GM Takes Heat for Backing the Trump's Administration Plan to Revoke California's Ability to Set its Own Emission Standards
【Summary】The Trump administration is seeking to revoke California’s authority to set its own standards, citing increased costs to automakers who must comply with it. Automakers Ford Motor Co, Honda, Volkswagen and BMW have already sided with California, however General Motors in a surprise move has decided to side with the Trump administration’s proposal.
When the state of California gained the ability to set its own emission rules in the 1960's, it was seen has a big win for the environment. At the time, cars weren't as clean burning as they are today and the Los Angeles metro area was frequently blanketed in a thick haze of harmful smog.
Now after decades of having the most strict emission standards for motor vehicles, the Trump administration is seeking to revoke California's authority to set its own standards, citing increased costs to automakers who must comply with it.
The Trump administration argues that the increased costs of building more fuel efficient cars will hurt automakers, and the increased costs will be passed down to consumers in the form of higher vehicle prices. Trump also said that fuel efficient vehicles are not as safe, without any data to support his claim.
California wants to push ahead with the Obama era rules to improve average fleet fuel economy to some 47 miles per gallon, the Trump administration is seeking to reduce average fuel efficiency to 37 mpg.
Automakers Ford Motor, Honda Motor, Volkswagen and BMW have already sided with California, however General Motors in a surprise move has decided to side with the Trump administration's proposal. Joining GM is Toyota, Fiat Chrysler Automobiles and Hyundai Motor.
For GM the stakes are high, the automaker's most profitable segment is gas guzzling pickup trucks and SUVs. GM would need to make changes in its vehicle lineup order to raise its fleet fuel economy average to 50 mpg by 2025.
The Clean Air Act
When the Clean Air Act was passed in 1963, it gave the U.S. Environmental Protection Agency the ability to regulate motor vehicle emissions standards at the national level. Since California was already actively developing its own stricter clean air standards, Congress granted California an exception, as long as any state emission plan it came up with complied with federal guidelines.
California did better, it enacted vehicle emissions standards more stringent than the federal government guidelines. Congress also permitted other states to follow California's more stringent emissions requirements, which many did.
Over the years, two dozen states, including New York, New Jersey, Illinois, Colorado and the District of Columbia adopted standards based on California's lead in order to curb greenhouse gasses.
However, the Trump administration's new proposal will allow GM to build and sell more profitable trucks and SUVs at a time when rival automakers are introducing fully-electric models. This probably won't sit well with environmentalists, but its apparently sits well with GM.
Sales of pickups and SUVs helped boost GM's Q3 earnings by 6% compared to the same period last year, despite a month long strike that idled its assembly plants.GM also posted healthy operating margin of 10.2% in North America, something it does not want to mess with going forward.
GM CEO Mary Barra said that the company's future is one of zero emissions, but the automakers decision to side with the Trump administration shows it's not quite ready to do that yet, even as its main U.S. rival Ford Motor Co plans an $11 billion investment to develop 40 new all-electric and hybrid models by 2022.
Meanwhile Tesla continues to gain market share with its strong selling Model 3, its first mass-market electric car. Demand for the electric Model 3 is still rising while GM axed poor selling combustion engine sedans like the Chevy Cruze.
With a market cap of $55 billion, GM is in a position to be a leader in electrification, but by siding with Trump the automaker appears to not want to take the same short term risks that electric automaker Tesla has.
Instead GM risks falling behind in the auto industry's push toward building more fuel efficient and fully-electric models, as it churns out thousands of gas-guzzling pickup trucks and SUVs.
GM is Suspending Bolt EV Production Until at Least Oct 15 Following Latest Recall Over Battery Fires
Electric Truck Startup Rivian Plans to Raise up to $8 Billion in its Upcoming IPO
Volkswagen’s ID.4 Pro SUV Awarded an EPA Estimated Range of 249 Miles, Edging Out the Ford Mustang Mach-E
Tesla Challenger XPeng to Officially Launch the P5 Sedan, its 3rd Electric Model, on Sept 15
Toyota Cuts its Annual Production Target by 300,000 Vehicles Due to Semiconductor Shortages
UPS Acquires Technology Platform Roadie to Facilitate Same Day Gig Deliveries
General Motors Extends Production Shutdown of the Chevy Bolt EV Until Sept 24 Due to Battery Recall
Tesla Sells 44,464 China-made Vehicles in August, Local Deliveries Surge 49.5% Compared to July
- Tesla's Chinese Battery Supplier CATL Unveils a Sodium-ion Battery, a Major Breakthrough for EVs
- Toyota to Invest $13.5 Billion in Electric Vehicle Battery Development by 2030
- Tesla to Add a ‘Beta Request’ Button to its Full-Self Driving Feature Next Week to Open it to More Drivers
- Ford & Argo AI to Deploy Self-driving Vehicles on Lyft’s Ride-Hailing Network This Year
- Ford Motor Co and Partners are Opening a ‘Smart Parking Lab’ in a Detroit Parking Garage to Test Automated Parking, EV Charging
- Volvo-backed Electric Brand Polestar in Talks to go Public via a SPAC Deal, Sources Say
- Self-Driving Truck Startup Embark to Launch IPO in a $5.2 Billion SPAC Deal
- General Motors to Source Lithium for EV Batteries From the Salton Sea Region in California With New Strategic Partnership
- Mercedes-Benz to Make its Sindelfingen Tech Center its Global ‘Electric Software Hub’, Plans to Hire 3,000 Developers
- Luxury-Electric Automaker Lucid Motors to Launch its Much-Anticipated IPO Next Week