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Automakers Raise Concerns Over Proposed Vehicle Regulations

Home » Automakers Raise Concerns Over Proposed Vehicle Regulations
December 24, 2023
Edward Smith

US Regulations Could Accelerate the Decline of Gas-Powered Vehicles

In a recent plea for reconsideration, a group representing major car manufacturers has asked the Biden administration to rethink three proposed rules that they fear could lead to the rapid decline of gas-powered cars. The Alliance for Automotive Innovation group includes big names like General Motors, Toyota, Volkswagen, Ford, and Stellantis. Their concerns revolve around strict regulations suggested by three government agencies: the Environmental Protection Agency (EPA), the National Highway Traffic Safety Administration (NHTSA), and the Department of Energy (DOE).

Worries About Tough Regulations

The government’s proposed rules aim to significantly change how cars are powered. They want 67% of all new vehicles in the United States to be electric by 2032. While switching to electric vehicles (EVs) can help reduce pollution and fight climate change, the Alliance for Automotive Innovation believes these rules might have some unintended consequences.

Financial Strain on Car Manufacturers

The alliance recently sent a letter expressing their concerns to the three government agencies and the White House. They worry that if the proposed rules are enacted, car companies could stop making gas-powered vehicles much sooner than planned. This could hurt their profits and make it harder for them to invest in electric vehicle technology. One of the significant concerns is the potential financial burden that car manufacturers could face in the form of Corporate Average Fuel Economy (CAFE) fines.

Alarming CAFE Fines

CAFE fines are penalties imposed on automakers for failing to meet the fuel efficiency standards set by the government. These standards regulate the average miles per gallon a car manufacturer’s fleet of vehicles must achieve. CAFE standards encourage car manufacturers to produce more fuel-efficient vehicles and reduce greenhouse gas emissions.

The letter from the alliance points out that these fines could be enormous. If the rules are implemented as is, it might lead to fines totaling $14 billion, with General Motors and Stellantis facing penalties of $6.5 billion and $3 billion, respectively. Such huge fines could severely impact car manufacturers’ financial stability and ability to invest in electric vehicles and the necessary infrastructure.

Focus on EPA and NHTSA Proposals

The EPA’s proposal calls for a 56% reduction in vehicle emissions by 2032, to have 67% of new cars be electric by the same year. Meanwhile, NHTSA’s proposal, introduced in July, aims to increase CAFE standards by 2032 to an average of 58 miles per gallon for all cars. This involves yearly increases of 2% for regular cars and 4% for trucks and SUVs. However, American carmakers want the yearly increase for trucks to be reduced to 2%.

Challenges Due to Conflicting Goals

One of the main issues is that these regulations have conflicting goals, which can be confusing and burdensome. The alliance is also worried about the Department of Energy’s proposed changes to evaluating electric vehicles within the CAFE program. These changes might make electric vehicles seem less fuel-efficient by 72%. The group believes this could jeopardize President Biden’s goal of reaching 50% electric vehicle sales by 2030 and shifting investments from innovative electric vehicle technology to older, traditional engine technology.

Automakers’ Response and Political Landscape

These concerns from car manufacturers come at a time when companies like General Motors and Ford are slowing down the production of some electric vehicles. Additionally, there’s a push from Republican lawmakers in Congress to either block or change the proposed electric vehicle regulations.

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Photo by Dylan McLeod on Unsplash

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