Fuel Economy Regulations Causing Discord Between Automakers, Lawmakers

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【Summary】The U.S. Environmental Protection Agency has been sued by 23 states over the government agency’s effort to revoke California’s ability to set its own car emissions rules.

Original Vineeth Joel Patel    Dec 31, 2019 5:30 AM PT
Fuel Economy Regulations Causing Discord Between Automakers, Lawmakers

While tariffs between China and the United States garner all of the attention for raising the price of automobiles and its effect on where carmakers manufacture vehicles, there's another battle looming closer to home. Washington, D.C. is currently a battleground for lawmakers, automakers, and states, more specifically, the U.S. Environmental Protection Agency (EPA) and 23 states. Roughly half of the states in the U.S. have sued the EPA over the agency's attempt to revoke California's ability to set its own emissions rules. General Motors and Fiat Chrysler Automobiles have sided with President Trump's administration, while Ford is with California. The latest lawsuit against the EPA has divided automakers.

Automakers Are Divided On Fuel Economy

According to The Detroit News, the split is coming at a time when automakers should be coming together to try to get the Trump administration to make a cohesive fuel economy mandate. U.S. Rep. Debbie Dingell, D-Dearborn, told the outlet that the division between automakers on fuel economy laws has resulted in confusion with lawmakers.

"It's a very difficult time for the industry," said Dingell. "People are viewing each company differently. People are asking why they are doing things, but it depends on who is doing the asking and what it is they are asking about."

Today's dispute can be traced back to the Obama administration that implemented fleetwide fuel economy requirements for automakers to follow by 5 percent annually to eventually reach 54.5 mpg by 2025. Automakers have asked the Trump administration to look at the rules for 2022-25 model years, states the outlet. Since the Obama administration enacted the fuel economy requirements before President Donald Trump took office in 2016, the recent administration has been working for the past three years to reverse the requirements.

Unfortunately, things get tricky here. President Trump went one step beyond what automakers wanted by planning to freeze fuel efficiency rates at 2020 levels until 2026, reports the outlet. That would mean automakers would be required to have fleets that average roughly 39 mpg.

California Whats Higher Fuel Economy Regulations

That decision didn't sit well with California, which sued the government over the rollback. Thirteen other states and Washington, D.C. follow California's fuel economy requirements, so it's fair to say that the other states weren't too happy, either. Then, the issue of automakers comes in, as a few, Ford, BMW, Volkswagen, and Honda, reached an agreement with California to raise fuel economy of their fleets up to 50 mpg by 2026. The Trump Administration wasn't thrilled with the move.

More recently, a division between automakers arose when General Motors, Toyota, Fiat Chrysler Automobiles, and the Association of Global Automakers sided with the Trump Administration, reports The Detroit News. These automakers believe that the federal government should have one set of fuel economy rules for the entire nation.

With the conflict, the administration may now be seeking a resolution, which includes enforcing a 1.5 percent annual mpg increase, which is far from the 5 percent under the Obama administration.

Why Are There Differences?

The reason for the different opinions from automakers is partly due to what vehicles they produce. American brands, like General Motors and Fiat Chrysler Automobiles have heavy-duty trucks and non-efficient models. Other brands, like Volkswagen and BMW have large plans for electric vehicles, so they're heading toward an efficient future anyway.

"The companies are in different places," said Gloria Bergquist, spokeswoman for the Alliance of Automobile Manufacturers. "I expect they're going to be together on a lot of other issues."

California, which is the United States' largest state, makes up roughly 12 percent of the U.S. auto market. So it has quite a lot of pull on what it can do. Brands need to be able to sell vehicles in the state, and if cars don't meet certain fuel economy requirements, there's a good chance California's lawmakers will simply not allow specific vehicles to be sold, registered, or kept within its borders. It also doesn't look good for American automakers when they're divided amongst themselves.

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