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Nissan Joins General Motors in Backing California's Stricter Emission Rules for Motor Vehicles

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【Summary】Japanese automaker Nissan Motor Co. has joined General Motors in exiting a group of automakers that had backed U.S. President Donald Trump in his bid to prevent California from imposing its own vehicle emissions rules. Nissan initially sided with the Trump administration on loosening the fuel economy standards, but after GM reversed its stance last week, Nissan is following the company's lead.

FutureCar Staff    Dec 04, 2020 5:00 PM PT
Nissan Joins General Motors in Backing California's Stricter Emission Rules for Motor Vehicles
Traffic backs up during rush hour near San Francisco. (Photo: David Paul Morris/Bloomberg/Getty Images)

During his presidency, Donald Trump has taken steps to revoke the state of California's ability to establish its own separate emissions standards. Surprisingly some automakers support the effort while others are siding with California.

Now Japanese automaker Nissan Motor Co. has joined General Motors in exiting a group of automakers that had backed U.S. President Donald Trump in his bid to prevent California from imposing its own vehicle emissions rules. 

Nissan initially sided with the Trump administration on loosening the fuel economy standards, but after GM reversed its stance last week the automaker is following GM's lead and will now support California effort to set its own vehicle emission standards.

Other automakers including Mazda Motor Corp, Hyundai Motor, Kia Motors Corp, Mitsubishi Motors Corp, Fiat Chrysler Automobiles NV, Subaru Corp and the National Automobile Dealers Association are supporting President Trump's efforts to bar California from setting its own fuel-efficiency rules separate from the less restrictive federal requirements. The automakers want the U.S. to have a nationwide standard, instead allowing California to set its own.

But with President-elect Joe Biden set to focus on renewable energy sources and electric vehicles, Nissan, GM and a group of other automakers are now backing California. GM's reversal won praise from Democratic President-elect Joe Biden, who will take office on Jan 20, 2021. 

President-elect Biden has made boosting electric vehicle adoption in the U.S. a top priority. His administration is pledging to spend billions of dollars to add 550,000 charging EV charging stations so drivers of electric vehicles will not be deterred from purchasing a battery-powered vehicle over concerns about being able to find convenient charging.

"We are confident that productive conversations among the auto industry, the Biden administration and California can deliver a common-sense set of national standards that increases efficiency and meets the needs of all American drivers," Nissan said in a statement.

The Trump administration argued that lowering fuel efficiency standards makes vehicles more affordable and safer, since vehicle manufacturers can build heavier vehicles that can better withstand a collision if fuel economy requirements were eased.

California's emissions standard standards are among the toughest in the nation, requiring automakers to install additional emission control devices on their vehicles in order to sell them in the state. 

The state had the ability to set its own emission standards since 1966, in an effort to combat worsening smog in the crowded Los Angeles Metro Area from millions of vehicles. California's notoriously bad traffic contributes  further to greenhouse gases and air pollution, as drivers are often stuck each day in bumper-to-bumper traffic on the state's freeways.

When California established its own emission rules in the 1960's, it was seen as 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. 

However, after former coal industry lobbyist Andrew Wheeler was tapped by the Trump administration to serve as EPA Administrator last year, rules and regulations have been systematically rolled back at the agency, including efforts by Wheeler to loosen restrictions on harmful pollutants and reduce the role of climate scientists in the agency's policy making processes across industries.

Trump tweeted in 2019 an unsubstantiated claim that "California has treated the auto industry very poorly for many years."

The EPA chief called out California again in September just days after the state's Governor, Gavin Newsom signed an unprecedented executive order that bans the sale of new gas-powered vehicles beginning in 2035 in an effort to reduce greenhouse gasses and fight climate change. 

In July 2019, Ford Motor Co, Honda Motor Co, Volkswagen AG and BMW struck a voluntary agreement with California on reducing vehicle emissions that is less stringent than rules previously adopted under President Barack Obama but still higher than the Trump administration's planned rollback. Ford urged other automakers to back the California framework as a way to move forward.

The Trump administration however showed no interest in extending the federal EV tax credit that's good for up to $7,500 on the purchase of a zero emissions electric vehicle.

President-elect Joe Biden Supports Extending Tax Credits for EVs

President-elect Biden made clear he supports new federal tax credits for purchases of electric vehicles and retrofitting factories for their production. 

The tax credit was first introduced in 2009 by the Obama administration and went into effect on Jan 1, 2010. It was designed to spur the adoption of electric or plug-in hybrid vehicles in the U.S, encouraging drivers to switch by offering a tax break that could be combined with other local incentives.  At the time, President Obama declared a goal of selling 1 million electric and  plug-in hybrid (PHEV) vehicles in the U.S. by 2015. 

The tax credit was especially welcomed by automakers offering fully-electric models that qualify for the full $7,500 amount, such as General Motors, Toyota and Tesla.

Part of Tesla success in selling the Model S sedan in the U.S. can be attributed to the federal EV tax credit. For years, Tesla advertised its Model S, and later the Model X and Model 3, with the $7,500 discount already factored in. 

Buyers in California were also able to take advantage of an additional state tax credit of up to $2,500. When combined together, Tesla buyers could receive a $10,000 tax break on the purchase of a Tesla vehicle.

However, the credit is only good on the first 200,000 qualifying vehicles from each automaker. California electric car maker Tesla became the first automaker to reach that limit in July, 2018 after the launch of the mass-market Model 3 sedan. The credit officially expired for Tesla on Dec. 31, 2019.

General Motors reached the 200,000 vehicle limit in the fourth quarter of 2018, boosted by sales of fully-electric Bolt EV. The $7,500 credit officially expired for GM on July 1, 2020.

The fight with California over fuel economy and emissions was part of a broader effort by the Trump Administration to scale back Obama era rules requiring U.S. auto fleets to average nearly 51 miles per gallon by model year 2025. 

Trump officials also drafted a plan in 2019 to freeze federal mileage standards at roughly 37 miles per gallon though model year 2026 vehicles. Now that Trump is a lame duck President, it likely won't happen.

resource from: Reuters

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