Under new CAFE rules plug-ins, natural gas, hydrogen cars are “incentive multipliers”

The new Corporate Average Fuel Economy (CAFE) standards for model year 2017-2025 vehicles was finalized at 54.5 miles per gallon today. The official rules document, though, is a whopping 1,230 pages long, and it take a while to decipher what in there. Things like the incentives for what the Environmental Protection Agency calls “game changing” advanced vehicle technologies. You can download the whole thing in PDF, but here are the pertinent points when it comes to the incentives.

First off, they’re not incentives for consumers, the way you can get a $7,500 tax credit for buying a high-capacity plug-in vehicle. Instead, they are corporate credits, which allow electric vehicles, plug-in hybrids and fuel cell vehicles (rules for natural gas credits are in the works) to give the company making the cars a bit of breathing room with its gas-only vehicles by acting as “incentive multipliers.” It turns out, Businessweeks says, that Honda, which was one of the automakers not in favor of these higher standards, could benefit greatly from them because of the fact that it sells the Civic Natural Gas, which qualifies for the incentives. Here’s how the incentives work:

This multiplier approach means that each EV/PHEV/FCV/CNG vehicle would count as more than one vehicle in the manufacturer’s compliance calculation. EPA is finalizing, as proposed, that EVs and FCVs start with a multiplier value of 2.0 in MY 2017 and phase down to a value of 1.5 in MY 2021, and that PHEVs would start at a multiplier value of 1.6 in MY 2017 and phase down to a value of 1.3 in MY 2021. EPA is finalizing multiplier values for both dedicated and dual fuel CNG vehicles for MYs 2017-2021 that are equivalent to the multipliers for PHEVs. All incentive multipliers in EPA’s program expire at the end of MY 2021 (page 57).

There is also this:

For EVs, PHEVs and FCVs, EPA is also finalizing, as proposed, to set a value of 0 g/mile for the tailpipe CO2 emissions compliance value for EVs, PHEVs (electricity usage) and FCVs for MY 2017-2021, with no limit on the quantity of vehicles eligible for 0 g/mi tailpipe emissions accounting. For MY 2022-2025, EPA is finalizing, as proposed, that 0 g/mi only be allowed up to a per-company cumulative sales cap, tiered as follows: 1) 600,000 EV/PHEV/FCVs for companies that sell 300,000 EV/PHEV/FCVs in MYs 2019-2021; or 2) 200,000 EV/PHEV/FCVs for all other manufacturers. Starting with MY 2022, the compliance value for EVs, FCVs, and the electric portion of PHEVs in excess of individual automaker cumulative production caps must be based on net upstream accounting (page 57).

So, basically, if you sell an advanced powertrain vehicle, it can count more toward your CAFE requirements than your high-mpg gas-powered car. The EPA is obviously trying to balance a lot of different powertrain types in this document, and that’s a good “all of the above” strategy. Since yesterday’s announcement, the Electric Drive Transportation Association issued a relatively positive statement about 54.5 mpg, but is reserving a bit of judgment:

EDTA is conducting further analysis of the rule and looks forward to continuing our communication with the EPA and DOT on the best ways to achieve our common goals.

We’ll see where things go from here.