On March 20, 2024, EPA announced new emissions standards for passenger cars, light-duty trucks, and medium-duty vehicles for model years 2027 through 2032 and beyond. Under the new final rule, Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles, EPA is enacting some of the strictest emissions standards for criteria pollutants and greenhouse gas emissions for light-duty vehicles and Class 2b and 3 (medium-duty) vehicles ever enacted. 

The new standards will be gradually phased in starting in model year 2027, with the stated goal of accelerating the adoption of cleaner vehicle technologies, such as plug-in hybrids and fully electric vehicles. For example, the rule caps tailpipe emissions of carbon dioxide ("CO₂") from light-duty vehicles at 85 grams per mile in 2032, which is down from 170 grams per mile for model year 2027. Similarly, the rule tightens emissions standards for medium-duty vehicles with a final standard of 247 grams of CO₂ per mile by 2032. This rule will lead to the reduction of about seven billion metric tons of CO₂ by 2055, according to the EPA. In addition, the rule sets new standards that will reduce emissions of fine particulate matter, nitrous oxides, and other ozone smog precursors.

Notably, EPA's new rule relies heavily on projections that U.S. consumers will continue to purchase cleaner vehicles, such as advanced gasoline vehicles, hybrids, plug-in hybrid electric vehicles, and full battery electric vehicles. The practical effect of this is that these types of vehicles will need to make up 35% to 56% of sales to meet EPA's model year 2032 standards. However, EPA's new emissions standards are more gradual than what EPA originally proposed last year, giving the auto industry more time to comply. Industry participants should carefully evaluate their compliance obligations under EPA's new rule.