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Major Automakers Support California Regarding Trump’s Fuel Economy Duel

  • Honda, Ford, BMW, and Volkswagen, which represent 30% of car manufacturers, have decided to side with California rather than Trump in regard to the federal fuel economy deal.
  • California’s Clean Air Act gives them the legal right to set their own fuel-efficiency standards. It also allows other states to adhere to their regulations if they so choose.
  • A 50-state fuel economy standard is the ideal goal, it’s just a matter as to who’s going to set that standard—California or the government.
  • Automakers want to maintain their environmentally-friendly reputation while making money at the same time.
  • Unless all states and the federal government are on the same side, no solution is really going to be a solution at all.

With the official institution of the Trump administration in January of 2017, a plethora of Obama-era policies was revoked. One such policy was the fuel economy standard in which car manufacturers were required to reach a fleet average of 54.5 mpg by 2025.

Trump’s administration has decided to roll-back on Obama’s rule by proposing a fleet average of 37 mpg. Four major automakers—Honda, Ford, BMW, and Volkswagen—who at one point requested the lower fuel economy standards are now siding with the state of California in what seems to be a major PR stunt.

California’s Clean Air Act

According to the Clean Air Act, California is allowed to set stricter standards than the federal government for its pollution policies due to the Los Angeles Basin’s abysmal air quality. The state of California was able to live in harmony with the previous two administrations in regard to their fuel economy but hasn’t been so successful with President Trump.

Another caveat to the Clean Air Act of 1963, is that any other state that would like to “fall in line” with California’s fuel economy standard can legally do so. The Act permits states to abide by federal or Californian mandated regulations.

Automakers in Support of California

Honda, Ford, BMW, and Volkswagen agreed to regulations that would require them to produce cars that get 51 mpg by 2026. Although these four automakers originally lobbied with the Trump Administration to lower the standard set by Obama, they have sense flip-flopped more than likely due to bad publicity. Fighting for weaker emissions standards doesn’t look too good in regard to public relations.

These four car manufacturers also make up 30% of the total market. With California selling the most vehicles in all of the United States it would be a mighty blow if automakers couldn’t sell their vehicles due to the standards set by California.

The biggest issue is having to set up two different production lines—one for states with stricter fuel economy standards, and another for the rest of the market. This would be a huge hit in productivity and revenue. The only solution that allows car companies to “save face” in the public eye and be financially productive is to have all states adhere to the regulations that California sets.

Does it Even Matter?

In an attempt to appease both California and federal fuel economy standards, car manufacturers will shift their production lines in order to provide California with more fuel-efficient vehicles while giving the other states the “left-overs.” This doesn’t seem to solve anything.

Sure California and its allied states have the highest fuel economy rate, but the rest of the country absorbs the excess. Although the “Californian states” may have decreased their emissions rate, the other states will have experienced an increase in pollution due to receiving inferior fuel-efficient vehicles.

In fact, the higher the standards are for fuel economy the more expensive the vehicles become. Currently, there are 13 states that side with California. If automakers decide to stick to a single production line, new vehicles are going to be far too expensive for those who aren’t even required to have the kind of fuel-efficiency that the vehicles were originally designed to accommodate.

Of course, this results in more consumers hanging on to older, more unsafe vehicles just to avoid going into debt to buy a vehicle that offers mileage that was neither required nor requested. It seems that fewer new cars will be sold and car manufacturers will suffer losses.

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