General Motors (GM) and Ford (F) scored a major win Tuesday as the U.S. softened fuel economy rules envisioning a rapid EV transition. GM stock broke out Wednesday and Ford stock rose near a buy point.

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Revised EV Mileage Rule Brings Relief

The Department of Energy significantly eased proposed rules that would have forced automakers to reduce production of gas-guzzling vehicles or face billions of dollars in fines, Reuters first reported.

Its final rules effectively allow GM, Ford and others to build more traditional vehicles with internal combustion engines (ICE) through 2030 and still reach fuel economy requirements.

The original proposal would have lowered “petroleum-equivalent fuel economy” ratings for electric vehicles by 72% in 2027. The final rules will instead gradually cut the EV mileage ratings through 2030 by 65%, giving automakers more time to adjust.

Automakers pushed back against the initial proposals, which could have led to $10.5 billion in fines through 2032 for not meeting fuel-economy requirements.

GM would have faced $6.5 billion in fines; Dodge and Ram parent Stellantis (STLA) $3 billion; and Ford $1 billion, Reuters said.

The revised rules came after intense discussions between the Joe Biden administration and automakers. The latter said they could not meet original proposals calling for a much more aggressive shift from ICE to EV.

Separately on Wednesday, the Environmental Protection Agency unveiled its final vehicle emissions standards giving automakers more time to continue selling gas-powered models while they scale up supply chains for electric vehicles.

The EPA forecast last year that EVs would be 60% of new car sales by 2030 and 67% by 2032, up from 8% in 2023.

The final rules project EVs making up 30%-56% of new car sales from 2030-2032, Reuters said.

GM Stock, Ford Stock

Shares of General Motors rose 1.8% to 42.24 on the stock market today. GM stock topped a 41.80 buy point from a huge consolidation, but volume was light. The U.S. auto giant is up 7% since last Thursday amid reports that the EPA would ease EV mileage rules. The relative strength line is at a seven-month high, signaling recent GM stock outperformance vs. the S&P 500 index.

Ford stock also gained Wednesday, rising 2.6% to 12.62, bouncing off the 200-day line. Shares are working on a 31.07 buy point from a flat base forged following a strong bounce from a 52-week low in November. Stellantis stock added a fraction to a fresh record high.

In late January, GM said it will bring back hybrid vehicles in response to an EV slowdown in the U.S. Ford also said it will shift investments to hybrid cars.

In the past year, Japan’s Toyota (TM) and Honda (HMC) have easily outpaced gains for GM stock and Ford, due in part to their surging hybrid sales. Toyota and Honda stock both edged higher Wednesday.

The new federal rules apply to all automakers in the U.S. But they especially impact the Detroit Big 3, which derive more of their sales from large combustion-engine SUVs and trucks.

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