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New Analysis Shows That Stronger Federal Fuel Economy Standards Have Major Benefits for the U.S. Auto Industry As More Investors and Companies Call for Stronger Rules



September 27, 2021 /3BL Media/ - Strong federal fuel economy standards carry critical benefits for the long-term economic health of the U.S. auto industry, according to a new policy brief published today by the sustainability nonprofit Ceres.

The findings, produced by independent automotive industry analysts, compared the weakest and strongest fuel economy standards currently under consideration by the National Highway Traffic Safety Administration (NHTSA). It found that the strongest proposed standards would provide all automakers operating in the U.S., including the Detroit Three — Ford, GM, and Stellantis — with a cost-effective insurance policy against future fuel price shocks and would make them more globally competitive as electric vehicle adoption accelerates worldwide. Stronger standards were found to particularly benefit suppliers, who collectively employ 3.5 times more Americans than automakers do — regardless of whether gas prices rise or fall.

“Federal regulators need to adopt strong standards if they hope to meet climate goals and ensure a strong and competitive U.S. auto industry,” said Carol Lee Rawn, senior director of transportation at Ceres. “We cannot afford to delay in setting strong emissions standards when our ability to meet climate goals, and the future strength of the U.S. auto industry, are at stake.”

Its findings show that under the proposed standards:

  • Suppliers will earn up to $1.61 billion more in pretax profits when fuel prices are high. As suppliers account for about 78% of auto industry jobs and are less geographically concentrated than automakers, the strongest proposal would bring benefits to the industry on a national basis..
  • Automakers will earn approximately $1.39 billion more in pretax profits than under the weakest standards proposed by NHTSA, assuming high fuel prices during the regulatory period.
  • U.S. automakers will be more globally competitive and will be insulated against any future fuel price shocks.
  • Automakers will use more clean vehicle technologies, helping put the industry on a glide path to meet President Biden’s goal of 50% zero-emission vehicle sales and a 60% reduction in fleet average emissions by 2030.
  • Greater electric vehicle production will create strong incentives to build a domestic electric vehicle supply chain that can operate at higher volumes, helping to keep jobs in the U.S. as the global industry transitions to advanced technologies.

The brief was released as the public comment period closed for proposed vehicle regulations by the U.S. Environmental Protection Agency (EPA).

In a trio of comment letters submitted today to the EPA, two powerful corporate networks, which together represent more than 80 companies with a combined $1.3 trillion in annual revenue, and a group of investors representing $2.72 trillion in assets under management, also cited the benefits of strong regulations. The letters called for the adoption of the strongest proposed standards, and urged the EPA to set standards aligned with the U.S. climate goals of ensuring a 60% overall reduction in emissions by 2030 and 100% electric vehicle sales by 2035 at the latest.

“Strong emissions and fuel economy standards are not only necessary to meet U.S. climate goals, they will also help enhance the competitiveness of the U.S. auto industry,” said Julie Gorte, senior vice president of sustainable investing at IMPAX Asset Management, one of the signatories to the investor letter. “Analysis by Ceres shows that auto suppliers particularly stand to benefit under strong vehicle standards, and that the Detroit Three will remain profitable under the most stringent proposed standards. Climate change poses both physical and financial risks, and we cannot pass up this opportunity to protect our investments and our world.”

“We share a common goal of electrifying our fleets and networks as well as reducing our transportation carbon footprint, and we recognize that strong policies will be necessary to effect this critical transition,” read the letter released on behalf of the Corporate Electric Vehicle Alliance. The network represents companies with more than $1 trillion in annual revenue that collectively own, operate, or lease more than 1.3 million on-road vehicles in the U.S. alone.

“In order for our member companies to meet their own climate goals and commitments, strong policy is needed to ensure sectoral change, and ensure the availability of clean vehicles across the U.S., as well as drive the necessary shift to electrification,” reads the letter released on behalf of the Ceres BICEP Network. The network, whose members advocate for meaningful climate policies, includes 75 companies, which together represent more than 1.5 million employees.

The letters also cited a range of the economic and environmental benefits under stronger vehicle standards, including operational cost savings, business and consumer protection from fuel price volatility, enhanced competitiveness of the U.S. auto industry, improved air quality, and reduced carbon emissions.

About Ceres

Ceres is a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges. Through our powerful networks and global collaborations of investors, companies and nonprofits, we drive action and inspire equitable market-based and policy solutions throughout the economy to build a just and sustainable future. For more information, visit and follow @CeresNews.

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KEYWORDS: EPA, fuel economy, Clean Cars, electric vehicles, CERES

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