Tier 3 Final Rule. Toyota Motor North America Product Regulatory Affairs Susan Collet April 2016

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1 Tier 3 Final Rule 1 Toyota Motor North America Product Regulatory Affairs Susan Collet April 2016

2 Tier 3 Vehicle Emissions Background Tier 3 Overview Timing Light and Medium Duty Standards: Tailpipe Evap OBD Test Procedure Changes Fuels Certification Alternative Fuels Market Summary 2

3 Vehicle Emissions 3 Background Information

4 Environmental Regulation: Is It Working? 4 Despite economic growth, regulations are improving air quality

5 National Air Quality Status and Trend 5 - Ozone and PM2.5 become closer to NAAQS but still remaining as issues. - NAAQS have been attained for NO2 & CO among all sites in US.

6 Vehicle Emission Systems Agency approval for emission control is required Tailpipe engine running Evaporative vehicle running & stationary, and refueling Onboard Diagnostics (OBD) To make sure systems are operating correctly. Illuminates check engine light on instrument cluster if vehicle's computer determines a component or system in the emission control system is not working properly. EPA and CARB approval required for new (Certification) and In-Use Testing 6

7 Tailpipe Emissions There are many tailpipe emission tests7 Federal Test Procedure (FTP) Monitor tailpipe emissions while car drives Federal Test Procedure (FTP) trace Low altitude High Altitude Cold CO Determines emissions compliance & fuel economy Federal Test Procedure (FTP) Supplemental Federal Test Procedure (SFTP) Supplemental Federal Test Procedure= SFTP = 0.35(FTP)+0.28(US06)+0.37(SC03) US06 = High Speed & High load SC03 = Air Conditioning test

8 Tier 3 8 Specific Tier 3 rule information Managing engines & fuels as a system

9 Tier 3 Overview EPA finalized Tier 3 regulations (supersedes Tier 2) Industry goals: LEV III and Tier 3 harmonization to lessen the certification and in-use testing burden. Result: Some difference exist 9 Similar to LEV III Fleet average NMOG +NOx Emission bins SFTP requirements PM Standards through 2024 Evaporative & OBD standards Different from LEV III Test fuels and market fuel PM after 2024 Evap leak test Tier 3 and LEV III are not completely harmonized

10 Timing 10 Tier 3: Rule became final with Federal Register publication, April 28, MY start date Reference: California s LEV III program 2015MY start date, optional compliance in 2014MY In 2015MY, Toyota LEVIII vehicles will be certified as 50-state vehicles.

11 150K Tailpipe FTP Bins New Bins Toyota hybrid vehicles certified to SULEV or better 11 Tier 3 Bin LEV III Tier 2 (Reference) NMOG+NOx (mg/mi) PM (mg/mi) CO (mg/mi) HCHO (mg/mi) Bin 160 LEV 160 Bin Bin 125 ULEV Bin 70 ULEV Bin 50 ULEV Bin 30 SULEV30 Bin Bin 20 SULEV Bin 0 ZEV Tier 3 Bins are aligned with LEV III

12 NMOG+NOx 150k Fleet Average 12 Fleet average required for FTP and SFTP NMOG+NOx for GVWR groups. Full useful life: 150K or 15 years (previous was 120K / 12 years). In 2025, vehicles will have NMOG +NOx average of current Prius emissions. Except start date, identical to LEV III < 6000 lbs GVWR begins ,001-8,500 Options: 2018 follow CA Curve or 2019 phase in ALL vehicles < 8,500 GVWR at 40/70/100% Full useful life: 150K miles or 15 years OR Establish a separate fleet ave for 120K FUL: 150K standard* 0.85 LDV/ LDT1 100% SULEV

13 NMOG+NOx 150k Fleet Average 13 Where we are now, certification levels FTP NMOG+ NOx (mg/mi) Tier 2, Bin 5 Avalon Venza Sienna Tacoma Tundra PC/LDT1 Fleet Ave LDT2/HLDT Fleet Ave SULEV Prius Currrent = 120K mile useful life Tier 3 = 150K useful life

14 Tailpipe Particulate Matter (PM) 14 PM testing is required for all vehicles. Adds PM US06 and in-use requirements Phase-in (%) 20* FTP Cert Std (mg/mi) All In Use Std (mg/mi) All US06 Cert Std (mg/mi) All *2017: 20% <6K lbs GVWR or 10% <8.5K;; After 2018 all vehicles included PM Testing required: In Use Std (mg/mi) All Durability vehicles/year Minimum # FTP Certification 25% 2 FTP In-use 50% of low and high mileage None SFTP Cert & In-use 25% 2 6 +

15 Part 1066 Test Procedures Durability vehicles, cert & in-use 15 testing require multiple fuels;; therefore multiple tests. Ethanol Content Factor: Interim changes to existing regulations needed to clarify testing requirements. New rule to be available early to mid 2015 Interim Testing Requirements on Tier 3 and Tier 2 Test Fuel Table IV-29: Interim Testing Requirements for EDVs and FEDVs on Tier 3 and Tier 2 Test Fuel Criteria Pollutant Test/Cycle 5-cycle 5-cycle (label) Test fuel Tier 3 or Requirements other transition option** GHG/Label/CAFÉ (Emission and Fuel Economy Durability Vehicles) 2-cycle (CAFÉ/GHG/label) Litmus Calculation 5-cycle Tier 2 Tier 2 Tier 3 Tier 2 or Tier 3 IUVP Criteria GHG* Pollutant Tier 3 Tier 2 FTP x x x Show criteria Use 5-cycle x x HFET x x x pollutant Tier 3 fuel x x US06 x x standards are or Tier 2 x SC03 x x met using Tier 2 fuel test fuel or must results Cold FTP x retest on Tier 3 fuel *Manufacturers may uniformly elect to use Tier 2 fuel results to meet the IUVP GHG requirements or rely on Tier 3 results. ** California Phase 2 fuel is only permitted for GHG/label/CAFÉ and litmus assessments for vehicles certified for criteria pollutants in the Tier 3 program using carryover data from CARB LEV II certification such as SULEVs and PZEVs. +

16 EPA Tier 3 Perspective: Fuels Overview of Tier 3 Aligned gasoline certification fuel with the market place Reduced octane, includes ethanol for gasoline cert fuel Reduce sulfur content of gasoline in the market 10 ppm average No change to diesel market fuel quality The sulfur content of highway diesel fuel (ULSD) is already required to meet a 15 ppm sulfur cap, which is sufficient for diesel fuel vehicles to meet the Tier 3 emissions standards. 16 +

17 Certification Fuel Tier 3 cert fuel is a E10 / 9# fuel with a ppm sulfur range: Decided on E10 ( v%) Best outcome from NPRM, which took comment on E10/10# and E15 Octane levels will move from 91 aki to 87 aki, unless the vehicles require premium by warranty Composition parameters are listed in Market fuel allows up to 15% ethanol (E15) so vehicles still needs to be designed & warrantied for this (no change from current practice) 17 Emission cert fuel now contains ethanol. But, it does not match LEV III cert fuel (E10/7#). + * RVP (or #) is the volatility metric for fuels **aki =Anti Knock Index [(R+M)/2]

18 Tier 3 overall Summary Tier 3 and LEV III are not completely harmonized Tier 3 continues key EPA philosophies: 1. Managing engines & fuels as a system 2. Vehicle classifications & Fuel neutral standard New Emission Standards Fleet average required for FTP and SFTP NMOG+NOx Full useful life: 150K or 15 years PM testing is required for all vehicles Evap family emission limit and fleet phase-in EPA adopts LEV III OBD and adds two parameters to LEV III New Test Requirements (Parts 1065/1066) Gasoline Cert Fuel Contains ethanol (E10), but has a lower octane level Change to Market Gasoline Lowering of sulfur average (30 è 10 ppm) but no change to caps 18

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