The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule III for Model Years 2022 to 2031 Passenger Cars and Light Trucks

A. Executive Summary

B. Overview of the Final Rule

1. Summary of the NPRM

2. Public Participation Opportunities and Summary of Comments

3. Changes to the CAFE Model in Light of Public Comments and New Information

4. Final Standards--Stringency

5. Final Standards--Impacts

6. Final Standards Are Maximum Feasible II. Technical Foundation for the Final Rule Analysis

A. Why is NHTSA conducting this analysis?

1. What are the key components of NHTSA's analysis?

2. How do statutory requirements shape NHTSA's analysis?

3. What updated capabilities and assumptions does the current Model reflect as compared to the version used in the analysis of the 2024 final rule?

B. What is NHTSA analyzing?

C. What inputs does the compliance analysis require?

1. What inputs does the analysis require for 2022-2026?

2. What inputs does the compliance analysis require for 2027- 2031?

a. Technology Options and Pathways

b. Defining Manufacturers' Current Technology Positions in the Analysis Fleet

c. Technology Effectiveness Values

d. Technology Costs

e. Simulating Tax Credits

f. Technology Applicability Equations and Rules

D. Technology Pathways, Effectiveness, and Cost

1. Engine Paths

2. Transmission Paths

3. Hybridization Paths

4. Road Load Reduction Paths

5. Mass Reduction

6. Aerodynamic Improvements

7. Low Rolling Resistance Tires

8. Simulating Air-Conditioning Efficiency and Off-Cycle Technologies

E. Consumer Responses to Manufacturer Compliance Strategies

1. Macroeconomic and Consumer Behavior Assumptions

2. Fleet Composition

a. Sales

b. Scrappage

3. Changes in Vehicle Miles Traveled

4. Changes to Fuel Consumption

F. Simulating Emissions Impacts of Regulatory Alternatives

G. Simulating Economic Impacts of Regulatory Alternatives

1. Private Costs and Benefits

2. External Costs and Benefits

H. Simulating Safety Effects of Regulatory Alternatives

1. Mass Reduction Impacts

2. Sales/Scrappage Impacts

3. Rebound Effect Impacts

4. Value of Safety Impacts III. Regulatory Alternatives Considered in This Final Rule

A. General Basis for Alternatives Considered

1. MYs 2022-2026

2. MYs 2027-2031

3. Minimum Domestic Passenger Car Standard Analysis Update

B. Regulatory Alternatives Considered

1. No-Action Alternatives for PCs and LTs

a. No-Action Alternative for the MYs 2022-2026 Amendment

b. No-Action Alternative for the MYs 2027-2031 Amendment

2. Action Alternatives for Passenger Cars and Light Trucks

a. Action Alternatives for MYs 2022-2026 Amendment

(1) Alternative 1

(2) Alternative 2

(3) Alternative 3--Preferred Alternative

(4) Alternative 4

(5) Alternative 5

b. Action Alternatives for MYs 2027-2031 Amendment

(1) Alternative 1

(2) Alternative 2

(3) Alternative 3--Preferred Alternative

(4) Alternative 4

(5) Alternative 5 IV. Effects of the Regulatory Alternatives

A. Effects of the Regulatory Alternatives for MYs 2022-2026

B. Effects of the Regulatory Alternatives for MYs 2027-2031

1. Effects on Vehicle Manufacturers

2. Effects on Society

3. Physical and Environmental Effects

4. Sensitivity Analysis V. Basis for NHTSA's Conclusion That the Final Standards Are Maximum Feasible

A. The Energy Policy and Conservation Act of 1975 (EPCA), as Amended by the Energy Independence and Security Act of 2007 (EISA)

1. Administrative Provisions Governing CAFE Standard Setting

a. Lead Time, Amendatory Authority, and the Number of Model Years for Which Standards May Be Set at One Time

b. Separate Standards for Passenger Automobiles and Non- Passenger Automobiles

c. Minimum Standards for Domestic Passenger Automobiles

d. Attribute-Based Standards Defined by a Mathematical Function

e. 35 Miles per Gallon in 2020

2. Maximum Feasible Standards

a. Technological Feasibility

b. Economic Practicability

c. The Effect of Other Motor Vehicle Standards of the Government on Fuel Economy

d. The Need of the United States To Conserve Energy

(1) Consumer Costs and Fuel Prices

(2) National Balance of Payments

(3) Environmental Effects

(4) Foreign Policy Implications

e. Factors That NHTSA Is Prohibited From Considering

f. Additional Considerations Relevant to NHTSA's Statutory Determination of Maximum Feasibility

B. Other Statutory Requirements

1. Administrative Procedure Act

2. National Environmental Policy Act

C. Evaluating the Statutory Factors and Other Considerations To Arrive at the Final Standards

1. Why is NHTSA's conclusion different from the 2020, 2022, and 2024 final rules?

2. Considerations Justifying the Final Standards

a. Technological Feasibility

b. Economic Practicability

c. Effect of Other Motor Vehicle Standards of the Government on Fuel Economy

d. The Need of the United States To Conserve Energy

e. Synthesis of the Record Supporting Alternative 3 as Maximum Feasible

3. Final Supplemental Environmental Impact Statement Analysis Results

D. Severability VI. Compliance and Enforcement

A. Background and Overview of Compliance and Enforcement

B. Finalized Changes to the CAFE Program

1. Modification of Vehicle Classification in the CAFE Program

a. Non-Passenger Automobile Definition

b. Finalized Changes to Criteria for Off-Highway Capability

c. Finalized Changes to Criteria for Functional Performance

(1) Automobiles With Three or More Rows of Seating

(2) Light-Duty Work Factor

2. Removal of Credit Trading in the CAFE Program

3. Technical Amendments To Remove References to EPA's Regulations for AC Efficiency and Off-Cycle Fuel Consumption Improvement Values

4. Modification of the Definition of Curb Weight and Manufacturer Reporting Requirements

C. Technical Amendments

1. Technical Amendments To Remove Residual Mention of Fuel Efficiency Standards for Trailers in NHTSA's Vehicle Classification Regulations

2. Technical Amendment To Remove Heavy-Duty Trailers From the List of Heavy-Duty Vehicle Regulatory Categories

3. Technical Amendments To Remove Civil Penalties for Non- Compliance With Fuel Economy Standards From the CAFE Program

4. Additional Technical Amendments

a. Technical Amendments to Part 523

b. Technical Amendments to Part 531

c. Technical Amendments to Part 533

d. Technical Amendments to Part 536

e. Technical Amendments to Part 537

5. Technical Amendment To Modify the Civil Penalty for Non- Compliance With Fuel Economy Standards in Part 578 VII. Regulatory Notices and Analyses

A. Executive Order 12866, “Regulatory Planning and Review”; Executive Order 13563, “Improving Regulation and Regulatory Review”; Executive Order 14192, “Unleashing Prosperity Through Deregulation”; and Executive Order 14219, “Ensuring Lawful Governance and Implementing the President's `Department of Government Efficiency' Deregulatory Initiative.”

B. Environmental Considerations

1. National Environmental Policy Act

2. Clean Air Act as Applied to NHTSA's Final Rule

3. Endangered Species Act (ESA)

4. Other Regulatory Analyses Discussed in the Final SEIS

5. Executive Order 13045: “Protection of Children From Environmental Health Risks and Safety Risks”

6. Executive Order 14154: “Unleashing American Energy.”

7. Executive Order 14173: “Ending Illegal Discrimination and Restoring Merit-Based Opportunity

C. Regulatory Flexibility Act

D. Executive Order 13132 (“Federalism”)

E. Executive Order 12988 (“Civil Justice Reform”)

F. Executive Order 13175 (“Consultation and Coordination With Indian Tribal Governments”)

G. Unfunded Mandates Reform Act

H. Regulation Identifier Number

I. National Technology Transfer and Advancement Act

J. Incorporation by Reference

K. Department of Energy Review

L. Paperwork Reduction Act

The relationship between the light-duty vehicle market and the corporate average fuel economy (CAFE) program has gone through several cycles over its almost 50-year history. First created to require conservation of petroleum in response to price shocks caused by the Arab oil embargoes of the 1970s, the CAFE program has led to the desired improvements in fuel economy, but it also has created unintended responses from vehicle manufacturers--often to the detriment of consumers.

Over the CAFE program's history, separate standards for the passenger car and light truck fleets (referred to by law

as passenger automobiles and non-passenger automobiles, and together known as light-duty vehicles) have led manufacturers to reshape the market in unanticipated ways--such as by almost eliminating the production of station wagons (passenger cars that generally have more robust cargo capacity, adding mass and reducing fuel economy) in favor of vehicles like minivans and crossover utility vehicles (considered light trucks, and subject to less stringent standards).

Strict miles-per-gallon-based standards in the early years of the program also led manufacturers to seek significant reductions in vehicle size and mass, leading to increased injury or fatality risk for occupants of smaller vehicles involved in a crash.\2\ NHTSA sought to mitigate these responses by creating attribute-based standards that relate the “footprint” size of vehicles to fuel economy, to some positive effect.

\2\ Transportation Research Board and National Research Council, Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards, National Academies Press: Washington, DC (2002), available at: https://www.nationalacademies.org/publications/10172 (accessed: June 18, 2026). This report describes at length and quantifies the potential safety problem with average fuel economy standards that specify a single numerical requirement for the entire industry, noting that smaller and lighter vehicles incentivized by those standards could be less safe for their occupants.

Meanwhile, the U.S. Environmental Protection Agency (EPA) started providing special fuel economy adjustments for technologies that had potential for fuel economy improvements but were not measurable using the laboratory test procedures (i.e., the “two-cycle” tests) for vehicle fuel economy. This included accommodating adjustments to efficiency values if manufacturers implemented preferred air conditioning (AC) technologies and installed special technologies with purported fuel-saving benefits that could not be captured on the aforementioned two-cycle tests, accordingly known as “off-cycle” (OC) technologies (e.g., vehicle stop/start functions that shut off the engine when the vehicle has stopped). These regulatory adjustments have led to widespread adoption of technologies with uncertain real-world benefits, added costs, and, in many cases, consumer backlash.

The creation of a system for inter-manufacturer credit trading-- intended to improve the cost effectiveness of the CAFE program by allowing manufacturers that could improve the fuel economy of their fleets more cost effectively to earn credits for exceeding fuel economy standards and sell those credits to manufacturers that would need to incur higher costs to meet fuel economy standards--has also resulted in a windfall for EV-exclusive manufacturers that sell credits to other non-EV manufacturers, which in turn pay for those credits with capital that could be invested toward improving the fuel economy performance or other desirable attributes of their traditional fleets. The enormous fuel economy values assigned to EVs have, heretofore, been included in the baseline fleet fuel economy for CAFE rulemakings upon which stringency increases are applied--thereby significantly increasing the fuel economy requirements for traditional gasoline- or diesel-fueled fleets.\3\

\3\ In a hypothetical and simplified example, if the baseline passenger car fleet of vehicles with an identical footprint consisted of nine gasoline-powered vehicles achieving 30 mpg and one EV achieving 150 mpg, the baseline fleet to which stringency increases would apply would be measured at 42 mpg. When CAFE standards are set inconsistent with the statute because the analysis considers EV fuel economy, manufacturers of gasoline-powered vehicles would face a challenge in catching up to the overall fleet fuel economy, requiring disproportionate investment in fuel-saving technologies, and incentivizing the purchase of regulatory credits from the EV manufacturer.

At the same time, the classification system that has long divided the fleet between passenger cars (intended to move passengers) and light trucks (intended to move cargo or operate off highway) no longer lives up to its anticipated use. Indeed, while 68 percent of the light- duty fleet meets the current light truck regulatory definition, the majority of these vehicles (e.g., all-wheel drive (AWD) crossover utility vehicles, vehicles with three or more rows of seating, and vehicles that do not have an approach angle high enough to handle an off-highway obstacle) cannot realistically operate off highway and have little value moving cargo. Instead, most of these vehicles are designed and intended primarily to move passengers but have additional features solely to meet regulatory definitions \4\--resulting in little added functionality, reduced fuel economy performance, added cost, and a homogenous design lacking in creativity.

\4\ Section VI discusses NHTSA's amended regulatory definitions for passenger and non-passenger automobiles in detail and includes examples of manufacturers excluding or including specific features solely to meet regulatory definitions. Two examples discussed in more detail in Section VI include manufacturers discontinuing FWD versions of vehicles after NHTSA properly reclassified over one million FWD automobiles as passenger automobiles in line with EPCA and opting to instead manufacture only AWD or 4WD versions to keep more of their products in the non-passenger automobile fleets (74 FR 14196, Mar. 30, 2009), and manufacturers including aerodynamic technologies to increase on-highway functionality instead of opting to meet approach angle requirements, which would make the vehicle more capable of approaching off-highway obstacles and, thus, more off-highway capable.

While the CAFE program was intended to push manufacturers to improve fuel economy while preserving their ability to design and produce vehicles that meet market demands, the system has spun off its axis and requires recalibration. Instead of allowing manufacturers to design and produce vehicles they believe their customers will want and need, while spreading real-world fuel economy improvements across their fleets, the system has increasingly led manufacturers to try to fit square vehicle pegs in round classification holes to force the adoption of technologies that do not meet the demands of American families simply to obtain on-paper fuel economy improvements that may have little basis in reality. All of this adds inefficiency and cost-- pushing even more consumers out of an already unaffordable new car market.

By delegation of authority from the Secretary of Transportation (the Secretary), NHTSA is, in this action, finalizing amendments to the previously promulgated CAFE standards applicable to passenger and non- passenger automobiles produced for MYs 2022-2026 and MYs 2027-2031. Finalizing amended standards beginning with MY 2022 is consistent with the Secretary's direction in the January 28, 2025, memorandum titled “Fixing the CAFE Program” and is also the earliest model year for which NHTSA has not concluded CAFE compliance proceedings; additional discussion regarding NHTSA's finalized amended standards can be found in Section V.

Consistent with the terms of the CAFE program mandated in the Energy Policy and Conservation Act of 1975 (EPCA), as amended by the Energy Independence and Security Act of 2007 (EISA) and other laws (codified in chapter 329 of Title 49 of the U.S. Code), the fuel economy standards finalized herein are based solely on light-duty vehicles powered by gasoline and diesel fuels, a category that includes non-plug-in hybrid vehicles.\5\ In formulating the finalized standards, NHTSA has not considered the imputed fuel-economy performance of EVs or the electric operation of plug-in hybrid

electric vehicles (PHEVs). This approach marks a change from previous rulemakings, as described above, but brings the CAFE program into compliance with statutory restrictions.

\5\ Non-plug-in hybrid vehicles are not dual-fueled vehicles under chapter 329 because any electricity generated by the electric motors or other electric components are generated solely by the petroleum-fueled engine and the batteries are incapable of charging from an external source: “a vehicle which is entirely dependent on a petroleum fuel for its motive power, regardless of whether electricity is used in the powertrain, is powered by petroleum.” 63 FR 66066 (Dec. 1, 1998).

This final rule fulfills NHTSA's statutory obligation to set CAFE standards at the maximum feasible level that the agency determines vehicle manufacturers can achieve in each model year, balancing four key factors: technological feasibility, economic practicability, the need of the United States to conserve energy, and the effect of other motor vehicle standards of the Government on fuel economy.\6\ This balancing must take into account current and projected circumstances and cannot consider the availability of alternative fuel technologies (e.g., EVs or PHEV electric operation), or compliance credits.\7\ This action is also consistent with Executive Order (E.O.) 14148, “Initial Rescissions of Harmful Executive Orders and Actions,” \8\ and E.O. 14154, “Unleashing American Energy,” \9\ as well as the Secretarial memorandum titled “Fixing the CAFE Program.” \10\

\6\ 49 U.S.C. 32902(a) and (f).

\7\ 49 U.S.C. 32902(h).

\8\ 90 FR 8237 (Jan. 28, 2025).

\9\ 90 FR 8353 (Jan. 29, 2025).

\10\ See DOT, Fixing the CAFE Program, Memorandum (2025), available at: https://www.transportation.gov/briefing-room/memorandum-fixing-cafe-program (accessed: June 18, 2026).

The standards presented in this final rule differ significantly from those finalized in the 2020, 2022, and 2024 rules. In formulating those prior standards, NHTSA considered both the fuel economy of EVs and PHEVs and compliance credits that could be earned when a manufacturer over-complied with an applicable fuel economy standard. As a result, the fuel economy standards previously established by NHTSA for passenger cars and light trucks for MYs 2022-2026 and MYs 2027-2031 failed to satisfy substantive statutory requirements. NHTSA is finalizing in this rule the “maximum feasible” fuel economy requirements for the model years in question that best reflects the balancing of the four statutory factors and limitations mandated for the CAFE program.

This rulemaking is intended to establish maximum feasible fuel economy standards while bringing the program into compliance with the law. It marks a significant reset. NHTSA has removed from every aspect of the standards development process consideration of factors inconsistent with the statute, including specific technologies and credits, to bring the program back within its statutory constraints. NHTSA discussed extensively its prior consideration of such technologies and credits in the standards development process in the final interpretive rule, Resetting the Corporate Average Fuel Economy Program,\11\ and in the proposal, and includes a more detailed discussion in Section V, below.

\11\ 90 FR 24518 (June 11, 2025).

NHTSA has also removed consideration of AC efficiency and OC fuel consumption improvement values (FCIVs) from its standard-setting analysis starting with MY 2028. This change will ensure that NHTSA's CAFE standards are achievable without the implementation of technologies with questionable fuel economy benefits and not demanded by consumers.

The agency is also eliminating the inter-manufacturer credit trading program (which is authorized, but not required, by 49 U.S.C. 32903(f)) beginning with credits earned in MY 2028. This change in the program is long overdue. Although NHTSA does not consider the availability of credits or credit trading in establishing standards, the agency believes that eliminating inter-manufacturer credit trading will encourage manufacturers to provide for steady improvement in fuel economy across their fleets over time, as opposed to relying upon credits acquired from third-party EV manufacturers. NHTSA recognizes that manufacturers have made investments in particular compliance pathways that may include purchasing credits from other manufacturers even though the availability of those credits is uncertain and is, therefore, finalizing this change beginning with credits earned in MY 2028. The finalized change provides additional transition time beyond that proposed in the notice of proposed rulemaking (NPRM), in recognition of any reliance interests in the trading program to achieve compliance, because manufacturers will still be able to purchase and use credits that were earned through MY 2027 for up to five model years after they were first generated (e.g., credits earned in MY 2026 may be purchased and applied through MY 2031, and credits earned in MY 2027 may be purchased and used through MY 2032). However, NHTSA is finalizing standards in this rule at levels that do not consider the use of compliance credits, thus minimizing any impacts that this change may have on manufacturers' decisions about compliance pathways. Moreover, this change will not impact the ability of automakers to transfer earned credits between different categories of vehicles in their own fleets or carry their own credits forward and backwards across model years, as prescribed by statute.

The agency is also finalizing a substantial reclassification of the light-duty fleet in this reset of the CAFE program, with the passenger car fleet consisting of vehicles primarily designed to move people, and the light truck fleet consisting of vehicles primarily designed to operate off highway or move cargo. NHTSA recognizes the changes will introduce significant design consideration for manufacturers. Moving a large fraction of vehicles previously classified as light trucks into a manufacturer's passenger vehicle fleet will have a significant effect on the overall fuel economy performance of the manufacturer's passenger fleet; even if based upon the same platform as a passenger car, the additional vehicle height adds significant mass and decreases aerodynamics, and therefore fuel economy. Meanwhile, removal of vehicles from a manufacturer's light truck fleet will leave that fleet consisting of heavier and less aerodynamic vehicles, such as large sports utility vehicles and pickup trucks, thereby decreasing the overall average fuel economy of the light truck fleet. Accordingly, while a manufacturer's combined overall fleet fuel economy may remain the same, both its passenger car and light truck fleets will necessarily achieve lower measured fuel economy. NHTSA has also updated the classification criteria from technology-based to performance-based standards where applicable. This final rule takes these changes into account through amendments to both the footprint curves and standards applicable to various points within the curves. NHTSA intends that, as a result of this update, automobiles classified as non-passenger will exhibit true non-passenger capabilities that display relevant off- highway vehicle attributes such as approach angle and running clearance or include design features that provide higher payload and towing abilities for transporting cargo.

By surveying the measured fuel economy performance of gasoline- and diesel-powered passenger cars and light trucks produced for the U.S. market in MY 2022, NHTSA has created a maximum feasible foundation from which to establish standards for subsequent model years. NHTSA is setting fuel economy standards for passenger automobiles that increase from the newly finalized MY 2022 standards at a rate of 0.90 percent per year through MY 2029 followed by one

percent per year through MY 2031, with MY 2030 stringency acting as a bridge between the vehicle classification updates. For non-passenger automobiles, NHTSA is setting fuel economy standards that increase from the newly finalized MY 2022 standards at a rate of 0.51 percent per year through MY 2029 followed by one percent per year through MY 2031, with MY 2030 stringency acting as a bridge between vehicle classification updates.\12\

\12\ For a detailed discussion of the transition to new footprint-based standards curves as a result of vehicle reclassification please see Section III.A.

The final standards may, in places, be referred to as the “Preferred Alternative(s),” but NHTSA intends “final standards,” “finalized standards,” and “Preferred Alternative(s)” to be used interchangeably for purposes of this document. In addition to the final standards, NHTSA considered a range of regulatory alternatives for each fleet, consistent with the agency's obligations under the Administrative Procedure Act (APA), National Environmental Policy Act (NEPA), and E.O. 12866. In response to public comments and the agency's additional analysis, NHTSA considered a greater number of regulatory alternatives for this final rule than were considered in the NPRM, for each fleet. The regulatory alternatives are as follows:

\13\ Percentages in the table represent the year over year reduction in gal/mile applied to the mpg values on the target curves. The reduction in gal/mile results in an increased mpg. [GRAPHIC] [TIFF OMITTED] TR30SE26.050

NHTSA has concluded that the levels of standards represented by Alternative 3 are the maximum feasible level for these model years, as discussed in more detail in Section V of this preamble. NHTSA has determined that the finalized standards satisfy the statutory requirements of maximum feasibility across the full range of gasoline- and diesel-powered vehicles currently on the market. These standards will be appropriately stringent in promoting fuel efficiency in the Nation's light-duty vehicle fleet while remaining technologically feasible and economically practicable to achieve without consideration of EV dedicated fuel economy or PHEV electric operation. The finalized standards also consider the effect of other motor vehicle standards of the Government on

the fuel economy performance of new motor vehicles, as well as the need of the United States to conserve energy. NHTSA has determined that it is both reasonable and consistent with EPCA to weigh the need of the United States to conserve energy such that vehicle fuel economy standards require continuous improvements over time, but at sustainable levels for manufacturers, consumers, and society at large. In particular, the diminishing effects attributable to fuel economy improvements from higher standards moderates against weighing the need of the United States to conserve energy too heavily compared to the other statutory factors.\14\ Manufacturers have limited supplies of capital for technological advancement and are constrained in recovering those investments by what consumers can afford to pay for technological innovations in new vehicles. Maximum feasible fuel economy standards, when set appropriately weighing economic practicability, should not incentivize manufacturers, for example, to add technologies that have questionable real-world fuel economy benefits that consumers reject, at the cost of investments in or application of vehicle safety technologies. Instead, when truly maximum feasible standards apply, manufacturers should be able to develop and apply continually both proven fuel-saving and safety-enhancing technologies in such a manner that allows consumers both to afford and desire the new vehicle.

\14\ As an example, a vehicle owner who drives a light vehicle 15,000 miles per year and trades in a vehicle with fuel economy of 15 mpg for one with fuel economy of 20 mpg, will reduce their annual fuel consumption from 1,000 gallons to 750 gallons--saving 250 gallons annually. If, however, that owner trades in a vehicle with fuel economy of 30 mpg for one with fuel economy of 40 mpg, the owner's annual gasoline consumption would drop from 500 gallons/year to 375 gallons/year--a fuel savings of only 125 gallons even though the mpg improvement is twice as large. Going from 40 to 50 mpg would save only 75 gallons/year. Yet each additional fuel economy improvement becomes much more expensive as the easiest to achieve low-cost technological improvement options are exhausted.

NHTSA concludes that this decision best comports with statutory requirements, and that the agency should exercise its authority to amend standards set in final rules issued in 2020, 2022, and 2024, respectively. The standards set in those final rules were set higher than maximum feasible levels because NHTSA considered statutorily prohibited factors in establishing those standards.\15\ Those rules resulted in distortions in the marketplace, which this final rule minimizes. These distortions include major non-market-based changes in automobile designs and the introduction of fundamental alterations in production processes not primarily driven by market demand.

\15\ 85 FR 24174 (Apr. 30, 2020); 87 FR 25710 (May 2, 2022); 89 FR 52540 (June 24, 2024).

Increasing the stringency of standards at modest annual rates, following a reset to eliminate the consideration of impermissible factors that were applied in setting the 2020, 2022, and 2024 standards, and coupled with a re-examination of the shape of the fuel economy target functions and the vehicle classification definitions, best comports with statutory requirements. Moreover, the level, shape, and applicability of the final standards to the passenger and non- passenger automobile fleets are justified by the inappropriate distortions the existing regulations have caused in the marketplace. Those regulations resulted in unnecessary regulatory burdens that did not further statutory purposes because the standards were not attainable for the gasoline- and diesel-powered vehicle fleet.

The final CAFE standards remain vehicle-footprint-based, like the current CAFE standards in effect since MY 2011. The footprint of a vehicle is the area calculated by multiplying the wheelbase times the track width, essentially the rectangular area of a vehicle measured from tire to tire where the tires contact the ground. This means that the standards are defined by mathematical equations that represent constrained linear functions relating vehicle footprint to fuel economy targets for passenger cars and light trucks.\16\ For this final rule, NHTSA has updated the mathematical functions (i.e., the target curves relating footprint to fuel economy) for passenger cars and light trucks based on the latest available data. NHTSA has concluded, based on this data, that the relationship between footprint and fuel economy has shifted from MY 2008 (the model year on which the current curves are based) and it is thus appropriate to modify the mathematical functions accordingly. NHTSA has also updated the functions that would be applied beginning in MY 2030 to reflect changes based on the finalized vehicle classification regulations.

\16\ Generally, passenger cars have more stringent targets than light trucks regardless of footprint, and smaller vehicles will have more stringent targets than larger vehicles because smaller vehicles are generally more fuel efficient. No individual vehicle or vehicle model need meet its target exactly, but a manufacturer's compliance is determined by how its average fleet fuel economy compares to the average fuel economy of the targets of the vehicles it manufactures.

NHTSA estimates that the final standards would correspond to a combined industry fleetwide average of roughly 34.9 mpg in MY 2031 for passenger cars and light trucks.\17\ NHTSA notes that this is a projection because the actual CAFE standards are the footprint target curves for passenger cars and light trucks. This is important because it means that the ultimate fleetwide levels will vary depending on the mix of vehicles that manufacturers produce for sale in those model years. NHTSA also calculates and presents “estimated achieved” fuel economy levels, which differ somewhat from the estimated required levels for each fleet, for each year.\18\ Note that the industry- average required and achieved values presented below reflect the end of the modeled application of AC and FCIV adjustments, beginning in MY 2028, and updated vehicle classification regulatory definitions, which go into effect beginning in MY 2030.

\17\ NHTSA notes both that real-world fuel economy is generally 20-30 percent lower than the estimated required CAFE level stated above, because CAFE compliance is evaluated per 49 U.S.C. 32904(c) Testing and Calculation Procedures, which states that the EPA Administrator (responsible under EPCA/EISA for measuring vehicle fuel economy) must use the same procedures used for MY 1975 (weighted 55 percent urban cycle and 45 percent highway cycle) or comparable procedures. Colloquially, this is known as the 2-cycle test. The “real-world” or 5-cycle evaluation includes the 2-cycle tests and three additional tests that are used to adjust the city, and highway estimates to account for higher speeds, AC use, and colder temperatures. In addition to calculating vehicle fuel economy, EPA is responsible for providing the fuel economy data that is used on the fuel economy label on all new cars and light trucks, which uses the “real-world” values. In 2006, EPA revised the test methods used to determine fuel economy estimates (city and highway) appearing on the fuel economy label of all new cars and light trucks sold in the United States, effective with MY 2008 vehicles.

\18\ NHTSA's analysis reflects that almost all manufacturers make the technological improvements prompted by CAFE standards at times that coincide with existing product “refresh” and “redesign” cycles, rather than unrealistically applying new technology every year regardless of those cycles. It is significantly more cost effective to make fuel economy-improving technology updates when a vehicle is being updated. See the Final TSD and preamble Section II for additional discussion about manufacturer refresh and redesign cycles.

For simplification, NHTSA provides industry-wide mpg estimates corresponding to the finalized standards in the table below but reiterates that the coefficients used to define the mathematical functions comprise the actual standards.

\19\ There is no legal requirement for combined passenger car and light truck fleets, but NHTSApresents information this way in recognition of the fact that many readers will be accustomed to seing such a value.

[GRAPHIC] [TIFF OMITTED] TR30SE26.051

To the extent that manufacturers are simulated to be over-complying with required fuel economy levels being set in MY 2027, NHTSA notes that this is due to factors including previous application of fuel economy technologies required by standards set for prior model years in a manner inconsistent with the statute because the analysis considered alternative fuel (e.g., EV) technology applications. Once standards are established that consider all statutory factors and limitations appropriately, manufacturers that previously applied technologies to meet standards set using an analysis inconsistent with the statute will have relief, while manufacturers that faced certain penalties can continue to improve efficiency to meet maximum feasible standards. NHTSA's review of achieved compliance at the manufacturer level also shows that, while some manufacturers manage to achieve greater over- compliance, other manufacturers are expected to achieve compliance values that will track the levels of the new standards. In addition, NHTSA believes that the finalized standards established for model years prior to the MY 2030 fleet reclassification, which NHTSA also extended from MY 2028 from the proposal in response to manufacturer comments regarding lead time and planning cycles, will allow manufacturers to plan strategically with sufficient lead time to manage that transition within their projected model year sales cycles. For all fleets, average requirements and average achieved CAFE levels will depend ultimately on manufacturer and consumer response to standards, technology developments, economic conditions, fuel prices, and other factors.

NHTSA is also finalizing new minimum domestic passenger car CAFE standards (MDPCS) for MYs 2022-2026 and MYs 2027-2031, which are applied to passenger cars manufactured in the United States. Section 32902(b)(4) of 49 U.S.C. requires NHTSA to project the minimum domestic standard when it promulgates passenger car standards for a model year; these standards are shown in Table I-3 below. NHTSA continues to apply an offset (albeit a smaller one than was first used in the 2020 final rule and applied to the 2022 and 2024 final rules) when calculating the MDPCSs for MYs 2027-2031, reflecting prior differences between passenger car footprints forecast originally by the agency and passenger car footprints as they occurred in the real world. The finalized MDPCS for each model year is shown in the table below. [GRAPHIC] [TIFF OMITTED] TR30SE26.052

NHTSA uses the CAFE Compliance and Effects Modeling System (the CAFE Model or the Model) developed and maintained by the Volpe National Transportation Systems Center (Volpe Center or Volpe) as a tool for assessing the likely regulatory effects of the final rule and various regulatory alternatives. The Model does not determine which

standards satisfy the requirements of EPCA, and no model can predict precisely the engineering configurations automakers are likely to introduce in response to evolving trends in market demand. However, the analysis developed using the CAFE Model provides further support for NHTSA's judgment that the standards finalized in this rule are the maximum standards that are technologically feasible and economically practicable for the gasoline- and diesel-powered vehicles covered by the final rule, considering the effect of other motor vehicle standards of the Government on fuel economy, and the need of the United States to conserve energy.

One significant modification from previous standard-setting proceedings and previous applications of the CAFE Model is that NHTSA did not include EVs in the base fleet for analysis purposes and did not consider or model the potential production of EVs as a CAFE compliance strategy for automakers. Section 32902 of chapter 49 directs NHTSA to establish fuel economy standards that are feasible and practicable for gasoline- and diesel-powered vehicles without regard to any reliance on alternatives. Automakers, of course, are free to produce EVs, or any other technologies, in response to market demand, and their production and sale of EVs will earn credit toward compliance with the CAFE standards in accordance with the “petroleum equivalency factor,” or “PEF,” prescribed by the Department of Energy (DOE).\20\

\20\ 49 U.S.C. 32904(a)(2)(B); Public Law 96-185, 93 Stat. 1324 (Jan. 7, 1980); 10 CFR part 474.

Additional updates to the CAFE Model and its inputs since the 2024 final rule and the 2025 proposal include updating the Market Data Input File to reflect the change in analysis fleet from MY 2022 to MY 2024, updating the modeling capability to allow for vehicle reclassification, updating the Scenarios Input File to set the value of civil penalties at zero,\21\ updating the Parameters Input File to set the monetary value of changes in non-criteria emissions at zero, updating other economic values, such as rebound elasticity and the payback periods, and updating fuel price projections using the 2026 Annual Energy Outlook's (AEO) Alternative Transportation and Electricity Case. These and other updates are described in more detail in Section II and the Final Technical Support Document (Final TSD).

\21\ See Public Law 119-21, 139 Stat. 72 (July 4, 2025).

NHTSA estimates that this final rule will reduce the average up- front vehicle costs due to CAFE standards by approximately $1,290, cutting by more than half what consumers might expect to pay as a result of increased requirements under the No-Action Alternative. NHTSA also estimates that this rule will be net beneficial economically for society.\22\ The tables below summarize estimates of the present discounted values of selected impacts viewed from both the model year and calendar year (CY) perspectives,\23\ for each of the regulatory alternatives, relative to the No-Action Alternative.

\22\ In rulemakings such as this one, where the agency is reducing the stringency of CAFE standards, the application of additional fuel-saving technologies may no longer be necessary when standards are reduced relative to a reference baseline level. Therefore any costs associated with meeting higher fuel economy standards in that baseline become cost savings when standards decrease in stringency. Negative benefits reflect a reduction in this category, while negative entries for costs reflect savings to manufacturers and vehicle buyers. Overall positive net benefits indicate that the reduction in benefits is outweighed by the total cost savings.

\23\ The bulk of the analysis for passenger cars and light trucks presents a “model year” perspective rather than a “calendar year” perspective. The model year perspective considers the lifetime impacts attributable to all passenger cars and light trucks produced through MY 2031, accounting for the operation of these vehicles over their entire lives (with some MY 2031 vehicles estimated to be in service as late as CY 2070). This approach emphasizes the role of the model years for which new standards are being finalized. The calendar year perspective, on the other hand, includes the annual impacts attributable to all vehicles estimated to be in service in each calendar year for which the analysis includes a representation of the entire registered light-duty fleet. For this final rule, this calendar year perspective covers each of CYs 2024-2050. Compared to the model year perspective, the calendar year perspective includes model years of vehicles produced in the longer term, beyond those model years for which standards are being finalized.

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\24\ For this and similar tables in this section, net benefits may differ from benefits minus costs due to rounding.

The current estimates of costs and benefits are important considerations, performed as directed by E.O. 12866, and also serve as an informative data point in NHTSA's consideration of the factors that NHTSA is required to balance by statute when determining maximum feasible standards. NHTSA concludes, for the purposes of this final rule, that Alternative 3 is maximum feasible on the basis of these respective factors. NHTSA also considered several sensitivity cases by varying different inputs and concluded that, even when varying inputs resulted in changes to net benefits, those changes were not significant enough to alter the conclusion that Alternative 3 is maximum feasible.

Finally, NHTSA has computed “annualized” benefits and costs relative to the No-Action Alternative, as follows:

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\25\ For this and similar tables in this section, net benefits may differ from benefits minus costs due to rounding.

Though NHTSA is prohibited from considering the availability of certain flexibilities in making its determination about the levels of CAFE standards that would be maximum feasible, manufacturers have a variety of flexibilities available to aid their compliance. NHTSA is finalizing certain changes to these flexibilities and other features of the CAFE program as shown in Table I-6, and as described further in Section VI of this preamble. NHTSA is also finalizing a technical amendment to update NHTSA's civil penalty for CAFE shortfalls in accordance with Public Law 119-21. Because NHTSA does not exercise any discretion in making the changes required by Public Law 119-21, NHTSA finds good cause, pursuant to 5 U.S.C. 553(b)(B), to make those changes without prior notice and opportunity for comment as such procedures are unnecessary. Accordingly, NHTSA is publishing this final rule without prior notice and comment. Discussion of this technical amendment is also found in Section VI of this preamble. BILLING CODE 4910-59-P

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BILLING CODE 4910-59-C

The following sections of this preamble discuss a summary of the proposal and comments received, the technical foundation for NHTSA's analysis, the regulatory alternatives considered in this final rule, the estimated effects of the regulatory alternatives, the basis for NHTSA's conclusion that the final standards are maximum feasible, and NHTSA's approach to compliance and enforcement. The extensive record for this action consists of this final rule, a Final TSD, a Final Regulatory Impact Analysis (FRIA), and a Final Supplemental Environmental Impact Statement (Final SEIS), along with extensive analytical documentation, supporting references, and many other resources. Most of these resources are available on NHTSA's website, and other references not available on NHTSA's website can be found in the rulemaking docket, the docket number of which is listed at the beginning of this preamble.\26\

\26\ NHTSA, Corporate Average Fuel Economy, available at: https://www.nhtsa.gov/laws-regulations/corporate-average-fuel-economy (accessed: May 28, 2026).

In the NPRM, NHTSA proposed to amend the CAFE standards for passenger cars and light trucks for MYs 2022-2026 and MYs 2027-2031. NHTSA explained that it was proposing these amended standards to fulfill its statutory obligation to set CAFE standards at the maximum feasible level, and to do so in a manner that provides for a substantial recalibration of the program to comply with statutory constraints. This included explicitly excluding the fuel economy of alternative fuel and dual-fueled vehicles, such as battery-powered EVs and the electric operation of PHEVs, and compliance credits from the standard-setting analysis. The proposal was also consistent with E.O. 14148 and E.O. 14154, and the Secretarial memorandum titled “Fixing the CAFE Program.”

NHTSA indicated that the agency did not incorporate EPA's non- criteria emissions standards into its proposal, as the EPA had then recently proposed to rescind its Endangerment Finding and all resulting greenhouse gas (GHG) emissions standards for light-, medium-, and heavy-duty vehicles and engines. NHTSA also explained that it was removing the consideration of California's Zero Emission Vehicle (ZEV) mandates and manufacturers' voluntary commitments to California from its standard-setting analysis. NHTSA concluded that its prior consideration of these programs and commitments in the analysis for the 2022 and 2024 final rules was inconsistent with the statute because the analysis considered alternative fueled vehicles and distorted the resulting CAFE standards for the model years regulated in those rules.

Based on the agency's updated analysis excluding those factors prohibited from consideration under subsection 32902(h) and considering the most up-to-date data available, NHTSA proposed fuel economy standards that increased from newly proposed MY 2022 standards at a rate of 0.5 percent per year through MY 2026, followed by a rate of 0.35 percent for passenger cars and 0.7 percent for light trucks in MY 2027, and 0.25 percent per year through MY 2031. In Section V of the NPRM, NHTSA outlined its legal justification for tentatively concluding that the proposed standards were maximum feasible, emphasizing its obligation to balance four statutory factors under EPCA: technological feasibility, economic practicability, the effect of other motor vehicle standards of the Government on fuel economy, and the need of the United States to conserve energy. The agency determined that prior CAFE standards established in 2020, 2022, and 2024 were set above the maximum feasible level because they considered factors prohibited by 49 U.S.C. 32902(h). To rectify this, NHTSA proposed to use EPCA's process to amend standards for previous model years not yet administratively closed to bring the CAFE program back into better alignment with statutory restrictions in a manner that does not penalize manufacturers for failing to meet standards established based upon the agency's prior analysis.\27\

\27\ Administratively closed refers to model years for which the Secretary of Transportation has provided notification pursuant to 49 U.S.C. 32903(b)(2)(B), specifying the penalty due for the average fuel economy of that manufacturer being less than the applicable standard prescribed under sec. 32902 of that title.

When re-evaluating the four statutory factors with EPCA's statutory constraints in mind, NHTSA outlined that considering the factor of technological feasibility does not require the agency to set technology-forcing standards. This is particularly true when the factor of economic practicability cautions against establishing such standards. For economic practicability, the agency focused on consumer acceptance and affordability, and the financial capabilities of the industry to advance the fuel efficiency of gasoline- and diesel-powered vehicles. NHTSA also considered the safety implications of the CAFE program.

NHTSA is also required to weigh the effect of other motor vehicle standards of the Government that affect fuel economy. In so doing, NHTSA determined it could consider only standards of the Federal Government, explicitly excluding California's Advanced Clean Car Rule-- which purports to establish separate State-law tailpipe carbon dioxide (CO2) emissions standards and a ZEV mandate--from its analysis. NHTSA has always considered these programs as related to fuel economy,\28\ and even modeled their impact in previous CAFE rulemakings.\29\ But since EPCA specifically prohibits consideration of alternative fuel vehicle (AFV) technologies when establishing fuel economy standards, and expressly preempts any State laws related to fuel economy standards, NHTSA proposed to exclude consideration of these elements in its proposal. Finally, when assessing the need of the United States to conserve energy, NHTSA tentatively concluded that the dramatic change in exposure to petroleum supply shocks enabled by the recently established abundance of domestic energy resources since the shale oil revolution reduces the weight of this factor. The United States is now the world's largest petroleum producer by a large margin, and is now a net energy exporter; these are circumstances completely unimagined when EPCA was enacted in the 1970s--or even when amended by EISA in 2007. Consequently, while the factor is afforded significant consideration, NHTSA asserted that the need to conserve energy now warranted less stringent standards that increased at smaller, steady, and incremental rates.

\28\ See, e.g., 85 FR 24174, at 24257 (Apr. 30, 2020) (“. . . the ZEV mandate is expressly and impliedly preempted by EPCA . . . .”

\29\ 87 FR 25710 (May 2, 2022); 89 FR 52540 (June 24, 2024).

Ultimately, NHTSA tentatively concluded that the previous rules distorted the marketplace by leveraging the CAFE program to push automakers to produce EVs faster than market demand would support. The agency stated that this forced transition undermined national security by increasing America's strategic dependence on foreign countries for critical EV battery materials, degraded highway safety by making new vehicles unaffordable and thereby slowing the fleet transition to newer and safer vehicles, and exacerbated the vulnerabilities of America's electricity grid. By eliminating the consideration of these factors, NHTSA tentatively concluded that the proposed reset represented the maximum feasible levels for the gasoline- and diesel-powered fleets.

NHTSA also proposed a substantial reclassification of the light- duty fleet to distinguish passenger cars more appropriately from light trucks, elimination of the inter-manufacturer credit trading program, and removal of AC/OC FCIVs from the standard-setting analysis. The agency justified its vehicle reclassification proposal by discussing the ways past standards incentivized manufacturers to alter vehicle attributes to classify passenger-oriented vehicles as light trucks to obtain the advantages of lower fuel economy standards. Specifically, NHTSA observed that manufacturers classified vehicles as light trucks designed for off-road purposes through existing ground clearance criteria while simultaneously retaining low, aerodynamic approach angles that severely limited real-world off-highway capability. To address this distortion, NHTSA proposed transitioning from technology- based specifications of non-passenger automobiles to performance-based criteria. This proposed change included eliminating axle clearance, a now defunct characteristic defined by a specific suspension technology, as a defining characteristic for high ground clearance and requiring vehicles to meet all four of the remaining clearance characteristics. NHTSA also proposed removing the non-passenger classification criterion for vehicles with three or more rows of seating, stating that this feature primarily indicated a passenger-carrying purpose rather than cargo transport. To ensure that vehicles used for transporting property will be classified correctly without relying on passenger-based design elements, NHTSA proposed adding a new performance-based light-duty work factor (LDWF) metric.

The agency also noted that the combination of inappropriately stringent standards and the credit trading system has increasingly incentivized ICE vehicle manufacturers to purchase credits from EV manufacturers to meet requirements, effectively subsidizing EV production without any increase in the fuel efficiency of the internal combustion fleet. Accordingly, NHTSA proposed to remove the credit trading program starting in MY 2028. By eliminating credit trading, the agency intended to encourage manufacturers to make steady, real-world fuel economy improvements across their own fleets of gasoline- and diesel-fueled vehicles. Finally, NHTSA proposed to eliminate AC/OC FCIVs from the standard-setting analysis, tentatively determining that the current FCIVs based on MY 2008 vehicle assessments, are no longer representative of real-world fuel savings and have created market distortions by incentivizing technologies that failed to provide commensurate fuel economy benefits.

NHTSA sought comment on a range of alternatives, including a No- Action Alternative and three action alternatives for each time period covered by this rulemaking (MYs 2022-2026 and MYs 2027-2031). NHTSA also sought comment on all aspects of the proposal, including the accompanying Draft SEIS and the Paperwork Reduction Act information collections. The agency requested feedback on several foundational legal and compliance assumptions, including whether Congress granted authority under EPCA to consider environmental effects when setting standards, whether an EIS is required under NEPA for standard setting in light of recent case law, and the assumption that manufacturers will make maximum practicable efforts to comply despite the newly enacted $0 CAFE civil penalty rate. Further, NHTSA requested comment on its proposals to end credit trading by MY 2028, the impact of the $0 penalty on credit values, and the agency's determination that FCIVs for AC/OC technologies no longer represent real-world fuel savings and should be removed.

The agency's requests for comments also focused on its economic and consumer behavior modeling. NHTSA sought comment on its updated 36- month payback assumption, sales elasticity estimate of -0.4 (and whether to apply separate short- and long-run elasticities), and the variables and methodology used in its scrappage module. NHTSA also asked whether it should remove the vehicle miles traveled (VMT) constraint across alternatives to account for mode shift, how best to account for the rebound effect, and whether it is accurate to assume drivers internalize 90 percent of the safety risk associated with rebound driving. In addition, NHTSA requested feedback on its estimation of opportunity costs, how best to incorporate vehicle affordability, alternative presentations of lifetime fuel savings that account for multiple vehicle owners, and an alternative cost-benefit analysis approach based upon using revealed consumer preference. The agency even requested feedback on whether manufacturers might simply install larger fuel tanks to limit increases in vehicle refueling frequency, and it requested data to quantify repair and maintenance costs.

Finally, NHTSA sought detailed technical feedback on its fleet data and emissions modeling, including its use of EPA's MOVES5 model for criteria emissions and brake and tire wear (BTW), as well as requests for better macroeconomic data sources or alternative approaches to its labor analysis. To support review of vehicle classification and standard-setting functions, the agency asked for input on its updated footprint curve shape analysis and whether there is a distinguishable overlap between 4WD and AWD technologies when determining off-highway classification. NHTSA also requested that stakeholders identify any missing data or errors in the MY 2024 analysis fleet dataset used as the starting point for the CAFE Model.

NHTSA estimated that the proposal would reduce the average upfront vehicle costs due to CAFE standards by approximately $900, cutting in half the increased cost consumers might expect to pay under the No- Action Alternative. NHTSA also estimated that the proposed standards would be net beneficial for society, projecting positive net benefits of $24.0 billion at a three percent discount rate and $22.2 billion at a seven percent discount rate, using a model year-based analysis.

The proposal was based upon an accompanying Preliminary Regulatory Impact Analysis (PRIA), a Draft Supplemental Environmental Impact Statement (Draft SEIS), a Draft Technical Support Document (Draft TSD), and other technical documentation, including documentation for the CAFE Model and Argonne's CAFE Autonomie modeling. 2. Public Participation Opportunities and Summary of Comments

The NPRM, with an accompanying Draft SEIS, was published on NHTSA's website on December 3, 2025, and in the Federal Register on December 5, 2025.\30\ Publication in the Federal Register began a 45-day comment period allowing the public to submit comments regarding the NPRM and Draft SEIS on or before January 20, 2026. On January 14, 2026, NHTSA announced a 15-day extension to the comment period for the NPRM and Draft SEIS, ending the comment period on February 4, 2026.\31\ A separate Federal Register notice was published on December 12, 2025, that announced a virtual public hearing taking place across multiple days starting on January 7, 2026.\32\ Approximately 78 individuals and organizations signed up to participate in the hearing. The hearing started at 9:00 a.m. EDT on January 7, 2026 and ended at approximately 2:40 p.m., after hearing from the entire list of participants, and resulting in a 70-page transcript.\33\ NHTSA also received many pages of comments from participants, in addition to the hearing transcript, all of which were submitted to the docket for the rule.

\30\ 90 FR 56438 (Dec. 5, 2025).

\31\ 91 FR 1494 (Jan. 14, 2026).

\32\ 90 FR 57726 (Dec. 12, 2025).

\33\ Docket No. NHTSA-2025-0491-4805.

NHTSA received a total of 68,294 comments in the docket for the proposed rule (Docket No. NHTS-2025-0491) and 2,695 comments in the docket for the Draft SEIS (Docket No. NHTSA-2025-0490).

NHTSA received comments on the proposal from a diverse range of stakeholders, including vehicle manufacturers, automotive suppliers, trade associations, environmental and public health non-governmental organizations (NGOs), State and local governments, Members of Congress, and individual citizens. Commenters expressed divided views on the agency's proposed recalibration of the CAFE standards and other proposed compliance provisions.

Many vehicle manufacturers, States, energy companies, and energy industry trade associations supported the proposal. Commenters supporting the proposal, such as the U.S. Chamber of Commerce, the Alliance for Automotive Innovation (The Alliance), and the American Petroleum Institute (API), commented in support of NHTSA's realigning the CAFE program with EPCA's statutory limitations. These commenters agreed with NHTSA's decision to exclude the imputed fuel

economy of EVs and the electric operation of PHEVs from the baseline and maximum feasibility determinations. Automakers, ranging from Volkswagen Group of America (Volkswagen) to Jaguar Land Rover (JLR) to Mazda North American Operations (Mazda), commented that the proposed reset would provide a stable and achievable regulatory framework that avoids forcing manufacturers to divert essential capital away from innovation toward meeting unrealistic requirements. Other supporters of the proposal, such as the National Automobile Dealers Association (NADA) and the Congressional Western Caucus, commented that the proposed stringency levels reflect current automotive market realities, and would help lower the upfront purchase price of new vehicles. Fuel industry groups noted the proposal properly re-incentivizes investments and innovation in advanced ICE technologies and compatible liquid fuels.

Conversely, many environmental NGOs, other States, and a group of Members of Congress commented in opposition to the proposal, arguing that EPCA mandates NHTSA to set standards at maximum feasible levels to achieve energy conservation, and that the proposed standards fail to do so. Several stakeholders, including the Southern Environmental Law Center, the American Council for an Energy-Efficient Economy (ACEEE), and Our Children's Trust (OCT), noted that the proposed MY 2031 standard of 34.5 mpg is lower than the 35.4-mpg average achieved by the light-duty fleet in MY 2024. These commenters asserted that NHTSA's exclusion of EVs and PHEVs in its baseline analysis relies on an incomplete and artificially low status quo, resulting in standards that are significantly weaker than what automakers are capable of producing. Furthermore, a coalition of Attorneys General argued that the proposal's rationale is pretextual and improperly shaped by Executive Orders aimed at promoting fossil fuel use at the expense of zero- emission technologies.

Opponents also highlighted alleged economic and environmental harms associated with less stringent standards. The National Association of Clean Air Agencies (NACAA) and the U.S. Conference of Catholic Bishops (USCCB) noted that, although the proposal claims to reduce average upfront vehicle costs, these savings would be more than offset by increased long-term fuel expenditures, which disproportionately impact lower-income households. Environmental groups and individual citizens emphasized that the proposed standards would lead to increased emissions of so-called GHGs and criteria pollutants, exacerbating climate change and harming public health and national parks. In addition, opponents commented that reducing the stringency of CAFE standards would undermine American innovation, global competitiveness, and job growth in the advanced electric powertrain sector.

In other areas, commenters expressed views on the specific compliance and structural changes proposed. For example, one individual commenter supported the proposal to eliminate the inter-manufacturer credit trading program, agreeing that manufacturers should achieve compliance within their own fleets. SEMA, PMI, and Manufacturers of Emission Controls Association (MECA) voiced support for the agency's proposed modifications to vehicle classifications within the CAFE program. Other commenters raised concerns about the timing and effects of the proposed vehicle reclassification.

NHTSA appreciates the robust public participation and the extensive, detailed feedback provided by a diverse range of stakeholders regarding the proposed recalibration of the CAFE standards. After a comprehensive review of comments and underlying data associated with those comments, in addition to other information the agency updated for the analysis, NHTSA has carefully reconsidered the stringency of the proposed standards. The agency balanced the statutory factors specified by EPCA--with particular focus on the need of the United States to conserve energy and the economic practicability of the standards. Based on this thorough evaluation, the agency has determined that somewhat more stringent standards than originally proposed represent maximum feasible fuel economy levels, capturing additional energy savings while maintaining a sustainable compliance pathway for manufacturers. Accordingly, in this final rule, NHTSA is adopting the NPRM's proposed Alternative 3 standards as the final light-duty vehicle fuel economy standards for the model years in question, subject to certain adjustments.

In addition to adjusting the final mathematical standards, NHTSA evaluated feedback concerning the structural and compliance changes detailed in the proposal, such as the elimination of the inter- manufacturer credit trading program and the modifications to vehicle classification provisions. In response to substantive comments highlighting the need for adequate industry lead time and regulatory certainty to prevent market disruptions, the agency has modified its original timeline and deferred the implementation of the vehicle reclassification proposal to MY 2030. The agency has also made adjustments in the final standards to mitigate the unintended consequences of the transition to the reclassified fleets. In addition, the final rule provides that, while manufacturers will no longer be able to generate tradable credits starting with MY 2028, credits generated through MY 2027 will remain tradable and applicable for up to five model years as provided in existing regulations.

NHTSA received numerous other substantive comments concerning its technical analysis, baseline assumptions, legal interpretations, and economic modeling. Detailed responses to these issues, along with the agency's final legal and technical determinations, are integrated and discussed throughout the relevant sections of this final rule preamble and accompanying documentation. 3. Changes to the CAFE Model in Light of Public Comments and New Information

As with all prior CAFE rules, NHTSA appreciates all comments received on the NPRM, because they are critical for gathering additional information that can inform the agency about aspects or effects of the proposal that the agency may not have considered at the time the proposal was issued. Comments can identify potential necessary analytical corrections, or provide understanding of stakeholder positions. The views, data, requests, and suggestions contained in the comments helped NHTSA to make appropriate adjustments to the agency's proposals to ensure that the final standards are reasonable throughout the timeframe covered by the rulemaking. For this final rule, the agency made substantive changes and corrections based on the suggestions and recommendations from commenters, as well as new information obtained since the time the proposal was developed. These changes reflect DOT's long-standing commitment to ongoing refinement and improvement of its approach to estimating the potential impacts of new CAFE standards. Through further consideration and deliberation, and also in response to public comments received, NHTSA has made a number of changes to the CAFE Model since the 2025 NPRM, including those that are listed below and detailed in Section II, as well as in the Final TSD and FRIA that accompany this final rule.

Following the 2024 final rule, NHTSA made several updates to the CAFE

Model specifically for the proposed rule. Within the Market Data Input File, the agency updated its analysis fleet from MY 2022-2024, incorporated vehicle reclassification functionality, and included advanced truck credits for MY 2024, though the agency noted these credits sunset after that single year. To align with its recalibrated standard-setting approach, NHTSA updated the Model's algorithms and settings to remove statutorily prohibited inputs, to allow toggling between constrained and unconstrained analyses, to enable vehicle reclassification modeling, and to exclude PHEV electricity usage when those vehicles are operating in gasoline-only mode. The Scenarios Input File was also modified to phase out AC/OC FCIVs, to adjust the phase- out timeframe for 45X, 30D, and 45W tax credits, and to set civil penalties to zero. In addition, the agency updated numerous economic assumptions: it shifted the base dollar year from 2021 to 2024, implemented a bracketed costing approach for five levels of mass reduction, set the social cost of carbon to zero, and updated the rebound elasticity, payback period, and value of travel time. Default MOVES5 assumptions were used for emissions rates, and numerous other updates were made based on the 2025 AEO.

For the final rule analysis, NHTSA implemented further refinements based on public comments, newly identified issues, and minor errors. The Market Data Input File was revised to address stakeholder feedback and to reflect a change in the implementation year for vehicle reclassification. The Scenarios Input File was updated to incorporate changes stemming from the petroleum equivalency factor (PEF) interim final rule and to adjust the 45X battery tax credit implementation through 2032. Furthermore, economic and emissions parameters were refreshed using the 2026 AEO, GREET 2025 emissions rates, and updated MOVES5 inputs.

NHTSA also made several structural modifications to the CAFE Model software itself for the final rule. These included expanding emissions reporting to distinguish between domestic and global quantities, refining battery tax credit calculations to utilize per-vehicle battery capacity based on Argonne simulation data, and adjusting the calculation of forgone consumer sales surplus so as properly to include vehicle and battery tax credits while fixing a minor calculation error. In addition, the agency improved its insurance cost calculations by transitioning from a sales-weighting method to weighting based on the surviving fleet at each vehicle age. NHTSA also made various adjustments to enable additional sensitivity case analyses, which are discussed in FRIA Chapter 9. Ultimately, these extensive updates reflect NHTSA's longstanding commitment to continually improving how it estimates the potential impacts of new CAFE standards, with further details provided throughout this preamble and associated technical documents. 4. Final Standards--Stringency

NHTSA is setting CAFE standards for passenger automobiles and non- passenger automobiles manufactured for sale in the United States in MYs 2022-2026 and MYs 2027-2031. Passenger automobiles are generally sedans, station wagons, and some crossovers and sport utility vehicles (CUVs and SUVs), and non-passenger automobiles are generally 4WD SUVs designed for offroad use, pickups, and passenger/cargo vans.\34\ NHTSA is setting fuel economy standards for passenger automobiles that increase from the newly finalized MY 2022 standards at a rate of 0.90 percent per year through MY 2029 followed by one percent per year through MY 2031, with MY 2030 stringency acting as a bridge between the vehicle classification updates. For non-passenger automobiles, NHTSA is setting fuel economy standards that increase from the newly finalized MY 2022 standards at a rate of 0.51 percent per year through MY 2029 followed by one percent per year through MY 2031, with MY 2030 stringency acting as a bridge between vehicle classification updates.\35\ The final standards, like the proposed standards, are defined by a mathematical equation that relates vehicle footprint to fuel economy targets for both passenger cars and light trucks.\36\

\34\ “Passenger automobile” and “non-passenger automobile” are defined at 49 CFR part 523.

\35\ For a detailed discussion of the transition to new footprint-based standards curves as a result of vehicle reclassification please see Section III.A.

\36\ Vehicle footprint is roughly measured as the rectangle that is made by the four points where the vehicle's tires touch the ground. Generally, passenger cars have more stringent targets than light trucks regardless of footprint, and smaller vehicles will have more stringent targets than larger vehicles. No individual vehicle or vehicle model need meet its target exactly, but a manufacturer's compliance is determined by how its average fleet fuel economy compares to the average fuel economy of the targets of the vehicles it manufactures.

Graphical representations of the target curves for passenger cars and light trucks for MY 2022-2031 are presented in Figure I-1 and Figure I-2 below. NHTSA underscores that the equations and coefficients defining the curves are, in fact, the CAFE standards, and not the mpg numbers that the agency currently estimates could result from manufacturers' complying with the standards. To give context for what the passenger automobile footprint curve is showing in Figure I-1, for MY 2022 the smallest passenger automobile footprint is 43 sq. ft., and the target fuel economy is 39.6 mpg. For MY 2031 the smallest footprint vehicle is 46 sq. ft. and has a target of 43.05 mpg.

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For the non-passenger automobile footprint curve shown in Figure I- 2, the largest footprint is 74 sq. ft., and the target fuel economy would be 21.7 mpg for MY 2022. And in MY 2031, for the same largest footprint, the target is 23.0 mpg. The smallest footprint non-passenger automobile targets would be 37.3 mpg at 42 sq. ft., and 29.5 mpg at 52 sq. ft., for MYs 2022 and MY 2031 respectively. [GRAPHIC] [TIFF OMITTED] TR30SE26.059

NHTSA has also amended the minimum domestic passenger car standard (MDPCS) for MY 2022-2031. Section 32902(b)(4) of 49 U.S.C. requires NHTSA to project the MDPCS when it promulgates passenger car standards for a model year, as a result the MDPCSs are established as specific mpg values. NHTSA used a direct estimate for MY 2022-2026 and estimated from analysis values for MYs 2027-2031. NHTSA retained the proposed 0.7-percent offset to the MDPCS values estimated from the analysis for MYs 2027-2031 to account for recent projection errors as part of estimating the total passenger car fleet fuel economy. The final MDPCS values for MYs 2022-2031 are presented above in Table I-3. 5. Final Standards--Impacts

As with past rulemakings, NHTSA has used the CAFE Model to estimate the effects of the final CAFE standards and other regulatory alternatives under consideration. Some inputs to the CAFE Model are derived from other models, such as Argonne National Laboratory's (Argonne) “Autonomie” vehicle simulation tool and Argonne's “GREET” fuel-cycle emissions analysis model, the National Energy Modeling System (NEMS) of the U.S. Energy Information Administration's (EIA's), and EPA's Motor Vehicle Emission Simulator (MOVES) vehicle emissions model. Given the temporal scope of the NHTSA's analysis (through MY 2050, with driving of MY 2031 vehicles accounted for through CY 2070), these inputs are subject to a multitude of uncertainties including future population and economic growth, future gasoline and electricity prices, future petroleum market characteristics (e.g., imports and exports), future manufacturer responses to standards and fuel prices, future buyer responses to changes in vehicle prices and fuel economy levels, and future emission rates for “upstream” processes (e.g., fuel refining and finished fuel transportation). As a result, NHTSA underscores that all results of this analysis are subject to some degree of uncertainty but represent the agency's best estimates based on the information currently before the agency and on the agency's reasonable judgment.

NHTSA estimates that this final rule would increase the eventual average of manufacturers' CAFE requirements to about 34.9 mpg by MY 2031 rather than an average of about 49.3 mpg under the No-Action Alternative (i.e., the standards issued in 2024). For passenger cars, the average in MY 2031 is estimated to reach 40.2 mpg, and for light trucks, 26.4 mpg. This compares with 65.8 mpg and 45.4 mpg for passenger cars and light trucks, respectively, under the No-Action Alternative. NHTSA notes that the significant downward shift in required fuel economy stringency beginning in MY 2030 is reflective of the fleet reclassification that moves lighter crossovers from the light truck fleet to the passenger car fleet--necessarily reducing the fuel economy performance of both fleets. [GRAPHIC] [TIFF OMITTED] TR30SE26.060

A key indicator of individual, or consumer, cost effects for the analysis is the per-vehicle regulatory cost. The regulatory cost represents the sum of vehicle costs caused by changes in vehicle technology and any fines incurred by manufacturers due to shortfalls in meeting the standards. Under current law there are no fines for manufacturer shortfalls, and therefore, only technology costs are incurred in this analysis. As summarized in Table I-8, NHTSA projects that under the final rule, technology costs, summed over the entire fleet, could decrease by $15.3 billion relative to the No-Action Alternative for MY 2031, assuming all manufacturers will attempt to meet standards with all practicable effort. If those savings are passed on to consumers, NHTSA estimates that per-vehicle costs for new vehicles would be reduced by $1,289 for MY 2031, on average, compared to the No-Action Alternative. [GRAPHIC] [TIFF OMITTED] TR30SE26.061

Under all regulatory alternatives considered, including the Final Preferred Alternative, absolute fleetwide fuel consumption is projected to decline over time. While the Final Preferred Alternative is estimated to result in a 4.6-percent increase in gasoline consumption through CY 2050 when measured against the No-Action baseline, this relative difference does not negate the broader, macro-level reductions in aggregate fuel use. Rather, due to continuous technological improvements and the steady retirement of older, less efficient vehicles through fleet turnover, the long-term energy conservation trajectory of the light-duty fleet remains intact under the finalized standards. Figure I-3 shows the total change in gasoline energy use in comparison to the No-Action Alternative.\37\

[GRAPHIC] [TIFF OMITTED] TR30SE26.062

NHTSA measures and reports benefits and costs from changes in fuel economy and efficiency standards from two different perspectives. First, the agency's “model year” perspective focuses on the benefits and costs of establishing alternative CAFE standards for MYs 2027-2031, and measures these over the lifetime of vehicles in each separate model year. The “calendar year” perspective includes the annual impacts attributable to all vehicles in the registered passenger car and light truck fleet estimated to be in service in each calendar year covered in the analysis. For this final rule, this calendar year perspective covers each of CYs 2024-2050. Compared to the model year perspective, the calendar year perspective includes model years of vehicles produced after those model years for which standards are being finalized, under the assumption that the MY 2031 standards remain in place for MY 2032 and beyond. The strengths and limitations of each accounting perspective are discussed in detail in FRIA Chapter 5.

\37\ 1 Quad is equal to one quadrillion (10\15\) British thermal units of energy.

With benefits and costs discounted at three percent and estimates attributable to vehicles produced during and prior to MY 2031 over the course of their lives, NHTSA estimates that monetized reduction of costs and benefits would be approximately $137.5 billion and $95.8 billion, respectively, relative to the No-Action baseline. This results in an estimated present value of aggregate monetized net benefits to society of approximately $41.8 billion. With benefits and costs discounted at seven percent, NHTSA estimates approximately a reduction of approximately $96.9 billion in monetized costs and $60.5 billion in monetized benefits, such that the present value of aggregate net monetized benefits to society would be approximately $36.3 billion. [GRAPHIC] [TIFF OMITTED] TR30SE26.063

With benefits and costs discounted at three percent and calculated for the full on-road light-duty fleet over CYs 2024-2050, NHTSA estimates that the monetized reduction of costs and benefits would be approximately $502.7 billion and $343.5 billion, respectively, such that the present value of aggregate monetized net benefits to society would be approximately $159.2 billion. With benefits and costs discounted at seven percent, NHTSA estimates reductions of

$283.1 billion in monetized costs and $185.3 billion in monetized benefits, such that the present value of aggregate net monetized benefits to society could be approximately $97.8 billion. [GRAPHIC] [TIFF OMITTED] TR30SE26.064

NHTSA's conclusion, after consideration of the factors described in this document and information in the administrative record for this action, is that that maximum feasible standards for passenger automobiles for MYs 2022-2031 are the newly finalized MY 2022 standards, increasing at a rate of 0.90 percent per year through MY 2029 followed by one percent per year through MY 2031, with the MY 2030's adjusted stringency acting as a bridge between the vehicle classification updates. Maximum feasible standards for non-passenger automobiles are an increase from the newly finalized MY 2022 standards at a rate of 0.51 percent per year through MY 2029 followed by one percent per year through MY 2031, again with the adjusted MY 2030 stringency acting as a bridge between vehicle classification updates.\38\

\38\ For a detailed discussion of the transition to new footprint-based standards curves as a result of vehicle reclassification, please see Section III.A.

DOT is committed to improving the affordability of light-duty vehicles while maintaining a reasonable level of fuel economy, removing market distortions caused by overly aggressive prior standards and program elements, such as FCIVs, and inappropriate classification criteria, and resetting the CAFE program in compliance with the statute. NHTSA has concluded that, in light of present and forecast economic, technological, and energy circumstances, the Alternative 3 proposed in the NPRM, subject to certain adjustments described below, will best achieve the standards which are technologically feasible, are economically practicable, accurately consider the effect of other motor vehicle standards of the Government on fuel economy, and appropriately address the need of the United States to conserve energy, as mandated by Congress.

When NHTSA promulgates new regulations or amends its existing regulations, it generally presents an analysis that estimates the impacts of those regulations, including the impacts of other regulatory alternatives it considered during the rulemaking. These analyses derive from statutes such as the APA \39\ and the NEPA,\40\ from Executive Orders (such as E.O. 12866),\41\ and from other administrative guidance (e.g., Office of Management and Budget (OMB) Circular A-4).\42\ NHTSA's authorizing statute for fuel economy regulations, the Energy Policy and Conservation Act of 1975 (EPCA), as amended, contains several requirements governing the scope and nature of fuel economy standard setting.\43\ Among these, some have been in place since EPCA was first signed into law in 1975, some were added in the Alternative Motor Fuels Act of 1988 (AMFA) \44\ and in the Energy Policy Act of 1992,\45\ and others were added in 2007 when Congress passed EISA.\46\ Most recently, the One Big Beautiful Bill Act (OB3) amended EPCA's civil penalty provisions.\47\

\39\ Codified in 5 U.S.C. 551-559.

\40\ Codified in 42 U.S.C. 4321-4347.

\41\ E.O. 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993), available at: https://www.archives.gov/files/federal-register/executive-orders/pdf/12866.pdf (accessed: Jul. 20, 2026) (hereinafter, “E.O. 12866”).

\42\ Office of Management and Budget, Circular A-4 (Sept. 17, 2003), available at: https://www.whitehouse.gov/wp-content/uploads/2025/08/CircularA-4.pdf (accessed: June 3, 2026) (hereinafter, “Circular A-4”).

\43\ Public Law 94-163, 89 Stat. 871 (Dec. 22, 1975).

\44\ Public Law 100-494, 102 Stat. 2441 (Oct. 14, 1988)

\45\ Public Law 102-486, 106 Stat. 2776 (Oct. 24, 1992).

\46\ Public Law 110-140, 121 Stat. 1492 (Dec. 19, 2007).

\47\ Public Law 119-21, 139 Stat. 72 (July 4, 2025).

These statutes contain a variety of requirements for which NHTSA seeks to account in its analysis. NHTSA captures all of these requirements by presenting an analysis that spans a meaningful range of regulatory alternatives; that quantifies a range of technological, economic, and environmental impacts; and that does so in a manner that accounts for various express statutory requirements for the CAFE program (e.g., passenger cars and light trucks must be regulated separately; and the standard for each fleet must be set at the maximum feasible level in each model year). NHTSA's standards are thus supported, though not dictated, by extensive analysis of potential impacts of the regulatory alternatives under consideration. Together with this preamble, a Final TSD, a FRIA, and a Final SEIS provide a detailed enumeration of related analysis methods, estimates, assumptions, and results. These additional analyses can be found in the rulemaking docket for this final rule and on NHTSA's website.48 49

\48\ Docket No. NHTSA-2025-0491; Docket No. NHTSA-2025-0490.

\49\ See NHTSA, Corporate Average Fuel Economy, available at: https://www.nhtsa.gov/laws-regulations/corporate-average-fuel-economy (accessed: May 28, 2026).

This section provides further detail on the key features and components of NHTSA's standard-setting (also known as “constrained”) analysis. NHTSA's standard-setting analysis reflects statutory limitations on what NHTSA

can consider when determining maximum feasible CAFE standards. In determining maximum feasible fuel economy levels, “the Secretary of Transportation--(1) may not consider the fuel economy of dedicated automobiles; (2) shall consider dual-fueled automobiles to be operated only on gasoline or diesel fuel; and (3) may not consider, when prescribing a fuel economy standard, the trading, transferring, or availability of credits.” \50\ NHTSA also conducts an “unconstrained” CAFE Model analysis to evaluate, as required by NEPA, the reasonably foreseeable environmental effects of its proposed action and a reasonable range of alternatives that meet the purpose and need for the proposed action.\51\ The technical assumptions for EIS simulations are discussed in the Final SEIS Appendix D.

\50\ 49 U.S.C. 32902(h).

\51\ 42 U.S.C. 4332.

This section also describes how NHTSA's analysis has been constructed specifically to reflect other governing law applicable to CAFE standards, reviews how NHTSA's analysis has been updated to adhere to relevant statutory provisions, and describes additional technical work recently conducted by the agency. The analysis for this final rule aids NHTSA in implementing its statutory obligations, including the weighing of various considerations, by informing decision-makers about the estimated effects of different regulatory alternatives. 1. What are the key components of NHTSA's analysis?

NHTSA's analysis makes use of a range of data (i.e., observations of things that have occurred), estimates (i.e., things that are unknown or may occur in the future), and models (i.e., methods for making estimates). Two examples of data include (1) records of actual odometer readings used to estimate annual mileage accumulation at different vehicle ages and (2) CAFE compliance data used as the foundation for the “reference fleet” containing, among other things, production volumes and fuel economy levels of specific configurations of specific vehicle models produced for sale in the United States. Two examples of estimates include (1) forecasts of future gross domestic product (GDP) growth used, with other estimates, to forecast future vehicle sales volumes and (2) technology cost estimates, which include estimates of the technologies' “direct cost,” marked up by a “retail price equivalent” factor, to estimate the ultimate cost to consumers of a given fuel-saving technology, and an estimate of “cost learning effects” (i.e., the tendency that it will cost a manufacturer less to apply a technology as the manufacturer gains more experience doing so).

In coordination with the DOT Volpe National Transportation Systems Center (Volpe or the Volpe Center), NHTSA uses the CAFE Compliance and Effects Modeling System (CAFE Model or the Model) to simulate and analyze manufacturers' potential responses to new CAFE standards and to estimate various impacts of those responses. NHTSA has used the CAFE Model to perform analyses supporting every CAFE rulemaking since 2001. Working together, NHTSA and Volpe ensure that the CAFE Model's operation reflects the statutory directives discussed in more detail in the remainder of this section.

The CAFE Model first estimates how vehicle manufacturers might respond to a given regulatory scenario; from that potential compliance solution, the system estimates what impact that response will have on fuel consumption, emissions, safety impacts, and economic externalities. The following section summarizes information necessary to understand the analysis, while Final TSD Chapter 2 and the CAFE Model Documentation present additional details on the Model's operation.

The CAFE Model may be characterized as an integrated system of models that estimate the impact of various policy options. For example, one model estimates manufacturers' responses, another estimates resultant changes in total vehicle sales, and still another estimates resultant changes in fleet turnover (i.e., scrappage). More importantly, the modeling system does not determine the form or stringency of the standards, which must be developed in consideration of statutory factors that must be balanced by policy-makers. Instead, the CAFE Model applies inputs specifying the form and stringency of standards to be analyzed and produces outputs showing the impacts of manufacturers working to meet those standards, which become part of the basis for comparing different potential stringencies. A regulatory scenario, meanwhile, involves specification of the form, or shape, of the standards (e.g., flat standards, or linear or logistic attribute- based standards), scope of passenger car and light truck regulatory classes, and stringency of the standards for each model year to be analyzed. For example, a regulatory scenario may define standards for a particular class of vehicles that increase in stringency by a given percent per year for a given number of consecutive years.

Manufacturer compliance simulation and the ensuing effects estimation, collectively referred to as compliance modeling, encompass numerous subsidiary elements. Compliance simulation begins with a detailed user-provided initial forecast of the vehicle models offered for sale during the simulation period.\52\ The compliance simulation then attempts to bring each manufacturer into compliance with the standards defined by the regulatory scenario contained within an input file developed by the user.

\52\ Because the CAFE Model is publicly available, anyone can develop their own initial forecast (or other inputs) for the Model to use. The DOT-developed Market Data Input File that contains the forecast for this final rule is available on NHTSA's website at https://www.nhtsa.gov/corporate-average-fuel-economy/cafe-compliance-and-effects-modeling-system (accessed: May 25, 2026).

Estimating impacts involves calculating resulting changes in new vehicle costs, estimating a variety of costs (e.g., for fuel expenditures or reduced or increased technology costs) and effects (e.g., gallons of fuel used by the fleet) occurring as vehicles are driven over their lifetimes before eventually being scrapped, and estimating the monetary value of these effects. Estimating impacts also involves consideration of consumer responses (e.g., the impact of vehicle fuel economy, operating costs, and vehicle price on consumer demand for light-duty vehicles). Both basic analytical elements involve the application of many inputs. Many of these inputs are developed outside of the Model and not by the Model. For example, the Model applies fuel price projections from DOE's EIA; it does not estimate fuel prices.

NHTSA also uses EPA's Motor Vehicle Emission Simulator (MOVES) model to estimate “vehicle” or “downstream” emission factors for criteria pollutants \53\ and uses four DOE and DOE-sponsored models to develop inputs to the CAFE Model, including three developed and maintained by DOE's Argonne National Laboratory (Argonne). The agency uses the NEMS from EIA to estimate fuel prices \54\ and uses Argonne's Greenhouse gases, Regulated Emissions, and Energy use in Transportation (GREET) Model to

estimate emissions rates from fuel production and distribution processes.\55\ DOT also sponsors Argonne to run its Autonomie full- vehicle modeling and simulation system to estimate the fuel economy impacts for over a million combinations of technologies and vehicle types.\56\ The Final TSD and FRIA describe details of the agency's use of these models. In addition, as discussed in the Final SEIS accompanying this final rule, NHTSA relied on a range of models to estimate various environmental impacts.

\53\ See https://www.epa.gov/moves. This final rule uses version MOVES5 (the latest version at the time of analysis), which is available at https://www.epa.gov/moves/latest-version-motor-vehicle-emission-simulator-moves (accessed: July 28, 2026).

\54\ See https://www.eia.gov/outlooks/aeo/. This final rule uses fuel prices estimated using the Annual Energy Outlook (AEO) (2026) version of NEMS. See https://www.eia.gov/outlooks/aeo/tables_ref.php (accessed: May 20, 2026).

\55\ Information regarding GREET is available at https://greet.anl.gov/ (accessed: May 22, 2025). This final rule uses the R&D GREET (2023) version.

\56\ As part of the Argonne simulation effort, individual technology combinations simulated in Autonomie were paired with Argonne's BatPaC model to estimate the battery cost associated with each technology combination based on characteristics of the simulated vehicle and its level of electrification. Information regarding Argonne's BatPaC model is available at https://www.anl.gov/cse/electrochemical-chemical-TEA. In addition, the impact of engine technologies on fuel consumption, torque, and other metrics was characterized using GT-POWER simulation modeling in combination with other engine modeling that was conducted by IAV Automotive Engineering, Inc. (IAV). The engine characterization “maps” resulting from this analysis were used as inputs for the Autonomie full-vehicle simulation modeling. Information regarding GT-POWER is available at https://www.gtisoft.com/gt-power/.

To prepare for the analysis supporting this final rule, DOT continued to refine and expand the capabilities of the CAFE Model. As examples, and as discussed in more detail below, the reference fleet uses mid-MY 2024 compliance data (the most recent available high- quality data at the time of the analysis) and includes the capability (in addition to capabilities integrated into the modeling system) to account for changes to regulatory vehicle classification definitions. The analysis also employs separate input files for the modeling runs that NHTSA uses for its standard-setting analysis (i.e., the constrained analysis), which excludes the 49 U.S.C. 32902(h) factors that NHTSA cannot consider, and the modeling runs that NHTSA uses for its analysis of impacts under NEPA (i.e., the unconstrained analysis), which does not exclude the 49 U.S.C. 32902(h) factors, and those input files have been updated accordingly. Common to both analyses are routine updates to dollar year values (e.g., 2021$ to 2024$) and routine updates to gas price projections. Some other updates, like updates to manufacturer credit banks, are confined to the unconstrained analysis only and are discussed further in the Final SEIS Appendix D. The values of many inputs remain uncertain, and NHTSA has conducted sensitivity analyses around selected inputs to attempt to capture some of that uncertainty. These changes reflect the agency's long-standing commitment to ongoing refinement of its approach to estimating the potential impacts of new CAFE standards. These and other updated analytical inputs are outlined in Section II below and discussed in detail in the Final TSD and FRIA. 2. How do statutory requirements shape NHTSA's analysis?

Multiple requirements govern the scope and nature of CAFE standard setting; the specific requirements regarding the technical characteristics of CAFE standards and the analysis thereof include, but are not limited to, the following:

Corporate Average Standards: 49 U.S.C. 32902 requires that standards apply to the average fuel economy levels achieved by each manufacturer's fleet of vehicles produced for sale in the United States. The CAFE Model calculates the CAFE fuel economy of each manufacturer's fleet based on estimated production volumes and characteristics, including fuel economy levels, of distinct vehicle models that could be produced for sale in the United States.

Separate Standards for Passenger and Non-Passenger Automobiles: 49 U.S.C. 32902 requires DOT to set separate CAFE standards for passenger automobiles and non-passenger automobiles. The CAFE Model accounts for passenger and non-passenger automobiles separately, including differentiated standards and compliance.

Attribute-Based Standards: 49 U.S.C. 32902 requires DOT to define CAFE standards (separately for passenger and non-passenger automobiles) as mathematical functions expressed in terms of one or more attributes related to fuel economy. This means that, for a given manufacturer's fleet of vehicles produced for sale in the United States in a given regulatory class and model year, the applicable minimum CAFE requirement (i.e., the numerical value of the requirement) is computed based on the applicable mathematical function as well as the mix and attributes of vehicles in the manufacturer's fleet. The CAFE Model accounts for such functions and vehicle attributes explicitly.

Separately Defined Standards for Each Model Year: 49 U.S.C. 32902 requires DOT to set CAFE standards (separately for passenger and non- passenger automobiles) at the maximum feasible levels in each model year. The CAFE Model represents each model year explicitly and accounts for the production relationships between model years. For example, a new engine first applied to a given vehicle model/configuration in MY 2030 will most likely be retained in MY 2031; that same vehicle model reflects the fact that manufacturers do not apply brand-new engines to a given vehicle model every year.

Separate Compliance for Domestic and Imported Passenger Car Fleets: 49 U.S.C. 32904 requires the U.S. EPA to determine CAFE compliance for each manufacturer's fleet of domestic passenger cars and imported passenger cars separately. A passenger car is domestic or import based on the definitions provided in 49 U.S.C. 32904. The CAFE Model accounts explicitly for this requirement when simulating manufacturers' potential responses to CAFE standards.

Minimum CAFE Standards for Domestic Passenger Car Fleets: 49 U.S.C. 32902 requires that domestic passenger car fleets also meet a minimum CAFE standard, which is calculated as 92 percent of the average fuel economy projected by the Secretary for the combined domestic and non- domestic passenger automobile fleets manufactured for sale in the United States by all manufacturers in the model year. This projection is published at the time the standard is promulgated. The CAFE Model accounts explicitly for this requirement.

Statutory Basis for Stringency: 49 U.S.C. 32902 requires DOT to set CAFE standards for passenger and non-passenger automobiles at the maximum feasible levels, determined by considering technological feasibility, economic practicability, the need of the U.S. to conserve energy, and the impact of other motor vehicle standards of the Federal Government on fuel economy. The analysis and balancing of these factors necessarily change in light of current and projected economic and market conditions. Accordingly, NHTSA has continued to expand and refine its qualitative and quantitative analysis to account for these statutory factors considering such conditions. For example, the simulations of technology effectiveness reflect the agency's judgment that it would not be economically practicable, appropriate, or cost effective for a manufacturer to “split” an engine shared among many vehicle models/configurations into myriad versions each optimized to a single vehicle model/configuration.

Civil Penalties for Noncompliance: 49 U.S.C. 32912 (and implementing regulations) prescribe a rate (in dollars per tenth of a mile per gallon) at which the Secretary is to levy civil penalties if a manufacturer fails to comply with a

CAFE standard for a given fleet in a given model year. When civil penalties are applicable, the CAFE Model will calculate civil penalties for CAFE shortfalls. Statutory civil penalties were set to $0 by OB3, Public Law 119-21 (July 4, 2025), so NHTSA did not use the CAFE Model to calculate civil penalties for the NPRM or this final rule.

Dual-Fueled and Dedicated Alternative Fuel Vehicles: For purposes of calculating CAFE levels used to determine passenger and non- passenger automobile fleet compliance, 49 U.S.C. 32905 and 32906 specify methods for calculating the fuel economy levels of vehicles operating on alternative fuels to gasoline or diesel fuels. The CAFE Model can account for these requirements explicitly for each relevant vehicle model. However, 49 U.S.C. 32902 also prohibits consideration of the fuel economy of dedicated AFV models (or the non-gasoline or non- diesel calculated fuel economy of dual-fueled AFVs) when NHTSA determines what levels of passenger and non-passenger automobile CAFE standards are maximum feasible. The CAFE Model is therefore run in a manner that excludes dedicated AFV technologies and limits the consideration of a dual-fueled AFV's fuel economy to their gasoline or diesel operation only. NHTSA operates the Model with this limitation when performing the analysis that is used to inform the setting of standards. The CAFE Model can also be run without this analytical constraint, and the agency does so in the NEPA analysis, as described below.

Creation and Use of Compliance Credits: 49 U.S.C. 32903 provides that manufacturers may earn CAFE “credits” by achieving a CAFE level beyond that required of a given fleet in a given model year and specifies how these credits may be used to offset the amount by which a different fleet falls short of its corresponding requirement. These provisions allow credits to be “carried forward” a maximum of five model years and “carried back” a maximum of three model years, transferred between regulated classes, and traded between manufacturers. However, credit use is also subject to specific limits: the statute caps the amount of credits that can be transferred between a manufacturer's fleets and prohibits manufacturers from applying traded or transferred credits to offset a failure to achieve the minimum standard for domestic passenger automobiles. The CAFE Model has the capability to simulate manufacturers' potential use of credits carried forward from prior model years or transferred from other fleets; \57\ however, this capability is not used in the standard- setting analysis because 49 U.S.C. 32902 prohibits consideration of manufacturers' potential application of CAFE compliance credits when setting maximum feasible CAFE standards for passenger and non-passenger automobiles.

\57\ Note that the CAFE Model does not simulate the potential for manufacturers to carry CAFE credits back (i.e., borrow) from future model years or acquire and use CAFE compliance credits from other manufacturers. NHTSA believes that there is significant uncertainty in how manufacturers may choose to use these particular flexibilities in the future: for example, though it is reasonably foreseeable that a manufacturer who over-complies in 1 year may “coast” through several subsequent years relying on that prior improvement rather than continuing to make technology improvements year after year, it is harder to assume with confidence that manufacturers will rely on future technology investments to offset prior-year shortfalls, or whether and how manufacturers will trade credits with market competitors rather than make their own technology investments.

National Environmental Policy Act (NEPA): The Final SEIS accompanying this final rule documents changes in fuel use and emissions as estimated using the CAFE Model and also documents corresponding estimates--based on the application of other models documented in the Final SEIS--of environmental impacts of the regulatory alternatives under consideration. 3. What updated capabilities and assumptions does the current Model reflect as compared to the version used in the analysis of the 2024 final rule?

DOT has continued its ongoing effort to refine and expand the capabilities of the CAFE Model for use in analyzing regulatory alternatives as considered in the NPRM and in this final rule. Any analysis of regulatory actions that will be implemented several years in the future, and whose benefits and costs accrue over decades, requires many assumptions. Over such time horizons, many, perhaps even most, of the relevant assumptions in such an analysis are inevitably uncertain. To help address this, NHTSA updates the assumptions used in each successive CAFE analysis to reflect the current state of the world more accurately and to apply the best current estimates of future conditions. Accordingly, since the 2024 final rule, DOT made the following changes to the CAFE Model and its inputs for the NPRM:

Updated the Market Data Input File to reflect the change in analysis fleet from MY 2022 to MY 2024;

Updated algorithms and settings to remove statutorily prohibited inputs from the standard-setting analysis and to select between different types of analyses (i.e., constrained and unconstrained);

Updated the base dollar year from 2021$ to 2024$;

Updated the capability to exclude PHEV electricity usage when PHEV fuel economy operation is in gasoline-only mode for standard setting;

Updated the modeling capability to allow for vehicle reclassification;

Updated the Market Data Input File to include vehicle reclassification;

Updated the Model to use a bracketed costing approach to determine prices for the five levels of mass reduction;

Updated the Scenarios Input File to phase out AC and OC fuel consumption improvement values (FCIVs);

Updated the Market Data Input File to include advanced truck credits for MY 2024 vehicles, noting that those credits sunset after MY 2024 and are therefore only applicable to that 1 year;

Updated the Parameters Input File to set the social cost of carbon at zero;

Updated the Parameters Input File for changes in other economic variables;

Updated the Scenarios Input File with an adjusted 45X, 30D, and 45W tax credit phase-out timeframe;

Updated the Scenarios Input File to set civil penalties to zero;

Updated selected economic assumptions:

[cir] Rebound elasticity;

[cir] Payback period;

[cir] Value of travel time per vehicle; and

[cir] Numerous other updates based on the 2025 AEO.

Updated emission rates based on default MOVES5 assumptions.

NHTSA has made further updates for the final rule analysis in response to comments received on the proposal, minor errors and omissions identified, and new information. These changes include:

Updating the Market Data Input File based on comments received and other identified issues:

[cir] Refresh and redesign years updated based on OEM announcements; \58\

\58\ NHTSA reviewed manufacturers' announcements regarding nameplate refresh and redesign for MYs 2025 and 2026. If the actual refresh or redesign misaligned with what was in the Market Data Input File for the NPRM, NHTSA updated the Market Data Input File to reflect the actual refresh or redesign year of the nameplate. The specific updates for nameplate refresh and redesign years can be found in Docket No. NHTSA-2025-0491 titled, “2026_FRM_Refresh_Redesign_Update.xlsx.”

[cir] U.S. dealership labor hours updated based on new data;

[cir] MR5 SKIP applied for light trucks; \59\

\59\ See Final TSD Chapter 3.4.3 for discussion on the MR5 SKIP.

[cir] Vehicle platforms realigned to segregate EV variants; \60\

\60\ To ensure EVs were excluded from the analysis, EV platforms were realigned to not share a powertrain with an ICE, SHEV, or PHEV variant. If a vehicle platform included both ICE and EV powertrains, the EV variant(s) were assigned its own platform.

[cir] E85 fuel shares shifted to gasoline; and

[cir] Miscellaneous data entry anomalies addressed.

Updating the Market Data Input File based on the changes to the vehicle reclassification implementation year.

Updating the Scenarios Input File based on the changes to the PEF interim final rule.\61\

\61\ 91 FR 7810 (Feb. 19, 2026).

Updating the Scenarios Input File with an adjustment to the 45X battery tax credit implementation through 2032.

Updating economic and emissions assumptions in the Parameters Input File:

[cir] Numerous updates based on the 2026 AEO; and

[cir] Updating selected emission rates based on GREET 2025 and updated input assumptions to MOVES5.

Modifying the CAFE Model to expand capabilities and implement minor corrections:

[cir] Update emissions calculations to report domestic quantities in addition to global quantities;

[cir] Adjust calculations of forgone consumer sales surplus to include vehicle and battery tax credits and correct a minor error in calculation;

[cir] Refine battery tax credit calculations to use per-vehicle battery capacity based on Argonne simulation data;

[cir] Improve insurance cost calculation by transitioning from sales-weighting to weights based on the surviving fleet at each age; and

[cir] Various adjustments to allow for additional sensitivity case analysis, as discussed in FRIA Chapter 9.

These and other updated analytical inputs are discussed in the remainder of this section and in detail in the Final TSD.

NHTSA is analyzing the effects of different potential CAFE standards on industry, consumers, and society at large. These different potential standards are described as “regulatory alternatives,” and, among the regulatory alternatives, NHTSA selects one set of final standards (i.e., one set consists of a standard for passenger cars and a standard for light trucks). EPCA, as amended by EISA, expressly requires that CAFE standards for passenger cars and light trucks be based on one or more vehicle attributes related to fuel economy and be expressed in the form of a mathematical function.\62\ Thus, the standards (and the regulatory alternatives) for passenger cars and light trucks take the form of fuel economy targets expressed as functions of vehicle footprint (the product of vehicle wheelbase and average track width) that are separate for passenger cars and light trucks.

\62\ 49 U.S.C. 32902(a)(3)(A).

Under the footprint-based standards, the function defines a fuel economy performance target for each unique footprint combination within a car or truck model type. Using the functions, each manufacturer thus will have an average fuel economy standard for each year that is unique to each of its regulatory fleets (i.e., passenger automobiles and non- passenger automobiles, consistent with 49 U.S.C. 32902(b)), based on the footprint and production volumes of the vehicle models produced by that manufacturer. The functions are negatively sloped, so that vehicles with larger footprints will generally be subject to lower mpg targets than vehicles with smaller footprints. This is because vehicles with smaller footprints are typically more capable of achieving higher levels of fuel economy, because they tend not to require as much energy to propel the mass necessary to perform their driving task. The standards with which a manufacturer must comply are determined by its final model year production figures. A manufacturer's calculation of its fleet average standards, as well as its fleets' average performance at the end of the model year, will thus be based on the production- weighted average target and performance of each model in its fleet.\63\

\63\ As discussed in prior rulemakings, a manufacturer may have some vehicle models that exceed their target and some that are below their target. Compliance with a fleet average standard is determined by comparing the fleet average standard (based on the production- weighted average of the target levels for each model) with fleet average performance (based on the production-weighted average of the performance of each model). This is inherent in the statutory structure of CAFE, which requires NHTSA to set corporate average standards.

For passenger cars, consistent with prior rulemakings, NHTSA proposed to define fuel economy targets as shown in Equation II-1. Equation II-1: Passenger Car Fuel Economy Footprint Target Curve [GRAPHIC] [TIFF OMITTED] TR30SE26.065

Where:

TARGETFE is the fuel economy target (in mpg) applicable to a specific vehicle model type with a unique footprint combination, a is a minimum fuel economy target (in mpg), b is a maximum fuel economy target (in mpg), c is the slope (in gallons per mile (or gpm) per square foot) of a line relating fuel consumption (the inverse of fuel economy) to footprint, and d is an intercept (in gpm) of the same line.

Here, MIN and MAX are functions that take the minimum and maximum values, respectively, of the set of included values. For example, MIN[40, 35] = 35 and MAX(40, 25) = 40, such that MIN[MAX(40, 25), 35] = 35.

For light trucks, also consistent with prior rulemakings, NHTSA proposed to define fuel economy targets as shown in Equation II-2. Equation II-2: Light Truck Fuel Economy Footprint Target Curve [GRAPHIC] [TIFF OMITTED] TR30SE26.066

Where:

TARGETFE is the fuel economy target (in mpg) applicable to a specific vehicle model type with a unique footprint combination, and a, b, c, and d are as for passenger cars, but take values specific to light trucks.

Though the general model of the target function equation is the same for passenger cars and light trucks, and the same for each model year, the parameters of the function equation differ for cars and trucks.

The parameters defining the general curve shapes have remained the same since the 2012 final rule. NHTSA periodically reconsiders whether to update the mathematical functions but in each prior instance had concluded that the existing curves continued to represent the relationship between footprint and fuel economy reasonably. Consistent with the agency's past practice of reviewing the mathematical functions prior to each rulemaking, NHTSA re-examined the curve shapes for the proposal and then subsequently again for this final rule.

For the proposal, NHTSA performed descriptive statistical analyses using manufacturer-reported data for the MY 2022 and MY 2024 fleets. NHTSA used the MY 2022 fleet for analysis of curve shapes relevant to the MY 2022-2027 standards and used the MY 2024 “reclassified” fleet for analysis of curve shapes relevant to the MY 2028-2031 standards. NHTSA used these separate fleets because the proposed updates to NHTSA's vehicle classification regulations proposed to begin in MY 2028 had material impacts on the relationship between fuel economy and footprint for each regulatory class, as expressed by the standards- defining functions.

To estimate the relationship between fuel economy and footprint and to maintain general consistency with analyses of past rules (and the conformance to statutory prohibitions), the agency excluded all diesel engine vehicles and all plug-in EVs, which include plug-in hybrid electric vehicles, battery electric vehicles (BEV), and fuel cell electric vehicles (FCEV), and applied weighting and other adjustments to the fuel consumption and footprint data. Table II-1 summarizes the methodological approaches that NHTSA considered for reassessing the footprint curves. BILLING CODE 4910-59-P

[GRAPHIC] [TIFF OMITTED] TR30SE26.067

BILLING CODE 4910-59-C

NHTSA stated its belief in the proposal that the ordinary least- squares (OLS) regression framework continued to be an appropriate method for estimating the relationship of footprint to fuel economy. While the agency relied on the minimum absolute deviation (MAD) regression framework in the 2010 final rule to address the effects of “outlier” vehicles in the fleet, the agency addressed outlier vehicles in

this reconsideration through technology-based exclusions (i.e., by excluding diesels, PHEVs, BEVs, and FCEVs, as mentioned above) and data normalization through the application of controls, including curb weight (CW) to footprint, horsepower (HP) to CW, and both together, depending on the regulatory fleet under consideration, as it has in each of its CAFE rulemakings since 2012.

The curves presented in the proposal also reflected updated fleet data to reset the “cutpoints,” or the places at the lowermost and uppermost bounds of vehicle footprint distributions where the standards remain flat (i.e., the mpg target does not continue to increase as footprint decreases, and vice versa). Since the 2012 final rule, the cutpoints had remained unchanged in subsequent proposed and final revisions to the standards until the proposed rule--passenger car cutpoints were set at 41 square feet (lower) and 56 square feet (upper), and light truck cutpoints were set at 41 square feet (lower) and 74 square feet (upper). NHTSA proposed to set the passenger car lower cutpoint at 45 square feet and an upper cutpoint at 57 square feet and also proposed to set the light truck lower cutpoint at 52 square feet and an upper cutpoint at 70 square feet for light trucks, after reviewing up-to-date fleet data.

NHTSA also discussed in the proposal how the agency considers a variety of technical and policy issues when determining the footprint curve shape in any CAFE rulemaking. For example, standards that decrease with increasing footprint could create incentives for manufacturers to upsize vehicles, since small changes in vehicle footprint would result in a significant change in the vehicle's fuel economy target; conversely, gradually increasing standards could create a significant amount of additional technology burden for larger vehicles to meet fuel economy targets like those of smaller vehicles. That said, NHTSA performed an analysis for the 2024 final rule showing that vehicle footprints, within vehicle types, have been stable on a sales-weighted basis since MY 2012.\65\ The biggest increase to within- type footprints was for the sedan/wagon category, which increased by 3.4 percent (or about 2 square feet) from 2012 (for reference, a 1.5- square foot increase would equate to about a 2-inch increase in the track width of a MY 2022 Toyota Corolla). NHTSA concluded that the disconnect between vehicle class-level characteristics and what was being perceived at the fleet level (i.e., vehicles seemingly getting larger) was traceable to the increase in the share of fleet vehicles classified as light trucks relative to the share of passenger cars. Available data indicate that the use of footprint as an attribute did not appear to lead to manufacturers significantly altering the size of their vehicles within vehicle classes.

\65\ NHTSA, 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, NHTSA: Washington, DC, pp. 1-20 (2024), available at: https://www.nhtsa.gov/sites/nhtsa.gov/files/2024-06/CAFE-2027-2031-HDPUV-2030-2035_Final-Technical-Support-Document.pdf (accessed: July 28, 2026).

The footprint curve updates presented in the proposal were intended to ensure that the agency appropriately captures the footprint-to-fuel- economy relationship using the most current data. As NHTSA discussed in the Draft TSD, the observed relationship between footprint and fuel economy for both the passenger car and light truck fleets is on average “flatter” (i.e., on average, the fuel economy did not vary as much across footprint levels) than the MY 2008 fleet used to create the footprint curves for the past several rules. While the technical concerns and policy trade-offs associated with the curve shapes still hold to some extent, NHTSA concludes it is more likely, as shown from the agency's 2024 analysis and the updated discussion in Section VI, that any shift in vehicle attributes present in the market over time has not been due to the shapes of curves or the use of footprint as the relevant attribute.

NHTSA sought comments on this conclusion, as well as the updated footprint curve shape analysis.

Hyundai Motor North America (Hyundai) commented in support of the continued use of footprint as the attribute for the development of attribute-based standards to ensure certainty and continuity in the design of CAFE standards.\66\ JLR criticized the design of standards due to the relative lack of separation between the passenger car and light truck curves in the mid-50s ft\2\ range.\67\ In contrast, the International Council on Clean Transportation (ICCT) argued that maintaining two separate curves for passenger cars and light trucks leaves open an incentive for manufacturers to redesign vehicles to be in a regulatory class subject to less stringent standards.\68\

\66\ Hyundai, Docket No. NHTSA-2025-0491-4972-A1, at 2.

\67\ JLR, Docket No. NHTSA-2025-0491-5196-A1, at 2-3.

\68\ ICCT, Docket No. NHTSA-2025-0491-5240-A2, at 13.

NHTSA is continuing to set separate standards for passenger cars and light trucks. As discussed in more detail in Section V, based on the plain language of EPCA, as amended, NHTSA consistently has interpreted the statutory requirement to set separate standards for passenger and non-passenger automobiles as preventing NHTSA from setting a single combined CAFE standard. NHTSA believes that the reclassification of the passenger car and light truck fleets (discussed in more detail in Section VI) will provide a better structure to address the incentives issue raised by ICCT. With the reclassification, the distinction between passenger cars and light trucks will be sharpened, as vehicles will be classified as light trucks based on their offroad and cargo-hauling capabilities, characteristics that involve a footprint-to-fuel-consumption profile that differs more significantly from that of passenger cars. In combination with the setting of fuel economy standards that are realistic and achievable for a wider range of passenger car models, this reclassification will minimize, if not eliminate, any regulation-induced incentive manufacturers may have to modify or add features to vehicles so that they can be classified as light trucks to get the benefit of less stringent CAFE requirements.

As explained further below, in this final rule, NHTSA has decided to push back implementation of the reclassification until MY 2030, instead of MY 2028 as initially proposed, and has also decided to make adjustments in the methodology for transitioning the standards from MY 2029 to MY 2030 in a manner that will limit the immediate regulatory impact of the reclassification, in particular for vehicles that are unlikely to change their classification. These adjustments will help to separate the fuel economy curves of the two classes along the lines advocated by JLR in its comments, while still allowing the curves to be closer in the footprint ranges where passenger cars and light trucks are most similar in design.

The Institute for Policy Integrity at the New York University School of Law (IPI) criticized several features of NHTSA's estimation strategy, including the assumption of a linear relationship between footprint and fuel consumption levels and the agency's choice of control variables.\69\ IPI also supported the use of production weighting to limit the influence of statistical outliers in the curve estimation, while ICCT argued that using production weights tends to

increase the slope of the footprint curve after vehicles are reclassified. ICCT also argued that current technology deployment for larger vehicles and production volumes is not representative of the future state of the market, making production weighting less suitable for designing policy in future years.\70\

\69\ IPI, Docket No. NHTSA-2025-0491-6015-A1, at 85.

\70\ ICCT, Docket No. NHTSA-2025-0491-5240-A2, at 13.

NHTSA agrees with IPI that the risk of outliers influencing the estimated relationship represents a significant source of potential bias in estimating the slope parameter and thus is continuing to use production weights. In response to ICCT's comment, NHTSA examined versions of the fleet with greater technology deployment on the upper end of the footprint curve and found that, after including control variables, the slope of the relationship was similar to that found in the observed data. While production volumes may change in future years as ICCT argues, so too may the models offered for sale by manufacturers. NHTSA will continue to monitor the market and determine whether it is suitable to update its estimated relationship in future rulemakings.

NHTSA disagrees with IPI's contention that estimating a linear relationship between levels of fuel consumption and footprint is inappropriate. NHTSA examined the residuals of its regressions and did not find a statistically significant relationship between footprint and the residuals when production weighting was used. Had a linear model been inappropriate as IPI contended, it is likely that a relationship between the explanatory variable and residuals would have been significant. NHTSA also investigated IPI's contention that using controls could cause instability in its model's results through collinearity of its explanatory variables. To do so, NHTSA examined the variance inflation factor (VIF) \71\ for a linear model including footprint, horsepower to curb weight, and curb weight to footprint. The VIF measures how much the variance of an estimated regression coefficient is increased due to collinearity. Values above five indicate a cause for concern with collinearity, while a VIF of one indicates no correlation between a predictor and the other explanatory variables, and values between indicate some correlation but not enough to threaten stability. NHTSA found that for each of the datasets it used to set standards (MY 2022 and MY 2024 fleets for passenger cars and light trucks) the VIF was below two for each of the three explanatory variables. As a result, NHTSA is not changing its set of control variables.

\71\ Fox, J. and Monette, G., Generalized collinearity diagnostics, Journal of the American Statistical Association, Vol. 87(417): 178-83 (1992), https://doi.org/10.1080/01621459.1992.10475190 (accessed: July 28, 2026).

The Alliance and Stellantis both criticized the proposed light truck upper cutpoint of 70 ft,\2\ arguing that there is a significant volume of production above this cutpoint that require design features to accommodate their higher towing and payload capacity.\72\ These commenters argued that placing a cutpoint at 70 ft,\2\ a lower footprint level than the existing cutpoint, would unfairly penalize these vehicles and discourage their production. The Alliance also argued that the changes NHTSA proposed would require significant lead time in order to address vehicle design changes necessary to comply with the standards under the new classification system.\73\

\72\ The Alliance, Docket No. NHTSA-2025-0491-5707-A1, at 10; Stellantis, Docket No. NHTSA-2025-0491-5968-A2, at IV 1 to IV 3.

\73\ The Alliance, Docket No. NHTSA-2025-0491-5707-A1, at 2 and 6.

After considering comments, NHTSA has pushed back the year in which it is changing its vehicle classification system from MY 2028 to MY 2030. NHTSA agrees with The Alliance that manufacturers should be given additional time to update production plans in advance of the change in classification. NHTSA used the MY 2022 fleet for analysis of curve shapes relevant to the MY 2022-2029 standards and used the MY 2024 “reclassified” fleet for analysis of curve shapes relevant to the MY 2030-2031 standards. NHTSA updated its MY 2024 reclassified fleet for the final rule to account for changes in its classification system after considering comments. This required NHTSA to re-estimate the coefficients used for the later period, and to re-evaluate its choice of cutpoints.

For cutpoint placement, NHTSA continued to examine regions of the footprint curve where the local relationship (LOESS) \74\ between footprint and fuel consumption varied from the overall linear relationship. These regions represent areas in which the tradeoff between footprint and fuel consumption no longer remains stable and thus are suitable bounds for constraining the level of the standards. For the final rule, the agency examined footprint levels at which the linear relationship diverged from a 95 percent confidence surrounding the local fit. The agency has shifted passenger car cutpoints inward by 1 square foot each to 46 sq. ft. for the lower cutpoint and 56 sq. ft. for the upper cutpoint. The light truck lower cutpoint remains the same as proposed in the NPRM at 52 sq. ft.

\74\ LOESS stands for Locally Estimated Scatterplot Smoothing, a non-parametric statistical method.

Though the 70 sq. ft. upper cutpoint was determined using the 95 percent confidence interval, NHTSA is finalizing a 74 sq. ft. upper cutpoint for light trucks. The agency reviewed comments as well as the cutpoint placement justification in the 2012 final rule. As discussed by commenters, reducing the upper cutpoint to 70 sq. ft. would disproportionately affect targets for several large footprint light trucks that require greater power to provide workplace utility. In the agency's engineering judgment, retaining a 74 sq. ft. cutpoint better balances fuel economy needs with commercial use cases.\75\

\75\ See preamble III.A for discussion of how standards were adjusted to account for vehicle reclassification.

The required CAFE level applicable to a passenger car (either domestic or import) or light truck fleet in a given model year is determined by calculating the production-weighted harmonic average \76\ of fuel economy targets applicable to specific vehicle model configurations in the fleet, as shown in Equation II-3.

\76\ Specialized average that accounts for both the number of cars sold and their different fuel economy target rates

Equation II-3: Calculation for Required CAFE Level [GRAPHIC] [TIFF OMITTED] TR30SE26.068

Where:

CAFErequired is the CAFE level the fleet is required to achieve, i refers to specific vehicle model configurations in the fleet, PRODUCTIONi is the number of model configuration i produced for sale in the United States, and TARGETFE, i is the fuel economy target (as defined above) for model configuration i.

Additional details about the specific values defining the mathematical functions and visual representations of the fuel economy target curves are presented in Section III, below.

The first step in the agency's analysis of the effects of different levels of fuel economy standards is the compliance simulation. As used throughout this rulemaking, “compliance simulation” means the simulation of how manufacturers could comply with different levels of CAFE standards by adding fuel economy-improving technology to an existing fleet of vehicles, using the CAFE Model. The CAFE Model uses a variety of data, including data provided by manufacturers, to simulate final fleet sales and performance.\77\

\77\ When NHTSA uses the phase “the Model” throughout this section, NHTSA is referring to the CAFE Model. Any other model is specifically named.

At the most basic level, a model is a set of equations, algorithms,\78\ or other calculations used to make predictions about a complex system. A model may consider various inputs, such as technology costs or other relevant factors, and use those inputs to generate output predictions. NHTSA used two separate approaches for this rulemaking to amend the existing CAFE standards, one for the analysis for amending the MY 2022-2026 standards and one for the analysis for amending the standards for MYs 2027-2031. The sections below discuss the inputs each of those analyses used.

\78\ See Merriam-Webster “algorithm.” Broadly, an algorithm is a step-by-step procedure for solving a problem or accomplishing some end. More specifically, an algorithm is a procedure for solving a mathematical problem (as of finding the greatest common divisor) in a finite number of steps that frequently involves repetition of an operation.