Powertrain mix

CAFE CO2 Requirements

CAFE/CO2 requirements are set to change in the US. How will this affect the powertrain mix?

Kevin Riddell, Senior Manager, Americas Powertrain Forecasts

19 April 2018


CO2 requirements

CAFE/CO2 requirements set to change in the US

As expected, EPA Administrator Scott Pruitt recently announced that the CO2 regulations currently enforced in the US are unacceptable, disagreeing with the initial assessment released in January 2017. In a press conference on 2 April, Pruitt also stressed the importance of a unified, national set of standards.

As noted in the Mid-Term Evaluation’s Final Assessment, the feedback received during the reopened comment period was diverse; there was plenty of support for both keeping the standards unchanged and for reducing the requirements, with the Administrator siding with the need for change. The upshot is that we have now entered a waiting period as new regulations are drafted, publically reviewed and submitted. While flat-lining or rolling back the fleet requirement is possible, a delay in reaching the targets by increasing the timeline is more likely. But how much would this change really affect the powertrain mix of Light Vehicles in the US?

The electrification push is well under way and we are likely to be in the last cycle of a high level of new engine and transmission activity across the industry, as significant funding for internal combustion (IC) engine development is being diverted to electrification initiatives. During this lengthy transition, evolutionary changes will continue as new conventional programs will occasionally surface and growth in hybridization will keep plenty of fuel remaining in the IC powertrain’s longevity tank. Softening the national standards would, theoretically, provide automakers with the opportunity for further electrification research and cost reduction. In reality, however, these changes would probably be used to balance the cost of required electrification development and production in other parts of the world with more advanced standards.

“But how much would this change really affect the powertrain mix of Light Vehicles in the US?”

With electrified models making up just 2-3% of US sales in the last few years, OEMs managed to exceed the US CO2 requirements. From 2005 to 2016, the average engine displacement dropped from 3,360 cc to 2,850 cc, a reduction of 15%, while average horsepower increased by 10% to 230. The significant shift from cars to trucks has required more power (not displacement) to push the generally larger and heavier models. Assuming no changes to California’s Zero Emission Vehicle (ZEV) legislation, a relaxing of the EPA/NHTSA requirements would cause the following shifts in the market:

  • Extend the adoption timeline of lower-emission vehicles, but not eliminate it, as the rest of the world pushes a faster agenda for lower emissions.
    • Planned evolution of IC powertrains – including engine downsizing, increasing numbers of transmission gears, variable compression technology and other IC-based technologies – will continue to adequately meet CO2 requirements for a longer timeframe.
  • Slow the expected expansion of electrified vehicle sales, including mild hybrids, in non-ZEV states. This would constrain EV volumes in a period when a significant number of launches are planned and could impact the regional focus of the developing charging infrastructure.

Source: EPA.GOV