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Rule2026-19964

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

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Published

September 30, 2026

Effective

November 30, 2026

Issuing agencies

Transportation DepartmentNational Highway Traffic Safety Administration

Abstract

NHTSA, on behalf of the U.S. Department of Transportation (DOT), is substantially recalibrating the Corporate Average Fuel Economy (CAFE) program to bring the program into compliance with the law and to remove previous regulatory distortions which have induced manufacturers to make design decisions that have neither aligned with market demand and the needs of American families nor have delivered the consistent improvements in the fuel economy performance of manufacturer fleets, as Congress intended. This recalibration finalizes amendments to fuel economy standards for light-duty vehicles for model years 2022- 2026 and MYs 2027-2031. This final rule also finalizes amendments to compliance aspects of the program, including to vehicle classification and other compliance pathways.

Full Text

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[Federal Register Volume 91, Number 188 (Wednesday, September 30, 2026)]
[Rules and Regulations]
[Pages 61988-62291]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-19964]

[[Page 61987]]

Vol. 91

Wednesday,

No. 188

September 30, 2026

Part III

Department of Transportation

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National Highway Traffic Safety Administration

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49 CFR Parts 523, 531, et al.

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

Federal Register / Vol. 91 , No. 188 / Wednesday, September 30, 2026
/ Rules and Regulations

[[Page 61988]]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 523, 531, 533, 536, 537, and 578

[NHTSA-2025-0491]
RIN 2127-AM76

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

AGENCY: National Highway Traffic Safety Administration (NHTSA).

ACTION: Final rule.

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SUMMARY: NHTSA, on behalf of the U.S. Department of Transportation
(DOT), is substantially recalibrating the Corporate Average Fuel
Economy (CAFE) program to bring the program into compliance with the
law and to remove previous regulatory distortions which have induced
manufacturers to make design decisions that have neither aligned with
market demand and the needs of American families nor have delivered the
consistent improvements in the fuel economy performance of manufacturer
fleets, as Congress intended. This recalibration finalizes amendments
to fuel economy standards for light-duty vehicles for model years 2022-
2026 and MYs 2027-2031. This final rule also finalizes amendments to
compliance aspects of the program, including to vehicle classification
and other compliance pathways.

DATES: This rule is effective November 30, 2026. The incorporation by
reference of certain publications listed in the regulations is approved
by the Director of the Federal Register as of November 30, 2026.

ADDRESSES: For access to the dockets or to read background documents or
comments received, please visit <a href="https://www.regulations.gov">https://www.regulations.gov</a>, or Docket
Management Facility, M-30, U.S. Department of Transportation, West
Building, Ground Floor, Rm. W12-140, 1200 New Jersey Avenue SE,
Washington, DC 20590. The Docket Management Facility is open between 9
a.m. and 4 p.m. Eastern time, Monday through Friday, except Federal
holidays.

FOR FURTHER INFORMATION CONTACT: For technical and policy issues,
Joseph Bayer, CAFE Program Division Chief, Office of Rulemaking,
National Highway Traffic Safety Administration, 1200 New Jersey Avenue
SE, Washington, DC 20590; email: <a href="/cdn-cgi/l/email-protection#e3a0a2a5a6bcae818c9ba3878c97cd848c95">[email&#160;protected]</a>. For legal issues,
Hannah Fish, NHTSA Office of Chief Counsel, National Highway Traffic
Safety Administration, 1200 New Jersey Avenue SE, Washington, DC 20590;
email: <a href="/cdn-cgi/l/email-protection#480b090e0d17052a2730082c273c662f273e">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

Table of Acronyms and Abbreviations

BILLING CODE 4910-59-P

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BILLING CODE 4910-59-C

Does this action apply to me?

This final rule affects companies that manufacture or sell new
passenger automobiles (passenger cars) and non-passenger automobiles
(light trucks), as defined under NHTSA's CAFE regulations.\1\ Regulated
categories and entities include:
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\1\ See 49 CFR part 523.
[GRAPHIC] [TIFF OMITTED] TR30SE26.049

This list is not intended to be exhaustive but rather provides a
guide regarding entities likely to be regulated by this action. To
determine whether particular activities may be regulated by this
action, you should carefully examine the regulations. You may direct
questions regarding the applicability of this action to the persons
listed in FOR FURTHER INFORMATION CONTACT.

Table of Contents

I. Executive Summary and Overview
A. Executive Summary
B. Overview of the Final Rule
1. Summary of the NPRM
2. Public Participation Opportunities and Summary of Comments
3. Changes to the CAFE Model in Light of Public Comments and New
Information
4. Final Standards--Stringency
5. Final Standards--Impacts
6. Final Standards Are Maximum Feasible
II. Technical Foundation for the Final Rule Analysis
A. Why is NHTSA conducting this analysis?
1. What are the key components of NHTSA's analysis?
2. How do statutory requirements shape NHTSA's analysis?
3. What updated capabilities and assumptions does the current
Model reflect as compared to the version used in the analysis of the
2024 final rule?
B. What is NHTSA analyzing?
C. What inputs does the compliance analysis require?
1. What inputs does the analysis require for 2022-2026?
2. What inputs does the compliance analysis require for 2027-
2031?
a. Technology Options and Pathways
b. Defining Manufacturers' Current Technology Positions in the
Analysis Fleet
c. Technology Effectiveness Values
d. Technology Costs
e. Simulating Tax Credits
f. Technology Applicability Equations and Rules
D. Technology Pathways, Effectiveness, and Cost
1. Engine Paths
2. Transmission Paths
3. Hybridization Paths
4. Road Load Reduction Paths
5. Mass Reduction

[[Page 61995]]

6. Aerodynamic Improvements
7. Low Rolling Resistance Tires
8. Simulating Air-Conditioning Efficiency and Off-Cycle
Technologies
E. Consumer Responses to Manufacturer Compliance Strategies
1. Macroeconomic and Consumer Behavior Assumptions
2. Fleet Composition
a. Sales
b. Scrappage
3. Changes in Vehicle Miles Traveled
4. Changes to Fuel Consumption
F. Simulating Emissions Impacts of Regulatory Alternatives
G. Simulating Economic Impacts of Regulatory Alternatives
1. Private Costs and Benefits
2. External Costs and Benefits
H. Simulating Safety Effects of Regulatory Alternatives
1. Mass Reduction Impacts
2. Sales/Scrappage Impacts
3. Rebound Effect Impacts
4. Value of Safety Impacts
III. Regulatory Alternatives Considered in This Final Rule
A. General Basis for Alternatives Considered
1. MYs 2022-2026
2. MYs 2027-2031
3. Minimum Domestic Passenger Car Standard Analysis Update
B. Regulatory Alternatives Considered
1. No-Action Alternatives for PCs and LTs
a. No-Action Alternative for the MYs 2022-2026 Amendment
b. No-Action Alternative for the MYs 2027-2031 Amendment
2. Action Alternatives for Passenger Cars and Light Trucks
a. Action Alternatives for MYs 2022-2026 Amendment
(1) Alternative 1
(2) Alternative 2
(3) Alternative 3--Preferred Alternative
(4) Alternative 4
(5) Alternative 5
b. Action Alternatives for MYs 2027-2031 Amendment
(1) Alternative 1
(2) Alternative 2
(3) Alternative 3--Preferred Alternative
(4) Alternative 4
(5) Alternative 5
IV. Effects of the Regulatory Alternatives
A. Effects of the Regulatory Alternatives for MYs 2022-2026
B. Effects of the Regulatory Alternatives for MYs 2027-2031
1. Effects on Vehicle Manufacturers
2. Effects on Society
3. Physical and Environmental Effects
4. Sensitivity Analysis
V. Basis for NHTSA's Conclusion That the Final Standards Are Maximum
Feasible
A. The Energy Policy and Conservation Act of 1975 (EPCA), as
Amended by the Energy Independence and Security Act of 2007 (EISA)
1. Administrative Provisions Governing CAFE Standard Setting
a. Lead Time, Amendatory Authority, and the Number of Model
Years for Which Standards May Be Set at One Time
b. Separate Standards for Passenger Automobiles and Non-
Passenger Automobiles
c. Minimum Standards for Domestic Passenger Automobiles
d. Attribute-Based Standards Defined by a Mathematical Function
e. 35 Miles per Gallon in 2020
2. Maximum Feasible Standards
a. Technological Feasibility
b. Economic Practicability
c. The Effect of Other Motor Vehicle Standards of the Government
on Fuel Economy
d. The Need of the United States To Conserve Energy
(1) Consumer Costs and Fuel Prices
(2) National Balance of Payments
(3) Environmental Effects
(4) Foreign Policy Implications
e. Factors That NHTSA Is Prohibited From Considering
f. Additional Considerations Relevant to NHTSA's Statutory
Determination of Maximum Feasibility
B. Other Statutory Requirements
1. Administrative Procedure Act
2. National Environmental Policy Act
C. Evaluating the Statutory Factors and Other Considerations To
Arrive at the Final Standards
1. Why is NHTSA's conclusion different from the 2020, 2022, and
2024 final rules?
2. Considerations Justifying the Final Standards
a. Technological Feasibility
b. Economic Practicability
c. Effect of Other Motor Vehicle Standards of the Government on
Fuel Economy
d. The Need of the United States To Conserve Energy
e. Synthesis of the Record Supporting Alternative 3 as Maximum
Feasible
3. Final Supplemental Environmental Impact Statement Analysis
Results
D. Severability
VI. Compliance and Enforcement
A. Background and Overview of Compliance and Enforcement
B. Finalized Changes to the CAFE Program
1. Modification of Vehicle Classification in the CAFE Program
a. Non-Passenger Automobile Definition
b. Finalized Changes to Criteria for Off-Highway Capability
c. Finalized Changes to Criteria for Functional Performance
(1) Automobiles With Three or More Rows of Seating
(2) Light-Duty Work Factor
2. Removal of Credit Trading in the CAFE Program
3. Technical Amendments To Remove References to EPA's
Regulations for AC Efficiency and Off-Cycle Fuel Consumption
Improvement Values
4. Modification of the Definition of Curb Weight and
Manufacturer Reporting Requirements
C. Technical Amendments
1. Technical Amendments To Remove Residual Mention of Fuel
Efficiency Standards for Trailers in NHTSA's Vehicle Classification
Regulations
2. Technical Amendment To Remove Heavy-Duty Trailers From the
List of Heavy-Duty Vehicle Regulatory Categories
3. Technical Amendments To Remove Civil Penalties for Non-
Compliance With Fuel Economy Standards From the CAFE Program
4. Additional Technical Amendments
a. Technical Amendments to Part 523
b. Technical Amendments to Part 531
c. Technical Amendments to Part 533
d. Technical Amendments to Part 536
e. Technical Amendments to Part 537
5. Technical Amendment To Modify the Civil Penalty for Non-
Compliance With Fuel Economy Standards in Part 578
VII. Regulatory Notices and Analyses
A. Executive Order 12866, ``Regulatory Planning and Review'';
Executive Order 13563, ``Improving Regulation and Regulatory
Review''; Executive Order 14192, ``Unleashing Prosperity Through
Deregulation''; and Executive Order 14219, ``Ensuring Lawful
Governance and Implementing the President's `Department of
Government Efficiency' Deregulatory Initiative.''
B. Environmental Considerations
1. National Environmental Policy Act
2. Clean Air Act as Applied to NHTSA's Final Rule
3. Endangered Species Act (ESA)
4. Other Regulatory Analyses Discussed in the Final SEIS
5. Executive Order 13045: ``Protection of Children From
Environmental Health Risks and Safety Risks''
6. Executive Order 14154: ``Unleashing American Energy.''
7. Executive Order 14173: ``Ending Illegal Discrimination and
Restoring Merit-Based Opportunity
C. Regulatory Flexibility Act
D. Executive Order 13132 (``Federalism'')
E. Executive Order 12988 (``Civil Justice Reform'')
F. Executive Order 13175 (``Consultation and Coordination With
Indian Tribal Governments'')
G. Unfunded Mandates Reform Act
H. Regulation Identifier Number
I. National Technology Transfer and Advancement Act
J. Incorporation by Reference
K. Department of Energy Review
L. Paperwork Reduction Act

I. Executive Summary and Overview

A. Executive Summary

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

[[Page 61996]]

as passenger automobiles and non-passenger automobiles, and together
known as light-duty vehicles) have led manufacturers to reshape the
market in unanticipated ways--such as by almost eliminating the
production of station wagons (passenger cars that generally have more
robust cargo capacity, adding mass and reducing fuel economy) in favor
of vehicles like minivans and crossover utility vehicles (considered
light trucks, and subject to less stringent standards).
Strict miles-per-gallon-based standards in the early years of the
program also led manufacturers to seek significant reductions in
vehicle size and mass, leading to increased injury or fatality risk for
occupants of smaller vehicles involved in a crash.\2\ NHTSA sought to
mitigate these responses by creating attribute-based standards that
relate the ``footprint'' size of vehicles to fuel economy, to some
positive effect.
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\2\ Transportation Research Board and National Research Council,
Effectiveness and Impact of Corporate Average Fuel Economy (CAFE)
Standards, National Academies Press: Washington, DC (2002),
available at: <a href="https://www.nationalacademies.org/publications/10172">https://www.nationalacademies.org/publications/10172</a>
(accessed: June 18, 2026). This report describes at length and
quantifies the potential safety problem with average fuel economy
standards that specify a single numerical requirement for the entire
industry, noting that smaller and lighter vehicles incentivized by
those standards could be less safe for their occupants.
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Meanwhile, the U.S. Environmental Protection Agency (EPA) started
providing special fuel economy adjustments for technologies that had
potential for fuel economy improvements but were not measurable using
the laboratory test procedures (i.e., the ``two-cycle'' tests) for
vehicle fuel economy. This included accommodating adjustments to
efficiency values if manufacturers implemented preferred air
conditioning (AC) technologies and installed special technologies with
purported fuel-saving benefits that could not be captured on the
aforementioned two-cycle tests, accordingly known as ``off-cycle'' (OC)
technologies (e.g., vehicle stop/start functions that shut off the
engine when the vehicle has stopped). These regulatory adjustments have
led to widespread adoption of technologies with uncertain real-world
benefits, added costs, and, in many cases, consumer backlash.
The creation of a system for inter-manufacturer credit trading--
intended to improve the cost effectiveness of the CAFE program by
allowing manufacturers that could improve the fuel economy of their
fleets more cost effectively to earn credits for exceeding fuel economy
standards and sell those credits to manufacturers that would need to
incur higher costs to meet fuel economy standards--has also resulted in
a windfall for EV-exclusive manufacturers that sell credits to other
non-EV manufacturers, which in turn pay for those credits with capital
that could be invested toward improving the fuel economy performance or
other desirable attributes of their traditional fleets. The enormous
fuel economy values assigned to EVs have, heretofore, been included in
the baseline fleet fuel economy for CAFE rulemakings upon which
stringency increases are applied--thereby significantly increasing the
fuel economy requirements for traditional gasoline- or diesel-fueled
fleets.\3\
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\3\ In a hypothetical and simplified example, if the baseline
passenger car fleet of vehicles with an identical footprint
consisted of nine gasoline-powered vehicles achieving 30 mpg and one
EV achieving 150 mpg, the baseline fleet to which stringency
increases would apply would be measured at 42 mpg. When CAFE
standards are set inconsistent with the statute because the analysis
considers EV fuel economy, manufacturers of gasoline-powered
vehicles would face a challenge in catching up to the overall fleet
fuel economy, requiring disproportionate investment in fuel-saving
technologies, and incentivizing the purchase of regulatory credits
from the EV manufacturer.
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At the same time, the classification system that has long divided
the fleet between passenger cars (intended to move passengers) and
light trucks (intended to move cargo or operate off highway) no longer
lives up to its anticipated use. Indeed, while 68 percent of the light-
duty fleet meets the current light truck regulatory definition, the
majority of these vehicles (e.g., all-wheel drive (AWD) crossover
utility vehicles, vehicles with three or more rows of seating, and
vehicles that do not have an approach angle high enough to handle an
off-highway obstacle) cannot realistically operate off highway and have
little value moving cargo. Instead, most of these vehicles are designed
and intended primarily to move passengers but have additional features
solely to meet regulatory definitions \4\--resulting in little added
functionality, reduced fuel economy performance, added cost, and a
homogenous design lacking in creativity.
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\4\ Section VI discusses NHTSA's amended regulatory definitions
for passenger and non-passenger automobiles in detail and includes
examples of manufacturers excluding or including specific features
solely to meet regulatory definitions. Two examples discussed in
more detail in Section VI include manufacturers discontinuing FWD
versions of vehicles after NHTSA properly reclassified over one
million FWD automobiles as passenger automobiles in line with EPCA
and opting to instead manufacture only AWD or 4WD versions to keep
more of their products in the non-passenger automobile fleets (74 FR
14196, Mar. 30, 2009), and manufacturers including aerodynamic
technologies to increase on-highway functionality instead of opting
to meet approach angle requirements, which would make the vehicle
more capable of approaching off-highway obstacles and, thus, more
off-highway capable.
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While the CAFE program was intended to push manufacturers to
improve fuel economy while preserving their ability to design and
produce vehicles that meet market demands, the system has spun off its
axis and requires recalibration. Instead of allowing manufacturers to
design and produce vehicles they believe their customers will want and
need, while spreading real-world fuel economy improvements across their
fleets, the system has increasingly led manufacturers to try to fit
square vehicle pegs in round classification holes to force the adoption
of technologies that do not meet the demands of American families
simply to obtain on-paper fuel economy improvements that may have
little basis in reality. All of this adds inefficiency and cost--
pushing even more consumers out of an already unaffordable new car
market.
By delegation of authority from the Secretary of Transportation
(the Secretary), NHTSA is, in this action, finalizing amendments to the
previously promulgated CAFE standards applicable to passenger and non-
passenger automobiles produced for MYs 2022-2026 and MYs 2027-2031.
Finalizing amended standards beginning with MY 2022 is consistent with
the Secretary's direction in the January 28, 2025, memorandum titled
``Fixing the CAFE Program'' and is also the earliest model year for
which NHTSA has not concluded CAFE compliance proceedings; additional
discussion regarding NHTSA's finalized amended standards can be found
in Section V.
Consistent with the terms of the CAFE program mandated in the
Energy Policy and Conservation Act of 1975 (EPCA), as amended by the
Energy Independence and Security Act of 2007 (EISA) and other laws
(codified in chapter 329 of Title 49 of the U.S. Code), the fuel
economy standards finalized herein are based solely on light-duty
vehicles powered by gasoline and diesel fuels, a category that includes
non-plug-in hybrid vehicles.\5\ In formulating the finalized standards,
NHTSA has not considered the imputed fuel-economy performance of EVs or
the electric operation of plug-in hybrid

[[Page 61997]]

electric vehicles (PHEVs). This approach marks a change from previous
rulemakings, as described above, but brings the CAFE program into
compliance with statutory restrictions.
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\5\ Non-plug-in hybrid vehicles are not dual-fueled vehicles
under chapter 329 because any electricity generated by the electric
motors or other electric components are generated solely by the
petroleum-fueled engine and the batteries are incapable of charging
from an external source: ``a vehicle which is entirely dependent on
a petroleum fuel for its motive power, regardless of whether
electricity is used in the powertrain, is powered by petroleum.'' 63
FR 66066 (Dec. 1, 1998).
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This final rule fulfills NHTSA's statutory obligation to set CAFE
standards at the maximum feasible level that the agency determines
vehicle manufacturers can achieve in each model year, balancing four
key factors: technological feasibility, economic practicability, the
need of the United States to conserve energy, and the effect of other
motor vehicle standards of the Government on fuel economy.\6\ This
balancing must take into account current and projected circumstances
and cannot consider the availability of alternative fuel technologies
(e.g., EVs or PHEV electric operation), or compliance credits.\7\ This
action is also consistent with Executive Order (E.O.) 14148, ``Initial
Rescissions of Harmful Executive Orders and Actions,'' \8\ and E.O.
14154, ``Unleashing American Energy,'' \9\ as well as the Secretarial
memorandum titled ``Fixing the CAFE Program.'' \10\
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\6\ 49 U.S.C. 32902(a) and (f).
\7\ 49 U.S.C. 32902(h).
\8\ 90 FR 8237 (Jan. 28, 2025).
\9\ 90 FR 8353 (Jan. 29, 2025).
\10\ See DOT, Fixing the CAFE Program, Memorandum (2025),
available at: <a href="https://www.transportation.gov/briefing-room/memorandum-fixing-cafe-program">https://www.transportation.gov/briefing-room/memorandum-fixing-cafe-program</a> (accessed: June 18, 2026).
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The standards presented in this final rule differ significantly
from those finalized in the 2020, 2022, and 2024 rules. In formulating
those prior standards, NHTSA considered both the fuel economy of EVs
and PHEVs and compliance credits that could be earned when a
manufacturer over-complied with an applicable fuel economy standard. As
a result, the fuel economy standards previously established by NHTSA
for passenger cars and light trucks for MYs 2022-2026 and MYs 2027-2031
failed to satisfy substantive statutory requirements. NHTSA is
finalizing in this rule the ``maximum feasible'' fuel economy
requirements for the model years in question that best reflects the
balancing of the four statutory factors and limitations mandated for
the CAFE program.
This rulemaking is intended to establish maximum feasible fuel
economy standards while bringing the program into compliance with the
law. It marks a significant reset. NHTSA has removed from every aspect
of the standards development process consideration of factors
inconsistent with the statute, including specific technologies and
credits, to bring the program back within its statutory constraints.
NHTSA discussed extensively its prior consideration of such
technologies and credits in the standards development process in the
final interpretive rule, Resetting the Corporate Average Fuel Economy
Program,\11\ and in the proposal, and includes a more detailed
discussion in Section V, below.
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\11\ 90 FR 24518 (June 11, 2025).
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NHTSA has also removed consideration of AC efficiency and OC fuel
consumption improvement values (FCIVs) from its standard-setting
analysis starting with MY 2028. This change will ensure that NHTSA's
CAFE standards are achievable without the implementation of
technologies with questionable fuel economy benefits and not demanded
by consumers.
The agency is also eliminating the inter-manufacturer credit
trading program (which is authorized, but not required, by 49 U.S.C.
32903(f)) beginning with credits earned in MY 2028. This change in the
program is long overdue. Although NHTSA does not consider the
availability of credits or credit trading in establishing standards,
the agency believes that eliminating inter-manufacturer credit trading
will encourage manufacturers to provide for steady improvement in fuel
economy across their fleets over time, as opposed to relying upon
credits acquired from third-party EV manufacturers. NHTSA recognizes
that manufacturers have made investments in particular compliance
pathways that may include purchasing credits from other manufacturers
even though the availability of those credits is uncertain and is,
therefore, finalizing this change beginning with credits earned in MY
2028. The finalized change provides additional transition time beyond
that proposed in the notice of proposed rulemaking (NPRM), in
recognition of any reliance interests in the trading program to achieve
compliance, because manufacturers will still be able to purchase and
use credits that were earned through MY 2027 for up to five model years
after they were first generated (e.g., credits earned in MY 2026 may be
purchased and applied through MY 2031, and credits earned in MY 2027
may be purchased and used through MY 2032). However, NHTSA is
finalizing standards in this rule at levels that do not consider the
use of compliance credits, thus minimizing any impacts that this change
may have on manufacturers' decisions about compliance pathways.
Moreover, this change will not impact the ability of automakers to
transfer earned credits between different categories of vehicles in
their own fleets or carry their own credits forward and backwards
across model years, as prescribed by statute.
The agency is also finalizing a substantial reclassification of the
light-duty fleet in this reset of the CAFE program, with the passenger
car fleet consisting of vehicles primarily designed to move people, and
the light truck fleet consisting of vehicles primarily designed to
operate off highway or move cargo. NHTSA recognizes the changes will
introduce significant design consideration for manufacturers. Moving a
large fraction of vehicles previously classified as light trucks into a
manufacturer's passenger vehicle fleet will have a significant effect
on the overall fuel economy performance of the manufacturer's passenger
fleet; even if based upon the same platform as a passenger car, the
additional vehicle height adds significant mass and decreases
aerodynamics, and therefore fuel economy. Meanwhile, removal of
vehicles from a manufacturer's light truck fleet will leave that fleet
consisting of heavier and less aerodynamic vehicles, such as large
sports utility vehicles and pickup trucks, thereby decreasing the
overall average fuel economy of the light truck fleet. Accordingly,
while a manufacturer's combined overall fleet fuel economy may remain
the same, both its passenger car and light truck fleets will
necessarily achieve lower measured fuel economy. NHTSA has also updated
the classification criteria from technology-based to performance-based
standards where applicable. This final rule takes these changes into
account through amendments to both the footprint curves and standards
applicable to various points within the curves. NHTSA intends that, as
a result of this update, automobiles classified as non-passenger will
exhibit true non-passenger capabilities that display relevant off-
highway vehicle attributes such as approach angle and running clearance
or include design features that provide higher payload and towing
abilities for transporting cargo.
By surveying the measured fuel economy performance of gasoline- and
diesel-powered passenger cars and light trucks produced for the U.S.
market in MY 2022, NHTSA has created a maximum feasible foundation from
which to establish standards for subsequent model years. NHTSA is
setting fuel economy standards for passenger automobiles that increase
from the newly finalized MY 2022 standards at a rate of 0.90 percent
per year through MY 2029 followed by one

[[Page 61998]]

percent per year through MY 2031, with MY 2030 stringency acting as a
bridge between the vehicle classification updates. For non-passenger
automobiles, NHTSA is setting fuel economy standards that increase from
the newly finalized MY 2022 standards at a rate of 0.51 percent per
year through MY 2029 followed by one percent per year through MY 2031,
with MY 2030 stringency acting as a bridge between vehicle
classification updates.\12\
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\12\ For a detailed discussion of the transition to new
footprint-based standards curves as a result of vehicle
reclassification please see Section III.A.
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The final standards may, in places, be referred to as the
``Preferred Alternative(s),'' but NHTSA intends ``final standards,''
``finalized standards,'' and ``Preferred Alternative(s)'' to be used
interchangeably for purposes of this document. In addition to the final
standards, NHTSA considered a range of regulatory alternatives for each
fleet, consistent with the agency's obligations under the
Administrative Procedure Act (APA), National Environmental Policy Act
(NEPA), and E.O. 12866. In response to public comments and the agency's
additional analysis, NHTSA considered a greater number of regulatory
alternatives for this final rule than were considered in the NPRM, for
each fleet. The regulatory alternatives are as follows:
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\13\ Percentages in the table represent the year over year
reduction in gal/mile applied to the mpg values on the target
curves. The reduction in gal/mile results in an increased mpg.
[GRAPHIC] [TIFF OMITTED] TR30SE26.050

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

[[Page 61999]]

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

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

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

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

Increasing the stringency of standards at modest annual rates,
following a reset to eliminate the consideration of impermissible
factors that were applied in setting the 2020, 2022, and 2024
standards, and coupled with a re-examination of the shape of the fuel
economy target functions and the vehicle classification definitions,
best comports with statutory requirements. Moreover, the level, shape,
and applicability of the final standards to the passenger and non-
passenger automobile fleets are justified by the inappropriate
distortions the existing regulations have caused in the marketplace.
Those regulations resulted in unnecessary regulatory burdens that did
not further statutory purposes because the standards were not
attainable for the gasoline- and diesel-powered vehicle fleet.
The final CAFE standards remain vehicle-footprint-based, like the
current CAFE standards in effect since MY 2011. The footprint of a
vehicle is the area calculated by multiplying the wheelbase times the
track width, essentially the rectangular area of a vehicle measured
from tire to tire where the tires contact the ground. This means that
the standards are defined by mathematical equations that represent
constrained linear functions relating vehicle footprint to fuel economy
targets for passenger cars and light trucks.\16\ For this final rule,
NHTSA has updated the mathematical functions (i.e., the target curves
relating footprint to fuel economy) for passenger cars and light trucks
based on the latest available data. NHTSA has concluded, based on this
data, that the relationship between footprint and fuel economy has
shifted from MY 2008 (the model year on which the current curves are
based) and it is thus appropriate to modify the mathematical functions
accordingly. NHTSA has also updated the functions that would be applied
beginning in MY 2030 to reflect changes based on the finalized vehicle
classification regulations.
---------------------------------------------------------------------------

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

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

\17\ NHTSA notes both that real-world fuel economy is generally
20-30 percent lower than the estimated required CAFE level stated
above, because CAFE compliance is evaluated per 49 U.S.C. 32904(c)
Testing and Calculation Procedures, which states that the EPA
Administrator (responsible under EPCA/EISA for measuring vehicle
fuel economy) must use the same procedures used for MY 1975
(weighted 55 percent urban cycle and 45 percent highway cycle) or
comparable procedures. Colloquially, this is known as the 2-cycle
test. The ``real-world'' or 5-cycle evaluation includes the 2-cycle
tests and three additional tests that are used to adjust the city,
and highway estimates to account for higher speeds, AC use, and
colder temperatures. In addition to calculating vehicle fuel
economy, EPA is responsible for providing the fuel economy data that
is used on the fuel economy label on all new cars and light trucks,
which uses the ``real-world'' values. In 2006, EPA revised the test
methods used to determine fuel economy estimates (city and highway)
appearing on the fuel economy label of all new cars and light trucks
sold in the United States, effective with MY 2008 vehicles.
\18\ NHTSA's analysis reflects that almost all manufacturers
make the technological improvements prompted by CAFE standards at
times that coincide with existing product ``refresh'' and
``redesign'' cycles, rather than unrealistically applying new
technology every year regardless of those cycles. It is
significantly more cost effective to make fuel economy-improving
technology updates when a vehicle is being updated. See the Final
TSD and preamble Section II for additional discussion about
manufacturer refresh and redesign cycles.
---------------------------------------------------------------------------

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

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

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[[Page 62000]]

[GRAPHIC] [TIFF OMITTED] TR30SE26.051

To the extent that manufacturers are simulated to be over-complying
with required fuel economy levels being set in MY 2027, NHTSA notes
that this is due to factors including previous application of fuel
economy technologies required by standards set for prior model years in
a manner inconsistent with the statute because the analysis considered
alternative fuel (e.g., EV) technology applications. Once standards are
established that consider all statutory factors and limitations
appropriately, manufacturers that previously applied technologies to
meet standards set using an analysis inconsistent with the statute will
have relief, while manufacturers that faced certain penalties can
continue to improve efficiency to meet maximum feasible standards.
NHTSA's review of achieved compliance at the manufacturer level also
shows that, while some manufacturers manage to achieve greater over-
compliance, other manufacturers are expected to achieve compliance
values that will track the levels of the new standards. In addition,
NHTSA believes that the finalized standards established for model years
prior to the MY 2030 fleet reclassification, which NHTSA also extended
from MY 2028 from the proposal in response to manufacturer comments
regarding lead time and planning cycles, will allow manufacturers to
plan strategically with sufficient lead time to manage that transition
within their projected model year sales cycles. For all fleets, average
requirements and average achieved CAFE levels will depend ultimately on
manufacturer and consumer response to standards, technology
developments, economic conditions, fuel prices, and other factors.
NHTSA is also finalizing new minimum domestic passenger car CAFE
standards (MDPCS) for MYs 2022-2026 and MYs 2027-2031, which are
applied to passenger cars manufactured in the United States. Section
32902(b)(4) of 49 U.S.C. requires NHTSA to project the minimum domestic
standard when it promulgates passenger car standards for a model year;
these standards are shown in Table I-3 below. NHTSA continues to apply
an offset (albeit a smaller one than was first used in the 2020 final
rule and applied to the 2022 and 2024 final rules) when calculating the
MDPCSs for MYs 2027-2031, reflecting prior differences between
passenger car footprints forecast originally by the agency and
passenger car footprints as they occurred in the real world. The
finalized MDPCS for each model year is shown in the table below.
[GRAPHIC] [TIFF OMITTED] TR30SE26.052

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

[[Page 62001]]

standards satisfy the requirements of EPCA, and no model can predict
precisely the engineering configurations automakers are likely to
introduce in response to evolving trends in market demand. However, the
analysis developed using the CAFE Model provides further support for
NHTSA's judgment that the standards finalized in this rule are the
maximum standards that are technologically feasible and economically
practicable for the gasoline- and diesel-powered vehicles covered by
the final rule, considering the effect of other motor vehicle standards
of the Government on fuel economy, and the need of the United States to
conserve energy.
One significant modification from previous standard-setting
proceedings and previous applications of the CAFE Model is that NHTSA
did not include EVs in the base fleet for analysis purposes and did not
consider or model the potential production of EVs as a CAFE compliance
strategy for automakers. Section 32902 of chapter 49 directs NHTSA to
establish fuel economy standards that are feasible and practicable for
gasoline- and diesel-powered vehicles without regard to any reliance on
alternatives. Automakers, of course, are free to produce EVs, or any
other technologies, in response to market demand, and their production
and sale of EVs will earn credit toward compliance with the CAFE
standards in accordance with the ``petroleum equivalency factor,'' or
``PEF,'' prescribed by the Department of Energy (DOE).\20\
---------------------------------------------------------------------------

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

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

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

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

\22\ In rulemakings such as this one, where the agency is
reducing the stringency of CAFE standards, the application of
additional fuel-saving technologies may no longer be necessary when
standards are reduced relative to a reference baseline level.
Therefore any costs associated with meeting higher fuel economy
standards in that baseline become cost savings when standards
decrease in stringency. Negative benefits reflect a reduction in
this category, while negative entries for costs reflect savings to
manufacturers and vehicle buyers. Overall positive net benefits
indicate that the reduction in benefits is outweighed by the total
cost savings.
\23\ The bulk of the analysis for passenger cars and light
trucks presents a ``model year'' perspective rather than a
``calendar year'' perspective. The model year perspective considers
the lifetime impacts attributable to all passenger cars and light
trucks produced through MY 2031, accounting for the operation of
these vehicles over their entire lives (with some MY 2031 vehicles
estimated to be in service as late as CY 2070). This approach
emphasizes the role of the model years for which new standards are
being finalized. The calendar year perspective, on the other hand,
includes the annual impacts attributable to all vehicles estimated
to be in service in each calendar year for which the analysis
includes a representation of the entire registered light-duty fleet.
For this final rule, this calendar year perspective covers each of
CYs 2024-2050. Compared to the model year perspective, the calendar
year perspective includes model years of vehicles produced in the
longer term, beyond those model years for which standards are being
finalized.

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[[Page 62002]]

[GRAPHIC] [TIFF OMITTED] TR30SE26.053

---------------------------------------------------------------------------

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

The current estimates of costs and benefits are important
considerations, performed as directed by E.O. 12866, and also serve as
an informative data point in NHTSA's consideration of the factors that
NHTSA is required to balance by statute when determining maximum
feasible standards. NHTSA concludes, for the purposes of this final
rule, that Alternative 3 is maximum feasible on the basis of these
respective factors. NHTSA also considered several sensitivity cases by
varying different inputs and concluded that, even when varying inputs
resulted in changes to net benefits, those changes were not significant
enough to alter the conclusion that Alternative 3 is maximum feasible.
Finally, NHTSA has computed ``annualized'' benefits and costs
relative to the No-Action Alternative, as follows:

[[Page 62003]]

[GRAPHIC] [TIFF OMITTED] TR30SE26.054

---------------------------------------------------------------------------

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

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

[[Page 62004]]

[GRAPHIC] [TIFF OMITTED] TR30SE26.055

[[Page 62005]]

[GRAPHIC] [TIFF OMITTED] TR30SE26.056

[[Page 62006]]

[GRAPHIC] [TIFF OMITTED] TR30SE26.057

BILLING CODE 4910-59-C
The following sections of this preamble discuss a summary of the
proposal and comments received, the technical foundation for NHTSA's
analysis, the regulatory alternatives considered in this final rule,
the estimated effects of the regulatory alternatives, the basis for
NHTSA's conclusion that the final standards are maximum feasible, and
NHTSA's approach to compliance and enforcement. The extensive record
for this action consists of this final rule, a Final TSD, a Final
Regulatory Impact Analysis (FRIA), and a Final Supplemental
Environmental Impact Statement (Final SEIS), along with extensive
analytical documentation, supporting references, and many other
resources. Most of these resources are available on NHTSA's website,
and other references not available on NHTSA's website can be found in
the rulemaking docket, the docket number of which is listed at the
beginning of this preamble.\26\
---------------------------------------------------------------------------

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

B. Overview of the Final Rule

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

[[Page 62007]]

NHTSA indicated that the agency did not incorporate EPA's non-
criteria emissions standards into its proposal, as the EPA had then
recently proposed to rescind its Endangerment Finding and all resulting
greenhouse gas (GHG) emissions standards for light-, medium-, and
heavy-duty vehicles and engines. NHTSA also explained that it was
removing the consideration of California's Zero Emission Vehicle (ZEV)
mandates and manufacturers' voluntary commitments to California from
its standard-setting analysis. NHTSA concluded that its prior
consideration of these programs and commitments in the analysis for the
2022 and 2024 final rules was inconsistent with the statute because the
analysis considered alternative fueled vehicles and distorted the
resulting CAFE standards for the model years regulated in those rules.
Based on the agency's updated analysis excluding those factors
prohibited from consideration under subsection 32902(h) and considering
the most up-to-date data available, NHTSA proposed fuel economy
standards that increased from newly proposed MY 2022 standards at a
rate of 0.5 percent per year through MY 2026, followed by a rate of
0.35 percent for passenger cars and 0.7 percent for light trucks in MY
2027, and 0.25 percent per year through MY 2031. In Section V of the
NPRM, NHTSA outlined its legal justification for tentatively concluding
that the proposed standards were maximum feasible, emphasizing its
obligation to balance four statutory factors under EPCA: technological
feasibility, economic practicability, the effect of other motor vehicle
standards of the Government on fuel economy, and the need of the United
States to conserve energy. The agency determined that prior CAFE
standards established in 2020, 2022, and 2024 were set above the
maximum feasible level because they considered factors prohibited by 49
U.S.C. 32902(h). To rectify this, NHTSA proposed to use EPCA's process
to amend standards for previous model years not yet administratively
closed to bring the CAFE program back into better alignment with
statutory restrictions in a manner that does not penalize manufacturers
for failing to meet standards established based upon the agency's prior
analysis.\27\
---------------------------------------------------------------------------

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

When re-evaluating the four statutory factors with EPCA's statutory
constraints in mind, NHTSA outlined that considering the factor of
technological feasibility does not require the agency to set
technology-forcing standards. This is particularly true when the factor
of economic practicability cautions against establishing such
standards. For economic practicability, the agency focused on consumer
acceptance and affordability, and the financial capabilities of the
industry to advance the fuel efficiency of gasoline- and diesel-powered
vehicles. NHTSA also considered the safety implications of the CAFE
program.
NHTSA is also required to weigh the effect of other motor vehicle
standards of the Government that affect fuel economy. In so doing,
NHTSA determined it could consider only standards of the Federal
Government, explicitly excluding California's Advanced Clean Car Rule--
which purports to establish separate State-law tailpipe carbon dioxide
(CO<INF>2</INF>) emissions standards and a ZEV mandate--from its
analysis. NHTSA has always considered these programs as related to fuel
economy,\28\ and even modeled their impact in previous CAFE
rulemakings.\29\ But since EPCA specifically prohibits consideration of
alternative fuel vehicle (AFV) technologies when establishing fuel
economy standards, and expressly preempts any State laws related to
fuel economy standards, NHTSA proposed to exclude consideration of
these elements in its proposal. Finally, when assessing the need of the
United States to conserve energy, NHTSA tentatively concluded that the
dramatic change in exposure to petroleum supply shocks enabled by the
recently established abundance of domestic energy resources since the
shale oil revolution reduces the weight of this factor. The United
States is now the world's largest petroleum producer by a large margin,
and is now a net energy exporter; these are circumstances completely
unimagined when EPCA was enacted in the 1970s--or even when amended by
EISA in 2007. Consequently, while the factor is afforded significant
consideration, NHTSA asserted that the need to conserve energy now
warranted less stringent standards that increased at smaller, steady,
and incremental rates.
---------------------------------------------------------------------------

\28\ See, e.g., 85 FR 24174, at 24257 (Apr. 30, 2020) (``. . .
the ZEV mandate is expressly and impliedly preempted by EPCA . . .
.''
\29\ 87 FR 25710 (May 2, 2022); 89 FR 52540 (June 24, 2024).
---------------------------------------------------------------------------

Ultimately, NHTSA tentatively concluded that the previous rules
distorted the marketplace by leveraging the CAFE program to push
automakers to produce EVs faster than market demand would support. The
agency stated that this forced transition undermined national security
by increasing America's strategic dependence on foreign countries for
critical EV battery materials, degraded highway safety by making new
vehicles unaffordable and thereby slowing the fleet transition to newer
and safer vehicles, and exacerbated the vulnerabilities of America's
electricity grid. By eliminating the consideration of these factors,
NHTSA tentatively concluded that the proposed reset represented the
maximum feasible levels for the gasoline- and diesel-powered fleets.
NHTSA also proposed a substantial reclassification of the light-
duty fleet to distinguish passenger cars more appropriately from light
trucks, elimination of the inter-manufacturer credit trading program,
and removal of AC/OC FCIVs from the standard-setting analysis. The
agency justified its vehicle reclassification proposal by discussing
the ways past standards incentivized manufacturers to alter vehicle
attributes to classify passenger-oriented vehicles as light trucks to
obtain the advantages of lower fuel economy standards. Specifically,
NHTSA observed that manufacturers classified vehicles as light trucks
designed for off-road purposes through existing ground clearance
criteria while simultaneously retaining low, aerodynamic approach
angles that severely limited real-world off-highway capability. To
address this distortion, NHTSA proposed transitioning from technology-
based specifications of non-passenger automobiles to performance-based
criteria. This proposed change included eliminating axle clearance, a
now defunct characteristic defined by a specific suspension technology,
as a defining characteristic for high ground clearance and requiring
vehicles to meet all four of the remaining clearance characteristics.
NHTSA also proposed removing the non-passenger classification criterion
for vehicles with three or more rows of seating, stating that this
feature primarily indicated a passenger-carrying purpose rather than
cargo transport. To ensure that vehicles used for transporting property
will be classified correctly without relying on passenger-based design
elements, NHTSA proposed adding a new performance-based light-duty work
factor (LDWF) metric.

[[Page 62008]]

The agency also noted that the combination of inappropriately
stringent standards and the credit trading system has increasingly
incentivized ICE vehicle manufacturers to purchase credits from EV
manufacturers to meet requirements, effectively subsidizing EV
production without any increase in the fuel efficiency of the internal
combustion fleet. Accordingly, NHTSA proposed to remove the credit
trading program starting in MY 2028. By eliminating credit trading, the
agency intended to encourage manufacturers to make steady, real-world
fuel economy improvements across their own fleets of gasoline- and
diesel-fueled vehicles. Finally, NHTSA proposed to eliminate AC/OC
FCIVs from the standard-setting analysis, tentatively determining that
the current FCIVs based on MY 2008 vehicle assessments, are no longer
representative of real-world fuel savings and have created market
distortions by incentivizing technologies that failed to provide
commensurate fuel economy benefits.
NHTSA sought comment on a range of alternatives, including a No-
Action Alternative and three action alternatives for each time period
covered by this rulemaking (MYs 2022-2026 and MYs 2027-2031). NHTSA
also sought comment on all aspects of the proposal, including the
accompanying Draft SEIS and the Paperwork Reduction Act information
collections. The agency requested feedback on several foundational
legal and compliance assumptions, including whether Congress granted
authority under EPCA to consider environmental effects when setting
standards, whether an EIS is required under NEPA for standard setting
in light of recent case law, and the assumption that manufacturers will
make maximum practicable efforts to comply despite the newly enacted $0
CAFE civil penalty rate. Further, NHTSA requested comment on its
proposals to end credit trading by MY 2028, the impact of the $0
penalty on credit values, and the agency's determination that FCIVs for
AC/OC technologies no longer represent real-world fuel savings and
should be removed.
The agency's requests for comments also focused on its economic and
consumer behavior modeling. NHTSA sought comment on its updated 36-
month payback assumption, sales elasticity estimate of -0.4 (and
whether to apply separate short- and long-run elasticities), and the
variables and methodology used in its scrappage module. NHTSA also
asked whether it should remove the vehicle miles traveled (VMT)
constraint across alternatives to account for mode shift, how best to
account for the rebound effect, and whether it is accurate to assume
drivers internalize 90 percent of the safety risk associated with
rebound driving. In addition, NHTSA requested feedback on its
estimation of opportunity costs, how best to incorporate vehicle
affordability, alternative presentations of lifetime fuel savings that
account for multiple vehicle owners, and an alternative cost-benefit
analysis approach based upon using revealed consumer preference. The
agency even requested feedback on whether manufacturers might simply
install larger fuel tanks to limit increases in vehicle refueling
frequency, and it requested data to quantify repair and maintenance
costs.
Finally, NHTSA sought detailed technical feedback on its fleet data
and emissions modeling, including its use of EPA's MOVES5 model for
criteria emissions and brake and tire wear (BTW), as well as requests
for better macroeconomic data sources or alternative approaches to its
labor analysis. To support review of vehicle classification and
standard-setting functions, the agency asked for input on its updated
footprint curve shape analysis and whether there is a distinguishable
overlap between 4WD and AWD technologies when determining off-highway
classification. NHTSA also requested that stakeholders identify any
missing data or errors in the MY 2024 analysis fleet dataset used as
the starting point for the CAFE Model.
NHTSA estimated that the proposal would reduce the average upfront
vehicle costs due to CAFE standards by approximately $900, cutting in
half the increased cost consumers might expect to pay under the No-
Action Alternative. NHTSA also estimated that the proposed standards
would be net beneficial for society, projecting positive net benefits
of $24.0 billion at a three percent discount rate and $22.2 billion at
a seven percent discount rate, using a model year-based analysis.
The proposal was based upon an accompanying Preliminary Regulatory
Impact Analysis (PRIA), a Draft Supplemental Environmental Impact
Statement (Draft SEIS), a Draft Technical Support Document (Draft TSD),
and other technical documentation, including documentation for the CAFE
Model and Argonne's CAFE Autonomie modeling.
2. Public Participation Opportunities and Summary of Comments
The NPRM, with an accompanying Draft SEIS, was published on NHTSA's
website on December 3, 2025, and in the Federal Register on December 5,
2025.\30\ Publication in the Federal Register began a 45-day comment
period allowing the public to submit comments regarding the NPRM and
Draft SEIS on or before January 20, 2026. On January 14, 2026, NHTSA
announced a 15-day extension to the comment period for the NPRM and
Draft SEIS, ending the comment period on February 4, 2026.\31\ A
separate Federal Register notice was published on December 12, 2025,
that announced a virtual public hearing taking place across multiple
days starting on January 7, 2026.\32\ Approximately 78 individuals and
organizations signed up to participate in the hearing. The hearing
started at 9:00 a.m. EDT on January 7, 2026 and ended at approximately
2:40 p.m., after hearing from the entire list of participants, and
resulting in a 70-page transcript.\33\ NHTSA also received many pages
of comments from participants, in addition to the hearing transcript,
all of which were submitted to the docket for the rule.
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\30\ 90 FR 56438 (Dec. 5, 2025).
\31\ 91 FR 1494 (Jan. 14, 2026).
\32\ 90 FR 57726 (Dec. 12, 2025).
\33\ Docket No. NHTSA-2025-0491-4805.
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NHTSA received a total of 68,294 comments in the docket for the
proposed rule (Docket No. NHTS-2025-0491) and 2,695 comments in the
docket for the Draft SEIS (Docket No. NHTSA-2025-0490).
NHTSA received comments on the proposal from a diverse range of
stakeholders, including vehicle manufacturers, automotive suppliers,
trade associations, environmental and public health non-governmental
organizations (NGOs), State and local governments, Members of Congress,
and individual citizens. Commenters expressed divided views on the
agency's proposed recalibration of the CAFE standards and other
proposed compliance provisions.
Many vehicle manufacturers, States, energy companies, and energy
industry trade associations supported the proposal. Commenters
supporting the proposal, such as the U.S. Chamber of Commerce, the
Alliance for Automotive Innovation (The Alliance), and the American
Petroleum Institute (API), commented in support of NHTSA's realigning
the CAFE program with EPCA's statutory limitations. These commenters
agreed with NHTSA's decision to exclude the imputed fuel

[[Page 62009]]

economy of EVs and the electric operation of PHEVs from the baseline
and maximum feasibility determinations. Automakers, ranging from
Volkswagen Group of America (Volkswagen) to Jaguar Land Rover (JLR) to
Mazda North American Operations (Mazda), commented that the proposed
reset would provide a stable and achievable regulatory framework that
avoids forcing manufacturers to divert essential capital away from
innovation toward meeting unrealistic requirements. Other supporters of
the proposal, such as the National Automobile Dealers Association
(NADA) and the Congressional Western Caucus, commented that the
proposed stringency levels reflect current automotive market realities,
and would help lower the upfront purchase price of new vehicles. Fuel
industry groups noted the proposal properly re-incentivizes investments
and innovation in advanced ICE technologies and compatible liquid
fuels.
Conversely, many environmental NGOs, other States, and a group of
Members of Congress commented in opposition to the proposal, arguing
that EPCA mandates NHTSA to set standards at maximum feasible levels to
achieve energy conservation, and that the proposed standards fail to do
so. Several stakeholders, including the Southern Environmental Law
Center, the American Council for an Energy-Efficient Economy (ACEEE),
and Our Children's Trust (OCT), noted that the proposed MY 2031
standard of 34.5 mpg is lower than the 35.4-mpg average achieved by the
light-duty fleet in MY 2024. These commenters asserted that NHTSA's
exclusion of EVs and PHEVs in its baseline analysis relies on an
incomplete and artificially low status quo, resulting in standards that
are significantly weaker than what automakers are capable of producing.
Furthermore, a coalition of Attorneys General argued that the
proposal's rationale is pretextual and improperly shaped by Executive
Orders aimed at promoting fossil fuel use at the expense of zero-
emission technologies.
Opponents also highlighted alleged economic and environmental harms
associated with less stringent standards. The National Association of
Clean Air Agencies (NACAA) and the U.S. Conference of Catholic Bishops
(USCCB) noted that, although the proposal claims to reduce average
upfront vehicle costs, these savings would be more than offset by
increased long-term fuel expenditures, which disproportionately impact
lower-income households. Environmental groups and individual citizens
emphasized that the proposed standards would lead to increased
emissions of so-called GHGs and criteria pollutants, exacerbating
climate change and harming public health and national parks. In
addition, opponents commented that reducing the stringency of CAFE
standards would undermine American innovation, global competitiveness,
and job growth in the advanced electric powertrain sector.
In other areas, commenters expressed views on the specific
compliance and structural changes proposed. For example, one individual
commenter supported the proposal to eliminate the inter-manufacturer
credit trading program, agreeing that manufacturers should achieve
compliance within their own fleets. SEMA, PMI, and Manufacturers of
Emission Controls Association (MECA) voiced support for the agency's
proposed modifications to vehicle classifications within the CAFE
program. Other commenters raised concerns about the timing and effects
of the proposed vehicle reclassification.
NHTSA appreciates the robust public participation and the
extensive, detailed feedback provided by a diverse range of
stakeholders regarding the proposed recalibration of the CAFE
standards. After a comprehensive review of comments and underlying data
associated with those comments, in addition to other information the
agency updated for the analysis, NHTSA has carefully reconsidered the
stringency of the proposed standards. The agency balanced the statutory
factors specified by EPCA--with particular focus on the need of the
United States to conserve energy and the economic practicability of the
standards. Based on this thorough evaluation, the agency has determined
that somewhat more stringent standards than originally proposed
represent maximum feasible fuel economy levels, capturing additional
energy savings while maintaining a sustainable compliance pathway for
manufacturers. Accordingly, in this final rule, NHTSA is adopting the
NPRM's proposed Alternative 3 standards as the final light-duty vehicle
fuel economy standards for the model years in question, subject to
certain adjustments.
In addition to adjusting the final mathematical standards, NHTSA
evaluated feedback concerning the structural and compliance changes
detailed in the proposal, such as the elimination of the inter-
manufacturer credit trading program and the modifications to vehicle
classification provisions. In response to substantive comments
highlighting the need for adequate industry lead time and regulatory
certainty to prevent market disruptions, the agency has modified its
original timeline and deferred the implementation of the vehicle
reclassification proposal to MY 2030. The agency has also made
adjustments in the final standards to mitigate the unintended
consequences of the transition to the reclassified fleets. In addition,
the final rule provides that, while manufacturers will no longer be
able to generate tradable credits starting with MY 2028, credits
generated through MY 2027 will remain tradable and applicable for up to
five model years as provided in existing regulations.
NHTSA received numerous other substantive comments concerning its
technical analysis, baseline assumptions, legal interpretations, and
economic modeling. Detailed responses to these issues, along with the
agency's final legal and technical determinations, are integrated and
discussed throughout the relevant sections of this final rule preamble
and accompanying documentation.
3. Changes to the CAFE Model in Light of Public Comments and New
Information
As with all prior CAFE rules, NHTSA appreciates all comments
received on the NPRM, because they are critical for gathering
additional information that can inform the agency about aspects or
effects of the proposal that the agency may not have considered at the
time the proposal was issued. Comments can identify potential necessary
analytical corrections, or provide understanding of stakeholder
positions. The views, data, requests, and suggestions contained in the
comments helped NHTSA to make appropriate adjustments to the agency's
proposals to ensure that the final standards are reasonable throughout
the timeframe covered by the rulemaking. For this final rule, the
agency made substantive changes and corrections based on the
suggestions and recommendations from commenters, as well as new
information obtained since the time the proposal was developed. These
changes reflect DOT's long-standing commitment to ongoing refinement
and improvement of its approach to estimating the potential impacts of
new CAFE standards. Through further consideration and deliberation, and
also in response to public comments received, NHTSA has made a number
of changes to the CAFE Model since the 2025 NPRM, including those that
are listed below and detailed in Section II, as well as in the Final
TSD and FRIA that accompany this final rule.
Following the 2024 final rule, NHTSA made several updates to the
CAFE

[[Page 62010]]

Model specifically for the proposed rule. Within the Market Data Input
File, the agency updated its analysis fleet from MY 2022-2024,
incorporated vehicle reclassification functionality, and included
advanced truck credits for MY 2024, though the agency noted these
credits sunset after that single year. To align with its recalibrated
standard-setting approach, NHTSA updated the Model's algorithms and
settings to remove statutorily prohibited inputs, to allow toggling
between constrained and unconstrained analyses, to enable vehicle
reclassification modeling, and to exclude PHEV electricity usage when
those vehicles are operating in gasoline-only mode. The Scenarios Input
File was also modified to phase out AC/OC FCIVs, to adjust the phase-
out timeframe for 45X, 30D, and 45W tax credits, and to set civil
penalties to zero. In addition, the agency updated numerous economic
assumptions: it shifted the base dollar year from 2021 to 2024,
implemented a bracketed costing approach for five levels of mass
reduction, set the social cost of carbon to zero, and updated the
rebound elasticity, payback period, and value of travel time. Default
MOVES5 assumptions were used for emissions rates, and numerous other
updates were made based on the 2025 AEO.
For the final rule analysis, NHTSA implemented further refinements
based on public comments, newly identified issues, and minor errors.
The Market Data Input File was revised to address stakeholder feedback
and to reflect a change in the implementation year for vehicle
reclassification. The Scenarios Input File was updated to incorporate
changes stemming from the petroleum equivalency factor (PEF) interim
final rule and to adjust the 45X battery tax credit implementation
through 2032. Furthermore, economic and emissions parameters were
refreshed using the 2026 AEO, GREET 2025 emissions rates, and updated
MOVES5 inputs.
NHTSA also made several structural modifications to the CAFE Model
software itself for the final rule. These included expanding emissions
reporting to distinguish between domestic and global quantities,
refining battery tax credit calculations to utilize per-vehicle battery
capacity based on Argonne simulation data, and adjusting the
calculation of forgone consumer sales surplus so as properly to include
vehicle and battery tax credits while fixing a minor calculation error.
In addition, the agency improved its insurance cost calculations by
transitioning from a sales-weighting method to weighting based on the
surviving fleet at each vehicle age. NHTSA also made various
adjustments to enable additional sensitivity case analyses, which are
discussed in FRIA Chapter 9. Ultimately, these extensive updates
reflect NHTSA's longstanding commitment to continually improving how it
estimates the potential impacts of new CAFE standards, with further
details provided throughout this preamble and associated technical
documents.
4. Final Standards--Stringency
NHTSA is setting CAFE standards for passenger automobiles and non-
passenger automobiles manufactured for sale in the United States in MYs
2022-2026 and MYs 2027-2031. Passenger automobiles are generally
sedans, station wagons, and some crossovers and sport utility vehicles
(CUVs and SUVs), and non-passenger automobiles are generally 4WD SUVs
designed for offroad use, pickups, and passenger/cargo vans.\34\ NHTSA
is setting fuel economy standards for passenger automobiles that
increase from the newly finalized MY 2022 standards at a rate of 0.90
percent per year through MY 2029 followed by one percent per year
through MY 2031, with MY 2030 stringency acting as a bridge between the
vehicle classification updates. For non-passenger automobiles, NHTSA is
setting fuel economy standards that increase from the newly finalized
MY 2022 standards at a rate of 0.51 percent per year through MY 2029
followed by one percent per year through MY 2031, with MY 2030
stringency acting as a bridge between vehicle classification
updates.\35\ The final standards, like the proposed standards, are
defined by a mathematical equation that relates vehicle footprint to
fuel economy targets for both passenger cars and light trucks.\36\
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\34\ ``Passenger automobile'' and ``non-passenger automobile''
are defined at 49 CFR part 523.
\35\ For a detailed discussion of the transition to new
footprint-based standards curves as a result of vehicle
reclassification please see Section III.A.
\36\ Vehicle footprint is roughly measured as the rectangle that
is made by the four points where the vehicle's tires touch the
ground. Generally, passenger cars have more stringent targets than
light trucks regardless of footprint, and smaller vehicles will have
more stringent targets than larger vehicles. No individual vehicle
or vehicle model need meet its target exactly, but a manufacturer's
compliance is determined by how its average fleet fuel economy
compares to the average fuel economy of the targets of the vehicles
it manufactures.
---------------------------------------------------------------------------

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

[[Page 62011]]

[GRAPHIC] [TIFF OMITTED] TR30SE26.058

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

[[Page 62012]]

NHTSA has also amended the minimum domestic passenger car standard
(MDPCS) for MY 2022-2031. Section 32902(b)(4) of 49 U.S.C. requires
NHTSA to project the MDPCS when it promulgates passenger car standards
for a model year, as a result the MDPCSs are established as specific
mpg values. NHTSA used a direct estimate for MY 2022-2026 and estimated
from analysis values for MYs 2027-2031. NHTSA retained the proposed
0.7-percent offset to the MDPCS values estimated from the analysis for
MYs 2027-2031 to account for recent projection errors as part of
estimating the total passenger car fleet fuel economy. The final MDPCS
values for MYs 2022-2031 are presented above in Table I-3.
5. Final Standards--Impacts
As with past rulemakings, NHTSA has used the CAFE Model to estimate
the effects of the final CAFE standards and other regulatory
alternatives under consideration. Some inputs to the CAFE Model are
derived from other models, such as Argonne National Laboratory's
(Argonne) ``Autonomie'' vehicle simulation tool and Argonne's ``GREET''
fuel-cycle emissions analysis model, the National Energy Modeling
System (NEMS) of the U.S. Energy Information Administration's (EIA's),
and EPA's Motor Vehicle Emission Simulator (MOVES) vehicle emissions
model. Given the temporal scope of the NHTSA's analysis (through MY
2050, with driving of MY 2031 vehicles accounted for through CY 2070),
these inputs are subject to a multitude of uncertainties including
future population and economic growth, future gasoline and electricity
prices, future petroleum market characteristics (e.g., imports and
exports), future manufacturer responses to standards and fuel prices,
future buyer responses to changes in vehicle prices and fuel economy
levels, and future emission rates for ``upstream'' processes (e.g.,
fuel refining and finished fuel transportation). As a result, NHTSA
underscores that all results of this analysis are subject to some
degree of uncertainty but represent the agency's best estimates based
on the information currently before the agency and on the agency's
reasonable judgment.
NHTSA estimates that this final rule would increase the eventual
average of manufacturers' CAFE requirements to about 34.9 mpg by MY
2031 rather than an average of about 49.3 mpg under the No-Action
Alternative (i.e., the standards issued in 2024). For passenger cars,
the average in MY 2031 is estimated to reach 40.2 mpg, and for light
trucks, 26.4 mpg. This compares with 65.8 mpg and 45.4 mpg for
passenger cars and light trucks, respectively, under the No-Action
Alternative. NHTSA notes that the significant downward shift in
required fuel economy stringency beginning in MY 2030 is reflective of
the fleet reclassification that moves lighter crossovers from the light
truck fleet to the passenger car fleet--necessarily reducing the fuel
economy performance of both fleets.
[GRAPHIC] [TIFF OMITTED] TR30SE26.060

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

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

[[Page 62013]]

[GRAPHIC] [TIFF OMITTED] TR30SE26.062

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

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

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

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

[[Page 62014]]

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

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

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

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

II. Technical Foundation for the Final Rule Analysis

A. Why is NHTSA conducting this analysis?

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

\39\ Codified in 5 U.S.C. 551-559.
\40\ Codified in 42 U.S.C. 4321-4347.
\41\ E.O. 12866 of September 30, 1993, Regulatory Planning and
Review, 58 FR 51735 (Oct. 4, 1993), available at: <a href="https://www.archives.gov/files/federal-register/executive-orders/pdf/12866.pdf">https://www.archives.gov/files/federal-register/executive-orders/pdf/12866.pdf</a> (accessed: Jul. 20, 2026) (hereinafter, ``E.O. 12866'').
\42\ Office of Management and Budget, Circular A-4 (Sept. 17,
2003), available at: <a href="https://www.whitehouse.gov/wp-content/uploads/2025/08/CircularA-4.pdf">https://www.whitehouse.gov/wp-content/uploads/2025/08/CircularA-4.pdf</a> (accessed: June 3, 2026) (hereinafter,
``Circular A-4'').
\43\ Public Law 94-163, 89 Stat. 871 (Dec. 22, 1975).
\44\ Public Law 100-494, 102 Stat. 2441 (Oct. 14, 1988)
\45\ Public Law 102-486, 106 Stat. 2776 (Oct. 24, 1992).
\46\ Public Law 110-140, 121 Stat. 1492 (Dec. 19, 2007).
\47\ Public Law 119-21, 139 Stat. 72 (July 4, 2025).
---------------------------------------------------------------------------

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

\48\ Docket No. NHTSA-2025-0491; Docket No. NHTSA-2025-0490.
\49\ See NHTSA, Corporate Average Fuel Economy, available at:
<a href="https://www.nhtsa.gov/laws-regulations/corporate-average-fuel-economy">https://www.nhtsa.gov/laws-regulations/corporate-average-fuel-economy</a> (accessed: May 28, 2026).
---------------------------------------------------------------------------

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

[[Page 62015]]

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

\50\ 49 U.S.C. 32902(h).
\51\ 42 U.S.C. 4332.
---------------------------------------------------------------------------

This section also describes how NHTSA's analysis has been
constructed specifically to reflect other governing law applicable to
CAFE standards, reviews how NHTSA's analysis has been updated to adhere
to relevant statutory provisions, and describes additional technical
work recently conducted by the agency. The analysis for this final rule
aids NHTSA in implementing its statutory obligations, including the
weighing of various considerations, by informing decision-makers about
the estimated effects of different regulatory alternatives.
1. What are the key components of NHTSA's analysis?
NHTSA's analysis makes use of a range of data (i.e., observations
of things that have occurred), estimates (i.e., things that are unknown
or may occur in the future), and models (i.e., methods for making
estimates). Two examples of data include (1) records of actual odometer
readings used to estimate annual mileage accumulation at different
vehicle ages and (2) CAFE compliance data used as the foundation for
the ``reference fleet'' containing, among other things, production
volumes and fuel economy levels of specific configurations of specific
vehicle models produced for sale in the United States. Two examples of
estimates include (1) forecasts of future gross domestic product (GDP)
growth used, with other estimates, to forecast future vehicle sales
volumes and (2) technology cost estimates, which include estimates of
the technologies' ``direct cost,'' marked up by a ``retail price
equivalent'' factor, to estimate the ultimate cost to consumers of a
given fuel-saving technology, and an estimate of ``cost learning
effects'' (i.e., the tendency that it will cost a manufacturer less to
apply a technology as the manufacturer gains more experience doing so).
In coordination with the DOT Volpe National Transportation Systems
Center (Volpe or the Volpe Center), NHTSA uses the CAFE Compliance and
Effects Modeling System (CAFE Model or the Model) to simulate and
analyze manufacturers' potential responses to new CAFE standards and to
estimate various impacts of those responses. NHTSA has used the CAFE
Model to perform analyses supporting every CAFE rulemaking since 2001.
Working together, NHTSA and Volpe ensure that the CAFE Model's
operation reflects the statutory directives discussed in more detail in
the remainder of this section.
The CAFE Model first estimates how vehicle manufacturers might
respond to a given regulatory scenario; from that potential compliance
solution, the system estimates what impact that response will have on
fuel consumption, emissions, safety impacts, and economic
externalities. The following section summarizes information necessary
to understand the analysis, while Final TSD Chapter 2 and the CAFE
Model Documentation present additional details on the Model's
operation.
The CAFE Model may be characterized as an integrated system of
models that estimate the impact of various policy options. For example,
one model estimates manufacturers' responses, another estimates
resultant changes in total vehicle sales, and still another estimates
resultant changes in fleet turnover (i.e., scrappage). More
importantly, the modeling system does not determine the form or
stringency of the standards, which must be developed in consideration
of statutory factors that must be balanced by policy-makers. Instead,
the CAFE Model applies inputs specifying the form and stringency of
standards to be analyzed and produces outputs showing the impacts of
manufacturers working to meet those standards, which become part of the
basis for comparing different potential stringencies. A regulatory
scenario, meanwhile, involves specification of the form, or shape, of
the standards (e.g., flat standards, or linear or logistic attribute-
based standards), scope of passenger car and light truck regulatory
classes, and stringency of the standards for each model year to be
analyzed. For example, a regulatory scenario may define standards for a
particular class of vehicles that increase in stringency by a given
percent per year for a given number of consecutive years.
Manufacturer compliance simulation and the ensuing effects
estimation, collectively referred to as compliance modeling, encompass
numerous subsidiary elements. Compliance simulation begins with a
detailed user-provided initial forecast of the vehicle models offered
for sale during the simulation period.\52\ The compliance simulation
then attempts to bring each manufacturer into compliance with the
standards defined by the regulatory scenario contained within an input
file developed by the user.
---------------------------------------------------------------------------

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

Estimating impacts involves calculating resulting changes in new
vehicle costs, estimating a variety of costs (e.g., for fuel
expenditures or reduced or increased technology costs) and effects
(e.g., gallons of fuel used by the fleet) occurring as vehicles are
driven over their lifetimes before eventually being scrapped, and
estimating the monetary value of these effects. Estimating impacts also
involves consideration of consumer responses (e.g., the impact of
vehicle fuel economy, operating costs, and vehicle price on consumer
demand for light-duty vehicles). Both basic analytical elements involve
the application of many inputs. Many of these inputs are developed
outside of the Model and not by the Model. For example, the Model
applies fuel price projections from DOE's EIA; it does not estimate
fuel prices.
NHTSA also uses EPA's Motor Vehicle Emission Simulator (MOVES)
model to estimate ``vehicle'' or ``downstream'' emission factors for
criteria pollutants \53\ and uses four DOE and DOE-sponsored models to
develop inputs to the CAFE Model, including three developed and
maintained by DOE's Argonne National Laboratory (Argonne). The agency
uses the NEMS from EIA to estimate fuel prices \54\ and uses Argonne's
Greenhouse gases, Regulated Emissions, and Energy use in Transportation
(GREET) Model to

[[Page 62016]]

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

\53\ See <a href="https://www.epa.gov/moves">https://www.epa.gov/moves</a>. This final rule uses version
MOVES5 (the latest version at the time of analysis), which is
available at <a href="https://www.epa.gov/moves/latest-version-motor-vehicle-emission-simulator-moves">https://www.epa.gov/moves/latest-version-motor-vehicle-emission-simulator-moves</a> (accessed: July 28, 2026).
\54\ See <a href="https://www.eia.gov/outlooks/aeo/">https://www.eia.gov/outlooks/aeo/</a>. This final rule uses
fuel prices estimated using the Annual Energy Outlook (AEO) (2026)
version of NEMS. See <a href="https://www.eia.gov/outlooks/aeo/tables_ref.php">https://www.eia.gov/outlooks/aeo/tables_ref.php</a>
(accessed: May 20, 2026).
\55\ Information regarding GREET is available at <a href="https://greet.anl.gov/">https://greet.anl.gov/</a> (accessed: May 22, 2025). This final rule uses the
R&D GREET (2023) version.
\56\ As part of the Argonne simulation effort, individual
technology combinations simulated in Autonomie were paired with
Argonne's BatPaC model to estimate the battery cost associated with
each technology combination based on characteristics of the
simulated vehicle and its level of electrification. Information
regarding Argonne's BatPaC model is available at <a href="https://www.anl.gov/cse/electrochemical-chemical-TEA">https://www.anl.gov/cse/electrochemical-chemical-TEA</a>. In addition, the
impact of engine technologies on fuel consumption, torque, and other
metrics was characterized using GT-POWER simulation modeling in
combination with other engine modeling that was conducted by IAV
Automotive Engineering, Inc. (IAV). The engine characterization
``maps'' resulting from this analysis were used as inputs for the
Autonomie full-vehicle simulation modeling. Information regarding
GT-POWER is available at <a href="https://www.gtisoft.com/gt-power/">https://www.gtisoft.com/gt-power/</a>.
---------------------------------------------------------------------------

To prepare for the analysis supporting this final rule, DOT
continued to refine and expand the capabilities of the CAFE Model. As
examples, and as discussed in more detail below, the reference fleet
uses mid-MY 2024 compliance data (the most recent available high-
quality data at the time of the analysis) and includes the capability
(in addition to capabilities integrated into the modeling system) to
account for changes to regulatory vehicle classification definitions.
The analysis also employs separate input files for the modeling runs
that NHTSA uses for its standard-setting analysis (i.e., the
constrained analysis), which excludes the 49 U.S.C. 32902(h) factors
that NHTSA cannot consider, and the modeling runs that NHTSA uses for
its analysis of impacts under NEPA (i.e., the unconstrained analysis),
which does not exclude the 49 U.S.C. 32902(h) factors, and those input
files have been updated accordingly. Common to both analyses are
routine updates to dollar year values (e.g., 2021$ to 2024$) and
routine updates to gas price projections. Some other updates, like
updates to manufacturer credit banks, are confined to the unconstrained
analysis only and are discussed further in the Final SEIS Appendix D.
The values of many inputs remain uncertain, and NHTSA has conducted
sensitivity analyses around selected inputs to attempt to capture some
of that uncertainty. These changes reflect the agency's long-standing
commitment to ongoing refinement of its approach to estimating the
potential impacts of new CAFE standards. These and other updated
analytical inputs are outlined in Section II below and discussed in
detail in the Final TSD and FRIA.
2. How do statutory requirements shape NHTSA's analysis?
Multiple requirements govern the scope and nature of CAFE standard
setting; the specific requirements regarding the technical
characteristics of CAFE standards and the analysis thereof include, but
are not limited to, the following:
Corporate Average Standards: 49 U.S.C. 32902 requires that
standards apply to the average fuel economy levels achieved by each
manufacturer's fleet of vehicles produced for sale in the United
States. The CAFE Model calculates the CAFE fuel economy of each
manufacturer's fleet based on estimated production volumes and
characteristics, including fuel economy levels, of distinct vehicle
models that could be produced for sale in the United States.
Separate Standards for Passenger and Non-Passenger Automobiles: 49
U.S.C. 32902 requires DOT to set separate CAFE standards for passenger
automobiles and non-passenger automobiles. The CAFE Model accounts for
passenger and non-passenger automobiles separately, including
differentiated standards and compliance.
Attribute-Based Standards: 49 U.S.C. 32902 requires DOT to define
CAFE standards (separately for passenger and non-passenger automobiles)
as mathematical functions expressed in terms of one or more attributes
related to fuel economy. This means that, for a given manufacturer's
fleet of vehicles produced for sale in the United States in a given
regulatory class and model year, the applicable minimum CAFE
requirement (i.e., the numerical value of the requirement) is computed
based on the applicable mathematical function as well as the mix and
attributes of vehicles in the manufacturer's fleet. The CAFE Model
accounts for such functions and vehicle attributes explicitly.
Separately Defined Standards for Each Model Year: 49 U.S.C. 32902
requires DOT to set CAFE standards (separately for passenger and non-
passenger automobiles) at the maximum feasible levels in each model
year. The CAFE Model represents each model year explicitly and accounts
for the production relationships between model years. For example, a
new engine first applied to a given vehicle model/configuration in MY
2030 will most likely be retained in MY 2031; that same vehicle model
reflects the fact that manufacturers do not apply brand-new engines to
a given vehicle model every year.
Separate Compliance for Domestic and Imported Passenger Car Fleets:
49 U.S.C. 32904 requires the U.S. EPA to determine CAFE compliance for
each manufacturer's fleet of domestic passenger cars and imported
passenger cars separately. A passenger car is domestic or import based
on the definitions provided in 49 U.S.C. 32904. The CAFE Model accounts
explicitly for this requirement when simulating manufacturers'
potential responses to CAFE standards.
Minimum CAFE Standards for Domestic Passenger Car Fleets: 49 U.S.C.
32902 requires that domestic passenger car fleets also meet a minimum
CAFE standard, which is calculated as 92 percent of the average fuel
economy projected by the Secretary for the combined domestic and non-
domestic passenger automobile fleets manufactured for sale in the
United States by all manufacturers in the model year. This projection
is published at the time the standard is promulgated. The CAFE Model
accounts explicitly for this requirement.
Statutory Basis for Stringency: 49 U.S.C. 32902 requires DOT to set
CAFE standards for passenger and non-passenger automobiles at the
maximum feasible levels, determined by considering technological
feasibility, economic practicability, the need of the U.S. to conserve
energy, and the impact of other motor vehicle standards of the Federal
Government on fuel economy. The analysis and balancing of these factors
necessarily change in light of current and projected economic and
market conditions. Accordingly, NHTSA has continued to expand and
refine its qualitative and quantitative analysis to account for these
statutory factors considering such conditions. For example, the
simulations of technology effectiveness reflect the agency's judgment
that it would not be economically practicable, appropriate, or cost
effective for a manufacturer to ``split'' an engine shared among many
vehicle models/configurations into myriad versions each optimized to a
single vehicle model/configuration.
Civil Penalties for Noncompliance: 49 U.S.C. 32912 (and
implementing regulations) prescribe a rate (in dollars per tenth of a
mile per gallon) at which the Secretary is to levy civil penalties if a
manufacturer fails to comply with a

[[Page 62017]]

CAFE standard for a given fleet in a given model year. When civil
penalties are applicable, the CAFE Model will calculate civil penalties
for CAFE shortfalls. Statutory civil penalties were set to $0 by OB3,
Public Law 119-21 (July 4, 2025), so NHTSA did not use the CAFE Model
to calculate civil penalties for the NPRM or this final rule.
Dual-Fueled and Dedicated Alternative Fuel Vehicles: For purposes
of calculating CAFE levels used to determine passenger and non-
passenger automobile fleet compliance, 49 U.S.C. 32905 and 32906
specify methods for calculating the fuel economy levels of vehicles
operating on alternative fuels to gasoline or diesel fuels. The CAFE
Model can account for these requirements explicitly for each relevant
vehicle model. However, 49 U.S.C. 32902 also prohibits consideration of
the fuel economy of dedicated AFV models (or the non-gasoline or non-
diesel calculated fuel economy of dual-fueled AFVs) when NHTSA
determines what levels of passenger and non-passenger automobile CAFE
standards are maximum feasible. The CAFE Model is therefore run in a
manner that excludes dedicated AFV technologies and limits the
consideration of a dual-fueled AFV's fuel economy to their gasoline or
diesel operation only. NHTSA operates the Model with this limitation
when performing the analysis that is used to inform the setting of
standards. The CAFE Model can also be run without this analytical
constraint, and the agency does so in the NEPA analysis, as described
below.
Creation and Use of Compliance Credits: 49 U.S.C. 32903 provides
that manufacturers may earn CAFE ``credits'' by achieving a CAFE level
beyond that required of a given fleet in a given model year and
specifies how these credits may be used to offset the amount by which a
different fleet falls short of its corresponding requirement. These
provisions allow credits to be ``carried forward'' a maximum of five
model years and ``carried back'' a maximum of three model years,
transferred between regulated classes, and traded between
manufacturers. However, credit use is also subject to specific limits:
the statute caps the amount of credits that can be transferred between
a manufacturer's fleets and prohibits manufacturers from applying
traded or transferred credits to offset a failure to achieve the
minimum standard for domestic passenger automobiles. The CAFE Model has
the capability to simulate manufacturers' potential use of credits
carried forward from prior model years or transferred from other
fleets; \57\ however, this capability is not used in the standard-
setting analysis because 49 U.S.C. 32902 prohibits consideration of
manufacturers' potential application of CAFE compliance credits when
setting maximum feasible CAFE standards for passenger and non-passenger
automobiles.
---------------------------------------------------------------------------

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

National Environmental Policy Act (NEPA): The Final SEIS
accompanying this final rule documents changes in fuel use and
emissions as estimated using the CAFE Model and also documents
corresponding estimates--based on the application of other models
documented in the Final SEIS--of environmental impacts of the
regulatory alternatives under consideration.
3. What updated capabilities and assumptions does the current Model
reflect as compared to the version used in the analysis of the 2024
final rule?
DOT has continued its ongoing effort to refine and expand the
capabilities of the CAFE Model for use in analyzing regulatory
alternatives as considered in the NPRM and in this final rule. Any
analysis of regulatory actions that will be implemented several years
in the future, and whose benefits and costs accrue over decades,
requires many assumptions. Over such time horizons, many, perhaps even
most, of the relevant assumptions in such an analysis are inevitably
uncertain. To help address this, NHTSA updates the assumptions used in
each successive CAFE analysis to reflect the current state of the world
more accurately and to apply the best current estimates of future
conditions. Accordingly, since the 2024 final rule, DOT made the
following changes to the CAFE Model and its inputs for the NPRM:
<bullet> Updated the Market Data Input File to reflect the change
in analysis fleet from MY 2022 to MY 2024;
<bullet> Updated algorithms and settings to remove statutorily
prohibited inputs from the standard-setting analysis and to select
between different types of analyses (i.e., constrained and
unconstrained);
<bullet> Updated the base dollar year from 2021$ to 2024$;
<bullet> Updated the capability to exclude PHEV electricity usage
when PHEV fuel economy operation is in gasoline-only mode for standard
setting;
<bullet> Updated the modeling capability to allow for vehicle
reclassification;
<bullet> Updated the Market Data Input File to include vehicle
reclassification;
<bullet> Updated the Model to use a bracketed costing approach to
determine prices for the five levels of mass reduction;
<bullet> Updated the Scenarios Input File to phase out AC and OC
fuel consumption improvement values (FCIVs);
<bullet> Updated the Market Data Input File to include advanced
truck credits for MY 2024 vehicles, noting that those credits sunset
after MY 2024 and are therefore only applicable to that 1 year;
<bullet> Updated the Parameters Input File to set the social cost
of carbon at zero;
<bullet> Updated the Parameters Input File for changes in other
economic variables;
<bullet> Updated the Scenarios Input File with an adjusted 45X,
30D, and 45W tax credit phase-out timeframe;
<bullet> Updated the Scenarios Input File to set civil penalties to
zero;
<bullet> Updated selected economic assumptions:
[cir] Rebound elasticity;
[cir] Payback period;
[cir] Value of travel time per vehicle; and
[cir] Numerous other updates based on the 2025 AEO.
<bullet> Updated emission rates based on default MOVES5
assumptions.
NHTSA has made further updates for the final rule analysis in
response to comments received on the proposal, minor errors and
omissions identified, and new information. These changes include:
<bullet> Updating the Market Data Input File based on comments
received and other identified issues:
[cir] Refresh and redesign years updated based on OEM
announcements; \58\
---------------------------------------------------------------------------

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

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

[[Page 62018]]

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

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

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

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

[cir] E85 fuel shares shifted to gasoline; and
[cir] Miscellaneous data entry anomalies addressed.
<bullet> Updating the Market Data Input File based on the changes
to the vehicle reclassification implementation year.
<bullet> Updating the Scenarios Input File based on the changes to
the PEF interim final rule.\61\
---------------------------------------------------------------------------

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

<bullet> Updating the Scenarios Input File with an adjustment to
the 45X battery tax credit implementation through 2032.
<bullet> Updating economic and emissions assumptions in the
Parameters Input File:
[cir] Numerous updates based on the 2026 AEO; and
[cir] Updating selected emission rates based on GREET 2025 and
updated input assumptions to MOVES5.
<bullet> Modifying the CAFE Model to expand capabilities and
implement minor corrections:
[cir] Update emissions calculations to report domestic quantities
in addition to global quantities;
[cir] Adjust calculations of forgone consumer sales surplus to
include vehicle and battery tax credits and correct a minor error in
calculation;
[cir] Refine battery tax credit calculations to use per-vehicle
battery capacity based on Argonne simulation data;
[cir] Improve insurance cost calculation by transitioning from
sales-weighting to weights based on the surviving fleet at each age;
and
[cir] Various adjustments to allow for additional sensitivity case
analysis, as discussed in FRIA Chapter 9.
These and other updated analytical inputs are discussed in the
remainder of this section and in detail in the Final TSD.

B. What is NHTSA analyzing?

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

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

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

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

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

Where:

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

Here, MIN and MAX are functions that take the minimum and maximum
values, respectively, of the set of included values. For example,
MIN[40, 35] = 35 and MAX(40, 25) = 40, such that MIN[MAX(40, 25), 35] =
35.
For light trucks, also consistent with prior rulemakings, NHTSA
proposed to define fuel economy targets as shown in Equation II-2.
Equation II-2: Light Truck Fuel Economy Footprint Target Curve
[GRAPHIC] [TIFF OMITTED] TR30SE26.066

[[Page 62019]]

Where:

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

Though the general model of the target function equation is the
same for passenger cars and light trucks, and the same for each model
year, the parameters of the function equation differ for cars and
trucks.
The parameters defining the general curve shapes have remained the
same since the 2012 final rule. NHTSA periodically reconsiders whether
to update the mathematical functions but in each prior instance had
concluded that the existing curves continued to represent the
relationship between footprint and fuel economy reasonably. Consistent
with the agency's past practice of reviewing the mathematical functions
prior to each rulemaking, NHTSA re-examined the curve shapes for the
proposal and then subsequently again for this final rule.
For the proposal, NHTSA performed descriptive statistical analyses
using manufacturer-reported data for the MY 2022 and MY 2024 fleets.
NHTSA used the MY 2022 fleet for analysis of curve shapes relevant to
the MY 2022-2027 standards and used the MY 2024 ``reclassified'' fleet
for analysis of curve shapes relevant to the MY 2028-2031 standards.
NHTSA used these separate fleets because the proposed updates to
NHTSA's vehicle classification regulations proposed to begin in MY 2028
had material impacts on the relationship between fuel economy and
footprint for each regulatory class, as expressed by the standards-
defining functions.
To estimate the relationship between fuel economy and footprint and
to maintain general consistency with analyses of past rules (and the
conformance to statutory prohibitions), the agency excluded all diesel
engine vehicles and all plug-in EVs, which include plug-in hybrid
electric vehicles, battery electric vehicles (BEV), and fuel cell
electric vehicles (FCEV), and applied weighting and other adjustments
to the fuel consumption and footprint data. Table II-1 summarizes the
methodological approaches that NHTSA considered for reassessing the
footprint curves.
BILLING CODE 4910-59-P

[[Page 62020]]

[GRAPHIC] [TIFF OMITTED] TR30SE26.067

BILLING CODE 4910-59-C
NHTSA stated its belief in the proposal that the ordinary least-
squares (OLS) regression framework continued to be an appropriate
method for estimating the relationship of footprint to fuel economy.
While the agency relied on the minimum absolute deviation (MAD)
regression framework in the 2010 final rule to address the effects of
``outlier'' vehicles in the fleet, the agency addressed outlier
vehicles in

[[Page 62021]]

this reconsideration through technology-based exclusions (i.e., by
excluding diesels, PHEVs, BEVs, and FCEVs, as mentioned above) and data
normalization through the application of controls, including curb
weight (CW) to footprint, horsepower (HP) to CW, and both together,
depending on the regulatory fleet under consideration, as it has in
each of its CAFE rulemakings since 2012.
The curves presented in the proposal also reflected updated fleet
data to reset the ``cutpoints,'' or the places at the lowermost and
uppermost bounds of vehicle footprint distributions where the standards
remain flat (i.e., the mpg target does not continue to increase as
footprint decreases, and vice versa). Since the 2012 final rule, the
cutpoints had remained unchanged in subsequent proposed and final
revisions to the standards until the proposed rule--passenger car
cutpoints were set at 41 square feet (lower) and 56 square feet
(upper), and light truck cutpoints were set at 41 square feet (lower)
and 74 square feet (upper). NHTSA proposed to set the passenger car
lower cutpoint at 45 square feet and an upper cutpoint at 57 square
feet and also proposed to set the light truck lower cutpoint at 52
square feet and an upper cutpoint at 70 square feet for light trucks,
after reviewing up-to-date fleet data.
NHTSA also discussed in the proposal how the agency considers a
variety of technical and policy issues when determining the footprint
curve shape in any CAFE rulemaking. For example, standards that
decrease with increasing footprint could create incentives for
manufacturers to upsize vehicles, since small changes in vehicle
footprint would result in a significant change in the vehicle's fuel
economy target; conversely, gradually increasing standards could create
a significant amount of additional technology burden for larger
vehicles to meet fuel economy targets like those of smaller vehicles.
That said, NHTSA performed an analysis for the 2024 final rule showing
that vehicle footprints, within vehicle types, have been stable on a
sales-weighted basis since MY 2012.\65\ The biggest increase to within-
type footprints was for the sedan/wagon category, which increased by
3.4 percent (or about 2 square feet) from 2012 (for reference, a 1.5-
square foot increase would equate to about a 2-inch increase in the
track width of a MY 2022 Toyota Corolla). NHTSA concluded that the
disconnect between vehicle class-level characteristics and what was
being perceived at the fleet level (i.e., vehicles seemingly getting
larger) was traceable to the increase in the share of fleet vehicles
classified as light trucks relative to the share of passenger cars.
Available data indicate that the use of footprint as an attribute did
not appear to lead to manufacturers significantly altering the size of
their vehicles within vehicle classes.
---------------------------------------------------------------------------

\65\ NHTSA, Technical Support Document: Corporate Average Fuel
Economy Standards for Passenger Cars and Light Trucks for Model
Years 2027 and Beyond and Fuel Efficiency Standards for Heavy-Duty
Pickup Trucks and Vans for Model Years 2030 and Beyond, NHTSA:
Washington, DC, pp. 1-20 (2024), available at: <a href="https://www.nhtsa.gov/sites/nhtsa.gov/files/2024-06/CAFE-2027-2031-HDPUV-2030-2035_Final-Technical-Support-Document.pdf">https://www.nhtsa.gov/sites/nhtsa.gov/files/2024-06/CAFE-2027-2031-HDPUV-2030-2035_Final-Technical-Support-Document.pdf</a> (accessed: July 28,
2026).
---------------------------------------------------------------------------

The footprint curve updates presented in the proposal were intended
to ensure that the agency appropriately captures the footprint-to-fuel-
economy relationship using the most current data. As NHTSA discussed in
the Draft TSD, the observed relationship between footprint and fuel
economy for both the passenger car and light truck fleets is on average
``flatter'' (i.e., on average, the fuel economy did not vary as much
across footprint levels) than the MY 2008 fleet used to create the
footprint curves for the past several rules. While the technical
concerns and policy trade-offs associated with the curve shapes still
hold to some extent, NHTSA concludes it is more likely, as shown from
the agency's 2024 analysis and the updated discussion in Section VI,
that any shift in vehicle attributes present in the market over time
has not been due to the shapes of curves or the use of footprint as the
relevant attribute.
NHTSA sought comments on this conclusion, as well as the updated
footprint curve shape analysis.
Hyundai Motor North America (Hyundai) commented in support of the
continued use of footprint as the attribute for the development of
attribute-based standards to ensure certainty and continuity in the
design of CAFE standards.\66\ JLR criticized the design of standards
due to the relative lack of separation between the passenger car and
light truck curves in the mid-50s ft\2\ range.\67\ In contrast, the
International Council on Clean Transportation (ICCT) argued that
maintaining two separate curves for passenger cars and light trucks
leaves open an incentive for manufacturers to redesign vehicles to be
in a regulatory class subject to less stringent standards.\68\
---------------------------------------------------------------------------

\66\ Hyundai, Docket No. NHTSA-2025-0491-4972-A1, at 2.
\67\ JLR, Docket No. NHTSA-2025-0491-5196-A1, at 2-3.
\68\ ICCT, Docket No. NHTSA-2025-0491-5240-A2, at 13.
---------------------------------------------------------------------------

NHTSA is continuing to set separate standards for passenger cars
and light trucks. As discussed in more detail in Section V, based on
the plain language of EPCA, as amended, NHTSA consistently has
interpreted the statutory requirement to set separate standards for
passenger and non-passenger automobiles as preventing NHTSA from
setting a single combined CAFE standard. NHTSA believes that the
reclassification of the passenger car and light truck fleets (discussed
in more detail in Section VI) will provide a better structure to
address the incentives issue raised by ICCT. With the reclassification,
the distinction between passenger cars and light trucks will be
sharpened, as vehicles will be classified as light trucks based on
their offroad and cargo-hauling capabilities, characteristics that
involve a footprint-to-fuel-consumption profile that differs more
significantly from that of passenger cars. In combination with the
setting of fuel economy standards that are realistic and achievable for
a wider range of passenger car models, this reclassification will
minimize, if not eliminate, any regulation-induced incentive
manufacturers may have to modify or add features to vehicles so that
they can be classified as light trucks to get the benefit of less
stringent CAFE requirements.
As explained further below, in this final rule, NHTSA has decided
to push back implementation of the reclassification until MY 2030,
instead of MY 2028 as initially proposed, and has also decided to make
adjustments in the methodology for transitioning the standards from MY
2029 to MY 2030 in a manner that will limit the immediate regulatory
impact of the reclassification, in particular for vehicles that are
unlikely to change their classification. These adjustments will help to
separate the fuel economy curves of the two classes along the lines
advocated by JLR in its comments, while still allowing the curves to be
closer in the footprint ranges where passenger cars and light trucks
are most similar in design.
The Institute for Policy Integrity at the New York University
School of Law (IPI) criticized several features of NHTSA's estimation
strategy, including the assumption of a linear relationship between
footprint and fuel consumption levels and the agency's choice of
control variables.\69\ IPI also supported the use of production
weighting to limit the influence of statistical outliers in the curve
estimation, while ICCT argued that using production weights tends to

[[Page 62022]]

increase the slope of the footprint curve after vehicles are
reclassified. ICCT also argued that current technology deployment for
larger vehicles and production volumes is not representative of the
future state of the market, making production weighting less suitable
for designing policy in future years.\70\
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\69\ IPI, Docket No. NHTSA-2025-0491-6015-A1, at 85.
\70\ ICCT, Docket No. NHTSA-2025-0491-5240-A2, at 13.
---------------------------------------------------------------------------

NHTSA agrees with IPI that the risk of outliers influencing the
estimated relationship represents a significant source of potential
bias in estimating the slope parameter and thus is continuing to use
production weights. In response to ICCT's comment, NHTSA examined
versions of the fleet with greater technology deployment on the upper
end of the footprint curve and found that, after including control
variables, the slope of the relationship was similar to that found in
the observed data. While production volumes may change in future years
as ICCT argues, so too may the models offered for sale by
manufacturers. NHTSA will continue to monitor the market and determine
whether it is suitable to update its estimated relationship in future
rulemakings.
NHTSA disagrees with IPI's contention that estimating a linear
relationship between levels of fuel consumption and footprint is
inappropriate. NHTSA examined the residuals of its regressions and did
not find a statistically significant relationship between footprint and
the residuals when production weighting was used. Had a linear model
been inappropriate as IPI contended, it is likely that a relationship
between the explanatory variable and residuals would have been
significant. NHTSA also investigated IPI's contention that using
controls could cause instability in its model's results through
collinearity of its explanatory variables. To do so, NHTSA examined the
variance inflation factor (VIF) \71\ for a linear model including
footprint, horsepower to curb weight, and curb weight to footprint. The
VIF measures how much the variance of an estimated regression
coefficient is increased due to collinearity. Values above five
indicate a cause for concern with collinearity, while a VIF of one
indicates no correlation between a predictor and the other explanatory
variables, and values between indicate some correlation but not enough
to threaten stability. NHTSA found that for each of the datasets it
used to set standards (MY 2022 and MY 2024 fleets for passenger cars
and light trucks) the VIF was below two for each of the three
explanatory variables. As a result, NHTSA is not changing its set of
control variables.
---------------------------------------------------------------------------

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

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

\72\ The Alliance, Docket No. NHTSA-2025-0491-5707-A1, at 10;
Stellantis, Docket No. NHTSA-2025-0491-5968-A2, at IV 1 to IV 3.
\73\ The Alliance, Docket No. NHTSA-2025-0491-5707-A1, at 2 and
6.
---------------------------------------------------------------------------

After considering comments, NHTSA has pushed back the year in which
it is changing its vehicle classification system from MY 2028 to MY
2030. NHTSA agrees with The Alliance that manufacturers should be given
additional time to update production plans in advance of the change in
classification. NHTSA used the MY 2022 fleet for analysis of curve
shapes relevant to the MY 2022-2029 standards and used the MY 2024
``reclassified'' fleet for analysis of curve shapes relevant to the MY
2030-2031 standards. NHTSA updated its MY 2024 reclassified fleet for
the final rule to account for changes in its classification system
after considering comments. This required NHTSA to re-estimate the
coefficients used for the later period, and to re-evaluate its choice
of cutpoints.
For cutpoint placement, NHTSA continued to examine regions of the
footprint curve where the local relationship (LOESS) \74\ between
footprint and fuel consumption varied from the overall linear
relationship. These regions represent areas in which the tradeoff
between footprint and fuel consumption no longer remains stable and
thus are suitable bounds for constraining the level of the standards.
For the final rule, the agency examined footprint levels at which the
linear relationship diverged from a 95 percent confidence surrounding
the local fit. The agency has shifted passenger car cutpoints inward by
1 square foot each to 46 sq. ft. for the lower cutpoint and 56 sq. ft.
for the upper cutpoint. The light truck lower cutpoint remains the same
as proposed in the NPRM at 52 sq. ft.
---------------------------------------------------------------------------

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

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

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

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

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

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

[[Page 62023]]

Where:

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

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

C. What inputs does the compliance analysis require?

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

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

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

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

1. What inputs does the analysis require for 2022-2026?
For the MYs 2022-2026 analysis, NHTSA performed two exercises:
first, the agency re-evaluated the statistical model used to determine
the shape (i.e., slope, intercept, and cutpoints) of the target
functions for passenger cars and light trucks. Then, based on its
preferred choice of shape, NHTSA evaluated the compliance position of
manufacturers in MYs 2022-2024 under alternative stringencies and
compared results to the manufacturers achieved average fuel economy in
these years. For both exercises, NHTSA relies on compliance data from
manufacturer mid-year compliance reports. For its curve fitting
analysis, NHTSA uses vehicle model level data on vehicle attributes,
including footprint, HP, CW, and 2-cycle fuel economy. NHTSA also uses
mid-year estimates of model sales from manufacturer compliance data.
NHTSA's curve fitting analysis is described in greater detail in Final
TSD Chapter 1. For NHTSA's comparison of achieved fuel economy and
finalized standards levels, the agency uses compliance data at the
model level for vehicle footprint, 2-cycle fuel economy, and mid-year
estimates of vehicle sales.
For MYs 2022-2024, NHTSA uses each standard to calculate vehicle
model target function values for each vehicle model in the standard-
setting fleet.\79\ Consistent with past rulemakings, the agency uses
piecewise linear functions of vehicle footprint, which map to a target
value of fuel consumption rate in gallons per mile.\80\ NHTSA
determines a vehicle's target fuel economy level in mpg for a given set
of standards and then takes the reciprocal of this value. NHTSA
determines the CAFE standards for each manufacturer at the regulatory
class level under each alternative by taking the sales-weighted
harmonic mean of the relevant models produced by the manufacturer in
each regulatory class in each model year. The agency repeats these
calculations for each model year under consideration to determine a
single value for each regulatory class in which the manufacturer
produced vehicles.
---------------------------------------------------------------------------

\79\ Per 49 U.S.C. 32902(h), dedicated alternative fueled
vehicles, such as EVs, are excluded from this analysis. For dual-
fueled vehicles, the analysis uses a fuel economy value for the
vehicles operating only on gasoline or diesel fuel. Id.
\80\ See Chapter 1.2 of the Final TSD discussing footprint
functions.
---------------------------------------------------------------------------

NHTSA also computes the MDPCS for each model year by taking the
sales-weighted harmonic mean of the model-level target function values
for all vehicles in the passenger car fleet in that model year and
multiplying the value by 92 percent.\81\
---------------------------------------------------------------------------

\81\ 49 U.S.C. 32902(b)(4).
---------------------------------------------------------------------------

NHTSA determines each manufacturer's achieved fuel economy in mpg
separately for each regulatory class using the sales-weighted average
of the 2-cycle fuel economy values of all models produced by the
manufacturer in the relevant regulatory class. NHTSA then compares this
achieved value to the corresponding regulatory class standard for each
manufacturer in each model year to determine whether the fleet of
vehicles to which it corresponds would comply with each standard. To
determine the total number of vehicles out of compliance, NHTSA
determines compliance for each manufacturer's regulatory fleet in each
model year under each finalized alternative. If a fleet is determined
to be out of compliance, the agency sums the total number of vehicles
sold in the non-compliant fleet.
As discussed in more detail in Section IV, NHTSA analyzes the
difference between each manufacturer's fleet CAFE compliance value and
the standard. NHTSA considered using the CAFE Model to simulate
behavior for the MYs 2022-2026 compliance period to estimate how
manufacturers and consumers could have responded to different CAFE
standards. However, for MYs 2022-2026, production is closed or is in
process at the time of this final rule's publishing. This type of
analysis overestimates the ability of manufacturers to optimize in
response to the finalized standards for these years and likely leads to
different results from the actual outcomes. Thus, simulating a response
and any monetized costs or benefits deriving from that response do not
represent real economic effects from the final change in policy.
2. What inputs does the compliance analysis require for 2027-2031?
For the MYs 2027-2031 amendment analysis, NHTSA used the CAFE Model
to simulate manufacturers' potential responses to new CAFE standards
and to estimate the various impacts of those responses on manufacturers
and society. The Model considers various inputs, such as technology
effectiveness data, technology costs, and other relevant factors, and
uses those inputs to generate output predictions.
NHTSA attempts to ensure that the technology inputs and assumptions
that go into the CAFE Model are based on sound science and reliable
data and that NHTSA's reasons for using those inputs and assumptions
are transparent and understandable to stakeholders. This section and
the following section discuss at a high level how the agency generates
the technology inputs and assumptions that the CAFE Model uses for the
compliance simulation.\82\ The

[[Page 62024]]

Final TSD, CAFE Model Documentation, CAFE Analysis Autonomie
Documentation,\83\ and other technical reports supporting this final
rule discuss the agency's technology inputs and assumptions in more
detail.
---------------------------------------------------------------------------

\82\ As explained throughout this section, a NHTSA input is a
specific number or datapoint used by the Model, and NHTSA's
assumptions are based on judgment after careful consideration of
available evidence. An assumption can be an underlying reason for
the use of a specific datapoint, function, or modeling process. For
example, an input might be the fuel economy value of the Ford
Mustang, whereas the assumption is that the Ford Mustang's fuel
economy value reported in Ford's CAFE compliance data should be used
in NHTSA's modeling.
\83\ The Argonne report is titled ``Vehicle Simulation Process
to Support the Analysis for MY 2027 and Beyond CAFE and MY 2030 and
Beyond HDPUV FE Standards.'' However, for ease of use and
consistency with the Final TSD it is referred to as ``CAFE Analysis
Autonomie Documentation.''
---------------------------------------------------------------------------

NHTSA incorporates technology inputs and assumptions either
directly in the CAFE Model or in the CAFE Model's various input files.
The compliance simulation algorithm is at the heart of the CAFE Model's
approach on applying technologies to a manufacturer's vehicles to
project how the manufacturer could meet CAFE standards. The compliance
simulation algorithm consists of several equations that direct the
Model to apply fuel economy-improving technologies to vehicles in a way
that simulates how manufacturers might apply those technologies to
their vehicles in the real world. The compliance simulation algorithm
projects a cost-effective pathway for manufacturers to comply with
different levels of CAFE standards, considering the technology present
on manufacturers' vehicles now and what technology could be applied to
their vehicles in the future. Embedded in the CAFE Model is the
universe of technology options that the Model can consider and rules
about the order in which it can consider those options, as well as
estimates of how effective fuel economy-improving technology is on
different types of vehicles (e.g., sedan or pickup truck).
Technology inputs and assumptions are also located in all four of
the CAFE Model Input Files. The Market Data Input File is a spreadsheet
file that characterizes the fleet of vehicles used as the starting
point for the CAFE Model. There is one row describing each vehicle
model and model configuration manufactured for the United States market
in a model year (or years) and input and assumption data that links
those vehicles to technology and economic, environmental, and safety
inputs and assumptions. The Technologies Input File identifies 69
technologies the agency uses in the analysis, along with information
used to inform the compliance simulation and effects estimates,
including phase-in caps to identify when and how widely each technology
can be applied to specific types of vehicles, most of the technology
costs (hybrid vehicle battery costs are provided in a separate file),
and the fuel share percentage for PHEV to capture the charge sustaining
operation. The Scenarios Input File provides the coefficient values
defining the standards for each regulatory alternative \84\ and other
relevant information applicable to modeling each regulatory
scenario.\85\ Finally, the Parameters Input File contains mainly
economic and environmental data.\86\
---------------------------------------------------------------------------

\84\ The coefficient values are defined in RIA Chapter 3 for the
CAFE standard.
\85\ This file also includes information about the amount of
fuel consumption improvement values a manufacturer currently
generates for compliance purposes under EPA's regulations and
information on EPA's regulatory limits on generating FCIVs for each
model year in the analysis. For this analysis the FCIVs will go to 0
in MY 2028 for the regulatory alternatives, as discussed in preamble
Section II.D.8.
\86\ See CAFE Model Documentation for a detailed discussion of
what inputs are held in each of the input data files.
---------------------------------------------------------------------------

NHTSA generates these technology inputs and assumptions in several
ways, including using data submitted by vehicle manufacturers pursuant
to their CAFE reporting obligations; public data on vehicle models from
manufacturer websites, press materials, marketing brochures, and other
publicly available information; collaborative research, testing, and
modeling with other Federal agencies, like Argonne; and research,
testing, and modeling with independent organizations, like IAV GmbH
Ingenieurgesellschaft Auto und Verkehr (IAV), Southwest Research
Institute (SwRI), National Academy of Sciences (NAS), and FEV North
America. NHTSA also considers the work done to develop inputs and
assumptions for prior rules to the extent it is still relevant and
applicable; feedback from stakeholders on prior rules and from meetings
conducted before the commencement of this final rule; and NHTSA's own
engineering judgment. NHTSA uses the term ``engineering judgment''
throughout this rulemaking to refer to decisions made by a team of
NHTSA engineers and analysts. This judgment is based on their
experience working in the automotive industry and other relevant fields
and assessment of all the data sources described above. Most
importantly, the agency uses engineering judgment to assess how best to
represent vehicle manufacturers' potential responses to different
levels of CAFE standards within the boundaries of the agency's modeling
tools, as ``a model is meant to simplify reality in order to make it
tractable.'' \87\ In other words, NHTSA uses engineering judgment to
concentrate potential technology inputs and assumptions from millions
of discrete data points from hundreds of sources into four external
input files and three datasets integrated into the CAFE Model. How the
CAFE Model decides to apply technology (i.e., the compliance simulation
algorithm) has been developed using engineering judgment considering
factors that manufacturers consider when they add technology to
vehicles in the real world. The specific technology inputs and
assumptions are discussed in more detail in the following sections and
in the associated technical documentation.
---------------------------------------------------------------------------

\87\ Chem. Mfrs. Ass'n v. EPA, 28 F.3d 1259, 1264-65 (D.C. Cir.
1994) (citing Milton Friedman, in Friedman, M., The Methodology of
Positive Economics, in Essays in Positive Economics 3, University of
Chicago Press: Chicago, IL, pp. 14-15 (1953), available at: <a href="https://www.wiwiss.fu-berlin.de/fachbereich/bwl/pruefungs-steuerlehre/loeffler/Lehre/bachelor/investition/Friedman_the_methology_of_positive_economics.pdf">https://www.wiwiss.fu-berlin.de/fachbereich/bwl/pruefungs-steuerlehre/loeffler/Lehre/bachelor/investition/Friedman_the_methology_of_positive_economics.pdf</a> (accessed: May 28,
2026)).
---------------------------------------------------------------------------

a. Technology Options and Pathways
NHTSA begins the compliance analysis by defining the range of fuel
economy-improving technologies that the CAFE Model could add to a
manufacturer's vehicles in the U.S. market. These are technologies that
the agency believes are representative of what vehicle manufacturers
currently use on their vehicles, and that vehicle manufacturers could
use on their vehicles in the timeframe for the finalized standards (MYs
2027-2031). The technology options include engines, transmissions,
hybridization, and road load technologies, which include mass
reduction, aerodynamic improvement (aerodynamic drag technology
(AERO)), and tire rolling resistance (ROLL) reduction technologies.\88\
---------------------------------------------------------------------------

\88\ Final TSD Chapter 3 contains discussion on the technology
tree and technologies available.
---------------------------------------------------------------------------

Adding a technology to the range of options that the CAFE Model can
consider requires several data elements, including a broadly applicable
technology definition, estimates of how effective that technology is at
improving fuel economy on different vehicle types (e.g., sedan or
pickup truck), and the cost to apply that technology to each. Each
technology the agency selects is designed to be representative of a
wide range of specific technology applications used in the automotive
industry. Some manufacturers' systems may perform better or worse than
NHTSA's modeled systems, and some

[[Page 62025]]

may cost more or less than NHTSA's modeled systems. However, selecting
representative technology definitions for the agency's analysis ensures
the agency captures a reasonable level of costs and benefits that would
result from any manufacturer applying the technology.
NHTSA has been refining the technology options it considers since
first developing the CAFE Model in 2002. In this context, ``refining''
means both adding and removing technology options depending on current
technology availability and projected future availability in the U.S.
market, while balancing a reasonable amount of modeling and analytical
complexity. In recent years, the agency has refined internal combustion
engine (ICE) technology options, particularly the TURBO and high
compression ratio (HCR) pathways, to reflect better the diversity of
engines in the current fleet. The agency includes several hybrid
technologies to represent appropriately the diversity of current and
anticipated future technology options while ensuring NHTSA's analysis
remains consistent with statutory limitations prohibiting the
consideration of EVs in establishing standards and considering only the
gas or diesel operation of dual-fueled automobiles.
The technology options do not include technologies NHTSA has
determined will not be available in the rulemaking timeframe. As with
past analyses, the agency does not include technologies unlikely to be
feasible in the rulemaking timeframe, engine technologies designed for
markets other than the United States market or required to use unique
gasoline,\89\ or technologies for which appropriate data are not
available for the range of vehicles that the agency models in the
analysis (i.e., technologies that are still in the research and
development phase and not ready for mass-market production). Each
technology section below and Chapter 3 of the Final TSD discuss these
modeling decisions in detail.
---------------------------------------------------------------------------

\89\ In general, most vehicles produced for sale in the United
States have been designed to use ``regular'' gasoline, or 87 octane.
See EIA, Gasoline Explained: What is octane?, last revised: Nov. 17,
2022, available at: <a href="https://www.eia.gov/energyexplained/gasoline/octane-in-depth.php">https://www.eia.gov/energyexplained/gasoline/octane-in-depth.php</a> (accessed: May 25, 2026).
---------------------------------------------------------------------------

The CAFE Model does not dictate or predict the technologies
manufacturers must use to comply; rather, the CAFE Model outlines a
technology pathway that manufacturers could use to meet the standards
in a cost-effective way. While NHTSA estimates the costs and benefits
for different levels of CAFE standards based on a simulation of the
technology manufacturers could apply in the rulemaking timeframe, it is
entirely possible and reasonable that manufacturers may use different
technology options to meet the agency's standards in the real world and
may even use technologies that NHTSA does not include in the analysis.
This is because NHTSA's standards do not mandate the application of any
technology. Rather, NHTSA's standards are performance-based:
manufacturers can and do use a range of compliance solutions that
include technology application and encouraging sales shifts from one
vehicle model or trim level to another.\90\ The agency has determined
that the 69 technology options included in the analysis strike a
reasonable balance between representing the diversity of technology
used by the entire industry and simplifying reality to make modeling
workable.\91\
---------------------------------------------------------------------------

\90\ Manufacturers could increase their production of one type
of vehicle with higher fuel economy, like the hybrid version of a
conventional vehicle model, to meet the standards. For example, Ford
has conventional and hybrid versions of its F-150 pickup truck, and
Toyota has conventional, hybrid, and plug-in hybrid versions of its
RAV4 sport utility vehicle.
\91\ For each technology option, the analysis includes distinct
technology cost and effectiveness values for 10 different types of
vehicles, resulting in nearly half a million different technology
effectiveness and cost data points.
---------------------------------------------------------------------------

Chapter 3 of the Final TSD and Section II.D below describe the
technologies that NHTSA uses for the analysis. Each technology has a
name that loosely corresponds to its real-world technology equivalent.
NHTSA abbreviates the name to a short signifier for the CAFE Model to
read. The agency organizes those technologies into groups based on
technology type: basic and advanced engines, transmissions,
hybridization, and road load technologies, which include mass
reduction, aerodynamic improvement, and low rolling resistance tire
technologies.
NHTSA then organizes the groups into pathways. The pathways
instruct the CAFE Model how and in what order to apply technology. In
other words, the pathways define mutually exclusive technologies (i.e.,
those that cannot be applied at the same time) and define the direction
in which vehicles can advance as the Model evaluates which technologies
to apply. The respective technology chapters in the Final TSD and
Section 4 of the CAFE Model Documentation include a visual of each
technology pathway. In general, the paths are tied to ease of
implementation of additional technology and how closely the
technologies are related.
As an example, NHTSA's ``Turbo Engine Path'' consists of five
different engine technologies that employ different levels of
turbocharging technology. A turbocharger is essentially a small turbine
driven by exhaust gases produced by the engine. As these gases flow
through the turbocharger, they spin the turbine, which in turn spins a
compressor that pushes more air into an engine's cylinders. Having more
air in the engine's cylinders allows the engine to burn more fuel,
which then creates more power, without needing a physically larger
engine. In the agency's analysis, an engine that is turbocharged
``downsizes,'' or becomes smaller. Choosing to turbocharge an engine
allows a manufacturer to maintain similar levels of performance to a
larger, non-turbocharged engine with a smaller engine that uses less
fuel to do the same amount of work. Allowing basic engines to be
downsized and turbocharged instead of just turbocharged keeps the
vehicle's utility and performance constant so that NHTSA can measure
the costs and benefits of different levels of fuel economy
improvements, rather than the change in different vehicle attributes.
This concept of performance neutrality is discussed further below.
The Model allows only forward movement along the technology
pathways, adding more advanced technology as the Model moves through
the technology tree. This ensures that a vehicle that uses a more
advanced technology cannot downgrade to a less advanced version of the
technology and ensures that a vehicle does not switch to technology
that is significantly technically different. This progressive order
also realistically represents how manufacturers often start with the
lowest and most cost-effective technologies and generally advance along
particular technology pathways. As an example, if a vehicle in the
compliance simulation begins with a TURBOD engine--a turbocharged
engine with cylinder deactivation--it cannot adopt a TURBO0 engine.\92\
Similarly, this vehicle with a TURBOD engine cannot adopt an advanced
cylinder deactivation on a dual-overhead camshaft (ADEACD) engine.\93\
As an example of NHTSA's rationale for ordering technologies on the
technology

[[Page 62026]]

tree, an engine could potentially be changed from TURBO0 to TURBO2
without redesigning the engine block or requiring significantly
different expertise to design and implement. A change to ADEACD likely
would require a different engine block that might not fit in the engine
bay of the vehicle without a complete redesign and different technical
expertise requiring years of research and development. This change,
which would strand capital and impact parts sharing, is why the
advanced engine paths restrict most movement between them. The concept
of stranded capital is discussed further in Section II.C.2.f.
---------------------------------------------------------------------------

\92\ TURBO0 is the baseline turbocharged engine and TURBOD is
TURBO0 with the addition of cylinder deactivation (DEAC). Chapter 3
of the Final TSD provides more discussion on engine technologies.
\93\ ADEACD is a dual-overhead camshaft engine with advanced
cylinder deactivation. Chapter 3 of the Final TSD provides more
discussion on engine technologies.
---------------------------------------------------------------------------

NHTSA also considers two categories of technology that the agency
could not simulate as part of the CAFE Model's technology pathways for
the regulatory alternatives for some of standard-setting years. ``Off-
cycle'' and AC efficiency are two types of technologies that improve
vehicle fuel economy but are not accounted for using 2-cycle testing.
To account for the benefits of these technologies, EPA has allowed
manufacturers to generate FCIVs when they add these technologies, which
are used to improve a manufacturers' fleet average fuel economy used
for complying with the CAFE standards. As an example, manufacturers can
generate FCIVs for technology like active seat ventilation and solar
reflective surface coatings that make the cabin of a vehicle more
comfortable for the occupants without using less efficient accessories
like heat or AC. Instead of including OC and AC efficiency technologies
in the technology pathways, NHTSA includes the improvement as a defined
benefit that gets applied to a manufacturer's entire fleet in
applicable model years instead of to individual vehicles. The defined
benefit that each manufacturer receives in the analysis for using OC
and AC efficiency technology on their vehicles is located in the Market
Data Input File. Chapter 3.7 of the Final TSD provides more discussion
on how OC and AC efficiency technologies are developed and modeled. As
discussed further in preamble Section II.D.8, NHTSA is removing
consideration of FCIVs from its standard-setting analysis beginning
with MY 2028. Preamble Section VI contains discussion of how
manufacturers generate FCIVs under the limits for FCIVs under EPA's
regulations.
To illustrate how NHTSA simulates technology application,
throughout this section NHTSA follows the hypothetical vehicle
mentioned above that begins the compliance simulation with a TURBOD
engine. The agency's hypothetical vehicle, Generic Motors' Ravine
Runner F Series, is a roomy, top-of-the-line SUV. The Ravine Runner F
Series starts the compliance simulation with technologies from most
technology pathways; specifically, after looking at Generic Motors'
website and marketing materials, the agency determines that it has
technology that loosely fits within the following technologies that the
agency considers in the CAFE Model: it has a turbocharged engine with
cylinder deactivation, a fairly advanced 10-speed automatic
transmission, a 12V start-stop system, the least advanced tire
technology, a fairly aerodynamic vehicle body, and it employs a fairly
advanced level of mass reduction. NHTSA tracks the technologies on each
vehicle using a ``technology key,'' which is the string of technology
abbreviations for each vehicle. The vehicle technologies and their
abbreviations that the agency considers in this analysis are shown in
Final TSD Chapter 2. The technology key for the Ravine Runner F Series
is ``TURBOD; AT10L2; SS12V; ROLL0; AERO5; MR3.''
b. Defining Manufacturers' Current Technology Positions in the Analysis
Fleet
The Market Data Input File is one of four Excel input files that
the CAFE Model uses for compliance and effects simulation. The Market
Data Input File's ``Vehicles'' tab (or worksheet) houses one of the
most significant compilations of technology inputs and assumptions in
the analysis, which is a characterization of the fleet of vehicle
models each manufacturer produced for sale in the United States for MY
2024. This provides the starting point from which the CAFE Model adds
fuel economy-improving technology. NHTSA calls this fleet the
``analysis fleet.'' The analysis fleet includes a number of inputs
necessary for the Model to add fuel economy-improving technology to
each vehicle for the compliance analysis and to calculate the resulting
impacts for the effects analysis.
The ``Vehicles'' tab contains a separate row for each vehicle
model. Vehicle models are vehicles that share the same fuel economy
value and vehicle footprint based on EPA's regulations for calculating
fuel economy. This means that vehicle ``trims'' with different
configurations that affect the vehicle's certification fuel economy
value are considered unique models distinguished in separate rows in
the Vehicles tab. For example, the agency's Ravine Runner example
vehicle comes in three different configurations--the Ravine Runner FWD,
Ravine Runner AWD, and Ravine Runner F Series--which would be reported
separately under EPA's regulations for compliance purposes and would
therefore result in three separate rows in the ``Vehicles'' tab.
In each row, NHTSA also designates a vehicle's engine,
transmission, and platform codes.\94\ Vehicles that have the same
engine, transmission, or platform code are deemed to ``share'' that
component in the CAFE Model. Parts sharing helps manufacturers achieve
economies of scale, deploy capital efficiently, and make the most of
shared research and development expenses, while still presenting a wide
array of consumer choices to the market. The CAFE Model has been
developed to treat vehicles, platforms, engines, and transmissions as
separate entities, which allows the modeling system to evaluate
technology improvements on multiple vehicles that may share a common
component concurrently. Sharing also enables realistic propagation, or
``inheriting,'' of previously applied technologies from an upgraded
component down to the vehicle ``users'' of that component that have not
yet realized the benefits of the upgrade. Section 2.1 and Section 4.4
of the CAFE Model Documentation contain additional information about
the initial state of the fleet, as well as technology evaluation and
inheriting within the CAFE Model.
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\94\ Each numeric engine, transmission, or platform code
designates important information about that vehicle's technology;
for example, a vehicle's 6-digit transmission code includes
information about the manufacturer, the vehicle's drive
configuration (e.g., front-wheel drive, all-wheel drive, 4WD, or
rear-wheel drive), transmission type, number of gears (i.e., a 6-
speed transmission has 6 gears), and the transmission variant.
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Figure II-1 below shows how an example of how the different
configurations of the hypothetical Ravine Runner would be separated.
NHTSA sees by the Platform Codes that these Ravine Runners all share
the same platform, but only the Ravine Runner FWD and Ravine Runner AWD
share an engine. Even so, all three fuel economy values are different,
which is common for vehicles that differ in drive type (drive type
meaning whether the vehicle has AWD, 4-wheel drive (4WD), front-wheel
drive (FWD), or rear-wheel drive (RWD)). Though it is simpler to
aggregate vehicles by model, ensuring that NHTSA captures model
variants at the level they would be reported for compliance improves
the accuracy of the analysis and the potential that estimated costs and
benefits from different levels of standards are appropriate. NHTSA
includes information about other vehicle

[[Page 62027]]

technologies at the farthest right side of the Vehicles tab, and in the
``Engines,'' ``Transmissions,'' and ``Platforms'' worksheets, as
discussed further below.
[GRAPHIC] [TIFF OMITTED] TR30SE26.069

Moving from left to right on the Vehicles tab, after including
general information about vehicles and their compliance fuel economy
value, NHTSA includes sales and manufacturer's suggested retail price
(MSRP) data, regulatory class information (e.g., domestic passenger
automobile, import passenger automobile, or non-passenger automobile),
and information about how NHTSA classifies vehicles for the
effectiveness and safety analyses. Each of these data points is
important to different parts of the compliance and effects analysis, so
that the CAFE Model can accurately average the technologies required
across a manufacturer's regulatory fleet to meet its CAFE standard or
estimate the impacts of higher fuel economy standards on vehicle sales.
---------------------------------------------------------------------------

\95\ Note that not all data columns are shown in this example
for brevity.
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Next, NHTSA includes vehicle information necessary for applying
different types of technology; for example, designating a vehicle's
body style allows NHTSA to apply aerodynamic technology appropriately,
and designating starting CW values allows the agency to apply mass
reduction technology more accurately. Importantly, this section also
includes vehicle footprint data, which is needed because NHTSA sets
footprint-based standards.
NHTSA also sets product design cycles, which are the years in which
the CAFE Model can apply technologies to vehicles. Manufacturers often
introduce fuel-saving technologies at a ``redesign'' of their product
or adopt technologies at ``refreshes'' in between product redesigns. As
an example, the redesigned third generation Chevrolet Silverado was
released for MY 2019 and featured a new platform, updated drivetrain,
increased towing capacity, reduced weight, improved safety, and
expanded trim levels, to name a few improvements. For MY 2022, the
Chevrolet Silverado received a refresh (or facelift as it is commonly
called), with an updated interior, infotainment, and front-end
appearance.\96\ Setting these product design cycles provides realistic
durations of product stability and ensures that the CAFE Model
simulates the opportunities manufacturers have to apply technologies in
line with refresh and redesign cycles.
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\96\ GM Authority, 2022 Chevy Silverado, last revised: 2022,
available at: <a href="https://gmauthority.com/blog/gm/chevrolet/silverado/2022-chevrolet-silverado/">https://gmauthority.com/blog/gm/chevrolet/silverado/2022-chevrolet-silverado/</a> (accessed: May 28, 2026).
---------------------------------------------------------------------------

During modeling, all improvements from technology application are
initially realized on a component and then propagated (or inherited)
down to the vehicles that share that component. As such, new component-
level technologies are initially evaluated and applied to a platform,
engine, or transmission during their respective redesign or refresh
years. Any vehicles that share the same redesign or refresh schedule as
the component apply these technology improvements during the same model
year. The rest of the vehicles inherit technologies from the component
during their refresh or

[[Page 62028]]

redesign year (for engine- and transmission-level technologies) or
during a redesign year only (for platform-level technologies). Section
4.4 of the CAFE Model Documentation contains additional information
about technology evaluation and inheriting within the CAFE Model.
The CAFE Model also considers the potential safety effect of mass
reduction technologies and crash compatibility of different vehicle
types. Mass reduction technologies lower the vehicle's CW, which may
change crash compatibility and safety, depending on the type of
vehicle. NHTSA assigns each vehicle in the Market Data Input File a
``safety class'' that best aligns with the CAFE Model's analysis of
vehicle mass, size, and safety, and include the vehicle's starting
CW.97 98
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\97\ Vehicle curb weight is the weight of the vehicle with all
fluids and components but without the drivers, passengers, or cargo.
\98\ Preamble Section II.H.1 and Final TSD Chapter 7.3 provides
more in depth discussion on the impacts of mass reduction on safety.
---------------------------------------------------------------------------

The CAFE Model includes procedures to consider the direct labor
impacts of manufacturers' responses to CAFE regulations, considering
the assembly location of vehicles, engines, and transmissions; the
percent U.S. content (based on the percent U.S. and Canadian content,
as reported by manufacturers to NHTSA); and the dealership employment
associated with new vehicle sales. Estimated labor information, by
vehicle, is included in the Market Data Input File. Sales volumes
included in and adapted from the market data also influence total
estimated direct labor projected in the analysis. Chapter 6.2.5 of the
Final TSD contains additional discussion of the labor utilization
analysis.
NHTSA then assigns the technologies to individual vehicles. This
initial linkage of vehicle technologies is how the CAFE Model knows how
to advance a vehicle down each technology pathway. Assigning CAFE Model
technologies to individual vehicles is dependent on the mix of
information the agency has about any particular vehicle and trends
about how a manufacturer has added technology to that vehicle in the
past, equations and models that translate real-world technologies to
their counterparts in NHTSA's analysis (e.g., drag coefficients and
body styles can be used to determine a vehicle's AERO level), and the
agency's engineering judgment.
As discussed further below, the agency uses information directly
from manufacturers to populate some fields in the Market Data Input
File, like vehicle HP ratings and vehicle weight. NHTSA also uses
manufacturer data as an input to various other models that calculate
how a manufacturer's real-world technology equates to a technology
level in the agency's model. For example, the agency calculates initial
mass reduction, aerodynamic drag reduction, and ROLL levels by looking
at industry-wide trends and calculating--through models or equations--
levels of improvement for each technology. The models and algorithms
that the agency uses are described further below and in detail in
Chapter 3 of the Final TSD. Other fields, like vehicle refresh and
redesign years, are projected forward based on historic trends.
Recall the Ravine Runner F Series example with the technology key
``TURBOD; AT10L2, SS12V; ROLL0; AERO5; MR3.'' For this example, Generic
Motor's publicly available specification sheet for the Ravine Runner F
Series says that it uses Generic Motor's Turbo V6 engine with
proprietary Adaptive Cylinder Management Engine (ACME) technology.
Generic Motor's ACME improves fuel economy and lowers emissions by
operating the engine using only three of the engine's cylinders in most
conditions and using all six engine cylinders when more power is
required. Based on this information, NHTSA would conclude that this
engine is turbocharged and uses a form of cylinder deactivation,
meaning it would be appropriately classified as TURBOD. Generic Motors
uses this engine in several of their vehicles, and the specifications
of the engine can be found in the Engines Tab of the Market Data Input
File, under a six-digit engine code.\99\
---------------------------------------------------------------------------

\99\ Like the transmission codes discussed above, the engine
codes include information identifying the manufacturer, engine
displacement (how many liters the engine is), whether the engine is
naturally aspirated or force-inducted (turbocharged), and other
unique engine attributes.
---------------------------------------------------------------------------

This is a relatively easy engine to assign based on publicly
available specification sheets, but some technologies are more
difficult to assign. Manufacturers use different trade names or terms
for different technology, and the way that the agency assigns the
technology in the agency's analysis may not necessarily line up with
how a manufacturer describes the technology. NHTSA must use some
engineering judgment to determine how discrete technologies in the
market best fit the technology options that the agency considers in the
agency's analysis. The agency discusses factors used to assign each
vehicle technology in the individual technology subsections below.
In addition to the Vehicles Tab that houses the analysis fleet, the
Market Data Input File includes information that affects how the CAFE
Model might apply technology to vehicles in the compliance simulation.
Specifically, the Market Data Input File's ``Manufacturers'' tab
includes a list of vehicle manufacturers considered in the analysis and
several pieces of information about their economic and compliance
behaviors. For this analysis, the compliance simulation assumes that
manufacturers continue to apply technology to the extent practicable to
reach compliance. This modeling change is made by indicating in the
``Manufacturers'' tab that all manufacturers will comply with NHTSA's
standards and is consistent with the recent amendment to EPCA that set
civil penalties (i.e., fines) to $0 effective for MY 2022 vehicles and
beyond.\100\ The CAFE Model's compliance simulation algorithm is
discussed in Section II.C.2.f.
---------------------------------------------------------------------------

\100\ See Public Law 119-21, 139 Stat. 72, sec. 40006 (July 4,
2025).
---------------------------------------------------------------------------

Finally, NHTSA designates a ``payback period'' for each
manufacturer. The payback period represents an assumption that
consumers are willing to buy vehicles with more fuel economy technology
because the fuel economy technology saves them money on gas in the long
run. For the past several rulemaking analyses using the CAFE Model the
agency has assumed that in the absence of CAFE or other regulatory
standards, manufacturers apply technology that ``pays for itself''--by
saving the consumer money on fuel--in 30 months, or 2.5 years. NHTSA
has updated the agency's payback period for this rulemaking to assume a
full 3-year payback period based on an examination of empirical
economics literature. This is discussed in detail in Section II.E.1.a
below, and in the Final TSD and FRIA.
Before the agency begins building the Market Data Input File for
any analysis, NHTSA must consider what model year vehicles comprise the
analysis fleet. There is an inherent time delay in the data the agency
can use for any analysis because NHTSA receives compliance data after a
model year has been completed.
For this rulemaking, NHTSA uses data from manufacturers' 2024 mid-
model year compliance reports. Though the agency possesses a limited
amount of more recent data, NHTSA is not using

[[Page 62029]]

that data for this rulemaking because the dataset is not complete.
At the time NHTSA starts building the analysis fleet, data received
from vehicle manufacturers \101\ offers the best snapshot of vehicles
for sale in the United States in a model year. The mid-model year
reports include information about individual vehicles at the vehicle
configuration level. NHTSA uses the vehicle configuration,
certification fuel economy, sales, regulatory class, and additional
technology data from these reports as the starting point to build a
``row'' (i.e., a vehicle model, with all necessary information about
the vehicle) in the Market Data Input File's Vehicles Tab. Additional
technology data comes from publicly available information, including
vehicle specification sheets, manufacturer press releases, owner's
manuals, and websites. NHTSA also generates some assumptions in the
Market Data Input File for data fields where there is limited data,
like refresh and redesign cycles for future model years, and technology
levels for certain road load reduction technologies like mass reduction
and aerodynamic drag reduction.
---------------------------------------------------------------------------

\101\ 49 U.S.C. 32907(a)(2) and 49 CFR part 537.
---------------------------------------------------------------------------

For this analysis, the light-duty analysis fleet consists of every
vehicle model in MY 2024 in nearly every configuration that has a
different compliance fuel economy value. This results in nearly 4,000
individual rows in the Vehicles Tab of the Market Data Input File.
The next section discusses how the agency's analysis evaluates how
effectively adding technology to a vehicle in the analysis fleet
improves that vehicle's fuel economy value.
c. Technology Effectiveness Values
The CAFE Model uses technology effectiveness values to allow it to
know which technologies to apply. Without these values, it does not
know how effective any particular technology is at improving a
vehicle's fuel economy value. Accurate technology effectiveness
estimates require information about (1) the vehicle type and size; (2)
other technologies on the vehicle or being added to the vehicle at the
same time; and (3) and how the vehicle is driven. Any
oversimplification of these complex factors could make the
effectiveness estimates less accurate.
To build a database of technology effectiveness estimates that
includes these factors, NHTSA partners with Argonne. Argonne has
developed and maintains a modeling and simulation tool called Autonomie
that generates technology effectiveness estimates for the CAFE Model.
The Autonomie Model is a mathematical representation of an entire
vehicle, including its individual technologies (such as the engine and
transmission), overall vehicle characteristics (such as mass and
aerodynamic drag), and environmental conditions (such as ambient
temperature and barometric pressure). The Autonomie Model simulates
vehicle behavior over time.
NHTSA simulates a vehicle model's behavior over the two-cycle tests
used to measure vehicle fuel economy.\102\ The two-cycle test is
carried out by operating a vehicle on a dynamometer. Using a
dynamometer is like running a car on a treadmill following a program--
or more specifically, two programs. The programs are the Federal Test
Procedure (FTP) and the Highway Fuel Economy Test (HFET). The FTP and
HFET are also commonly referred to as the urban cycle and highway
cycle, respectively. For the FTP drive cycle, the vehicle meets certain
speeds at certain times during the test, or in technical terms, the
vehicle must follow a designated speed trace.\103\ The FTP is meant to
simulate stop-and-go city driving, and the HFET is meant to simulate
steady flowing highway driving at about 50 miles per hour (mph). The
agency also uses Society of Automotive Engineers (SAE) recommended
practices to simulate hybridized drive cycles,\104\ which involves the
test cycles mentioned above as well as additional test cycles to
measure battery energy consumption and range. For PHEVs, this analysis
utilizes only the gasoline (charge-sustaining) mode for the drive
cycles.
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\102\ NHTSA is statutorily required to use the two-cycle tests
to measure vehicle fuel economy in the CAFE program. See 49 U.S.C.
32904(c) (``Testing and calculation procedures. . . . [T]he
Administrator shall use the same procedures for passenger
automobiles the Administrator used for model year 1975 (weighted 55
percent urban cycle and 45 percent highway cycle), or procedures
that give comparable results.'').
\103\ EPA, Emissions Standards Reference Guide: EPA Federal Test
Procedure (FTP), last revised: Mar. 13, 2025, available at: <a href="https://www.epa.gov/emission-standards-reference-guide/epa-federal-test-procedure-ftp">https://www.epa.gov/emission-standards-reference-guide/epa-federal-test-procedure-ftp</a> (accessed: May 28, 2026).
\104\ SAE, Recommended Practice for Measuring the Exhaust
Emissions and Fuel Economy of Hybrid-Electric Vehicles, Including
Plug-in Hybrid Vehicles, SAE Standard J1711_202302, SAE
International: Warrendale, PA (2023), available at: <a href="https://www.sae.org/standards/j1711_202302-recommended-practice-measuring-exhaust-emissions-fuel-economy-hybrid-electric-vehicles-including-plug-hybrid-vehicles">https://www.sae.org/standards/j1711_202302-recommended-practice-measuring-exhaust-emissions-fuel-economy-hybrid-electric-vehicles-including-plug-

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