NEW YORK, March 27 (Reuters) - Automakers face

"daunting" government regulations to sell half of new vehicles

by 2030 as electric or plug-in hybrids despite a U.S. decision

to soften the final rules over its initial, tougher proposal, a

top industry official said on Wednesday.

Under all compliance scenarios, automakers will need to sell

at least 50% plug-in and EVs by 2030 to meet regulatory targets,

according to the Environmental Protection Agency. Under the

initial proposal, they were projected to need to sell 60% EVs by

2030 and 68% by 2032.

John Bozzella, who heads the Alliance for Automotive

Innovation trade group, said the revised rules represent "very

ambitious and daunting targets. There's no sugarcoating that."

After heavy lobbying by the automakers that called the EPA's

initial April 2023 proposal "neither reasonable nor achievable,"

the 2027-2032 EPA vehicle emissions rules dramatically soften

yearly requirements, dropping its U.S. electric vehicle adoption

target from 67% by 2032 to as little as 35%.

Bozzella had urged the Biden administration to make changes.

"I said, 'You need to slow the pace of the rules.' And they

did," Bozzella said. "Why? Because they saw what was happening

in the market: a choppy EV retail environment" along with

inadequate public charging stations and not yet mature EV supply

chains.

The EPA rule cuts vehicle emissions by 49% by 2032 compared

with 56% under the initial proposal.

Pablo Di Si, head of Volkswagen's North American

business, called the 2032 requirements "extremely tough." He

said the automaker will not change "one product launch" as a

result of the softer rules, which will "not change the end game

for the U.S. and for VW," and will continue with EV rollout

plans.

Hyundai Global Chief Operating Officer Jose

Munoz said on Wednesday that the EPA revised standards are "a

little bit less demanding but is still challenging." The company

is spending $12.6 billion to ramp up EV and battery production.

Toyota Motor ( TM ) called the initial EPA proposal

"extreme and outside historical norms." Jack Hollis, president

of Toyota Motor Sales USA, said the company does not plan to

change its product portfolio depending on who wins the White

House in November.

President Joe Biden, a Democrat, strongly supports electric

and hybrid vehicles as part of an effort to fight climate

change. His main opponent, Republican former President Donald

Trump, has criticized Biden's backing of EVs, saying they will

destroy the U.S. auto industry and destroy jobs.

"It just changes literally the regulations and the timelines

to get to where we're going to end up going anyway," Hollis said

at an auto show forum.