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

The following sections describe NHTSA's approach for measuring the economic costs and benefits that could result from amending previously established CAFE standards. OMB Circular A-4 states that benefits and costs reported in regulatory analyses must be defined and measured consistently with economic theory and also should reflect how alternative regulations are anticipated to change the behavior of producers and consumers from a baseline scenario without the regulation.\446\ Fuel economy standards affect vehicle manufacturers, buyers of new vehicles, owners of used vehicles, and suppliers of fuel, all of whom respond in complex ways to the standards that DOT establishes for future model years. NHTSA's accounting framework for the economic costs and benefits of CAFE standards was developed for a scenario in which standards are being set for cars and light trucks produced during future model years, for which no standards currently exist. Under this framework, NHTSA assumes hypothetical baseline standards for those future years to be identical to those in the last model year for which the agency previously established standards. Costs of alternative standards considered for future model years are measured relative to those for meeting the baseline standards, while benefits for each alternative are savings or other gains to buyers and users of new cars and light trucks or the general public, again measured in reference to the baseline alternative.

\446\ Circular A-4.

Most of the agency's rulemakings have established standards for future model years that are above their hypothetical baseline level, so the costs of meeting these standards have consisted primarily of manufacturers' outlays to increase the fuel economy of their car and light truck models to meet those higher standards, while benefits have consisted primarily of fuel savings for buyers and subsequent owners of models offering higher fuel economy. In rulemakings, such as this one, where the agency reduces previously established standards for future model years due to updated economic, market, and technological realities, manufacturers costs will be reduced compared to those for meeting the previous standards, while new cars and light trucks will consume more fuel than if those previous standards remained in place.

Thus, the estimated costs of meeting the revised standards are reported as negative values, which represents a regulatory cost savings. In addition, vehicle buyers' increased costs for fuel represent a reduction in benefits, and are therefore also reported as negative values. The analysis supporting this final rule assumes that reduced costs to manufacturers for meeting reduced CAFE standards will be reflected in lower prices for new cars and light trucks.

NHTSA's approach to estimating the economic impacts of regulatory alternatives considered in this rulemaking, including the assumptions it relies upon and the methodologies it employs, is discussed in detail in Chapter 6 of the Final TSD and throughout the FRIA (particularly Chapter 5). The safety implications of the final rule, including monetary measures of those impacts, are covered in Section II.H below.

Regulatory analysis needs to express costs and benefits that occur at different future times in comparable terms, which is done by discounting each future year's impacts to their present values. Following OMB Circular A-4 (2003), NHTSA presents the current values of all economic impacts quantified in its regulatory analysis discounting using the recommended rates of three and seven percent. One commenter argues that a seven percent capital-based rate should be accompanied by a different pass-through rate of compliance costs to consumers, and that the default discount rate should be a consumption-based one, with rates closer to two percent.\447\

\447\ IPI, Docket No. NHTSA-2025-0491-6015, at 19.

The discount rates used in rulemaking are prescribed by the White House OMB. The current operative guidance from OMB, Circular A-4, refers agencies to OMB's earlier guidance on discounting contained in its Circular A-94, noting that “[a]s a default position, OMB Circular A-94 states that a real discount rate of 7 percent should be used as a base-case for regulatory analysis.” \448\ OMB continues to use the seven percent rate to estimate the average pre-tax rate of return to private capital investment throughout the U.S. economy. Because it is intended to approximate the opportunity cost of capital, it is the appropriate discount rate for evaluating the economic consequences of regulations that affect private-sector capital investments. OMB's guidance on discounting also recognizes that some Federal regulations are more likely to affect private consumption decisions made by households and individuals, such as when they affect prices or other attributes of consumer goods. In these cases, Circular A-4 advises that a lower discount rate is likely to be more appropriate, and that a reasonable choice for such a lower rate is the real consumer (or social) rate of time preference. This is the rate at which individual consumers discount future consumption to determine its present value to them, and a three percent rate is appropriate in this context.

\448\ Circular A-4, at p. 33.

The categories of economic costs and benefits resulting from NHTSA's finalized amendment to its previously established CAFE standards are described in Chapter 5 of the FRIA (see in particular Table 5-1). Monetary values of those estimates are presented in Chapter 8 (for the central analysis) and Chapter 9 (showing the results of various sensitivity analyses around key parameters and assumptions) of the accompanying FRIA.

Table II-8 below lists the economic benefits and costs analyzed in conjunction with this final rule and identifies where to find explanations of how they were estimated. The organization of the table shows how individual elements of the analysis are grouped together to produce NHTSA's estimates of each alternative's private

and external costs and benefits.\449\ Private benefits and costs are those borne by vehicle manufacturers and by users of new cars and light trucks, including their initial purchasers and subsequent owners. External costs and benefits result indirectly from producing and consuming fuel and are borne by the public rather than just those who purchase and use vehicles. Social costs and benefits are the sum of their private and external components.

\449\ Changes in tax revenues are a transfer and not an economic externality as traditionally defined, but NHTSA groups tax revenue changes together with other external costs because fuel taxes fund government activities affecting society as a whole rather than only consumers or manufacturers.

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\450\ This table presents the societal costs and benefits. Costs and benefits that affect only the consumer analysis, such as sales taxes, insurance costs, and reallocated VMT, are intentionally omitted from this table. Chapters 8.2.3 and 8.3.3 of the FRIA describe consumer-specific costs and benefits.

\451\ These costs are discussed qualitatively but not monetized in the central analysis.

\452\ Because taxes are transfers from consumers to governments, a portion of the Savings in Retail Fuel Costs includes taxes avoided. The Loss in Fuel Tax Revenue is completely offset within the Savings in Retail Fuel Costs.

\453\ These impacts are discussed qualitatively but not monetized in the central analysis.

\454\ The CAFE Model computes select health impacts resulting from population exposure to PM2.5 associated with emissions from directly emitted PM and two precursors to PM2.5 (NOX and SOX). The analysis considers the effects of both downstream and upstream emissions.

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The remainder of this section briefly describes the key economic impacts of the finalized amendment and explains how they are categorized within the FRIA (with the exception of safety costs, which as noted earlier are covered in Section II.H). 1. Private Costs and Benefits

Manufacturer efforts to meet CAFE standards consist primarily of adding new technology to their car and light truck models, and together with any necessary design or engineering modifications, this increases their production costs. NHTSA assumes manufacturers pass these costs on to buyers of models that offer higher fuel economy by raising their selling prices.\455\ While the agency incorporates the effects of available tax credits in its analysis, these credits simply transfer revenue from taxpayers to vehicle buyers and have no net effect on the benefits or costs of the final rule. Estimates of technology costs reported throughout this final rule should be interpreted as excluding the value of tax credits unless otherwise noted.

\455\ While NHTSA recognizes that some manufacturers may defray their regulatory costs for meeting increased fuel economy standards through more complex pricing strategies, the agency lacks sufficient insight into manufacturer pricing strategies to analyze such alternative approaches.

Resetting CAFE standards will reduce the cost of technology that manufacturers need to add to their car and light truck models in order to comply with CAFE standards, and NHTSA assumes that this reduction in regulatory costs will be passed through to vehicle buyers in the form of lower prices. Relaxing standards will reduce the regulatory burden on manufacturers and enable them to produce models that offer combinations of fuel economy, other features, and prices that align more closely with consumer demand, resulting in higher vehicle sales. The CAFE reset will improve consumer welfare for consumers who are able to purchase vehicles at lower prices, and their collective welfare gain is measured by the increase in consumer surplus from higher sales of new cars and light trucks. Consumer surplus represents the value a good or service provides to consumers (the maximum they would have been willing to pay for it) over and above its market price, and OMB guidance states that it should be accounted for in regulatory analysis.\456\ Resetting previous standards will keep would-be purchasers from being priced out of the new vehicle market as manufacturers raise prices to recover their costs for applying more technology to meet higher standards, so buyers' consumer surplus will increase as sales rise rather than decline as it would have with the higher fuel economy standards in the No-Action Alternative. Section II.C.2.f of this preamble and Chapter 2.4 of the Final TSD provide more details.

\456\ OMB's Circular A-4 explains that the “net reduction in the total surplus (consumer plus producer) is a real cost to society,” and recommends that changes in consumer or producer surplus should be monetized “when they are significant.”

Generally, NHTSA's CAFE rulemaking analyses include estimates of benefits to consumers from improving fuel economy, measured by the resulting reduction in vehicles' fuel costs. However, while improved fuel economy reduces vehicles' fuel cost throughout their lifetimes, new car buyers and subsequent owners do not appear to value those savings fully. If they did, manufacturers would presumably offer the levels of fuel economy that buyers demand, and market-determined fuel economy levels would balance the costs of improving it against the private benefits from saving fuel. To the extent regulating fuel economy does not improve the welfare of vehicle owners, regulation can only be justified if it produces additional benefits that are not experienced by buyers themselves. As discussed in II.E, NHTSA assumes that manufacturers will only adopt technologies with fuel economy improvements that repay the higher prices of models offering those improvements within 36 months.

In past rulemakings, the agency has described its assumption that buyers will forgo purchasing vehicles with higher fuel economy, even when they appear to offer future savings exceeding their price premiums, as an example of what is often termed an “energy paradox” or “energy-efficiency gap.” Though there has been extensive debate about whether and why such a gap might arise, NHTSA has recently justified stricter standards partly by assuming that potential car and light truck buyers act shortsightedly when they refuse to purchase models whose lower fuel costs would more than repay their higher purchase prices. This rationale is fundamentally different from the agency's traditional justification that fuel economy standards are necessary to remedy some “externality”--whereby buyers' choices cause economic harm to others--that arises from producing and consuming fuel.

Without clear evidence of such “myopia,” continuing to raise CAFE standards distorts the market by constraining manufacturers to provide levels of fuel economy above those consumers demand, causing manufacturers to raise prices to recover their higher costs for producing those vehicles or to sacrifice improvements in their models' other features. Instead, the agency believes a more plausible explanation for buyers' reluctance to purchase higher mpg models is that their unsatisfactory combinations of

price and other features offset the attraction of lower fuel costs, and recent research supports this interpretation.\457\ Chapter 6.1.3 of the Final TSD provides further detailed review of this research. NHTSA has acknowledged this potential “opportunity cost” of raising fuel economy standards in its recent rules but has attempted to estimate its magnitude only as one of a large number of sensitivity analyses. The agency has justified this decision by claiming there is uncertainty in the literature over the degree to which requiring higher fuel economy will lead manufacturers to delay or forgo improvements to their models' features and how consumers would react. NHTSA has also cited data from EPA's Fuel Economy Trends Report showing that HP and acceleration have not decreased even when fuel economy standards were rising. However, these arguments did not consider the possibility that manufacturers could have offered further improvements in their models' other features or lower prices without continuing pressure to increase fuel economy.

\457\ For example, Leard et al. (2023) finds that consumers value performance improvements at three times the rate at which they value improvements in fuel economy and that forgone improvements in performance from recent changes in CAFE standards have essentially offset consumer welfare improvements from the fully valued savings in fuel costs. Klier and Linn (2016) find that if performance trade- offs resulted from a hypothetical 10-percent increase in regulatory stringency, U.S. consumers would value the resulting fuel economy gains at levels approximately 65-85-percent greater than their willingness to pay for any associated forgone horsepower. Reynaert (2021) finds that the European Union's emission standards caused manufacturers to choose between fuel economy and performance, and that the standards were ultimately not welfare improving. In addition to forgoing technological improvements that would improve performance, economists have also modeled manufacturers trading off performance for fuel economy at a fixed level of technology in order to reduce compliance costs (Whitefoot et al. (2017)).

NHTSA includes an estimate of the extent to which relaxing standards will reduce the opportunity cost of meeting previously established standards in its primary analysis of this final rule. The agency assumes that this cost must be sufficient to account for buyers' apparent unwillingness to purchase models whose higher fuel economy would repay their higher purchase prices. NHTSA estimates the opportunity cost as the value of fuel savings consumers are unwilling to pay for voluntarily that accrues between years 4 and 10 of a vehicle's life.\458\ In practice, manufacturers will respond to lower standards by adjusting the technologies they add to vehicles as well as by altering the tuning of these technologies and mix of vehicles in their production fleets, with the goal of increasing profits. For individual vehicle models this could result in a pure cost reduction, an improvement in other vehicle features, or a combination of the two.\459\ At the vehicle level, NHTSA's estimates of changes in costs and other vehicle attributes could be over- or under-estimates. However, at the aggregate level it is reasonable to assume, as NHTSA does, that there is likely to be a combination of lower technology costs and a reduction in the IOC cost relative to the No-Action Alternative. NHTSA included in the Draft TSD a detailed description of the agency's method for developing this measure, including its assumptions about manufacturers' anticipated response. The agency sought comments on its approach as well as suggestions for improving it.

\458\ As explained in Chapter 6.1.3 of the Final TSD, consumers value the first 10 years of discounted fuel savings but are unwilling to pay for more than 3 years, because the value of fuel savings during years 4 through 10 is offset by the cost of sacrifices in improvements to vehicles' other attributes.

\459\ As explained in Final TSD Chapter 2.3.5, NHTSA attempts to maintain performance neutrality when a technology is applied to a vehicle so that the change is only applied to improving fuel economy.

Various organizations commented that the inclusion of IOC in the central analysis is arbitrary, lacks empirical evidence, and is inconsistent with established economic theory.\460\ They contend that NHTSA has not provided sufficient justification for elevating these costs from a sensitivity analysis to the central analysis.

\460\ ICCT, Docket No. NHTSA-2025-0491-5240-A1, at 8; NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 87-89; IPI, Docket No. NHTSA-2025-0491-6015-A2, at 20-59; ZETA, Docket No. NHTSA-2025-0491- 6039, at Appendix 24-34; Attorneys General, Docket No. NHTSA-2025- 0491-6064-A4, at 27-29.

The agency included the IOC in its central analysis, after presenting it as a sensitivity analysis in multiple prior rulemakings, because of its strong theoretical basis and the preponderance of empirical findings supporting its existence and importance. As documented in Final TSD Chapter 6, research shows that consumers place significant value on vehicle attributes like acceleration and that manufacturers have tended to make improvements to these features rather than fuel economy when standards are not rising. Moreover, findings from recent research including Leard et al. (2023) suggest that when CAFE standards increase manufacturers have less ability to design to the preferences of their customers for attributes other than fuel economy. This constitutes a significant cost to consumers because manufacturers invest less in features that consumers value.

NHTSA does not explicitly model vehicle design decisions over the full range of vehicle features and so must rely on other means to estimate the value of the IOC. This is similar to other aspects of NHTSA's analysis, like the additional mobility benefit provided by rebound driving, that use simplifying assumptions.\461\ This approach relies on the economic assumption that competitive, profit maximizing firms will be incentivized to provide vehicles with a mix of attributes that consumers desire in order to increase market share and profits. Manufacturers choosing to prioritize improving performance and other features rather than focusing on improving fuel economy during periods in which standards are constant reveals that consumers value these attributes more than the alternative improvements that could be made to fuel economy, even if consumers also recognize the value of fuel economy. The fact that these improvements to other features slows during periods of increasing standards, while improvements to fuel economy increase demonstrates that CAFE standards are restricting improvements to other features that would have been made otherwise. NHTSA does not model the range of design decisions that manufacturers alter to accommodate applying fuel-saving technology but instead assumes that their cost must be significant enough to account for the gap described above. Thus, NHTSA's approximation is rooted in the economic principle of revealed preference and is consistent with its approach to estimating other costs and benefits accounted for in its analysis.

\461\ Rather than modeling the change in different types of trips for each driver in response to a change in the cost of driving, and then valuing each separately, NHTSA assumes that because drivers accept the risks of accidents, and costs of fuel when they voluntarily drive additional miles, they must derive some benefit.

NHTSA chose to approximate the value of the IOC by using the gap between what consumers have demonstrated they are willing to pay for changes in fuel economy, absent the sacrifice in other vehicle attributes, and the fuel savings that accrue within the first three years, or payback period. UCS claimed that this represented an inconsistency, since NHTSA's choice of payback period was not equal to its assumption about consumer willingness to pay for fuel savings.\462\ However, as discussed in Final TSD Chapter 4.2.1.1, these represent distinct concepts. The

former can be thought of as the degree to which consumers will be willing to pay more for a new vehicle with high fuel efficiency if they expect gasoline prices to be relatively higher over the period in which they own the vehicle verses when they expect gasoline prices to be relatively lower. In this case, the quality of the vehicle's other features is unchanged, but the value of any fuel savings generated by the more fuel-efficient vehicle varies with the level of gas prices. The latter represents the degree to which consumers value a vehicle with greater fuel economy after considering any design changes manufacturers make to accommodate improvements to the vehicle's efficiency. Based on the evidence NHTSA examined in Final TSD Chapters 4 and 6, NHTSA believes that these two concepts differ.

\462\ UCS, Docket No. NHTSA-2025-0491-6027-A1, at 45-47.

IPI argued that observed consumer undervaluation was more likely the result of behavioral anomalies and other market failures.\463\ However, as discussed in FRIA Chapter 2, NHTSA found the evidence for this conclusion to be less compelling as evidence supporting the IOC.

\463\ IPI, Docket No. NHTSA-2025-0491-6015-A2, at 52-58.

In addition, some commenters argued that the magnitude of NHTSA's estimate of the IOC was unrealistic and had too large of an influence on the estimated net benefits for each alternative, given that it is being added as a measured cost in the central analysis for the first time in this rulemaking.\464\ One commenter suggested that NHTSA had used the wrong number of years (10) of discounted fuel savings in calculating the IOC because it did not correspond to the average length of ownership by the initial purchaser.\465\

\464\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 87-89; ZETA, Docket No. NHTSA-2025-0491-6039, at Appendix 42; Attorneys General, Docket No. NHTSA-2025-0491-6064-A4, at 27.

\465\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 90-91.

As explained in Chapter 6 of the Final TSD, the 10-year timeframe accounts for about 75 percent of discounted lifetime fuel consumption. While this period extends beyond a typical initial purchaser's ownership, original owners are still compensated for future fuel savings because a portion of that value is capitalized into the vehicle's resale price. However, as detailed in Final TSD Chapter 6.1.3.4, buyers remain reluctant to factor these recaptured savings into their initial purchasing decisions. The agency's view is that this behavior demonstrates a clear trade-off: the value buyers place on other vehicle features--which manufacturers must often forgo to meet stringent CAFE standards--must significantly exceed the financial benefit of both their direct fuel savings and the capitalized resale value. Further, these other attributes could add value at resell too, which may offset any losses at the time of resale from reduced fuel economy; however, at this time, the agency is not directly measuring the change in value of used vehicles based on differing attributes.

Although NHTSA's estimate of the IOC is meaningful, it is just one of several costs and benefits estimated in the analysis, and the overall estimated net benefits of the final standards would remain positive even if it were to be excluded entirely. Moreover, NHTSA views this as evidence that estimates of costs in prior rulemakings were biased downward by the failure to include the IOC. PMI agreed with this characterization, arguing that costs were underestimated in past rulemakings and pointed to estimates from the economics literature to support its position.\466\

\466\ PMI, Docket No. NHTSA-2025-0491-5001-A2, at 48-51.

Commenters suggested that NHTSA's modeling of the IOC would be improved by modeling the sacrifice in other vehicle features rather than approximating the value of these features.\467\ UCS proposed one potential method for modeling this tradeoff by examining the full range of available technologies for each vehicle in each alternative, and comparing the value of using these technologies to improve performance rather than fuel economy. After accounting for the added cost of applying these technologies, the value of this additional performance can then be compared across alternatives. To address these comments, NHTSA has added a sensitivity case using a similar methodology to that suggested by UCS to estimate the value of the IOC. These results can be found in FRIA Chapter 9.

\467\ UCS, Docket No. NHTSA-2025-0491-6027-A1, at 34-40; ZETA, Docket No. NHTSA-2025-0491-6039, at Appendix 24.

Commenters also argued that NHTSA misinterprets manufacturers' reluctance to apply fuel-saving technology as being due to a tradeoff of other vehicle features, claiming instead that it is evidence of supply side market failures, such as market power.\468\

\468\ IPI, Docket No. NHTSA-2025-0491-6015-A2, at 53-57; UCS, Docket No. NHTSA-2025-0491-6027-A1, at 26.

In response to this comment, NHTSA considered the financial incentives facing these manufacturers, the findings of economic research on this topic, and the spending by manufacturers on market research. Grieco et al. (2024) find that evidence of concentrated market power-based markups have fallen over the past four decades, and that consumers' share of total surplus has increased.\469\ The authors suggest that the consumers captured benefits through improvements to features other than fuel economy and from manufacturers passing through reductions in production costs.\470\

\469\ Grieco, P. et al., The evolution of market power in the U.S. automobile industry, The Quarterly Journal of Economics, Vol. 139(2): pp. 1201-53 (2024), available at: https://doi.org/10.1093/qje/qjad047 (accessed: June 5, 2026).

\470\ The authors measure consumer demand for horsepower and vehicle size explicitly and capture other vehicle characteristics like safety features and improved electronics through unobserved vehicle quality.

Some commenters argued that NHTSA's performance neutrality modeling constraint is incompatible with modeling the existence of an IOC.\471\ This position misconstrues the nature of the IOC as applied in NHTSA's analysis. Although performance does not decline in the CAFE Model, it also does not improve. Past observed manufacturer decisions and evidence from the economics literature demonstrate that, in the absence of higher standards, manufacturers will make greater effort to improve performance and other features than they would make under higher standards. Thus, the relevant metric is not the difference in performance between the initial fleet and the modeled fleet under higher standards, but instead the modeled fleet under higher standards and under lower standards. NHTSA's performance neutrality assumption simplifies its modeling but prevents it from modeling these tradeoffs. However, NHTSA accounts for their impact on consumer welfare through the IOC.

\471\ UCS, Docket No. NHTSA-2025-0491-6027-A1, at 46; ZETA, Docket No. NHTSA-2025-0491-6039, at Appendix 24-25; Attorneys General, Docket No. NHTSA-2025-0491-6064-A4, at 28.

Some commenters criticized NHTSA's treatment of the IOC as a single value, rather than accounting for any production costs that would have been diverted from fuel-saving technologies to other vehicle features under reduced fuel economy standards.\472\ Because NHTSA does not explicitly model changes in performance and other attributes, NHTSA can only model the IOC's net impact on consumer welfare. In its analysis, NHTSA assumes that the additional consumer benefits that these attributes provide would be larger than consumer willingness to pay for fuel economy improvements using the same

technology or carrying the same cost. This example is illustrated in TSD Chapter 6.1.3.2, which explains the mechanisms through which CAFE standards generate this negative impact for consumers. For this reason, lower standards, which effectively allow manufacturers to substitute from fuel economy improvements to performance and other attribute improvements, are still likely to be net beneficial to the consumer even if there is no net reduction in technology costs (and thus no reduction in vehicle prices) associated with it. There likely are also cases in which manufacturers will choose not to apply additional fuel- saving technologies and will either adopt some additional performance enhancing technology, or not adopt additional technology but instead redeploy existing technology towards greater performance rather than fuel economy. In these cases, costs would decline below levels seen under high standards, performance would improve, and fuel economy would either remain unchanged or decline somewhat. Based on the measures of consumer willingness to pay for these other attributes, consumers will experience a net improvement, as modeled by the IOC. For the final rule, NHTSA has included a sensitivity analysis based on a methodology suggested by UCS, which decomposes technology costs between performance and fuel economy using the existing technology set in the CAFE Model. These results are presented in FRIA Chapter 9.

\472\ IPI, Docket No. NHTSA-2025-0491-6015-A2, at 21-25; UCS, Docket No. NHTSA-2025-0491-6027-A1, at 39-40.

Finally, some commenters suggested that because some fuel-saving technologies like improved aerodynamics can improve both fuel economy and performance, or because performance features have improved alongside improvements in fuel economy over time, NHTSA's model of the production frontier as a tradeoff between fuel economy and performance is flawed.\473\

\473\ IPI, Docket No. NHTSA-2025-0491-6015-A2, at 23; ICCT, Docket No. NHTSA-2025-0491-5240-A2, at 9; UCS, Docket No. NHTSA- 2025-0491-6027-A1, at 24-25.

There are some technologies that may improve both performance and technology, and as NHTSA points out in its discussion of the production frontier, the figure in Final TSD Chapter 4.2.1.1. represents only a single slice of a multidimensional function relating fuel economy to other attributes. However, based on its review of the economics literature, tradeoffs between fuel economy and performance features more generally operate in the direction NHTSA indicates.\474\

\474\ For example, Knittel (2011) and Klier and Linn (2016) estimate a tradeoff of between 3-6 percent improvement in horsepower (which is a determinant of acceleration) for every 1 percent improvement in fuel economy. Watten and Anderson (2025) find an average rate of around 1.4 percent improvement in horsepower to weight for every 1 percent improvement in fuel economy, though the rate varies over time and is closer to 2 percent in recent years.

PMI supported NHTSA's decision to include the IOC rather than assuming that market failures accounted for buyers' apparent undervaluation of fuel savings.\475\ They argued that in past rulemakings failing to consider tradeoffs between fuel economy and performance, and the high value consumers place on performance, has caused the agency to significantly underestimate the costs of CAFE standards. PMI argued that the effects of high standards can be seen in the share of more powerful V-6 and V-8 engines, which has dropped since 2005, and been replaced by V-4 engines.

\475\ PMI, Docket No. NHTSA-2025-0491-5001-A2, at 48-49.

After consideration of the comments and relevant literature, NHTSA has continued to include an estimate of the IOC in the analysis supporting this final rule.

Resetting previously established CAFE standards will permit lower fuel economy for some new cars and light trucks, thus increasing their fuel consumption and raising owners' fuel costs. The difference between fuel consumption in the No-Action Alternative and in each regulatory alternative represents that alternative's effect on total fuel use, and the cost of this additional consumption is estimated using forecasts of retail fuel prices. The agency's assumptions about future fuel prices are discussed in detail in Chapter 4.1.2 of the Final TSD. NHTSA received no substantive comments regarding the methodology used in the calculation of fuel costs for consumers. Commenters did compare the projected change in fuel costs to consumers to the upfront savings in vehicle prices, noting that for some model years the lifetime average change in fuel costs is greater than the average decrease in projected vehicle price.\476\ However, when taking into account the other categories that accrue privately to consumers, both private net benefits and overall net benefits are positive under the action. See Final TSD Chapter 6.1 for an explanation of the methodology for calculating fuel expenditure and FRIA Chapter 8 for the projected change in fuel expenditure as well as all other categories of private consumer costs and benefits.

\476\ Cleveland, Docket No. NHTSA-2025-0491-4840, at 2, 10; OCT, Docket No. NHTSA-2025-0491-4903, at 3; New York State Department of Environmental Conservation (NY DEC), Docket No. NHTSA-2025-0491- 5058, at 3; U.S. Climate Alliance, Docket No. NHTSA-2025-0491-5065, at 2; ICCT, Docket No. NHTSA-2025-0491-5240, at 18; NACAA, Docket No. NHTSA-2025-0491-5884, at 15.

Lowering existing standards will lead to relatively shorter driving ranges of models that achieve lower fuel economy in the action alternatives, requiring their users to refuel more frequently than under the No-Action Alternative. Drivers (and passengers) of future new cars and light trucks will economize on refueling stops as fuel economy increases over time under each regulatory alternative. However, their savings will be more modest than under the No-Action Alternative, so it appears as an incremental increase in the frequency of refueling stops in the analysis. NHTSA estimates the cost of more frequent fill-ups by calculating the amount of time it takes to locate a retail outlet, refuel one's vehicle, and pay, accounting for the typical number of passengers traveling with the driver, and multiplying by DOT's recommended value of travel time. NHTSA has updated these values for the final rule consistent with DOT's most recent benefit-cost analysis (BCA) guidance.\477\ For a full description of the agency's methodology, refer to Chapter 6.1.5 of the Final TSD. The agency sought comment on whether, and the extent to which, a reasonable manufacturer may simply install a larger fuel tank--potentially eliminating any refueling time savings. There was no substantive feedback on this potential impact on refueling time savings nor on the methodology for calculating it. One commenter did point to the updated guidance from DOT regarding the value of travel time savings used as an input.\478\ The commenter discussed the various categories of the value of time travel savings as well as the share of travel that is local versus inter-city. The December 2025 DOT BCA Guidance update does have categories for personal versus business travel time as well as local (urban) versus intercity (rural) travel, given that there is information on the mix of local versus long-distance

intercity travel.\479\ The final rule has been updated to use parameters from the latest guidance.

\477\ DOT, Benefit-Cost Analysis Guidance for Discretionary Grant Programs, DOT: Washington, DC (2025), available at: https://www.transportation.gov/sites/dot.gov/files/2025-12/Benefit%20Cost%20Analysis%20Guidance%202026%20Update%20%28Final%29.pdf (accessed: June 5, 2026).

\478\ Philip Liang, Docket No. NHTSA-2025-0491-0149.

\479\ DOT, Benefit-Cost Analysis Guidance for Discretionary Grant Programs, Table A-2: Value of Travel Time Savings, DOT: Washington, DC (2025), available at: https://www.transportation.gov/sites/dot.gov/files/2025-12/Benefit%20Cost%20Analysis%20Guidance%202026%20Update%20%28Final%29.pdf (accessed: June 5, 2026).

Under the regulatory alternatives, new car and light truck models that achieve lower fuel economy would be driven slightly less than in the No-Action Alternative, as their higher fuel cost reduces the fuel economy rebound effect described in preamble Section II.E.3. Again, the final rule would continue to raise fuel economy standards but at a slower rate than under the No-Action Alternative. For example, while vehicle use would continue to increase under each regulatory alternative, it would increase more slowly than under the No-Action Alternative. Additional driving enables buyers of new cars and light trucks to travel more frequently or to reach more desirable destinations, but because vehicle use increases more slowly, these benefits are more modest under this reset of the CAFE standards.\480\ NHTSA received no substantive comments on the methodology of calculating the benefits from reallocated mileage.

\480\ NHTSA does not estimate benefits associated with reallocating travel among vehicles of different ages, because there is no associated change in total VMT until the rebound effect is introduced. Chapter 6.1.5 of the Final TSD explains NHTSA's methodology for reallocating travel and discusses whether any benefits would result as well as how they would be measured. NHTSA sought comment on its methodology for calculating the benefits from reallocated mileage, as well as on whether it is reasonable to assume that reduced sales of new vehicles leads to a transfer of some travel to older models and any welfare implications of such a transfer.

In addition to the private costs and benefits described above, Table II-8 includes maintenance and repair cost savings as a line item without an associated dollar value; the agency projects the reset of CAFE standards to reduce technology requirements for meeting the new standards and thus to lower buyers' costs to repair and maintain new vehicles. However, the agency does not currently possess sufficiently robust data to quantify maintenance and repair costs in the analysis. NHTSA requested comments on whether the agency should include estimates of repair and maintenance costs--and that interested commenters provide data to support an informed analysis.

There was general support for the inclusion of repair and maintenance costs, as these may be major considerations for consumers in their purchase of a new vehicle.\481\ One commenter discussed maintenance and repair costs for low rolling resistance tires, stating that “lower rolling resistance tires would increase maintenance costs assuming they were replaced at the end of their lifespans.” \482\ The life of low rolling resistance tires can indeed be time limited even if the treads are not worn out; however, the same is also true for conventional tires. Historically, low rolling resistance came from using harder tread compounds and harder tires tend to wear longer than softer tires. With modern materials and compounding it is now possible to maintain this connection as well as to increase traction. For this final rule NHTSA did not make any changes to its consideration of maintenance and repair costs for low rolling resistance tires.

\481\ ICCT, Docket No. NHTSA-2025-0491-5240, at 9; Philip Liang, Docket No. NHTSA-2025-0491-0149.

\482\ Philip Liang, Docket No. NHTSA-2025-0491-0139.

Several commenters noted that there may be a difference in cost for ICE vehicles versus BEVs, and ICCT cited a 2021 Argonne National Laboratory report that develops estimates of maintenance costs that vary for ICE vehicles, HEVs, PHEVs, and BEVs.\483\ Due to statutory constraints on considering the fuel economy of BEVs and the full fuel economy of PHEVs in determining maximum feasible CAFE standards, any change in maintenance and repair costs due to electrification would have a limited impact on NHTSA's analysis comparing alternatives. As the results would not affect the agency's decision given the statutory constraint on consideration of BEV fuel economy in determining maximum feasible CAFE standards, it is reasonable not to model these benefits or costs in this final rule.

\483\ ICCT, Docket No. NHTSA-2025-0491-5240, at 9.

Commenters also raised methodological concerns related to PRIA Appendix II. NHTSA included an alternative analysis of the benefits and costs of the proposed rule in Appendix II of the NPRM applying a revealed preference approach and sought comment on the analysis. A commenter stated that the methods were unjustified, the assumptions were faulty, and the data was outdated as well as improperly applied.\484\ NHTSA has not relied upon Appendix II as justification for this rulemaking. Based on the feedback of the methodology and use of outdated data in Appendix II, NHTSA is not including Appendix II in its analysis of this final action.

\484\ IPI, Docket No. NHTSA-2025-0491-6015-A2, at 45.

Higher fuel economy standards increase vehicle use via the rebound effect and contribute to increased traffic congestion and highway noise. These impacts affect other road users (and nearby residents) rather than the drivers generating additional mileage. Conversely, resetting previous CAFE standards will reduce fuel economy levels compared to the No-Action Alternative, and the resulting reduction in fuel efficiency will lead to fewer rebound miles being driven which will lower the external costs that congestion and noise impose on others. NHTSA estimates these impacts by updating per-mile congestion and noise costs from increased automobile and light truck use originally reported in FHWA's 1997 Highway Cost Allocation Study to account for changes in congestion levels, travelers' value of time, and inflation, an approach it also used for the 2020, 2022, and 2024 final rules. NHTSA received no comments related to its methodology for estimating noise and congestion costs.

Changes in new car and light truck buyers' costs for fuel represents changes in tax revenue received by Federal, State, and some local government agencies. Any variation in the fuel tax burden on drivers is offset by changes in tax revenues, so this transfer does not affect net benefits from changing CAFE standards. However, NHTSA estimates those offsetting changes in drivers' fuel tax payments and tax revenue received by government agencies to highlight this transfer and show its potential impact on government finances. The estimation of this transfer is supported by the DOTs of ID, MT, ND, SD and WY (ID, MT, ND, SD, and WY DOTs). Their comment points to the impact that changing fuel tax revenues have on the Highway Trust Fund and transportation investment.\485\ As indicated above, any increase in tax revenue received by governments that levy taxes on fuel is exactly offset by higher fuel tax payments by consumers, so from an economy- wide standpoint increases in gasoline tax revenues are simply a transfer of economic resources and have no effect on net benefits.

\485\ ID, MT, ND, SD, and WY DOTs, Docket No. NHTSA-2025-0491- 4948, at 1.

Fuel production, distribution, and use generate emissions of certain “criteria” or regulated pollutants, and the population's exposure to these pollutants causes adverse effects on public health. Raising or lowering CAFE

standards affects these emissions by changing the volume of fuel produced and consumed, and NHTSA estimates these changes in emissions and their economic consequences for public health. The CAFE Model estimates monetized health effects associated with population exposure to fine particulate matter, which is emitted directly by refineries and vehicles and also formed in the atmosphere via physical and chemical reactions involving other regulated pollutants emitted by refining and using fuel.\486\ Chapter 5 of the Final TSD accompanying this final rule includes a detailed description of the Model's procedures for calculating emissions of these pollutants and assessing their consequences for public health.

\486\ As discussed in Section II.F above, though other criteria pollutants are currently regulated, only impacts from these three pollutants are calculated because they are emitted regularly by refineries and motor vehicles, cause the most severe effects on human health, and have been the subject of extensive research to quantify and monetize their health impacts. NHTSA's regulatory analysis does not attempt to quantify the adverse health effects of air toxics, which are emitted during fuel production and use, or ozone, which is formed in the atmosphere by emissions of regulated pollutants.

Many commenters noted the increase in criteria pollutant emissions and the resulting monetized health costs from rule.\487\ NHTSA received comments on the NPRM regarding healthcare costs that are expected to be incurred, given the criteria pollutant health damages projected in the rule analysis.\488\ Some commenters specifically cited concerns over healthcare costs in their regions and provided these estimates, stating that NHTSA's health effects analysis was missing these healthcare- specific costs.\489\ NHTSA is maintaining the health damages estimates from the NPRM, partly because of the unavailability of updated estimates that correspond to the pollutant source categories needed for the CAFE analysis, and partly because the inclusion of healthcare payments in addition to the health damages already included in the analysis would constitute a double-counting of costs. The cost values per ton used in NHTSA's analysis already include healthcare costs.\490\

\487\ Climate Reality, Docket No. NHTSA-2025-0491-4896, at 2; PSCAA, Docket No. NHTSA-2025-0491-4918, at 2-3; Cleveland, Docket No. NHTSA-2025-0491-4840, at 2, 4-10; AVE, Docket No. NHTSA-2025- 0490-0033, at 5; SELC, Docket No. NHTSA-2025-0490-0035, at 6; NACAA, Docket No. NHTSA-2025-0491-5884, at 15; South Coast AQMD, Docket No. NHTSA-2025-0490-0064, at 3-5; ME DEP, Docket No. NHTSA-2025-0490- 0026, at 6; Madison, Docket No. NHTSA-2025-0491-6063, at 1-2.

\488\ American Lung Association (ALA), Docket No. NHTSA-2025- 0491-5977, at 1-3; Oregon Department of Environmental Quality (OR DEQ), Docket No. NHTSA-2025-0491-5937, at 4-5; Change the Chamber (CTC), Docket No. NHTSA-2025-0491-4904, at 2-3; NRDC et al., Docket No. NHTSA-2025-0491-5928, Appendix A, at 7-9; IPI, Docket No. NHTSA- 2025-0491-6015, at 15.

\489\ OCT, Docket No. NHTSA-2025-0491-4903, at 5-7; PSCAA, Docket No. NHTSA-2025-0491-4918, at 2-3.

\490\ EPA, How BenMAP-CE Estimates the Health and Economic Effects of Air Pollution, last revised: May 20, 2026, available at: https://www.epa.gov/benmap/how-benmap-ce-estimates-health-and-economic-effects-air-pollution (accessed: June 5, 2026).

Southern Environmental Law Center (SELC) and Attorneys General noted that NHTSA only monetizes the health impacts of NOX, SOX, and PM2.5 and does not monetize the impacts of other pollutants, arguing that the impacts of these other pollutants are substantial and would change the final net benefit calculation.\491\ NHTSA only calculates the impacts from these three pollutants, because they are known to be emitted regularly from mobile sources, have the most adverse effects on human health, and have been the subject of extensive research to estimate the benefits of reducing these pollutants. Commenters did not provide peer-reviewed research for the monetization of CO, volatile organic compounds (VOCs), or air toxics. NHTSA received comments on the NPRM pointing to academic sources of monetized values of the health effects of CH4 through its contribution to ozone.\492\ NHTSA has included a sensitivity case in PRIA Chapter 9 using these estimates, adding them to the health damages portion of the cost-benefit analysis.

\491\ SELC, Docket No. NHTSA-2025-0490-0035, at 6; Attorneys General, Docket No. NHTSA-2025-0491-6064, Detailed Comments, at 89.

\492\ SELC, Docket No. NHTSA-2025-0490-0035, at 6-7.

NHTSA did not include monetized estimates of changes in so-called GHG emissions in the central analysis supporting the proposal.\493\ NHTSA stated in the proposal that this was because there are significant uncertainties related to the monetization of GHGs that include, but are not limited to: the magnitude of the change in climate due to a change in GHG emissions; the relationship between changes in the climate and the economy and, therefore, the resulting economic impacts; future economic and population growth, which are important for estimating vulnerability, willingness to pay to avoid impacts, and the ability to adapt to future changes; future technological advancements that would reduce vulnerability and impacts; the share of impacts from GHG emissions that affect citizens and residents of the United States; and the appropriate discount rates to use when discounting in an intergenerational context. Monetizing these impacts could potentially result in flawed decision-making due to overreliance on highly uncertain values. NHTSA presented a sensitivity analysis using domestic-only (rather than global) estimates in the Draft RIA and concluded that these estimates, if considered in the central analysis, would not have changed its proposed amended standards.

\493\ See E.O. 14154, Unleashing American Energy (Jan. 20, 2025), available at: https://www.govinfo.gov/content/pkg/DCPD-202500121/pdf/DCPD-202500121.pdf (accessed: June 5, 2026) (hereinafter, “E.O. 14154”); Office of Information and Regulatory Affairs, Guidance Implementing Section 6 of Executive Order 14154, Entitled “Unleashing American Energy,” Memorandum M-25-27, Executive Office of the President: Washington, DC (2025), available at: https://www.whitehouse.gov/wp-content/uploads/2025/02/M-25-27-Guidance-Implementing-Section-6-of-Executive-Order-14154-Entitled-Unleashing-American-Energy.pdf (accessed: June 6, 2026).

Many commenters encouraged NHTSA to monetize GHG emissions in its central analysis rather than a sensitivity analysis,\494\ and to use a global value of the impact of GHG emissions (in particular, those published by the EPA in 2023).\495\ A subset of these commenters referenced Center for Biological Diversity v. NHTSA,\496\ saying that an estimate of this impact must be included in the analysis.\497\ Others supported NHTSA's decisions to exclude these costs from the central analysis, enumerating the uncertainties involved in estimation of these costs and encouraging the calculation of net benefits to rely on non-subjective or speculative parameters.\498\

\494\ Cleveland, Docket No. NHTSA-2025-0491-4840, at 2, 7-10; OCT, Docket No. NHTSA-2025-0491-4903, at 3-4; ICCT, Docket No. NHTSA-2025-0491-5240, at 7; Institute for Policy Integrity at New York University School of Law, Center for Climate and Energy Solutions, Clean Air Task Force, Earthjustice, Environmental Defense Fund, Montana Environmental Information Center, Natural Resources Defense Council, Sierra Club, and Union of Concerned Scientists (IPI et al.), Docket No. NHTSA-2025-0491-5758, at i-iii; NRDC et al., Docket No. NHTSA-2025-0491-5928, Appendix A, at 62-64; ZETA, Docket No. NHTSA-2025-0491-6039, at 6; Lucid, Docket No. NHTSA-2025-0491- 6043, at 10; Attorneys General, Docket No. NHTSA-2025-0491-6064, Detailed Comments, at 81-87.

\495\ ICCT, Docket No. NHTSA-2025-0491-5240, Appendix at 16; IPI et al., Docket No. NHTSA-2025-0491-5758, at 24-34.

\496\ Ctr. for Biological Diversity v. Nat'l Highway Traffic Safety Admin., 538 F.3d 1172 (9th Cir. 2008).

\497\ ZETA, Docket No. NHTSA-2025-0491-6039, at 6; Oakley Vincent, Docket No. NHTSA-2025-0491-6036, at 4; Lucid, Docket No. NHTSA-2025-0491-6043, at 10; Attorneys General, Docket No. NHTSA- 2025-0491-6064, Detailed Comments, at 82.

\498\ PMI, Docket No. NHTSA-2025-0491-5001-A2, at 39-40; IER, Docket No. NHTSA-2025-0491-6029, at 1, 3-4.

NHTSA disagrees that CBD v. NHTSA requires the agency to include monetized estimates of the changes in GHG emissions in its central analysis. In the rule at issue in that case, the agency deliberately set standards at the point that maximized societal net benefits.\499\ The court acknowledged that the agency possessed the legal discretion to determine standards by maximizing societal net benefits--though not required to \500\--but noted that if the agency were to use such a process, then the agency needed to account reasonably for the social cost of carbon given the agency stated it believed the value was above zero. The holding that the agency acted arbitrarily by not monetizing carbon emissions was conditioned on the agency's decision to determine the stringency of its standards by maximizing monetized net benefits, and the court rejected the agency's decision to exclude a factor the agency acknowledged would affect societal net benefits.

\499\ See, e.g., 71 FR 15588.

\500\ Ctr. for Biological Diversity v. Nat'l Highway Traffic Safety Admin., 538 F.3d 1172, 1197 (9th Cir. 2008).

Since that rule and decision, NHTSA has departed from the stance that its estimate of societal net benefits should be deterministic; instead, NHTSA uses the analysis and ensuing estimates of net benefits as one of many inputs for the setting of maximum feasible standards in the context of the statutory balancing of factors specified in 49 U.S.C. 32902(f). As discussed in more detail in Section V, NHTSA is not setting standards based on maximizing net benefits and instead is focusing on resetting the CAFE standards to align more faithfully with the factors Congress directed the agency to balance. In addition, as noted in the proposal, there are significant uncertainties related to the monetization of GHG emissions. As such, for this final rule, NHTSA continues to follow Federal guidance and excludes monetized estimates of changes in GHG emissions in its central analysis.\501\ As with the NPRM, the agency includes with the final rule a sensitivity analysis that is discussed in more detail in FRIA Chapter 9. This sensitivity analysis ensures that excluding this value from the central analysis does not bias the cost-benefit analysis that informs the determination of maximum feasible standards. The sensitivity analysis demonstrates that including a monetized estimate for changes in GHG emissions in the central analysis would not have altered NHTSA's maximum feasible determination. This sensitivity analysis uses the same domestic value of the impacts of GHG emissions as used in the 2020 final rule, adjusted for inflation. This value also conforms with E.O. 14154 and Circular A-4 (2003), which direct agencies to consider domestic-only impacts. NHTSA's selection of final standards, considering the various sensitivity analyses presented in FRIA Chapter 9, is discussed in more detail in Section V.

\501\ See, E.O. 14154.

Resetting CAFE standards may increase domestic consumption of gasoline compared to the regulatory baseline, producing a corresponding increase in the Nation's demand for crude petroleum. The U.S. accounts for a significant share of global oil consumption, so the resulting increase in global petroleum demand will exert some upward pressure on worldwide prices, but the financial consequences of higher prices are transfers. Unlike in decades past, when the U.S. was heavily dependent upon foreign petroleum and therefore was broadly exposed to price shocks attributable to supply disruption, the U.S. is now an established net exporter of petroleum. Accordingly, while domestic petroleum production does not insulate the U.S. from international disruptions in petroleum generation, any transfer from global consumers to petroleum producers becomes a financial benefit to the U.S. economy.

Higher U.S. petroleum consumption increases all domestic consumers' exposure to the risks of potential rapid increases in oil prices and interruptions in petroleum imports, though rising domestic production cushions the latter's effect. Individual petroleum users are unlikely to consider the effect of their own consumption on such economy-wide risks, so they may unwittingly impose costs on others that increase with domestic petroleum use. NHTSA includes this effect as a cost of the finalized standards, and Chapter 6.2.4.4 of the Final TSD explains how the agency estimates its magnitude.

Several commenters supported NHTSA's methodology for considering energy security risks, noting (as mentioned above) that the U.S. is now a net exporter of petroleum and arguing that the need to conserve energy against supply shocks has shifted over time as the U.S. has become more insulated due to its growing dominance in this market.\502\ Others commented in a general way on the need to insulate consumers from supply shocks and to reduce the impact of foreign power, arguing that changing CAFE standards expose consumers to these costs.\503\ As discussed above and in Final TSD Chapter 6.2.4.4, increased domestic petroleum consumption may impose an externality through its impact on the domestic economy as a result of petroleum supply shocks. Such a cost is measured and included in the final calculation of net benefits.

\502\ PMI, Docket No. NHTSA-2025-0491-5001-A2, at 33-37; ACI, Docket No. NHTSA-2025-0491-4892, at 7-8; American Fuel & Petrochemical Manufacturers (AFPM), Docket No. NHTSA-2025-0491-5964, at 4.

\503\ Anonymous, Docket No. NHTSA-2025-0491-0033; Anonymous, Docket No. NHTSA-2025-0491-5014.

Raising or lowering petroleum imports has also been claimed to influence U.S. military spending, but most careful studies conclude that changes in petroleum use on the scale likely to result from changing CAFE standards are unlikely to affect military activity.\504\ Thus, as Chapter 6.2.4.3 of the Final TSD explains in detail, NHTSA does not consider the potential impact of changing CAFE standards on military spending. No substantive comments were received regarding the exclusion of military spending impacts.

\504\ See for example: Brown, S., New estimates of the security costs of U.S. oil consumption, Energy Policy, Vol. 113: pp. 171-92 (2018), available at: https://doi.org/10.1016/j.enpol.2017.11.003 (accessed: June 9, 2026); Brown, S., & Huntington, H., Assessing the U.S. oil security premium, Energy Economics, Vol. 38: pp. 118-27 (2013), available at: 10.1016/j.eneco.2013.03.010 (accessed: May 26, 2026).

NHTSA is also monitoring the availability of critical minerals used in electrified powertrains and whether any shortage of such materials could emerge as an additional energy security concern. Although nearly all electricity in the United States is generated through the conversion of domestic energy sources and thus its supply does not raise security concerns, EVs (as well as hybrids and plug-in hybrids) also require batteries to store and deliver that electricity. Currently, the most common EV battery chemistries include relatively scarce materials (compared to other automotive parts) which are sourced, in large part, from foreign adversaries or potentially insecure or unstable overseas sites. While all mined materials (including those in vehicles powered by ICEs) can pose environmental challenges during extraction and conversion to usable material, this is particularly true with minerals used in battery production. Known supplies of some of these critical minerals are also highly concentrated in a few countries and therefore face similar market power concerns to petroleum products.

NHTSA is restricted from considering the fuel economy of alternative fuel

sources in determining CAFE standards, so the agency only considers the gasoline powered fleet in simulating compliance with fuel economy regulatory alternatives and determining their effects. Although the cost of critical minerals may affect the cost to supply both plug-in and non-plug-in hybrids that require larger batteries, this cost would apply primarily to manufacturers whose voluntary compliance strategy emphasizes hybridization. NHTSA does not include costs or benefits related to these emerging energy security considerations in its analysis for its final rule because, pursuant to its statutory authority to set CAFE standards, NHTSA cannot consider alternative fueled vehicles when setting standards. A few commenters encouraged NHTSA to consider security risks of critical mineral supply chains given supposed growth in electric and hybrid vehicles.\505\ As discussed above, NHTSA only considers the gas-powered fleet in determining CAFE standards, and as critical mineral costs would mostly impact voluntary compliance strategies by manufacturers, these costs would be unlikely to vary by alternative. Therefore, NHTSA does not include costs or benefits associated with critical mineral security in its analysis.

\505\ CPAC-CRF, Docket No. NHTSA-2025-0491-5054, at 9; PMI, Docket No. NHTSA-2025-0491-5001-A2, at 36-37.

The analysis considers the direct labor effects that the finalized standards would have across the automotive sector. The effects include: (1) dealership labor related to new light-duty sales; (2) assembly labor for new vehicles, engines, and transmissions; and (3) labor for developing and producing technologies that improve fuel economy but exclude any broader implications of fuel economy standards for economy- wide employment. NHTSA has used this approach in several recent rulemakings but has not highlighted its results because of its limited scope and the uncertainty introduced by rapidly changing labor inputs for vehicle assembly and technology development. NHTSA sought comment on alternative approaches to the labor analysis that the agency could consider, including approaches that could supplement the agency's current approach or succeed it in future rulemakings. Multiple commenters focused on labor utilization from the manufacturing of fuel- economy-improving components.\506\ They argued that the proposed standards will result in substantial losses of jobs associated with making components and materials for fuel-efficiency-based technologies and will likely incentivize OEMs to move production of advanced technologies to parts of the world where regulatory standards are more stringent. Other commenters pointed out the importance of keeping U.S. jobs in automotive technology manufacturing for specific regions and cities where these economic effects are strongest (e.g., Indiana's “Battery Belt,” the City of Cleveland).\507\

\506\ MECA, Docket No. NHTSA-2025-0491-5331, at 4; BGA, NHTSA- 2025-0491-5931, at 1-3, 5.

\507\ Matthew Sparks, Docket No. NHTSA-2025-0491-4821, at 2; Cleveland, Docket No. NHTSA-2025-0491-4840, at 10-11; CPAC-CRF, Docket No. NHTSA-2025-0491-5054, at 7.

NHTSA is keeping the methodology used in the NPRM for the final rule analysis as well because none of the alternative approaches suggested by commenters fits the scope of the CAFE analysis. NHTSA especially cannot consider impacts on battery-producing areas given that the statute prohibits the agency from considering the fuel economy of dedicated automobiles.\508\ Regarding fuel-economy-improving component manufacturing, lower CAFE standards do not prevent manufacturers from producing more efficient vehicles domestically nor from selling those vehicles in the U.S. Manufacturers that have already invested capital to build so-called clean vehicles in the United States are not disincentivized from these investments as they can continue to sell these vehicles in the U.S. to consumers who demand them and to export these vehicles to meet demand in other countries. Chapter 6.2.5 of the Final TSD describes the current process NHTSA uses to estimate labor impacts in additional detail.

\508\ 49 U.S.C. 32902 Average fuel economy standards.

Fuel economy standards have the potential to lead manufacturers to alter the vehicles they produce in ways that may have unintended consequences for motor vehicle safety. The analysis accompanying the final rule includes a comprehensive measure of safety impacts from three sources:

Changes in Vehicle Mass.

NHTSA calculates the safety impact of changes in vehicle mass made to reduce fuel consumption to comply with the standards. Statistical analysis of historical crash data indicates that reducing mass in heavier vehicles generally improves safety for occupants in lighter vehicles and other road users such as pedestrians and cyclists, while reducing mass in lighter vehicles generally reduces safety.

Impacts of Vehicle Prices on Fleet Turnover.

Vehicles have become safer over time through a combination of new safety regulations and voluntary safety improvements. NHTSA expects this trend to continue as emerging technologies, such as advanced driver assistance systems, are incorporated into new vehicles. Safety improvements will continue regardless of changes in the standards; however, vehicle technologies added to comply with increased fuel economy standards increase vehicle prices, slowing the acquisition of newer, safer vehicles and retirement of older, less safe vehicles.

The standards also influence the composition of the new light-duty sales mix. As the safety of light trucks, SUVs, and passenger cars is affected by technologies that manufacturers employ to meet the standards differently--particularly mass reduction--fleets with different compositions of body styles have varying safety risks. Therefore, changing the share of each type of light-duty vehicle in the projected future fleet impacts safety outcomes.

Changes in Safety Associated With “Rebound Effect” Driving.

The “rebound effect” predicts consumers will drive more when the cost of driving declines. More stringent standards reduce vehicle operating costs, and in response, some consumers may choose to drive more. Additional driving increases exposure to risks associated with motor vehicle travel, and this added exposure translates into higher fatalities and injuries. Slowing vehicle turnover results in an older fleet on average. As a result, this slowing turnover exacerbates the safety costs of additional driving resulting from the “rebound effect.”

Resetting the CAFE standards will improve safety overall. Setting less stringent standards will accelerate fleet turnover, limit the amount of rebound driving, and reduce the need to adopt mass reduction technologies across the fleet.

The contributions of the three factors described above generate the differences in safety outcomes among regulatory alternatives. NHTSA's analysis makes extensive efforts to allocate the differences in safety outcomes between the three factors. Fatalities expected during future years under each alternative are projected by deriving a fleetwide fatality rate (fatalities per VMT) that incorporates the effects of differences in each of the three factors from the reference baseline and then multiplying it by that alternative's expected VMT. Fatalities are converted into a societal cost by multiplying

estimated fatalities by the DOT-recommended value of a statistical life (VSL), supplemented by additional economic costs not considered in VSL measurements. Traffic injuries and property damage are also modeled directly using the same process and valued using costs specific to each injury severity level.

All three factors influence predicted fatalities, but only two of them--changes in vehicle mass and in the composition of the light-duty fleet in response to changes in vehicle prices--directly impose increased risks on drivers and passengers not compensated for by accompanying benefits. In contrast, increased driving associated with the rebound effect is a consumer choice that reveals the benefits of additional travel. Consumers who choose to drive more have decided that the utility of additional driving exceeds the additional costs for doing so, including the crash risk that they perceive additional driving involves. As discussed in Chapter 7 of the Final TSD, the benefits of rebound driving are accounted for by offsetting a portion of the added safety costs.

NHTSA's analysis considers the safety impact to both vehicle occupants and non-occupants, such as pedestrians and cyclists. The agency categorizes safety outcomes through three measures of light-duty vehicle safety: fatalities occurring in crashes, serious injuries, and the amount of property damage incurred in crashes with no injuries. Counts of fatalities among occupants of automobiles and non-occupants are obtained from NHTSA's Fatal Accident Reporting System for 1975- 2022. Estimates of the number of serious injuries to drivers and passengers of light-duty vehicles are tabulated from NHTSA's General Estimates System (GES) for 1990-2015, and from its Crash Report Sampling System (CRSS) for 2017-2022. Both GES and CRSS include annual samples of motor vehicle crashes occurring throughout the United States. Weights for different types of crashes were used to expand the samples of each type to estimates of the total number of crashes occurring during each year. Finally, estimates of the number of automobiles involved in property damage-only crashes each year were also developed using CRSS.

NHTSA does not anticipate, and does not model, any changes in safety from the finalized changes in vehicle classification. A vehicle's safety performance is unrelated to its CAFE vehicle classification; instead, the safety risk is dependent on its physical attributes, the safety technologies incorporated, and how the vehicle is used. 1. Mass Reduction Impacts

Vehicle mass reduction can be one of the more cost-effective means of improving efficiency, particularly for makes and models built with less high-strength steel or aluminum closures or low-mass components. Manufacturers have stated that they will continue to reduce mass of some of their models to meet more stringent standards (such as those currently in place), and therefore, this expectation is incorporated into the modeling analysis supporting the final rule. Safety trade-offs associated with mass reduction have occurred in the past, particularly before standards were attribute-based, because manufacturers chose, in response to standards, to build smaller and lighter vehicles; these smaller, lighter vehicles did not fare as well in crashes as larger, heavier vehicles, on average. Although NHTSA now uses attribute-based standards, in part to reduce or eliminate the incentive to downsize vehicles to comply with the standards, NHTSA is mindful of the possibility of related safety trade-offs. For this reason, NHTSA accounts for how the application of mass reduction to meet standards affects the safety of a specific vehicle given changes in CW.

For the final rule, the agency employed the modeling technique developed in the 2016 Puckett and Kindelberger report to analyze the updated crash and exposure data by examining the cross sections of the societal fatality rate per billion VMT by mass and footprint, while controlling for driver age, sex, and other factors, in separate logistic regressions for five vehicle groups and nine crash types. NHTSA utilized the findings from the study about the relationships between weight and safety, expressed as a percentage increase in fatalities per 100-pound weight reduction (which is how mass reduction is applied in the technology analysis; see Section II.D.5), to examine the changes in mass in response to standards across the regulatory scenarios. The effects of mass reduction on safety were estimated relative to the regulatory baseline in the analysis, across all vehicles for MY 2024 and beyond. The analysis of mass reduction includes two opposing impacts.

Research shows that mass reduction affects “lighter” and “heavier” vehicles differently across crash types. The 2016 Puckett and Kindelberger report found mass reduction concentrated among the heaviest vehicles is likely to have a beneficial effect on overall societal fatalities, while mass reduction concentrated among the lightest vehicles is likely to have a detrimental effect on occupant fatalities but a slight benefit to pedestrians and cyclists. This represents a relationship between the dispersion of mass across vehicles in the fleet and societal fatalities: decreasing dispersion is associated with a decrease in fatalities. For collisions with large mass disparities, mass reduction in heavier vehicles would be more beneficial to the occupants of lighter vehicles than it would be harmful to the occupants of heavier vehicles. Mass reduction in lighter vehicles is more harmful to the occupants of lighter vehicles than it is beneficial to the occupants of heavier vehicles.

To capture the differing effect on lighter and heavier vehicles accurately, NHTSA splits vehicles into lighter and heavier vehicle classifications. However, this poses a challenge to identifying statistically meaningful results. There is limited relevant crash data to use for the analysis. Each partition of the data reduces the number of observations per-vehicle classification and crash type and thus reduces the statistical robustness of the results. The methodology employed by NHTSA was designed to balance these competing forces as a trade-off to capture the impact of mass-reduction across vehicle CWs and crash types while preserving the potential to identify robust estimates.

Commenters noted that the estimates of fatality rate impacts of changes in vehicle mass by safety class are not statistically significant at the 95-percent confidence level, and that mass changes should not be modeled as having any impact on safety.\509\ The mass- size-safety estimates are used as intermediate inputs in the CAFE Model. The body of engineering and research evidence suggests that there is indeed a mass-disparity safety effect. Using the best available data, NHTSA conducted a study to measure and bound this effect.

\509\ Consumer Reports, Docket No. NHTSA-2025-0491-5926-A1, at 11; ICCT, Docket No. NHTSA-2025-0491-5240, at 9; ICCT, Docket No. NHTSA-2025-0491-5240, Appendix at 15-16; Attorneys General, Docket No. NHTSA-2025-0491-6064, at 97.

It is essential for NHTSA, as a safety agency, to consider potential safety impacts of its regulations using the best available estimates. As the agency believes that the point estimates still represent the best available data, NHTSA continues to include a measurement of mass-safety impacts in its analysis. In addition, because the resulting estimated net safety impact of mass changes in the Preferred Alternative is close to zero, assuming no

safety impact from mass reduction would have little effect in the CAFE analysis.

Although the agency does not attempt to model safety impacts on a vehicle model-level basis, resetting the standards as finalized will lessen the need to adopt mass reduction technologies broadly across the fleet and will allow manufacturers to incorporate mass reduction more thoughtfully within its fleet. In addition, the agency's finalized vehicle reclassification could incentivize manufacturers to adopt mass reduction technologies to larger vehicles, which would provide other road users tangible safety benefits.

NHTSA received comments on the treatment of the vehicle mix in the analysis, including trade-offs and incentives with respect to dimensions and mass across vehicle models. One commenter stated that “larger, taller fronts increase risks for pedestrians and occupants of smaller vehicles” and that “a credible safety analysis should address how different standards affect vehicle mix and safety outcomes for all users.” \510\ Cleveland stated that the NPRM “fails to deliver on its stated goals” to improve safety outcomes, such as by incentivizing manufacturers to concentrate mass reduction among larger vehicles.\511\ CPAC Foundation Center for Regulatory Freedom (CPAC-CRF) stated that the NPRM “does not adequately examine the tradeoffs that arise when compliance is driven by vehicle downsizing and weight reduction” and that “safety outcomes cannot be assumed; they must be demonstrated through careful analysis that accounts for engineering constraints and real-world driving conditions.” \512\

\510\ John K., Docket No. NHTSA-2025-0491-0084.

\511\ Cleveland, Docket No. NHTSA-2025-0491-4840, at 12.

\512\ CPAC-CRF, Docket No. NHTSA-2025-0491-5054, at 6.

Effects of different standards on the vehicle mix and associated societal safety outcomes are central components of the analysis. NHTSA applies extensive engineering and economics-based modeling to compare impacts of potential standards and compliance paths (e.g., mass reduction technologies) associated with those standards. The choice of Preferred Alternative involves optimizing with respect to many trade- offs among factors influencing benefits and costs rather than optimizing mass reduction in isolation. The analysis identifies an approximately neutral net effect of vehicle mass on safety across the alternatives considered.

Commenters stated that applying mass reduction can be associated with societal safety improvements, whether for individual vehicles or applying mass reduction across the full fleet.\513\ NHTSA has acknowledged the potential for combinations of mass reduction to yield net societal safety benefits across its mass-size-safety analyses. For example, if mass reduction approached a proportional case, in which more absolute mass were reduced from larger vehicles, the estimated net safety impact could be a reduction in societal fatalities. Because the estimated coefficients for the lightest passenger cars and the heaviest LTVs are of opposite sign, the CAFE Model allows for mass reduction across safety classes to yield a net safety benefit if the concentration of mass reduction is sufficiently weighted towards heavier LTVs. This estimated relationship is consistent with a hypothesis that reducing dispersion in vehicle mass can reduce societal fatality risk.

\513\ ACC, Docket No. NHTSA-2025-0491-4733, at 2; ICCT, Docket No. NHTSA-2025-0491-5240, Appendix at 12.

ACC offered extensive feedback regarding vehicle design and its effect on safety outcomes. ACC commented that NHTSA should “more fully acknowledge the limitations of the [George Washington University (GWU)] study in Section 7.3” of the Final TSD and “provide additional analysis and statistical review of the improvements in vehicle design and associated safety benefits that have emerged since the study was completed.” \514\ ACC also stated that the GWU study “demonstrates that well-designed lightweighted vehicles may help improve occupant outcomes.” \515\ In a related comment CPAC-CRF acknowledged trade-offs between vehicle mass and crashworthiness, noting, “although advances in materials and design have improved safety performance over time, there are physical limits to how much mass can be reduced without affecting occupant protection.” \516\ CPAC-CRF continued, “the proposal assumes continued progress in reconciling these competing goals without sufficiently addressing the diminishing returns and structural tradeoffs involved.”

\514\ ACC, Docket No. NHTSA-2025-0491-4733, at 5.

\515\ ACC, Docket No. NHTSA-2025-0491-4733, at 3.

\516\ CPAC-CRF, Docket No. NHTSA-2025-0491-5054, at 6.

NHTSA agrees with ACC's assessment that “vehicle design and material science has evolved over the last 20 years since the [GWU] study was completed.” NHTSA maintains that the findings from the GWU study are valid in concert with the evolution of vehicle design and material science over the past 20 years, and that the crash data informing safety estimates associated with mass changes incorporate processes of improvement in design and materials that are consistent with the present.

NHTSA agrees with CPAC-CRF regarding decreasing returns to scale for the potential to mitigate safety risk from mass reduction through vehicle design and advanced materials. However, NHTSA disagrees with CPAC-CRF's assessment that NHTSA's analysis assumes continued progress in mitigating safety risk from mass reduction beyond what is observed in the data. The mass-size-safety estimates maintain a net safety decrement for reducing mass in the lightest vehicles (chiefly representing own-vehicle incremental risk) and a net safety improvement for reducing mass in the heaviest vehicles (chiefly representing risk reductions to other vehicles and persons) that is based on variability in vehicle mass for the crash records in the analysis.

ACC suggested that “NHTSA should deepen its analysis of existing older studies to better reflect the data about the role of vehicle design in safety outcomes associated with vehicle mass reduction,” \517\ and recommended further recent studies focusing on safety improvements and the potential to incorporate those improvements while decreasing vehicle mass for NHTSA to include in its literature review regarding vehicle mass and safety.\518\ ACC also discouraged NHTSA “from associating vehicle mass disparity and societal fatality risk . . . without further discussion and analysis on the impact of these factors.” \519\ ICCT agreed with ACC in a comment, recommending that NHTSA “report its findings from leading research, research from the literature, and automaker developments on how lightweighting designs that the auto industry is pursuing are positively impacting vehicle crash and crash avoidance properties.” \520\

\517\ ACC, Docket No. NHTSA-2025-0491-4733, at 3.

\518\ ACC, Docket No. NHTSA-2025-0491-4733, at 6.

\519\ ACC, Docket No. NHTSA-2025-0491-4733, at 4.

\520\ ICCT, Docket No. NHTSA-2025-0491-5240, Appendix at 12.

Studies cited by ACC from Section 7.3 of the Draft and Final TSD include the National Academies of Sciences, Engineering, and Medicine's (NASEM) 2021 report, the analysis discussed in Nolan's presentation at the 2013

NHTSA Mass-Size-Safety Workshop,\521\ NRC (2015), and Park et al. (2012). Recent studies suggested by the National Research Council (NRC) include Hollowell et al. (2023) and Gunti et al. (2017).\522\

\521\ ACC, Docket No. NHTSA-2025-0491-4733, at 5.

\522\ Hollowell, W. et al., Evaluation of Different ADS Material Concepts using Various Safety Metrics, Presented at 27th International Technical Conference on the Enhanced Safety of Vehicles, April 3-6, 2023, Yokohama, Japan, NHTSA (2023); Gunti, R. et al., An enhanced methodology for lightweighting a vehicle design considering front crashworthiness and pedestrian impact safety requirements, Procedia Engineering, Vol. 173(5): pp. 623-30 (2017), available at: https://doi.org/10.1016/j.proeng.2016.12.118 (accessed: June 5, 2026).

NHTSA agrees with key points by Nolan (2013), including concerning the generally improving and narrowing safety trends across safety classes, the role of design improvements (notably, crash compatibility, side impact safety technology, and electronic stability control) in driving those trends, the potential for crash avoidance technologies to extend those trends, and the caveat that smaller and lighter vehicles may still face safety disadvantages regardless of vehicle design improvements. NHTSA likewise agrees with NASEM's position that new vehicle designs are part of an array of influences leading to potential changes in safety outcomes over time. Technological developments in vehicle safety are represented in the CAFE Model within the baseline, and changes in vehicle mass are accounted for relative to that baseline.

NHTSA agrees with key points by NRC (2015), including that mass disparity is a factor in fatality risk, albeit one subject to change as technologies and fleet composition overall evolve, and that the role of vehicle mass in societal safety should be evaluated in an effort to mitigate statistical biases that may be present in predominant modeling efforts. It is feasible to apply advanced materials science to mitigate at least some safety risk associated with mass reduction, per Park et al. (2012), through the use of plastics and polymers, especially for incremental technologies that would otherwise add net weight, such as advanced driver assistance systems.

NHTSA acknowledges the findings in Hollowell et al. (2023) and Gunti et al. (2017),\523\ which confirm that advanced designs can incorporate new technologies while optimizing vehicle mass. NHTSA notes, however, that the role of automated driving systems is outside the scope of the mass-size-safety analysis. Furthermore, though it is feasible to reduce vehicle mass while adding safety technology, such capability would be distributed across the fleet and hence part of the baseline, while the mass-size-safety component of the analysis would center on differential changes in mass across models under different fuel economy standards.

\523\ Hollowell, W. et al., Evaluation of Different ADS Material Concepts using Various Safety Metrics, Presented at 27th International Technical Conference on the Enhanced Safety of Vehicles, April 3-6, 2023, Yokohama, Japan, NHTSA (2023); Gunti, R. et al., An enhanced methodology for lightweighting a vehicle design considering front crashworthiness and pedestrian impact safety requirements, Procedia Engineering, Vol. 173(5): pp. 623-30 (2017), available at: https://doi.org/10.1016/j.proeng.2016.12.118 (accessed: June 5, 2026).

Both NHTSA's safety baseline and the mass-size-safety model already reflect the ability to mitigate some detrimental effects of mass reduction on safety outcomes, in that extant mass reduction incorporates the technologies discussed in the literature. Optimized designs may help improve occupant safety, and improvements in vehicle design and changes in mass disparity could lead to distinct observed societal safety outcomes. However, NHTSA maintains that the estimated relationships are the best available estimate for this analysis.

Despite the technological advancements noted by commenters, mass still plays a critical role in determining safety outcomes when crashes do occur and therefore needs to be accounted for in the analysis. As noted earlier, NHTSA believes that the mass-size safety approach developed in the 2016 Puckett and Kindelberger report represents the most accurate methodology to examine to approximate, all else being equal, the changes to safety when isolating changes in mass.

A more detailed description of the mass-safety analysis can be found in Chapter 7.3 of the Final TSD. 2. Sales/Scrappage Impacts

As described in Section II.E.2, resetting CAFE standards would have important safety consequences because of the resulting increase in fleet turnover. Less stringent standards allow manufacturers to sell more vehicles demanded by consumers at cheaper prices, which increases the rate at which newer vehicles, and their associated safety improvements, enter the on-road population. The sales response also influences the mix of vehicles on the road based on the relative net price increases caused by CAFE standards. Setting less stringent standards removes distortionary effects that push consumers into vehicles with less preferred body styles that may have different intrinsic safety risks. Similarly, as the price of new vehicles decreases, fleet turnover increases compared to the baseline, meaning newer, safer vehicles would replace older, less safe vehicles on the road. These effects would reduce the safety risk not only for the occupants of newer vehicles but also for other road users who benefit from newer vehicles equipped with advanced driving assistance systems.

Any effect of sales and scrappage on fleet composition will affect the distribution of both ages and model years present in the on-road light-duty fleet. Because each of these vintages carries with it inherent rates of fatal crashes, and newer vintages are generally safer than older ones, changing that distribution will change the safety performance of the fleet, affecting the total number of on-road fatalities under each regulatory alternative. Similarly, the DFS model captures the changes in the light-duty fleet's composition of cars and light trucks. As cars and trucks have different fatality rates, differences in fleet composition across the alternatives will affect fatalities.

NHTSA received various comments on the modeling of safety effects related to sales and scrappage in the CAFE Model. IPI speculated that NHTSA fails to “account for countervailing safety effects if lower prices increase VMT by young, male, riskier drivers.” \524\ IPI also argued that increasing the prices of new vehicles makes used vehicles less affordable for consumers and therefore improves safety. IPI speculated that lower used vehicle prices result in marginal consumers becoming drivers and that these drivers are disproportionately some of the riskiest drivers. However, IPI provided no evidence that such selective entry into driving or disparate changes in driving behavior occur in response to changes in used vehicle prices. In its argument, IPI disregarded the effect of higher used vehicle prices on the prevalence of older less safe vehicles in the fleet. Lower used vehicle prices also mean that more consumers can afford newer and safer used vehicles regardless of demographics. As explained elsewhere in the rule, NHTSA believes that the demand for driving is relatively inelastic, meaning that the final rule and the effects analyzed are focused, for the most part, on determining which vehicle will be driven rather than if the mile will be driven at all. Furthermore, IPI's claim contradicts another argument

they make: that more stringent standards would have a minimal impact on new vehicle demand and thus minimal impact on the used vehicle fleet.\525\

\524\ IPI, Docket No. NHTSA-2025-0491-6015, Appendix: Policy Integrity Comments at 7.C.

\525\ IPI, Docket No. NHTSA-2025-0491-6015, Appendix: Policy Integrity Comments at 1.B.

At the highest level, NHTSA calculates the impact of the sales and scrappage effects by multiplying the VMT of a vehicle by the fatality risk of that vehicle. For the analysis, NHTSA uses the distribution of miles calculated in Chapter 4.3 of the Final TSD. The fatality risk measures the likelihood that a vehicle will be involved in a fatal accident per-mile driven. NHTSA calculates the fatality risk of a vehicle based on the vehicle's model year, age, and style, while controlling factors that are independent of the intrinsic nature of the vehicle, such as behavioral characteristics. Using this same approach, NHTSA designed separate models for fatalities, non-fatal injuries, and property damaged vehicles.

NHTSA received comments on the model used to estimate fatality risks for future fleets. ICCT commented on the use of a single fleetwide fatality rate in the safety analysis. ICCT argued that it would be more appropriate to model fatality rates based on vehicle class due to differences in vehicle safety characteristics.\526\ IPI stated that “NHTSA's model does not cleanly identify the impacts of vehicle age, model year, and time, leading to biased results.” \527\ NHTSA finds it unnecessary to disaggregate fatality rates by fleet because the CAFE compliance model does not substantially change the relative composition of vehicle body types in the on-road fleet between regulatory alternatives. As such a single fleetwide value for fatality rates is sufficient for NHTSA's analysis. While IPI listed a set of potential econometric concerns with the age-period-cohort fatality rate forecast, IPI did not explain how these potential econometric issues could materially affect the analysis. Without further details regarding the alleged error, the agency cannot evaluate the merit of the comment. For example, IPI failed to identify the direction or magnitude of the claimed bias. The agency also believes that the cohort methodology is designed to address IPI's concern that safety technologies are not applied uniformly in a singular model year. The fatality rate model is consistent with previous rulemaking and is still the best methodology to use in the analysis of CAFE standards.

\526\ ICCT, Docket No. NHTSA-2025-0491-5243, at p. 12.

\527\ IPI, Docket No. NHTSA-2025-0491-6015, Appendix: Policy Integrity Comments at 7.B.

The vehicle fatality risk described above captures the historical evolution of automotive safety. Given that modern technologies are proliferating faster than ever and offer greater safety benefits than traditional safety improvements through crash avoidance, NHTSA augmented the fatality risk projections with knowledge about forthcoming safety improvements. NHTSA applied estimates of the market uptake and improving effectiveness of crash avoidance technologies to estimate their effect on the fleetwide fatality rate, including incorporating both the direct effect of those technologies on the crash involvement rates of new vehicles equipped with them, as well as the “spillover” effect of those technologies on improving the safety of occupants of vehicles that are not equipped with these technologies.

NHTSA's approach to measuring these impacts derives effectiveness rates for these ADAS technologies from safety technology literature. NHTSA applies these effectiveness rates to specific crash target populations for which the crash avoidance technology is designed to mitigate, which are then adjusted to reflect the current pace of adoption of the technology, including any public commitment by manufacturers to install these technologies or recent regulatory actions. The product of these factors produces a fatality rate reduction percentage that is applied to the fatality rate trend model discussed above, which projects both vehicle and non-vehicle safety trends. The combined model produces a projection of impacts of changes in vehicle safety technology as well as behavioral and infrastructural trends. A much more detailed discussion of the methods and inputs used to make these projections of safety impacts from advanced technologies is provided in Chapter 7 of the Final TSD.

While ADAS features directly affect safety of the fleet over time, IPI asserted that “NHTSA fails to account for the negative externalities to safety associated with horsepower and other attributes.” \528\ IPI also asserted that NHTSA does not measure an unaccounted for “Peltzman Effect” between vehicle size and driving behavior attributable to a “positional goods treadmill.” IPI speculated that changes in fuel economy standards induce indirect second order effects on consumers' preferences for vehicle characteristics and driving behavior.

\528\ IPI, Docket No. NHTSA-2025-0491-6015, Appendix: Policy Integrity Comments at 7.D.

IPI's concerns regarding potential horsepower-related and other attribute-related safety impacts are not applicable to the CAFE analysis due to the performance-neutrality modeling assumption. Adjustments in vehicle HP are not modeled as a compliance strategy. IPI states elsewhere in its comment that they believe fuel economy can be improved without adversely affecting performance and even argue that improvements in fuel economy might improve vehicle performance.\529\ IPI's argument is largely based on industry press releases rather than applicable engineering studies. There is insufficient evidence to assert there is an omitted “other attribute” safety impact via fleet turnover, nor is there a pathway for such “other attributes” to affect fleet safety through the CAFE Model.

\529\ IPI, Docket No. NHTSA-2025-0491-6015, Appendix: Policy Integrity Comments at 4.C.

IPI's claim of an unaccounted for Peltzman Effect argues that the agency should assume that drivers are more careless when they drive larger vehicles because they feel safer.\530\ IPI presented no material evidence supporting their conjecture that changes in CAFE standards result in second order changes in consumers' overall preferences for automobiles, automobile attributes, or driving behavior. The sales module captures the effect of reducing prices of larger vehicles through reductions in regulatory costs, in its forecast of future fleets under different regulatory approaches.

\530\ Chuang, E. et al., Under the Hood: EPA and DOT's Models Overlook Hidden Attributes of Fuel Efficiency Improvements Policy Integrity, Institute for Policy Integrity, New York University School of Law: New York, NY (2026), available at: https://policyintegrity.org/files/publications/Cars_Hidden_Externalities_Report.pdf (accessed: May 28, 2026).

The additional VMT demanded due to the rebound effect is accompanied by more exposure to risk. However, rebound miles are not imposed on consumers by regulation. Rather, they are a freely chosen activity resulting from reduced vehicle operational costs. As such, NHTSA has long believed that a large portion of the safety risks associated with additional driving are offset by the benefits drivers gain from added driving. The level of risk internalized by drivers is uncertain. This analysis assumes that drivers internalize 90 percent of this risk, which mostly offsets the societal impact of added fatalities from this voluntary consumer choice. However, by resetting the standards, NHTSA would expect fewer rebound miles and therefore fewer

crashes, injuries, and fatalities. Additional discussion of internalized risk is contained in Chapter 7.5 of the Final TSD. NHTSA sought comment on this assumption. In particular, the agency asked commenters for any evidence that could be used to bolster a higher or lower estimate of how much consumers internalize the risk of driving an additional mile.

No commenters provided evidence to support either a higher or lower estimate for internalized risk of driving. Two commenters, NRDC et al. and Consumer Reports, opposed NHTSA's inclusion of the safety impacts of rebound driving in the analysis. NRDC et al. claimed that “it is unreasonable for NHTSA to consider individuals' driving choices, which the Agency cannot control or regulate, as a safety impact of the 2024 rule.” Consumer Reports commented that because behavioral responses to changes in fuel economy standards are “voluntary,” these responses are “not imposed by regulation” and that NHTSA should not measure the safety effects of rebound driving. Consumer Reports then claimed that “NHTSA and DOT do not apply rebound driving safety impacts to other policies that influence consumer finances; applying it selectively here to justify lower fuel economy standards.” \531\

\531\ NRDC et al., Docket No. NHTSA-2025-0491-5982, Appendix A, (“NHTSA lacks support for its finding that the existing standards are significantly degrading highway safety.”), p. 42.; Consumer Reports, Docket No. NHTSA-2025-0491-5926, at Section 5.3, p. 12.

Rebound driving results when improved fuel economy lowers the marginal cost of driving additional miles. The rebound effect is a long-standing finding from economic research on the effects of improving energy efficiency on consumer behavior. In the context of CAFE, rebound driving would not occur in the absence of regulatory action, and while the additional driving is a “voluntary” choice by drivers, it occurs in direct response to regulatory action. It is thus appropriate for NHTSA to measure the safety impacts of rebound driving resulting from changes in CAFE standards. Even if drivers internalize some of these safety costs, these costs are still affected by the change in standards and borne by members of society.

NRDC et al. stated that fatality rates, rather than total fatalities, are the proper metric for considering the safety effects of changes in fuel economy standards. In the SAFE II final rule, NHTSA responded to a similar comment by Environmental Defense Fund (EDF), noting that NHTSA must weigh the value of benefits from its regulatory actions against their costs. NHTSA stated, “the fundamental metric for valuing loss of life is VSL. To apply this metric, [NHTSA] must first produce estimates of any change in the numbers of fatalities that result from regulatory action. Fatalities prevented, as well as other safety impacts such as non-fatal injuries prevented and property damage crashes avoided, are appropriate measures of the consequences of rules that affect vehicle safety.” \532\

\532\ NHTSA and EPA, FRIA: The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Year 2021-2026 Passenger Cars and Light Trucks, p. 1078 (2020), available at: https://www.nhtsa.gov/sites/nhtsa.gov/files/documents/final_safe_fria_web_version_200701.pdf (accessed: May 28, 2026).

Fatalities, non-fatal injuries, and property damage crashes are valued as a societal cost within the CAFE Model's cost and benefit accounting. Estimated fatality costs are based on the comprehensive value of a fatality, which includes lost quality of life and is quantified in the VSL, as well as economic costs related to medical and emergency care, insurance administrative costs, legal costs, and other economic impacts not captured in the VSL. These values were first derived from data in Blincoe et al. (2015), updated in Blincoe et al. (2023), adjusted to 2024 dollars, and updated to reflect DOT guidance on the VSL.\533\

\533\ DOT, Departmental Guidance on Valuation of a Statistical Life in Economic Analysis, available at: https://www.transportation.gov/office-policy/transportation-policy/revised-departmental-guidance-on-valuation-of-a-statistical-life-in-economic-analysis (accessed: May 22, 2026).

Non-fatal injury costs, which differ by severity, were weighted according to the relative incidence of injuries across the Abbreviated Injury Scale. To determine this incidence, NHTSA applied a KABCO/ Maximum AIS (MAIS) translator to CRSS KABCO based injury counts from 2017-2019. This produced the MAIS-based injury profile. This profile was used to weight non-fatal injury unit costs derived from Blincoe et al. (2023), adjusted to 2024 price and income levels and updated consistently with DOT guidance on the VSL. Property-damaged vehicle costs were also taken from Blincoe et al. (2023) and adjusted to 2024 dollars.

For the analysis, NHTSA assigns a societal value of $14.1 million for each fatality, $338,000 for each non-fatal injury, and $9,700 for each property damaged vehicle. As discussed in the previous section, NHTSA discounts 90 percent of the safety costs associated with the rebound effect. The remaining 10 percent of those safety costs are not considered to be internalized by drivers and appear as a cost of the standards that influence net benefits. Similarly, the effects on safety attributable to changes in mass and fleet turnover are not offset by additional benefits because manufacturers are responsible for deciding how to design and price vehicles. However, 90 percent of these costs are also treated as private costs because they are borne by owners of vehicles rather than society more broadly. The safety costs not internalized by drivers are equal to 10 percent of the sum of the mass- safety effects, fleet turnover effects, and rebound-related fatality and non-fatal injuries, plus the cost of any property damage.