How an obscure energy calculation could dramatically speed up America's EV future

With the new calculation, 98% of sales would have to be for the all-electric Ford F-150 Lightning models.

Of course, automakers produce more than just trucks, which use more energy than cars and smaller SUVs. An alternative scenario helps illustrate how the rule comes into play with a more diverse product mix.

Imagine a world where Chevrolet only sold the Silverado pickup, its most popular vehicle, and the Bolt, a popular but temporarily discontinued EV. The new energy calculation would push the automaker to triple Bolt sales while selling far fewer Silverados.

Even if Biden chooses to scale back his proposed fuel economy targets — or former President Donald Trump does away with them in a potential second term — the wonkish petroleum equivalency update will make it harder for automakers to use EV sales as a powerful counterbalance to gas-powered car sales.

‘Less well-known but hugely significant’

The Biden administration originally proposed the petroleum equivalency rule on April 11 last year. The following day, the EPA released its landmark tailpipe emission proposal — which became a lightning rod for political attention and debate.

It elicited more than 4,500 public comments from private citizens, businesses and lobbyists. The Energy Department rule, by contrast, got only 49. At one point, the agency actively solicited additional feedback from major automakers.

Most of the public comments came from industry players who opposed the change. John Bozzella, president of the Alliance for Automotive Innovation, called the rule “less well-known but hugely significant.”

The American Automotive Policy Council, which represents the interests of Ford, General Motors Co. and Stellantis, warned last year that the new rule would cause steep fines on the Detroit Three and undermine their investments into EVs. The council urged the government to hold off on finalizing the rule before other regulations were finalized.

The only automakers to support the rule as initially proposed were Tesla and Rivian Automotive Inc., which make only all-electric vehicles.

Industry opponents did win two important concessions from the Biden administration in the final rule. Most importantly, the new calculation will phase in between 2027 and 2030, rather than going into effect all at once in 2027, as originally proposed.

The Alliance had argued there was not enough lead time for the industry to adjust to a sudden implementation.

The Biden administration also softened — by about 25% — how much it was downgrading EV fuel economy. The original proposal pegged the PEF at 23,160 watt-hours/gal, whereas the final will land at 28,996 Wh/gal in 2030

Bozzella said the phase-in compromise was “positive” and commended the Biden administration for better harmonizing the rule with the EPA's tailpipe emissions rule and proposed CAFE standards.

"My sense is that agency coordination is starting to happen across the government," he wrote in a blog post. But he still called into question why fuel economy standards should even exist for fully electric vehicles. “I’m not sure there’s a need for CAFE in an electric vehicle world,” Bozzella said.

Even with those compromises, environmental groups cheered the new rule.

“The automakers’ free ride is over,” said Pete Huffman, a senior attorney at NRDC. "This important update from the Department of Energy will curtail automakers’ use of phantom credits they used to keep selling gas guzzlers. They now need to hit the accelerator on more fuel-efficient vehicles, saving consumers money at the pump.”