Inside automakers' Jekyll-and-Hyde approach to emissions rules
By many measures, the auto industry has been moving swiftly to electrify new vehicle models, invest in a future of battery-powered cars and leave the internal combustion car behind. However, traces of the conflicted era of the "compliance car" and GM’s EV1 debacle are still alive and well some two decades later.
On Monday afternoon, the U.S. Environmental Protection Agency announced that it plans to start the process of weakening pollution rules for cars and light trucks for model years 2022 to 2025. In 2012, President Barack Obama announced the greenhouse reduction and fuel efficiency rules, called the CAFE standards, which require automakers to almost double the average fuel economy of new cars and trucks by 2025.
In a release Monday, EPA Administrator Scott Pruitt called the Obama administration’s determination on the standards "wrong" and said the fuel efficiency rules were set "too high."
The move to weaken the rules has been expected for over a year. President Donald Trump said last year that his administration planned "to work on the CAFE standards" so automakers can "make cars in America again."
While clean-energy and energy-efficiency advocates, led by the state of California, staunchly oppose the EPA’s latest move, the auto industry isn’t exactly pushing back.
Following the EPA’s announcement, the Alliance of Automobile Manufacturers, an industry group which represents 12 auto makers, released a statement calling the EPA’s move "the right decision." The alliance includes BMW, Fiat Chrysler, Ford, General Motors, Jaguar Land Rover, Mazda, Mercedes-Benz, Mitsubishi, Porsche, Toyota, Volkswagen Group of America and Volvo Car USA.
"We support the administration for pursuing a data-driven effort and a single national program as it works to finalize future standards," said the group.
Egregious and riddled
Last year, the alliance sent a letter to the EPA asking the agency to withdraw the final determination on the CAFE standards, calling it "the product of egregious procedural and substantive defects." The alliance described the ruling as "riddled with indefensible assumption, inadequate analysis and a failure to engage with contrary evidence."
The alliance stated that the CAFE standards would force the auto industry to spend $200 billion between 2012 and 2025 to comply with the rules. The group stated the added expenses would boost the price of new vehicles for Americans.
At a transportation policy event in Sacramento last week, Marie Liu, an environmental legislative advisor, described the auto industry’s dual nature as:
"The car industry is a little bit like Jekyll and Hyde. On the one hand, we have car manufacturers who talk about how they're pushing innovation. On the other, we know that the car companies make the most profit off of their SUVs and big trucks."
Energy and environmental advocacy groups contend that the new rules will be bad for car buyers.
In a statement, the Alliance to Save Energy said that the weakening of the CAFE standards would "mean higher fuel costs for individuals and businesses, more greenhouse gas emissions and sacrificing our energy security."
The Consumer Federation of America said: "American families cannot afford to spend more money at the pump. They do not deserve to be saddled with gas-guzzling vehicles that will wreak havoc on their household finances when gas prices inevitably spike again."
The auto industry’s support of weaker fuel efficiency standards might seem surprising to anyone that’s been following the nonstop headlines touting the coming wave of electric cars. Bloomberg New Energy Finance estimated that the majority, or 54 percent, of new car sales by 2040 will be electric.
GM, which pushed to launch the all-electric Bolt in late 2016, said it’ll make money by selling electric cars by 2021. Its Bolt was the first mainstream electric car with a range over 200 miles and a price under $40,000.
Daimler plans for its brands Mercedes-Benz and Smart to sell electric versions for all models by 2022. Already the German automaker intends to build electric vehicles in large volumes at six factories across three continents.
Ford said this year that it plans to double its spending on electric vehicles to $11 billion. At the North American International Auto Show, Ford Motor Executive Chairman Bill Ford Jr. said, "We’re all in… The only question is, will the customers be there with us? And we think they will."
But are auto makers "all in" if they're supporting a weakening of fuel efficiency standards?
Tesla, a company that has bet everything on the growth of the electric car market, is one automaker that doesn’t back relaxation of the CAFE rules.
A Tesla spokesperson said: "Fuel economy standards should be strengthened, not weakened. This is overwhelmingly the opinion of the scientific community. The oil industry obviously has a different opinion. We would invite people to consider which one sounds more credible."
However, Tesla is the exception because 100 percent of its vehicles are electric. While the big automakers are starting the electrification transition, many are simultaneously growing their profitable SUV and pickup lineups. GM, Ford and Fiat Chrysler’s full-sized pickups were the most popular vehicle models sold in America last year, followed by Toyota’s RAV4 SUV.
While the auto industry straddles the transition to cleaner cars, it’ll likely face yet another fight from California, which has been prodding the industry for years.
California's Gov. Jerry Brown issued a statement on the EPA’s decision Monday stating: "Watch out for this belated April Fools’ Day trick. This cynical and meretricious abuse of power will poison our air and jeopardize the health of all Americans."
California is legally able to set its own pollution standards, and because of its size can in effect push automakers to adopt stricter fuel efficiency rules. Brown’s statement on the EPA's decision noted that California previously has intervened in a lawsuit filed by the Alliance of Automotive Manufacturers that challenged the CAFE standards.
California and the EPA appear to be gearing up for a fight of epic proportions.
In the EPA’s own statement Monday, the agency challenged California’s pollution waiver, saying that it "is still being reexamined by EPA under Administrator Pruitt’s leadership."
Pruitt added: "Cooperative federalism doesn’t mean that one state can dictate standards for the rest of the country… It is in America's best interest to have a national standard, and we look forward to partnering with all states, including California, as we work to finalize that standard."