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Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
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associated higher emissions, if new vehicle sales decrease. The Gruenspecht effect, therefore, may have the additional consequence of increased concentrations of older vehicles in some communities in the short term, and may delay benefits associated with advanced vehicle technologies for those communities. As discussed in Section VII.B of this preamble, new vehicle sales are projected to show a roughly one-half to one percent decrease from sales under the SAFE rule; that value depends on the uncertain assumption that vehicle buyers consider just a small share of future fuel consumption in the purchase decision. Changes in the new vehicle market are expected not only to have immediate effects on the prices of used vehicles, but also to affect the market over time, as the supply of used vehicles in the future depends on how many new vehicles are sold.274 As discussed in Section VII.J of this preamble, because the prices of used vehicles depreciate more rapidly than fuel savings, buyers of used vehicles will recover any increase in up-front costs more rapidly than buyers of new vehicles.
Access to credit is a potential barrier to purchase of vehicles whose up-front costs have increased; access may also be affected by race, ethnicity, gender, gender identity, residential location, religion, or other factors. If lenders are not willing to provide financing for buyers who face higher prices, perhaps because the potential buyers are hitting a maximum on the debt-to-income ratio DTI that lenders are willing to accept, then those buyers may not be able to purchase new vehicles. NADA in its comments provided results of two surveys of financial institutions, which were asked whether they would increase credit for a more expensive vehicle with lower cost of ownership.
With about half of those surveyed responding, over 80 percent of respondents replied that they would not; the remainder said they would.
These survey results do not contradict EPAs observation, discussed in the proposed rule, that some lenders are willing to give discounts on loans to purchase more fuel-efficient vehicles.275
Subsidies exist from the federal government, and some state 274 U.S. Environmental Protection Agency 2021.
The Effects of New-Vehicle Price Changes on Newand Used-Vehicle Markets and Scrappage. EPA
420R21019, https cfpub.epa.gov/si/si_public_
record_Report.cfm?dirEntryId=352754&Lab=OTAQ
accessed 10/06/2021.
275 Helfand, Gloria 2021. Memorandum:
Lending Institutions that Provide Discounts for more Fuel Efficient Vehicles. U.S. EPA Office of Transportation and Air Quality, Memorandum to the Docket.

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governments, for plug-in electric vehicles.276 In addition, the DTI does not appear to be a fixed obstacle for access to finance; from 2007 to 2019, 40
percent of lower-income households and 8 percent of higher-income households who both had a DTI of over 36 percent and purchased at least one new vehicle financed their vehicle purchases.277
Low-priced vehicles may be considered an entry point for people into buying new vehicles instead of used ones; automakers may seek to entice people to buy new vehicles through a low price point. It is possible that higher costs associated with standards could affect the ability of automakers to maintain vehicles in this value segment. At the same time, this segment historically tended to include more fuel-efficient vehicles that assisted automakers in achieving CAFE
standards.278 The footprint-based standards, by encouraging improvements in GHG emissions and fuel economy across the vehicle fleet, reduce the need for low-priced vehicles to be a primary means of compliance with the standards. This change in incentives for the marketing of this segment may contribute to the increases in the prices of vehicles previously in this category. Low-priced vehicles still exist; the Chevrolet Spark, for example, is listed as starting at $13,400.279 At the same time, this segment is gaining more content, such as improved entertainment systems and electric windows; they may be developing an identity as a desirable market segment without regard to their previous purpose in enabling the sales of less efficient vehicles and compliance with CAFE
standards.280 Whether this segment continues to exist, and in what form, may depend on the marketing plans of manufacturers: whether benefits are greater from offering basic new vehicles to first-time new-vehicle buyers, or from 276 U.S. Department of Energy and U.S.
Environmental Protection Agency. Federal Tax Credits for New All-Electric and Plug-in Hybrid Vehicles. https www.fueleconomy.gov/feg/
taxevb.shtml, accessed 4/28/2021.
277 Hutchens, A., et al. 2021. Impacts of LightDuty Vehicle Greenhouse Gas Emission Standards on Vehicle Affordability. Working paper.
278 Austin, D., and T. Dinan 2005. Clearing the Air: The Costs and Consequences of Higher CAFE
Standards and Increased Gasoline. Journal of Environmental Economics and Management 503:
56282; Kleit, A. 2004. Impacts of Long-Range Increases in the Fuel Economy CAFE Standard.
Economic Inquiry 422: 279294.
279 Motortrend 2021. These Are the 10
Cheapest Cars You Can Buy in 2021. https
www.motortrend.com/features-collections/top-10cheapest-new-cars/, accessed 4/28/2021; Chevrolet Spark, https www.chevrolet.com/cars/spark, accessed 5/27/2021.
280 See Note 268.

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making small vehicles more attractive by adding more desirable features to them.
The updated analysis for the final rule projects that, although the vast majority of vehicles produced in the time frame of the standards will be gasoline-fueled vehicles, EVs and PHEVs increase with each MY up to about 17 percent total market share by MY 2026, compared to about 7 percent MY 2023; see Table 33.
New EVs and PHEVs have lower operating costs than gasoline vehicles, but currently have higher up-front costs and require access to a means of charging. EPA has heard from some environmental justice groups and Tribes that limited access to electric vehicles and charging infrastructure can be a barrier for purchasing EVs. Comments received on the proposed rule cited both the higher up-front costs of EVs as challenges for adoption, and their lower operating and maintenance costs as incentives for adoption. A number of auto manufacturers commented on the importance of consumer education, purchase incentives, and charging infrastructure development for promoting adoption of electric vehicles.
Some NGOs commented that EVs have lower total cost of ownership than ICE
vehicles, and that EV purchase incentives should focus on lowerincome households, because they are more responsive to price incentives than higher-income households. Access to charging infrastructure may be especially challenging for those who do not have easy access to home charging, such as people living in multi-unit dwellings, unless public charging infrastructure or charging at workplaces becomes more widespread. On the other hand, a recent report from the National Renewable Energy Laboratory estimated that public and workplace charging is keeping up with projected needs, based on Level 2 and fast charging ports per plug-in vehicle.281 EPA acknowledges the comments received. As the up-front costs of EVs drops, as discussed in Section III.A of this preamble, EPA
expects consumer acceptance of EVs to increase; as more EVs enter the new vehicle market, those EVs will gradually move into the used vehicle fleet and become more accessible to lowerincome households. In addition, as adoption of EVs increases, EPA expects greater development of charging 281 Brown, A., A. Schayowitz, and E. Klotz 2021.
Electric Vehicle Infrastructure Trends from the Alternative Fueling Station Locator: First Quarter 2021. National Renewable Energy Laboratory Technical Report NREL/TP540080684, https
afdc.energy.gov/files/u/publication/electric_
vehicle_charging_infrastructure_trends_first_
quarter_2021.pdf, accessed 11/3/2021.

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