 2.....................          161          141          121          112          103           92
Alternative 3.....................          166          149          132          115           99           82
----------------------------------------------------------------------------------------------------------------

Table 107--Projected Achieved Levels With ACC II, for No Action Case, Proposed and Alternatives--Cars and Trucks
                                                    Combined
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          146          123          104          100          103           99
Proposed..........................          149          129          107           96           90           81
Alternative 1.....................          145          122           99           83           73           66
Alternative 2.....................          153          132          119          110          100           90
Alternative 3.....................          154          133          122          113           96           81
----------------------------------------------------------------------------------------------------------------

Table 108--BEV Penetrations With ACC II, for No Action Case, Proposed and Alternatives--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           32           42           49           52           52           54
Proposed..........................           37           45           55           61           64           68
Alternative 1.....................           38           47           55           63           68           72
Alternative 2.....................           37           46           51           57           61           65
Alternative 3.....................           36           45           50           55           62           68
----------------------------------------------------------------------------------------------------------------

             Table 109--Average Incremental Vehicle Cost vs. No Action Case With ACC II, Proposed and Alternatives--Cars and Trucks Combined
                                                                     [2020 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   2027         2028         2029         2030         2031         2032       6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed.....................................................         $172          $56          $11          $57         $268         $423         $164
Alternative 1................................................          454          639        1,130        1,050        1,212        1,186          945
Alternative 2................................................          106         -$29        -$184        -$188           73          235            2
Alternative 3................................................           85          -43         -221         -182          214          483           56
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Battery Costs
    We have included sensitivities for battery pack costs that are (a)
25 percent higher and (b) 15 percent lower (on a $/kWh basis) than the
battery pack costs in the central case. The high and low sensitivities
were selected so as to bound what EPA considered to be a reasonable
envelope for future nominal battery pack cost per kWh, as informed by
the full range of forecasts in the literature (see the discussion of
battery cost forecasts we considered in Preamble Section IV.C.2 and
DRIA Chapter <IP_ADDRESS>.3).
i. Low Battery Costs

   Table 110--Projected Targets With Low Battery Costs for No Action Case, Proposed and Alternatives--Cars and
                                                 Trucks Combined
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          162          162          164          164          164          163
Proposed..........................          152          132          111          102           93           82
Alternative 1.....................          141          122          102           93           83           72
Alternative 2.....................          161          141          121          113          103           92
Alternative 3.....................          165          148          131          115           99           82
----------------------------------------------------------------------------------------------------------------

Table 111--Projected Achieved Levels With Low Battery Costs, for No Action Case, Proposed and Alternatives--Cars
                                               and Trucks Combined
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          152          138          108          106           99          111
Proposed..........................          154          130          110          100           83           80
Alternative 1.....................          154          125          102           83           70           65
Alternative 2.....................          157          136          119           96           98           90
Alternative 3.....................          161          141          124          109           95           80
----------------------------------------------------------------------------------------------------------------

   Table 112--BEV Penetrations With Low Battery Costs, for No Action Case, Proposed and Alternatives--Cars and
                                                 Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           34           39           51           52           55           51
Proposed..........................           38           46           54           59           66           68
Alternative 1.....................           38           46           54           63           68           71
Alternative 2.....................           37           46           53           63           62           66
Alternative 3.....................           36           44           51           58           63           69
----------------------------------------------------------------------------------------------------------------

        Table 113--Average Incremental Vehicle Cost vs. No Action Case for Low Battery Costs, Proposed and Alternatives--Cars and Trucks Combined
                                                                     [2020 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   2027         2028         2029         2030         2031         2032       6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed.....................................................         $623         $553         $303         $313         $365         $490         $441
Alternative 1................................................          623        1,441        1,690        1,568        1,392        1,443        1,360
Alternative 2................................................          319          213          -13          112            7          286          154
Alternative 3................................................          161          128          -81          -22           64          446          116
--------------------------------------------------------------------------------------------------------------------------------------------------------

ii. High Battery Costs

  Table 114--Projected Targets With High Battery Costs for No Action Case, Proposed and Alternatives--Cars and
                                                 Trucks Combined
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          166          165          164          163          161          161
Proposed..........................          153          132          112          102           93           82
Alternative 1.....................          143          122          102           92           83           72
Alternative 2.....................          163          142          122          112          103           92
Alternative 3.....................          167          150          133          116           99           82
----------------------------------------------------------------------------------------------------------------

  Table 115--Projected Achieved Levels with High Battery Costs, for No Action Case, Proposed and Alternatives--
                                            Cars and Trucks Combined
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          162          153          152          155          160          159
Proposed..........................          151          130          110          100           92           81
Alternative 1.....................          144          121          100           90           82           71
Alternative 2.....................          159          139          119          110          101           92
Alternative 3.....................          164          147          131          115           98           83
----------------------------------------------------------------------------------------------------------------

  Table 116--BEV Penetrations With High Battery Costs, for No Action Case, Proposed and Alternatives--Cars and
                                                 Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                     2027  (%)    2028  (%)    2029  (%)    2030  (%)    2031  (%)    2032  (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           21           26           28           29           29           29
Proposed..........................           33           41           51           55           60           65
Alternative 1.....................           36           44           54           60           63           69
Alternative 2.....................           29           36           47           52           56           60
Alternative 3.....................           27           33           42           50           58           64
----------------------------------------------------------------------------------------------------------------

       Table 117--Average Incremental Vehicle Cost vs. No Action Case for High Battery Costs, Proposed and Alternatives--Cars and Trucks Combined
                                                                     [2020 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   2027         2028         2029         2030         2031         2032       6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed.....................................................       $1,246       $1,057       $1,329       $1,553       $2,103       $2,505       $1,632
Alternative 1................................................        1,884        1,676        1,768        1,885        2,430        2,750        2,066
Alternative 2................................................          888          874        1,227        1,347        1,938        2,340        1,436
Alternative 3................................................          820          785        1,138        1,484        2,242        2,803        1,545
--------------------------------------------------------------------------------------------------------------------------------------------------------

3. Consumer Acceptance
    We have included sensitivities on the rate of BEV acceptance as
well. Given the prevalence of automaker announcements in the media, we
estimate results assuming a faster rate of BEV acceptance for all body
styles. We also acknowledge that, though unlikely given available data
and current trends, BEV acceptance may be slower than we estimate in
our central case, possibly due to use cases such as towing or
populations in remote locations. For information on what these BEV
acceptance rates are, refer to DRIA Chapter 4.1.3. Results assuming a
faster rate of BEV acceptance are provided in Table 118 through Table
121. Results assuming a slower rate of BEV acceptance are shown in
Table 122 through Table 125.
i. Faster BEV Acceptance

 Table 118--Projected Targets With Faster BEV Acceptance for No Action Case, Proposed and Alternatives--Cars and
                                                 Trucks Combined
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          163          163          164          165          165          166
Proposed..........................          151          132          112          103           93           83