The report projects that only modest penetration of hybrids and only low levels of electric vehicles are needed to meet the standards. This is consistent with what the National Academies of Science found in a comprehensive 2015 study. Manufacturers can meet the standards at similar or even lower costs than what was anticipated in the 2012 rulemaking with substantial fuel savings payback to consumers.

The draft TAR examines a wide range of technical and cost issues relevant to the adopted 2022-2025 greenhouse gas emission standards and is the product of close collaboration and significant effort over the past four years on the part of California and the two federal agencies, including extensive laboratory testing by US EPA and extensive outreach to auto manufacturers and other stakeholders.

In the draft TAR, EPA provided its initial technical assessment of the technologies available to meet the MY2022-2025 GHG standards and one reasonable compliance pathway, and NHTSA provides its initial assessment of technologies available to meet the augural MY2022-2025 CAFE standards and a different reasonable compliance pathway.

Given that there are multiple possible ways that new technologies can be added to the fleet, examining two compliance pathways provided valuable additional information about how compliance may occur. NHTSA and EPA also performed multiple sensitivity analyses which show additional possible compliance pathways. The agencies’ independent analyses complement one another and reach similar conclusions:

• A wider range of technologies exist for manufacturers to use to meet the MY2022-2025 standards, and at costs that are similar or lower, than those projected in the 2012 rule;

• Advanced gasoline vehicle technologies will continue to be the predominant technologies, with modest levels of strong hybridization and very low levels of full electrification (plug- in vehicles) needed to meet the standards;

• The car/truck mix reflects updated consumer trends that are informed by a range of factors including economic growth, gasoline prices, and other macro-economic trends. However, as the standards were designed to yield improvements across the light duty vehicle fleet, irrespective of consumer choice, updated trends are fully accommodated by the footprint- based standards.

The GHG analysis used a baseline fleet based on the MY2014 fleet, the latest year available for which there are final GHG compliance data. The CAFE analysis used a MY2015 baseline fleet based on MY2015 data and sales projections provided by manufacturers in the latter half of MY2015, when production was well underway.

These data sets complement one another and each yield important perspective, with the MY2014 data having the benefit of validation through compliance data, and the MY2015 data providing more recent perspective. The GHG and CAFE analysis fleets utilized similar, but separate, purchased projections from IHS-Polk for the future vehicle fleet mix out to 2025, thereby representing some of the uncertainty inherent in all reference case projections.

Both analyses used data from the Energy Information Administration’s Annual Energy Outlook 2015 (AEO 2015) as the basis for total vehicle sales projections to 2025, as well as for the car and truck volume mix. Although the agencies have relied on different data sources in development of the baseline fleets, they believe this combination of approaches strengthens the results by showing robust results across a range of reference case projections.

Technologies considered in the Draft TAR include more efficient engines and transmissions; aerodynamics; light-weighting; improved accessories; low rolling resistance tires; improved air conditioning systems, and others. Beyond the technologies the agencies considered in the 2012 final rule, manufacturers are now employing several technologies, such as higher compression ratio, naturally aspirated gasoline engines, and greater penetration of continuously variable transmissions (CVTs); other new technologies are under active development and are expected to be in the fleet well before MY2025, such as 48- volt mild hybrid systems.

There are more than 100 car, SUV, and pick-up truck versions on the market today that already meet 2020 or later standards, suggesting that automakers should be well-positioned to meet future average standards through additional application of those technologies.

It is clear that the automotive industry is innovating and bringing new technology to market at a rapid pace and neither of the respective agency analyses reflects all of the latest and emerging technologies that may be available in the 2022-2025 time frame. For example, the agencies were not able for this Draft TAR to evaluate the potential for technologies such as electric turbo-charging, variable compression ratio, skip-fire cylinder deactivation, and P2-configuration mild-hybridization. These technologies may provide further cost-effective reductions in GHG emissions and fuel consumption. The agencies will continue to update their analyses throughout the MTE process as new information becomes available.

—Draft TAR

Based on the extensive updated assessments provided in the Draft TAR, the projections for the average per-vehicle costs of meeting the MY2025 standards (incremental to the costs already incurred to meet the MY2021 standard) are, for EPA’s analysis of the GHG program, $894 - $1,017, and, for NHTSA’s analysis of the CAFE program, $1,245 in the primary analysis using Retail Price Equivalent (RPE), and $1,128 in a sensitivity case analysis using Indirect Cost Multipliers (ICM). In the 2012 final rule, the estimated costs for meeting the MY2022-2025 GHG standards (incremental to the costs for meeting the MY2021 standard in MY2021) was $1,070.

CARB worked with EPA to include ZEVs reflecting compliance with California’s ZEV program within the reference fleet used by EPA. NHTSA’s analysis did not. This accounts for at least part of the cost differences in the two agencies’ analyses as well as for some of the difference in technology penetration rates for full hybrids.

The draft report is the first of several steps the agencies will take as part of assessing the standards for new vehicles in the 2022-2025 model years (MY). The report itself is not a rulemaking and does not change any of the existing requirements under the existing National Program.

The National Program does not set a single fuel economy target number for all vehicles, but instead it establishes separate footprint-based standards for passenger cars and light trucks. A manufacturer’s compliance obligation depends on the mix of vehicles that it produces for sale in each model year—if a manufacturer produces mostly larger vehicles, its average standard will be less stringent than if it produces mostly smaller vehicles, reflecting the reality that smaller vehicles often have better fuel economy and lower carbon emissions than larger vehicles.

This approach allows consumers to continue to choose from the full range of fuel efficient vehicles on the market, and at the same time, it improves efficiency and emissions for all types of vehicles.

CARB will leverage the work done on the TAR as the technical underpinning for moving forward on the California ZEV Mandate, said CARB Deputy Executive Officer Dr. Alberto Ayala.

Release of the Draft TAR begins a 60-day public comment period. These comments, along with any new data and information, will inform the development and next steps in the Mid-Term Evaluation leading to a final determination about the standards for MY 2022-2025.