President Joe Biden speaks at the United Auto Workers political convention at the Marriott Marquis in Washington, D.C., Jan. 24, 2024.

Saul Loeb | AFP | Getty Images

DETROIT — The Biden administration’s decision to ease its timeline for all-electric vehicle adoption and give automakers more ways to meet new tailpipe emissions standards is expected to be a win for legacy automakers.

The new Environmental Protection Agency rules released Wednesday aim to cut tailpipe emissions by 49% between model years 2027 and 2032. The EPA set a target for EVs to make up at least 35% of new vehicle sales by 2032.

The standards are less ambitious than proposed rules released last year, which targeted a 56% reduction in emissions by 2032 and called for EVs to represent 67% of new vehicles by that year.

The lower expectation for EV adoption comes amid slower-than-expected sales of the vehicles, which can cost tens of thousands of dollars more than their traditional gas counterparts.

The EPA’s new strategy for cutting tailpipe emissions doesn’t focus only on EVs. It took into account more efficient gasoline engines, hybrids and plug-in hybrid electric vehicles.

The EPA’s percentage targets for EV adoption are not mandates but expectations for how automakers could meet the emissions regulations. The target range for the share of EV sales in the market in 2032 is between 35% and 56%.

The EPA said the standards will avoid more than 7 billion tons of carbon emissions and provide nearly $100 billion of annual net benefits to society. It said those include $13 billion of annual public health benefits due to improved air quality, along with $62 billion in reduced annual fuel costs and maintenance and repair costs for drivers.

Here are some key takeaways about what the new guidelines mean for automakers, investors and the environment.

A win for Detroit

Automotive officials and Wall Street analysts are touting the altered rules as a major win for legacy automakers, specifically the traditional Detroit automakers General Motors, Ford Motor and Chrysler parent Stellantis, which largely rely on big SUVs and trucks to make profits.

“We view this development as positive for traditional US automakers, since the new rules put less pressure on them to ramp up EV production in the near term, and could even potentially enable them to reduce further EV capex and R&D,” Deutsche Bank analyst Emmanuel Rosner said Thursday in an investor note.

President Joe Biden, with General Motors CEO Mary Barra, looks at a Chevrolet Silverado electric vehicle as he tours the 2022 North American International Auto Show at Huntington Place Convention Center in Detroit, Michigan, on Sept. 14, 2022. Biden is visiting the auto show to highlight electric vehicle manufacturing.

Mandel Ngan | Afp | Getty Images

John Bozzella, president and CEO of the Alliance for Automotive Innovation, a lobbying group that represents most automakers in the U.S., agreed.

“Moderating the pace of EV adoption in 2027, 2028, 2029 and 2030 was the right call because it prioritizes more reasonable electrification targets in the next few (very critical) years of the EV transition,” he said.

The new rules also are a victory for the Detroit-based United Auto Workers union, which has raised concerns about how the transition from internal combustion engines to EVs could affect jobs.

“By taking seriously the concerns of workers and communities, the EPA has created a more feasible emissions rule that protects workers building [internal combustion engine] vehicles, while providing a path forward for automakers to implement the full range of automotive technologies to reduce emissions,” the UAW said in a statement.

Stocks for the Detroit automakers, as well as others such as U.S. hybrid leader Toyota Motor, closed higher Wednesday following the announcement.

Tesla, some green groups unhappy

While the new standards sparked relief in Detroit, others weren’t too pleased.

The new rule “falls far short of what is needed to protect public health and our planet. EPA is giving automakers a pass to continue producing polluting vehicles,” said Chelsea Hodgkins, senior policy advocate at left-leaning consumer rights group Public Citizen.

Martin Viecha, vice president of investor relations for the biggest U.S. EV maker, Tesla, agreed in a post on X: “Unfortunately, people use plug-in hybrids mainly as gas cars, which means their CO2 emissions are far worse than official EPA or WLTP ratings suggest.”

“Just like officially rated energy consumption of EVs has been getting closer and closer to reality, same should be done for plug-in hybrids,” he added.

Environmental group Sierra Club, which has condemned automakers such as Toyota for their reliance on hybrids, broke with past statements and hailed the standards. The organization, which endorsed President Joe Biden for reelection, said the new rules are “one of the most significant actions his administration can take on climate change.”

Political implications

Not over yet

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