The U.S. Environmental Protection Agency (EPA) issued proposed new federal emissions standards for motor vehicles model-years '27 to '32, which are intended to dramatically increase sales of electric vehicles (EVs).

As a result, the EPA estimates that two-thirds of new passenger vehicles sold in the United States would be EVs by 2032 under its proposed standards. SEMA opposes the proposed rule as currently written.

EPA Proposed New Emissions Rules (PDF)

More detail is provided in the talking points below:

OVERVIEW
 

• The EPA proposed rules in May 2023 that, if finalized, would require light-duty vehicles to meet increasingly stringent emissions reductions for model year 2027 through 2032 model year (see table at the end of this document for more detail).
   
• It has also eliminated an exemption provided to low-volume car manufacturers (those that produce fewer than 5,000 vehicles a year).
   
• The proposal, as drafted, is essentially the knock-out punch to the internal combustion engine technologies the specialty automotive aftermarket has built its industry around.
   
• The Biden Administration estimates this proposal will result in two out of three new vehicles sold in the U.S. being electric by 2032. The proposal is not technology neutral, as the EPA and White House suggest.
   
• Ultimately, if these regulations are implemented, it will likely lead to more government subsidies to large automakers to manufacture EVs and for consumers to purchase them.
   
• We have already witnessed massive government subsidies to implement the infrastructure to support EVs:
   
  • The Infrastructure Bill that became law in 2022 funded 500,000 electric vehicle charging stations nationally
     
  • The Inflation Reduction Act of 2022 financially incentivized Americans to purchase electric vehicles
     
• Government policies should support the work of small business innovators that employ millions of Americans by letting the market and innovation drive solutions to the environmental challenges we all seek to solve.
   
• The unintended consequences of these regulations will be extremely far-reaching, adversely impacting rural and urban vehicle owners and reducing consumer choice.

Why SEMA opposes the current rules, as proposed:
 

• The proposal intends to lower carbon emissions in a way that essentially forces EVs to become the only option for automakers to produce and consumers to purchase. Given the subsidies in place for EV purchases and production, EVs are the de facto choice to achieve the rulemaking's climate goals, as other options, such as hydrogen, new synthetic fuels, and multiple renewables, do not enjoy a level playing field of subsidies.
   
• Government should not pick winners and losers regarding automotive technologies. The current proposal places the federal government's thumb squarely on the scale for electric vehicles. The EPA should help the market drive technology solutions like the following:
  • Cummins recently debuted a 15-liter fuel-agonistic engine platform, capable of running on hydrogen, natural gas, or diesel. Walmart + Cummins + Chevron, to debut this engine running on Renewable Natural Gas (RNG). ¹
  • Clear Flame Engine Technologies develops conversion kits for diesel engines to run on alternative fuels such as ethanol, reducing emissions by 42%.²
  • Shell and Penske are working on a collaboration regarding renewable diesel. ³
  • UPS fleet run on a variation of powertrains: Hybrid Electric, BEV, Propane, CNG, LNG, and Ethanol.⁴
  • Toyota is investing in Hydrogen Fuel Cell powertrains for heavy duty and passenger vehicle applications. ⁵
  • Loop Energy is offering hydrogen fuel cell crate engines⁶
  • Alliance AutoGas offers propane conversion kits.⁷
     
• This proposal flies in the face of consumers having the freedom to purchase the vehicles that best suit their personal needs and the needs of their families.
  • The average cost of a battery-electric vehicle (BEV) is $58,000 while the average cost of a non-BEV is $48,000, which puts an undue, financial burden on American consumers. ⁸
  • Many U.S. consumers do not want to purchase an EV. A March 2023 JD Power survey showed that while 26.9% percent of the population is very likely to consider an EV for their next vehicle, 21% of those surveyed said they were very unlikely to consider an EV. Top concerns over purchasing include lack of charging availability and purchase price, and limited driving distance per charge. ⁹
  • It hurts consumers in rural markets with limited EV infrastructure and consumers who drive long distances for work and other daily necessities, making EV charging stations less accessible.
  • To To make BEV charging convenient, 28 million American homeowners must install their own chargers at an average cost of $1,300. ¹⁰
  • Urban consumers will also be heavily disadvantaged in an EV-centric market with limited access to charging stations for those who park on streets or parking garages that can't fully equip themselves with necessary charging stations.  

• It will require massive federal government spending. To meet the charging requirements for the proposed rules sales target, America will need to add an additional 1.2 million public chargers by 2032. That amounts to approximately 400 new chargers per day. This will require an 800% increase compared to the average of 50 new public chargers added per day last year. ¹¹
   
• The proposal would treat hybrids unfairly, essentially blocking them out of the marketplace and defining them as "dirty."
   
• A dozen states have recently introduced or passed legislation or resolutions affirming support for the internal combustion engine and for government to remain technology-neutral in the debate to reduce automotive emissions. The federal government should follow the states' lead.
   

Impact on small business:
 

• 95% percent of SEMA’s business members are small businesses.
   
• 55% of the manufacturer brands in SEMA Data make ICE-related components, consisting of parts for air & fuel, ignition, emission control and engine and exhaust.
   
• 33% of consumer spending on performance and accessory product goes toward upgrading ICE engines and drivetrains. That's nearly $17 billion dollars of the $51 billion specialty aftermarket industry.
   
• Small businesses will be most vulnerable to the disruptions caused by a seismic shift to battery-electric vehicles.
   
• They employ American workers with technical skills and create the often politically celebrated blue-collar jobs.
   
• The specialty automotive aftermarket has led technology innovation, making vehicles more fuel efficient, safer, and more appealing to consumers.
   
• Large automakers are losing billions a year in their electric-vehicle programs, despite the massive financial infusion of taxpayer dollars they receive from the government and subsidies to purchase EVs.
   
• If the large manufacturers are struggling, how are small businesses expected to survive?

More details about the proposed rules:
 

• Lowers the allowable emissions from ICE-powered vehicles over the course of five years by about 13 percent each year (see table at the end of this document for more detail).
   
• Creates an allowable limit for the fleet of vehicles produced by a single manufacturer that can only be met by a significant percentage of the fleet being EV.
   
• Vehicle emissions would only measure the vehicle's tailpipe and evap emissions. It will not include calculations with regard to the carbon footprint of the battery manufacturing or the power plant generating the electricity, or its future recyclability.
   
• The amount of raw materials in one BEV could instead be used to make 6 plug-in hybrid electric vehicles or 90 hybrid electric vehicles. The proposed rule aims to reduce multi-pollutant emissions, but it does not consider that those 90 hybrid vehicles reduce carbon 37 times as much as a single battery electric vehicle over the lifetime of the vehicles. ¹²
   
• New GHG standards would significantly reduce the allowed fuel consumption from bigger footprint cars forcing automakers to produce smaller cars. This would exacerbate the spread between what the consumer wants and what would be available for sale, likely leading to significant financial problems for the manufacturers.

¹ Cummins Fuel-Agnostic Engine Platform capability comes to Con-Expo | Cummins Inc.
² Our Total Cost of Ownership (TCO) Analysis | ClearFlame
³ Penske Truck Leasing Expands Use of Renewable Diesel with Shell - Penske Truck Leasing
⁴ UPS Recognized By EPA Among Top Environmental Performers With Smartway Excellence Award | About UPS
⁵ Toyota hydrogen fuel cell powertrain in commercial truck (sae.org)
⁶ Hydrogen cost-parity with diesel cut by up to eight years with new Loop Energy fuel cell - Loop Energy
⁷ AAG-Key-Facts-One-Pager.pdf (allianceautogas.com)
⁸ New-Vehicle Transaction Prices Trend Downward as Incentives Rise, According to Kelley Blue Book - Mar 8, 2023 (kbb.com)
⁹ https://www.jdpower.com/business/resources/ev-divide-grows-us-more-new-vehicle-shoppers-dig-their-heels- internal-combustion
¹⁰ What Does an EV Home Charger Cost? (jdpower.com)
¹¹ building the electric-vehicle-charging-infrastructure-america-needs-vf.pdf (mckinsey.com)
¹² Here's Why Toyota Isn't Rushing to Sell You an Electric Vehicle (jalopnik.com)

Source 1: Automotive Consulting Services

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Six SEMA members, along with SEMA President and CEO Mike Spagnola, testified before the U.S. Environmental Protection Agency (EPA) in opposition to the agency's recently proposed new federal emissions standards. You can watch and listen to their testimony here.