Are some top carmakers heading down a ‘dead-end road’?

GM, Toyota, Hyundai and others show support for Trump’s move to block California setting its own tough emissions goals.

The car makers said that the government's stance provided 'vehicle manufacturers with the certainty that states cannot interfere with federal fuel economy standards' [File: David Paul Morris/Bloomberg]
The car makers said that the government's stance provided 'vehicle manufacturers with the certainty that states cannot interfere with federal fuel economy standards' [File: David Paul Morris/Bloomberg]

Some of the world’s biggest carmakers are siding with United States President Donald Trump in his administration’s bid to prevent California from setting its own fuel-efficiency rules or zero-emission requirements for vehicles, the companies said in a filing with a US appeals court late on Monday.

The move by firms including General Motors Co, Toyota Motor Corp, Hyundai Motor Co, and Fiat Chrysler Automobiles NV, follows legal challenges by California and 22 other states and environmental groups against Trump in September. A senior Democrat said these carmakers were heading “down a dead-end road” by not supporting tougher emissions standards.

The challenges by California and the other states aim to undo the Trump administration’s determination, issued in September, that federal law bars California from setting stiff tailpipe emissions standards and zero-emission vehicle mandates.

The carmakers backing Trump, along with the National Automobile Dealers Association, said in a court filing that they support the government’s bid to bar states from setting their own emissions rules.

They asked to intervene, arguing the administration’s rule provided “vehicle manufacturers with the certainty that states cannot interfere with federal fuel economy standards”.

A spokeswoman for California Attorney General Xavier Becerra said the action “doesn’t change our resolve to fight as long and hard as necessary to protect our standards”.

She added, “The courts have upheld our authority to set standards before and we’re hopeful they will yet again.”

Mazda, Nissan Motor Co, Kia Motors Corp and Subaru Co are also among the carmakers supporting Trump, a decision which could prompt a furious backlash from Democrats and environmentalists.

Their support for Trump could also be a risky move if a Democrat wins the White House in next year’s election and reverses Trump’s actions, and also reinstates California’s right to set its own rules and tougher national emissions standards adopted by President Barack Obama.

The announcement, however, showed an industry split.

Ford Motor Co, BMW AG, Honda Motor Co and Volkswagen AG, which announced a voluntary deal with California in July on emissions rules, are not joining the bid to intervene on the administration’s side.

The US Department of Justice warned the four carmakers then that the agreement “may violate federal antitrust laws,” according to documents seen by Reuters.

John Bozzella, president and chief executive of Global Automakers, a trade group representing major foreign firms, said the other companies had little choice but to back the administration.

“It’s been the federal policy for the better part of 40 years that the federal government has the sole responsibility for regulating fuel economy standards, but it doesn’t have to get to that,” Bozzella told reporters. He was speaking for an ad-hoc group, the Coalition for Sustainable Automotive Regulation.

“We can still reach an agreement” on fuel economy rules, Bozzella said, adding that companies still support a “middle ground” between California and the administration that would see rising attainable fuel efficiency requirements. He said the Trump administration did not ask the automakers to intervene.

Senator Tom Carper, the top Democrat on the Senate Environment and Public Works Committee, had harsh words for the automakers siding with Trump.

“Instead of choosing the responsible path forged by four automakers and the state of California, one that will move us toward the cleaner, alternative fuel vehicles of the future, these companies have chosen to head down a dead-end road,” Carper said in a statement.

A group of major environmental groups, including the Sierra Club, the Union of Concerned Scientists and Natural Resources Defense Council, sued in September to block the determination.

On Friday, seven US states, including Alabama, Ohio, Texas, Utah and West Virginia, also filed in support of the Trump regulation, arguing that without the rule their residents would have to pay “higher vehicle costs”.

In August 2018, the Environmental Protection Agency and National Highway Traffic Safety Administration proposed freezing fuel efficiency requirements at 2020 levels through 2026.

The Obama-era rules adopted in 2012 called for a fleetwide fuel efficiency average of 46.7 miles per gallon (approximately 20 kilometres per litre) by 2026, with average annual increases of nearly 5 percent. Under Trump, cars on average would only have to achieve fuel efficiency of 37 mpg (15.7 km/l) by 2026.

The final rule is expected to modestly boost fuel efficiency from the initial proposal, with some automakers anticipating annual increases of about 1.5 percent, but still much less stringent than the Obama rules.

The group was not taking a position on what those requirements should be, Bozzella said, but reiterated they should continue to rise annually.

“The decision to intervene in the lawsuit is about how the standard should be applied, not what the standard should be,” Bozzella said.

Source: Reuters

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