Automakers offer mixed solutions to easing fuel economy rules

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December 5, 2018
General Motors proposed a nationwide mandate for electric vehicles in the ongoing debate on fuel economy standards. The automaker produces the Chevrolet Bolt EV electric car.
Photo courtesy of General Motors

With President Donald Trump’s administration calling for easing of Obama-era fuel economy rules that call for 54.5mpg by 2025, major automakers offered differing opinions in hearings and in public comments in recent months. The Trump proposal would freeze standards at levels envisioned for 2020 and would cancel a waiver that lets California and several other states set their own efficiency and emissions rules. http://www.epa.gov; http://www.nhtsa.gov

General Motors (GM) – The country’s largest automaker proposed rules that would expand California’s all-electric vehicles (EVs) mandate nationwide, making EVs 25% of new-car sales by 2030.

“GM strongly believes that EVs are the future of transportation. But, the path to that future will require deliberate regulatory incentives due to the high cost of batteries and competition from foreign manufacturers,” GM officials said in regulatory filings.

GM’s filings support canceling California’s rule-making ability. Toyota and several other automakers used similar language in opposing California’s waiver.

Ford Motor Co. – Unlike GM and Toyota, Ford officials support California’s waivers, saying that eliminating green states’ abilities to set their own rules would likely launch a wave of lawsuits. Litigation could tie up rule-making processes for years, making it difficult for automakers to plan what cars and trucks to design and build.

“The long-term impact is difficult to quantify, but could be quite negative to Ford's financial health and its employees,” company officials said.

Fiat Chrysler Automobiles (FCA) – FCA supports revoking California’s rule-making ability, and the company offered the most direct support to Trump’s proposals, saying many of the assumptions that automakers and regulators used to set rules in 2012 were wrong. Regulators assumed that cars would move from 50% of vehicle sales to about 57% by 2025. Instead, cars fell to 30% of new sales last year, and the decline in share continues.

Tesla – The EV maker is the strongest critic of Trump’s proposals, saying it has proven that standards are achievable and that reducing fuel economy targets will stifle innovation.

Honda –Honda rejected the call to revoke California’s rulemaking ability, with officials saying the effort would bring “years of uncertainty for the auto industry while federal and state parties litigate.” Honda also opposes freezing standards, saying automakers should face stricter annual targets.

Tesla CEO Elon Musk settles with regulators, steps down as chairman

The U.S. Securities and Exchange Commission (SEC) settled with Tesla Chairman and CEO Elon Musk and his company for $40 million, Musk’s ouster as chairman, and agreements to put people in place to monitor the CEO’s communications with investors.

The SEC had sought to remove Musk as chairman and CEO in its suit, saying he misled markets when he announced he had “funding secured” to take Tesla private in August.

That deal fell apart weeks later, and the funding turned out to have been an unofficial verbal deal with Saudi Arabia’s sovereign wealth fund.

In the settlement, Musk agreed to resign as chairman and be replaced with an independent chairman. Two independent directors will also join the board, and a committee of independent directors will develop controls and procedures to oversee Musk’s communications.

Musk and Tesla will each pay $20 million, $40 million total, in fines – Musk for violating communications standards and Tesla for not having adequate protections in place to prevent him from doing so. http://www.sec.gov; http://www.tesla.com