EPA Updating Fuel Economy Standards: How Will Automakers Respond?

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The Environmental Protection Agency (EPA) released new fuel economy standards for the auto industry at the end of 2021. By 2026, fleets will need an average consumption rate of 40 miles per gallon. Right now, the agency’s target is 32 mpg.
Mandatory changes will be incremental. Automakers are supposed to improve year over year by 5 to 10%. 
The EPA also set up a system that allows companies to collect credit for years when they exceeded targets and use them against later, stricter standards or sell them to companies who can’t reach the new targets. 
Jerry read through the details of the EPA’s new rules to get a clearer picture of how this will affect automakers and drivers.
A car at the pump refueling.
The EPA trying to coax automakers into improving fuel economy.

How will the EPA’s new rules affect automakers?

On the whole, most automakers won’t have much trouble achieving the new targets set out by the EPA since they’re transitioning to electric powertrains anyway. 
The new mpg averages are meant to push the companies dragging their feet into the EV revolution while rewarding the movement’s leaders. Electric car brands like Tesla and Rivian will be able to make easy cash by selling their credits to companies that are more reliant on gas.
Luxury and supercar brands like Ferrari and Lamborghini will have a slightly tougher time adjusting, but they aren’t alone. Toyota, the largest car manufacturer in the world, has also been slow on the uptake for moving into the electric era.

How will the new fuel economy standards affect drivers?

How these changes will trickle down to consumers remains to be seen, but Kelley Blue Book says the EPA expects the industry’s improved fuel economy numbers to save Americans money. 
The health benefits associated with improved air quality will inevitably make life less expensive, but the most direct way the new rules will keep money in your pockets is at the pump. 
Improved technology might increase starting prices for cars, but the EPA estimates that over the lifetime of the average vehicle, savings on fuel will exceed those increases by nearly $1,100. Collectively, the net benefits for the nation from these new rules are estimated at $190 billion.

Does fuel economy impact car insurance rates?

While fuel consumption and car insurance rates don’t tend to be directly related, some car-buying decisions can lower both expenses. 
The size of your vehicle, for example, tends to raise or lower both costs in the same direction. Small vehicles like cars and crossovers generally use less gas and can be insured for less than larger ones like full-size SUVs and pickup trucks.
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