Automakers Get Huge Break On EV Transition

Photo: Erin Kirkland / Bloomberg (Getty Images)
Photo: Erin Kirkland / Bloomberg (Getty Images)

Good morning! It’s Thursday, March 21, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

1st Gear: Biden Admin. Revises Emissions Rules

The Biden Administration finalized tough new greenhouse gas standards for vehicles sold in the U.S., but it did ease up on automakers that are worried they might be too strict to actually comply with in the near future. They’ve now got a few more years before standards increase more steeply. Here’s what happened. From the Detroit Free Press:


A year ago in April, the U.S. Environmental Protection Agency (EPA) shocked the auto industry and heartened environmentalists by proposing tailpipe emissions standards so strict that, by model year 2032, automakers would virtually be required to ensure that two-thirds of all new cars and light-duty trucks sold were electric vehicles (EVs) or potentially face stiff fines.

The final standards released Wednesday didn’t back off that ambitious 2032 target in terms of the fleetwide reduction in greenhouse gases, including carbon monoxide, hydrocarbons and others that are considered dangerous to human health and contribute to climate change.

But they did change the amount by which those reductions occur beginning with model year 2027, making them somewhat less strict compared with the current standards in the first couple of years, before ramping them up more steeply later. And while the original proposal — which was always technology-neutral in theory, meaning automakers could sell any cars and light-duty trucks they wanted as long as they hit the fleetwide reductions — noted that the likely and least costly path toward hitting them meant an enormous growth in the sales of plug-in electric vehicles (PEVs), which accounted for only a portion of the 9% of new car sales last year, the final rule outlined several pathways that could work.

For instance, the EPA said, under one likely pathway, the percentage of light-duty trucks and cars powered by internal combustion engines (ICEs) could drop from 64% of new vehicle sales in model year (MY) 2027 and 58% in MY 2028, to 29% in MY 2032; while the percentage of battery-only electric vehicles (BEVs) could increase from 26% in 2027 and 31% in 2028, to 56% in 2028, with other EVs — pure hybrids and plug-in hybrids — making up the difference.

In the proposed rule last year, however, the pathway foresaw BEVs needing to account for 36% of new cars in 2027 and 45% in 2028 — a much steeper sales curve.

Shockingly, this rule change isn’t sitting well with environmental groups. The director of the Center for Biological Diversity’s Safe Climate Transport Campaign said the EPA “caved to pressure from Big Auto, Big Oil and car dealers,” which will allow more damage to the planet and public health up front.

Other groups were a bit more pragmatic with the whole situation. Freep reports they are still happy with the plan and recognize the challenges facing the industry during the transition to EVs.

President Joe Biden, whose administration worked with environmentalists, the automakers and the UAW in reaching the final rule — and who has been chastised by Republicans and former President Donald Trump for implementing what they have called an EV “mandate” — issued a statement saying he’s following through on a promise to try to make half of all new cars and trucks sold by 2030 be zero-emission.

“Today, we’re setting new pollution standards for cars and trucks,” he said. “U.S. workers will lead the world on autos making clean cars and trucks, each stamped ‘Made in America.’ You have my word.”

EPA Administrator Michael Regan also noted that, with transportation sources making up the largest percentage of greenhouse gas pollutants, the new standards will protect public health while creating new jobs for workers building vehicles that comply with them. “The standards will slash over 7 billion tons of climate pollution, improve air quality in overburdened communities and give drivers more clean vehicle choices while saving them money,” he said.

You all should really head over to the Detroit Free Press for an even fuller picture of what’s going on and what the political implications of this move from the Biden Administration are.

2nd Gear: Fiat 500e May Not Be All “e”

Fiat could end up adding a mild-hybrid gasoline engine to its (currently all-electric) 500e model lineup.

A mild-hybrid 500e could (and probably would) be powered by the 1.0-liter 70-horsepower FireFly gasoline engine used in the previous internal combustion 500 and the current Panda minicar. Production could start as soon as late 2025 or early 2026. From Automotive News:

Early this month, Fiat asked suppliers for quotations to increase 500e production at Stellantis’ Mirafiori factory to 175,000 units annually from the 77,260 built in 2023. The news of the potential conversion was first reported by Il Corriere della Sera and confirmed to Automotive News Europe by suppliers.

Of that total, 100,000 would be gasoline models, the suppliers said on condition of anonymity to disclose confidential information, and because Fiat has not yet decided whether to proceed.

The move to convert a car designed to be electric-only to internal combustion would be highly unusual, not the least because Fiat already sells a gasoline-engine 500, although it predates the 500e by more than a decade and is slightly smaller. That model, on the market since 2007, is built in Tychy, Poland.

Adding a gasoline version of the 500e to Mirafiori could ease unions’ fears about declining 500e volumes as well as help satisfy the Italian government’s goal of maintaining the country’s auto production at no less than 1 million per year. Stellantis is the only volume manufacturer in Italy.

In 2023, Fiat sold a little over 100,000 gasoline 500s and over 62,000 electric 500es in Europe.

AutoNews says there are several factors at play here when it comes to an ICE 500.

The first is internal. Fiat, with a target of being an electric-only brand in Europe by 2030, has decided not to upgrade the current 500 ICE model to comply with new EU safety and cybersecurity rules coming in July. Instead, it is revamping the Panda to comply and keep the model in production until at least 2027.

The Panda would be Fiat’s ICE minicar, while the 500e would cover the minicar segment for EV buyers.

The second is external. Electric car sales in Europe are slowing because of higher interest rates, a lack of disposable income because of inflation and cutbacks in EV incentives in large markets such as Germany.

Italian unions worry that lagging 500e demand in Europe could lead to Fiat reducing Mirafiori output to 40,000 to 50,000 from the 100,000 planned for this year, even though the model will also be exported to the U.S.