Petroleum-Equivalent Fuel Economy of Electric Vehicles: In Brief

June 6, 2024 R48086

Petroleum-Equivalent Fuel Economy of
Electric Vehicles: In Brief
June 6, 2024
Congressional Research Service
https://crsreports.congress.gov
R48086

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Petroleum-Equivalent Fuel Economy of Electric Vehicles: In Brief

he Biden Administration and recent Congresses have supported policies for a transition
toward a greater penetration of electric and other alternative-fueled vehicles in the U.S.
T transportation sector. On August 5, 2021, President Biden signed Executive Order 14037,
“Strengthening American Leadership in Clean Cars and Trucks.”1 The order required, among
other items, executive agencies to revisit and amend the federal standards that regulate air
pollution emissions, greenhouse gas (GHG) emissions, and fuel economy of new passenger cars
and light trucks. These standards include the Motor Vehicle Emission and Fuel Standards
promulgated by the U.S. Environmental Protection Agency (EPA), the Light-Duty Vehicle GHG
Emissions Standards promulgated by EPA, and the Corporate Average Fuel Economy (CAFE)
Standards promulgated by the National Highway Traffic Safety Administration (NHTSA). The
order also included a nonbinding electrification goal that “50 percent of all new passenger cars
and light trucks sold in 2030 be zero-emissions vehicles, including battery electric, plug-in hybrid
electric, or fuel cell electric vehicles.”
EPA published its proposal—the “Multi-Pollutant Emissions Standards for Model Years 2027 and
Later Light-Duty and Medium-Duty Vehicles”—on May 5, 2023, and announced the final rule on
March 20, 2024.2 NHTSA published its proposal—the “Corporate Average Fuel Economy
Standards for Passenger Cars and Light Trucks for Model Years 2027–2032”—on August 17,
2023.3 Further, in the 117th Congress, the Infrastructure Investment and Jobs Act (IIJA, P.L. 117-
58) and the law commonly referred to as the Inflation Reduction Act (IRA, P.L. 117-169)
provided federal funding and financial incentives for alternative-fueling infrastructure and
alternative-fueled vehicle deployment.4
Oversight of the Administration’s implementation of the vehicle-related provisions in the IIJA and
the IRA and of EPA’s and NHTSA’s automotive rulemakings has been under consideration in the
118th Congress through both hearings and legislation.5 Motor vehicle electrification and other
alternative-fueled vehicles in the United States could have a variety of effects on energy security,
the economy, and the environment. The effects of federal rulemakings on the promotion of such
vehicle technologies and their share of the vehicle market may continue to be of interest to
Congress.
Background
In March 2024, the U.S. Department of Energy (DOE) published a final rule to revise its
regulations for calculating a value for the “petroleum-equivalent fuel economy” of electric
vehicles (EVs).6 The 2024 rule amends the method of calculation that the agency finalized in June

1 Executive Office of the President, “Executive Order 14037 of August 5, 2021, Strengthening American Leadership in
Clean Cars and Trucks,” 86 Federal Register 43583-43585, August 10, 2021.
2 EPA, “Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty
Vehicles,” 89 Federal Register 27842-28215, April 18, 2024.
3 NHTSA, “Corporate Average Fuel Economy Standards for Passenger Cars and Light Trucks for Model Years 2027-
2032 and Fuel Efficiency Standards for Heavy-Duty Pickup Trucks and Vans for Model Years 2030-2035,” 88 Federal
Register 56128-56390, August 17, 2023.
4 For more information, see CRS In Focus IF12433, Automobiles, Air Pollution, and Climate Change, by Richard K.
Lattanzio; CRS Report R47675, Federal Policies to Expand Electric Vehicle Charging Infrastructure, by Melissa N.
Diaz and Corrie E. Clark; and CRS In Focus IF12600, Clean Vehicle Tax Credits, by Donald J. Marples and Nicholas
E. Buffie.
5 See, for example, H.R. 7570, Shrinkflation Reduction Act; H.R. 1435, Preserving Choice in Vehicle Purchases Act;
and H.R. 4468, Choice in Automobile Retail Sales Act of 2023, among others.
6 Department of Energy (DOE), Office of Energy Efficiency and Renewable Energy (EERE), “Petroleum-Equivalent
Fuel Economy Calculation,” 89 Federal Register 22041, March 29, 2024.
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Petroleum-Equivalent Fuel Economy of Electric Vehicles: In Brief

2000.7 This calculation is used by NHTSA to determine the fuel economy of EVs for compliance
purposes under the CAFE program.8 DOE’s 2024 rule applies to new EVs manufactured in model
year (MY) 2027 and beyond. These EVs would be covered under NHTSA’s 2023 proposed CAFE
rule, if finalized.9 NHTSA’s proposed CAFE rule would establish more stringent fuel economy
standards for the U.S. fleet of new passenger cars and light trucks during MYs 2027–2031, which
would increase, on average, at a rate of 2% per year for passenger cars and 4% per year for light
trucks, among other provisions.10
DOE’s 2024 rule addresses stakeholder concerns that the previous calculation was out of date and
could create a distortion in a manufacturer’s average fleetwide fuel economy. They argued that
this distortion was caused, in part, by DOE’s use of a “fuel content factor” (FCF) in the 2000 rule.
Congress had created the FCF in 1975 as a compliance incentive for liquid and gaseous
alternative-fueled vehicles under NHTSA’s CAFE program. While Congress did not explicitly
stipulate the use of the FCF for EVs in 1975, DOE adopted its use in the 2000 rule based on
agency interpretations. DOE’s 2024 rule phases out the use of the FCF, among other changes.
These changes will alter the calculations for measuring the fuel economy of EVs in the CAFE
program, which, as discussed below, may lead to a range of potential outcomes in the vehicle
manufacturing industry. In April 2024, 13 states and an industry group challenged DOE’s 2024
rule in the U.S. Court of Appeals for the 8th Circuit.11
For this report, EVs refer to plug-in electric vehicles, which include both (1) battery electric
vehicles (BEVs) that use only batteries to power the motor and use electricity from an external
source for recharging, and (2) plug-in hybrid electric vehicles (PHEVs), which use an electric
motor and an internal combustion engine for power and use electricity from an external source to
recharge the batteries. Further, this report does not address EPA’s light- and medium-duty vehicle
GHG emission standards. As stated above, DOE’s 2024 rule revises its regulations for calculating
a value for the “petroleum-equivalent fuel economy” of EVs; it does not address emissions of
GHG or other air pollutants. Thus, DOE’s calculation is not used by the EPA in administering its
vehicle standards.
Petroleum-Equivalent Fuel Economy
To assess and compare the energy efficiencies of EVs and other alternative-fueled vehicles in
relation to those of petroleum-fueled vehicles under the NHTSA’s CAFE program, an analysis
must convert the vehicles’ fuel consumption inputs into a common unit of measure. For example,
in the United States, the fuel economy of a petroleum-fueled vehicle is commonly rated in miles
per gallon (MPG), or the number of miles that the vehicle can travel using the energy produced
by combusting one gallon of fuel (e.g., gasoline or diesel) in its engine. The fuel economy of an
EV is commonly rated in kilowatt hours per 100 miles (kWh/100 mi), or the number of kilowatt
hours of electrical power it takes to propel the vehicle 100 miles. Converting the fuel economy
units of an EV (kWh/100 mi) into those of a petroleum-fueled vehicle (MPG) results in a value
commonly referred to as “miles per gallon equivalent” (MPGe). DOE and EPA report this value

7 10 C.F.R. §474.3.
8 49 C.F.R. Part 531.
9 Department of Transportation (DOT), National Highway Traffic Safety Administration (NHTSA), “Corporate
Average Fuel Economy Standards for Passenger Cars and Light Trucks for Model Years 2027-2032 and Fuel
Efficiency Standards for Heavy-Duty Pickup Trucks and Vans for Model Years 2030-2035,” 88 Federal Register
56128, August 17, 2023.
10 Ibid.
11 Petition for Review, Iowa v. Granholm, No. 24-1721 (8th Cir. Apr. 5, 2024).
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Petroleum-Equivalent Fuel Economy of Electric Vehicles: In Brief

on the federal government’s fuel economy website and on the fuel economy labels of new
automobiles.
For the purposes of calculating NHTSA’s CAFE compliance for EVs, however, the agencies are
required by statute to include the upstream energy inputs for the various fuel pathways.12 That is,
DOE must incorporate the energy efficiencies of petroleum’s production, refining, and
distribution, and the energy efficiencies of electricity’s generation and transmission, into its
petroleum-equivalent fuel economy calculation.13 This set of calculations is the focus of DOE’s
2024 rule.
Agency Authorities
NHTSA’s CAFE Standards
The Energy Policy and Conservation Act of 1975 (EPCA; P.L. 94-163), as amended, requires
NHTSA to administer CAFE standards for passenger cars beginning in MY1978 and for light
trucks (including most pickup trucks, passenger vans, and sport utility vehicles) beginning in
MY1979. The standards are designed to conserve energy—and in particular, petroleum—through
improvements in automotive fuel economy. They require each auto manufacturer to meet a target
for the sales-weighted fuel economy of its entire fleet of new automobiles sold in the United
States in each model year. NHTSA is responsible for prescribing the standards and enforcing the
civil penalties for non-compliance.14
EPA’s Determination of a Manufacturer’s CAFE
For the purposes of CAFE compliance, EPA is responsible for calculating the average fuel
economy of a manufacturer’s fleet “in a way prescribed by the [EPA] Administrator.”15 EPA bases
its calculations on standardized laboratory test procedures designed to ensure reliable and
repeatable reporting across different vehicle manufacturers, models, and makes. These test
procedures and calculations are outlined at 40 C.F.R. Part 600.
DOE’s “Petroleum Equivalency Factor” (PEF)
The Chrysler Corporation Loan Guarantee Act of 1979 (P.L. 96-185) directed the Secretary of
Energy to conduct an evaluation program for the inclusion of EVs in the calculation of average
fuel economy and determine “the value and implications of such inclusion as an incentive for the
early initiation of industrial engineering development and initial commercialization of electric
vehicles in the United States.” P.L. 96-185 also amended the CAFE program to require that, if an
automaker manufactures an EV, EPA must include in the calculation of average fuel economy the
equivalent petroleum-based fuel economy values determined by DOE for various classes of
EVs.16 These values are incorporated into the automaker’s sales-weighted fuel economy for its

12 The Energy Policy and Conservation Act of 1975 (EPCA; P.L. 94-163), as amended.
13 Generation efficiency “relates to the conversion of the limited resources into electricity, e.g., by combustion, heating
a boiler, and turning a turbine”; see 89 Federal Register 22045.
14 49 U.S.C. Chapter 329.
15 49 U.S.C. § 32902 and § 32904.
16 49 U.S.C. §32904(a)(1).
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Petroleum-Equivalent Fuel Economy of Electric Vehicles: In Brief

MY fleet of vehicles for compliance purposes. DOE must review these calculations each year and
propose necessary revisions based on the following factors:
1. The approximate electrical energy efficiency of the vehicle, considering the kind
of vehicle and the mission and weight of the vehicle.
2. The national average electrical generation efficiency and national average
electrical transmission efficiency.
3. The need of the United States to conserve all forms of energy and the relative
scarcity and value to the United States of all fuel used to generate electricity.
4. The specific patterns of use of EVs compared to petroleum-fueled vehicles.17
The PEF, as determined by DOE, is used to convert the measured electrical energy consumption
of an EV into a gasoline-equivalent fuel economy. For BEVs, the PEF applies to all measured
electrical energy consumption. For PHEVs, the PEF only applies to the measured electrical
energy consumption and does not apply to the measured petroleum energy consumption.18
DOE’s 2000 PEF Standard
In 2000, DOE published a final rule with procedures for calculating the petroleum-equivalent fuel
economy of EVs.19 The calculation procedure (see Equation 1) converts the measured electrical
energy consumption of an EV into a gasoline-equivalent fuel economy value (EG), and then
multiplies this value by the FCF (see Text Box) of 1/0.15 (effectively 6.67) to arrive at a final
petroleum-equivalent fuel economy value. Two additional factors are present in the equation—an
accessory factor (AF) and driving pattern factor (DPF)—but these usually are considered to have
a value of one, which would not influence the value of the PEF.
Equation 1:
PEF = EG*FCF*AF*DPF
To determine the gasoline-equivalent fuel economy value (EG) in Equation 1, the product of the
U.S. average fossil-fuel electricity generation efficiency (Tg), the U.S. average electricity
transmission efficiency (Tt), and a conversion factor (C) is divided by the petroleum refining and
distribution efficiency (Tp) (see Equation 2). Thus, EG accounts for expressing the relative energy
efficiency of the full energy cycles of gasoline and electricity.
Equation 2:
Tg*Tt*C
EG =

Tp
In the 2000 rule, DOE determined an EG of 12,307 watt-hours per gallon (Wh/gal), which
accounted for the efficiencies of fossil-fuel electric generation (Tg = 0.328), electric transmission
(Tt = 0.924), and petroleum refining and distribution (Tp = 0.830) at the time of the rulemaking,
and a standard conversion factor of electric energy to gallon of gasoline (C = 33,705 Wh/gal).

17 49 U.S.C. §32904(a)(2)(B).
18 For PHEVs, fuel economy accounts for the percentage utilization for petroleum and electricity.
19 DOE, EERE, “Electric and Hybrid Vehicle Research, Development, and Demonstration Program; Petroleum-
Equivalent Fuel Economy Calculation,” 65 Federal Register 36986, June 12, 2000.
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Petroleum-Equivalent Fuel Economy of Electric Vehicles: In Brief

Fuel Content Factor (FCF)
Under the CAFE program, Congress requires NHTSA to include the FCF in calculating the fuel economy of liquid
and gaseous alternative-fueled vehicles as an incentive for manufacturers to design engines to conserve petroleum.
The FCF is understood to be a measure of the relative content of petroleum within an alternative fuel. Per EPCA,
a gallon of a liquid or gaseous alternative fuel used to operate alternative-fueled vehicle is deemed to contain 0.15
gallon of “petroleum” fuel.20 The FCF for liquid and gaseous alternative-fueled vehicles is unaffected by DOE’s
2000 and 2024 rules.
The FCF is not required by statute to be used in calculating the fuel economy of EVs. However, in DOE’s 1999
proposed rule, the agency included the FCF in its PEF calculation for EVs and identified the fol owing rationale for
such an approach:
•
The FCF is consistent with existing regulatory and statutory procedures for other types of alternative-fueled
vehicles,
•
It provides a similar treatment to manufacturers of all types of alternative-fueled vehicles, and
•
It is a simple and straightforward approach, compared to other approaches considered.21
Further, in the 2000 final rule, DOE suggested that the FCF, in part, accounts for the consideration of “the relative
scarcity and value to the United States of all fuel used to generate electricity.”22
DOE’s 2024 PEF Standard
DOE’s 2024 rule grants a 2021 petition for rulemaking submitted to the agency from the Natural
Resources Defense Council and the Sierra Club.23 The petitioners asserted that the data
underlying the previous regulation were outdated, resulting in higher imputed values of fuel
economy for EVs. They argued that a higher imputed value for EVs—to which the FCF
contributed—distorted a manufacturer’s calculation of its average fleetwide fuel economy. This
enabled a situation where fewer efficiency improvements would be required for the remainder of
the manufacturer’s fleet (i.e., petroleum-fueled vehicles) to meet compliance with CAFE
standards.
DOE’s final rule modifies the methodology for calculating the PEF by
1. Updating the electric generation mix projection to account for changes in
technologies and policies.
2. Changing from EG to a cumulative gasoline-equivalent fuel economy value
(CEG), which is determined by multiplying EG by the corresponding annual share
of lifetime vehicle miles traveled based on the survivability-weighted lifetime
mileage schedule derived by NHTSA.24 The 2024 rule set the CEG at 28,996

20 49 U.S.C. §32905(a).
21 DOE, EERE, “Electric and Hybrid Vehicle Research, Development, and Demonstration Program; Petroleum-
Equivalent Fuel Economy Calculation,” 64 Federal Register 37905, July 14, 1999.
22 DOE, EERE, “Electric and Hybrid Vehicle Research, Development, and Demonstration Program; Petroleum-
Equivalent Fuel Economy Calculation,” 65 Federal Register 36986, June 12, 2000, p. 21535.
23 DOE, EERE, “Petroleum Equivalence Factor, Notification of Petition for Rulemaking,” 86 Federal Register 73992,
December 29, 2021.
24 The survivability-weighted lifetime mileage schedule is derived from NHTSA’s CAFE rulemaking to account for the
length of time that vehicles remain in the on-road fleet and how many miles are driven by new and used vehicles of
different ages. For more information, see DOT, NHTSA, “Chapter 4: Consumer Response to Manufacturer Compliance
Strategies,” Draft Technical Support Document: Corporate Average Fuel Economy Standards for Passenger Cars and
Light Trucks for Model Years 2027 and Beyond and Fuel Efficiency Standards for Heavy-Duty Pickup Trucks and Vans
for Model Years 2030 and Beyond, July 2023, p. 4-5, https://www.nhtsa.gov/sites/nhtsa.gov/files/2023-08/CAFE-2027-
2032-HDPUV-2030-2035-Draft-TSD-tag.pdf.
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Wh/gal—which also accounted for increased U.S. average electricity generation
efficiency (Tg), which now includes metrics for nuclear and renewable energy
generation; increased Tt; reduced Tp; and a forward-looking electric generation
mix.
3. Phasing out the use of the FCF between MY2027 and MY2030.
4. Setting values for AF and DPF equal to 1.00.
Table 1 presents DOE’s revised PEF values.
Table 1. PEF Values for MY2024-MY2030 EVs
Model Year
CEG
FCF
AF
DPF
PEF
2024-2026
12,307a
1
1.0b
1.0
82,049

0.15
2027
28,996
1
1.0
1.0
79,989

0.3625
2028
28,996
1
1.0
1.0
50,427

0.575
2029
28,996
1
1.0
1.0
36,820

0.7875
2030+
28,996
1.0
1.0
1.0
28,996
Source: Table 7 of DOE, Office of Energy Efficiency and Renewable Energy, “Petroleum-Equivalent Fuel
Economy Calculation,” 89 Federal Register 22053, March 29, 2024.
Notes: “CEG” is cumulative gasoline-equivalent fuel economy value; “FCF” is fuel content factor; “AF” is
accessory factor, “DPF” is driving pattern factor; “PEF” is petroleum equivalency factor. Values in last column
may not be the product of the other columns due to rounding.
a. 12,307 Wh/gal is the EG, not the CEG.
b. Assumes no petroleum-powered accessories for MY2024-MY2026 EVs.
In the proposed version of the 2024 final rule, DOE would have eliminated the FCF altogether,
beginning in MY2027.25 In the 2024 final rule, while DOE concludes that “removing the fuel
content factor will, over the long term, further the statutory goals of conserving all forms of
energy while considering the relative scarcity and value to the United States of all fuels used to
generate electricity,”26 the agency also states:
[W]hile the recently adopted IIJA and IRA are in effect, the critical incentives and support
for EVs and charging infrastructure that these laws provide are in the early stages of
implementation and will become more fully operative and effective over time. DOE agrees
with commenters that there is still an opportunity to incentivize additional EV production,
and the resulting greater petroleum conservation, through a fuel content factor over the
next several years.27
Thus, DOE retains the current FCF through MY 2026, under a revised statutory basis, and
gradually phases it out between MY2027 and MY2030.

25 DOE, EERE, “Petroleum-Equivalent Fuel Economy Calculation,” 88 Federal Register 21525, April 11, 2023.
26 89 Federal Register 22050.
27 Ibid.
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Petroleum-Equivalent Fuel Economy of Electric Vehicles: In Brief

Example Compliance Calculations
Below is an example of how the PEF affects fuel economy values for EVs.
An EV rated at 28 kWh/100 mi is listed as having a 120 MPGe fuel economy based on the
standard conversion factor of electric energy to gallon of gasoline of 33,705 Wh/gal. This value
only considers engine efficiencies, and is the one listed on the federal government’s fuel economy
website and on the fuel economy labels of new automobiles. This calculation does not include the
PEF.
For CAFE compliance purposes, inclusive of the PEF, the MPGe of a MY2030 EV rated at 28
kWh/100 mi would be calculated as follows under DOE’s 2024 rule:
100 mi
1 kWh
28,996 Wh
*
*
= 104 MPGe
28 kWh 1000 Wh
1 gal
A MY2024 EV rated at 28 kWh/100 mi would be calculated as follows under DOE’s 2000 rule:
100 mi
1 kWh
82,049 Wh
*
*
= 293 MPGe
28 kWh 1000 Wh
1 gal
Figure 1 shows the change in PEF by MY as a result of the 2024 rule.
Figure 1. Effective Miles per Gallon Equivalent for Electric Vehicles According to
Different Methods of Calculation
for an electric vehicle rated at 28 kWh/100 mile for MY2024-MY2030

Source: CRS.
Notes: The effective miles per gallon equivalent for electric vehicles for each model year is used for calculating
the average fuel economy of a manufacturer’s fleet for a given model year. Depicted are the effective miles per
gallon equivalent under three approaches: (1) rated fuel economy assumes a standard conversion of 33,705
Wh/gal; (2) 2000 rule refers to the Department of Energy (DOE) final rule with a set (petroleum equivalency
factor) PEF of 82,049; and (3) 2024 rule refers to the DOE final rule with a phase-out of the fuel content factor,
which gradually decreases the PEF to 28,996 by MY2030.
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Petroleum-Equivalent Fuel Economy of Electric Vehicles: In Brief

Thus, the 2024 rule would cause an EV rated at 28 kWh/100 mi to have a much smaller impact on
the sale-weighed fleet average for a manufacturer’s CAFE compliance in MY2030 than the 2000
rule.
Potential Implications of DOE’s Rule
DOE’s 2024 rule raises several potential policy and legal implications which could merit further
consideration.
The FCF serves as an incentive for manufacturers to include alternative-fueled vehicles in their
fleet under the CAFE program. Removing the FCF from calculations assessing the CAFE fuel
equivalency for EVs may disincentivize the production of EVs while continuing to incentivize the
production of liquid and gaseous alternative-fueled vehicles. Congress may consider the extent to
which alternative-fueled vehicles should continue to be incentivized under NHTSA’s CAFE
program, and whether the FCF should remain only for liquid and gaseous alternative-fueled
vehicles, or if it should extend to all—or should be removed from all—alternative-fueled vehicles
for consistency within the program.
The PEF is required by statute and under DOE’s rule to include a consideration of upstream
energy inputs for EVs. However, in determining the fuel economy rating for non-EVs under the
CAFE program, no consideration is taken of upstream energy inputs for petroleum, natural gas,
methanol, or biofuel vehicles. Such a consideration would likely decrease the efficiency of these
vehicles. Congress may consider whether and how upstream energy inputs should be addressed
under NHTSA’s CAFE program, and whether they should remain solely for EVs, or if they
should extend to all—or be removed from all—compliance calculations for consistency within
the program.
Automakers have commented that an overly strict NHTSA rule or reduced PEF value could
subject them to higher civil penalties under the CAFE program. This argument has been echoed
by some Members of Congress in a letter to NHTSA.28 Others in Congress have expressed
concerns about the effect of the PEF on NHTSA’s credit trading and transferring option between
automotive manufacturers that are not in compliance with the CAFE standard and those
manufacturers that exceed the CAFE standard.29 Some stakeholders have refuted arguments from
automakers and questioned the assumptions underlying industry’s claims.30 The effects of federal
rulemaking on industry depend upon not only the requirements of NHTSA’s CAFE program,
which could rely upon DOE’s 2024 rule to determine the effective miles per gallon equivalent for
electric vehicles, but also the separate requirements of EPA’s GHG emissions standards, which
were published in April 2024.31

28 Letter from Mike Crapo, United States Senator, et al., to Ms. Sophie Shulman, Deputy Administrator, National
Highway Traffic Safety Administration, January 23, 2024, https://www.crapo.senate.gov/imo/media/doc/
nhtsacafestandards01242024.pdf.
29 Letter from Rick Scott, United States Senator, et al., to The Honorable Gene Dodaro, Comptroller General,
Government Accountability Office, May 20, 2024, https://www.rickscott.senate.gov/services/files/66086F5E-639F-
4E59-955C-7266997B46E2.
30 See, for example, Union of Concerned Scientists, “Automakers Opt Out of Cleaning Up Their Vehicles … But at
What Cost?” November 9, 2023, https://blog.ucsusa.org/dave-cooke/automakers-opt-out-of-cleaning-up-their-
vehiclesbut-at-what-cost/.
31 Environmental Protection Agency, “Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-
Duty and Medium-Duty Vehicles,” 89 Federal Register 27842, April 18, 2024.
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Petroleum-Equivalent Fuel Economy of Electric Vehicles: In Brief

Depending on NHTSA’s standards, automakers could respond to compliance requirements in a
number of ways. They could increase the efficiency of internal combustion engine vehicles in
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Petroleum-Equivalent Fuel Economy of Electric Vehicles: In Brief

their fleet; they could change the configuration of their fleet to include more EVs; and/or they
could change the configuration of their fleets to include more liquid and gaseous alternative-
fueled vehicles. Other options could include carrying forward credits earned in a prior model year
or buying or transferring credits from another fleet category or another automaker. Alternatively,
automakers could provide NHTSA with a plan to make up the difference in the next three years
(carry back credits) or potentially pay a civil penalty.
In April 2024, 13 states and an industry group challenged DOE’s 2024 rule in the U.S. Court of
Appeals for the 8th Circuit.32 The petition argues that the agency (1) lacked statutory authority to
impose a fuel-content factor on EVs; (2) lacked authority to apply its revised calculation starting
in MY2027 because Congress requires an annual review of the PEF; (3) failed to perform an
environmental impact statement under the National Environmental Policy Act; and (4) violated
the Administrative Procedure Act because the rule is “arbitrary and capricious.”
DOE’s 2024 rule highlights the challenges involved in comparing motor vehicles powered by
different sources of energy and how underlying assumptions in the calculations can lead to
economic impacts. These challenges may arise in other policy determinations in the
transportation sector.

Author Information

Corrie E. Clark
Richard K. Lattanzio
Specialist in Energy Policy
Specialist in Environmental Policy

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32 Petition for Review, Iowa v. Granholm, No. 24-1721 (8th Cir. Apr. 5, 2024).
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