When billions of dollars are at stake over research and development, tooling, manufacturing, and sales, huge companies like Ford, Honda, and Mercedes-Benz look for one thing above all else: stability. A tumultuous future does nothing but invite reactionary decisions that could grind profitability to a halt, something that could now occur thanks to the Trump Administration rolling back Obama-era Corporate Average Fuel Economy standards for less stringent rules and regulations, under the very questionable auspices of making cars cheaper and safer.
What’s worse, the decision strikes a huge blow to the effort to clean up America’s air pollution from vehicles. And the Trump Administration, as well as the automakers who are going along with the change, will be on the wrong side of history because of it.
Yesterday, while the country and the world grappling with the lethal, economy-crippling effects of the coronavirus outbreak, the federal government acted to roll back Obama-era regulations around vehicle emissions. Few noticed, as the consumer advocacy group Public Citizen wrote on Twitter, which is understandable given the state of fear that pervades our new reality.
In short, the new rule from the Environmental Protection Agency and the Department of Transportation requires automakers to hit a fleet average fuel economy target of 40 MPG by 2026 instead of the considerably more aggressive Obama rules that mandated an average of 54.5 MPG by 2025. The government argues this will result in cheaper cars and save more lives, because it compels people to buy more of those newer, safer and cheaper cars.
The data behind this decision is, to put it politely, questionable. From the New York Times:
Mr. Trump’s critics said the rule showed the president’s disregard for science and could actually harm the economy over time. The administration’s own draft economic analyses of the rule showed that it could hurt consumers by forcing them to buy more gasoline. And a February report by a panel of government-appointed scientists, many of them selected by the Trump administration, concluded that “there are significant weaknesses in the scientific analysis” of the rule.
There’s been an active debate surrounding CAFE since its inception in the 1970s, mostly coming from the automakers themselves stating that the rules are too stringent, they don’t consider the cost of research and development, and that consumers don’t actually care. But with stricter CAFE regulations in place, the average fuel economy has increased, emissions have decreased, and the world has continued to turn. It’s also helped the advent of alternative fuel vehicles like hydrogen fuel cell vehicles and EVs like Tesla.
But Trump and company see these rules as anti-business and automakers like Fiat Chrysler, General Motors, and Toyota have, by whispering in Trump’s ear, pushed the current administration to roll back the Obama-era regulations. Also culpable are a group of automakers called the “Coalition for Sustainable Automotive Regulation,” which includes Hyundai, Kia, Nissan, Maserati, Ferrari, Nissan, and Aston-Martin, and are fighting to curb California’s ability to set the national standards. The new proposal, labeled Safer Affordable Fuel Efficient (SAFE) Vehicles, has returned as, even though the world is in the midst of a pandemic that could see up to 200,000 Americans die, the President of the United States is hoping to bully the rules through and promoting it on his Twitter account.
He added, “My Administration is helping U.S. auto workers by replacing the failed Obama Emissions Rule. Impossible to satisfy its Green New Deal Standard; Lots of unnecessary and expensive penalties to car buyers! My proposal to the politically correct Automobile Companies would lower the average price of a car to consumers by more than $3500, while at the same time making the cars substantially safer. Engines would run smoother. Positive impact on the environment! Foolish executives!”
SAFE wouldn’t replace the previous administration’s CAFE rule change, nor would it let manufacturers return to an era of spewing tons of emissions into the atmosphere. (That’s what Trump’s EPA is for.) Instead, SAFE would pin the standards to the 2021 CAFE rules of 37 MPG, but also cut the requirement of hybrids and EVs, and remove California’s power to set its own emissions standards.
What Trump’s change represents is volatility, something the Obama rules hoped to rectify. When those previous rule changes occurred in the mid-2010s, regulations were the wild west. Europe had stringent rules, as did California, while the DOT and EPA had its own set of standards. It was added complexity to an already complex business, but with a more singular set of rules encompassing the industry at large, the new standards provided a roadmap that automakers could follow and strategically plan their respective portfolios.
And they did as billions of dollars were spent on better technology, increased miles per gallon, hundreds of battery-electric vehicles, and reducing a company’s entire carbon footprint to meet those standards.
This proposed change then would set fire to that map, that progress, and cause massive instability which would likely increase the cost of your car, not decrease it as stated. The change also wouldn’t make cars safer or engines run smoother, despite what the president says either, because that’s not how any of this works.
When Trump’s plan was first floated late last year, Ford, BMW, Honda, and Volkswagen banded together with California to continue using the stricter rules and regulations, because, again, they don’t want the sort of instability it represents. Automakers would probably rather abide by one global standard for emissions because it’s much cheaper to develop cars that way, and the European automakers, in particular, are making more efficient cars because they have to for their home markets.
The deal reportedly enraged the President, who promptly directed the Justice Department to launch an anti-trust investigation into the deal. According to The Verge, the investigation was “to figure out whether the four automakers—Ford, Volkswagen, BMW, and Honda—engaged in anticompetitive behavior when they agreed with each other to follow California’s fuel economy standards, which largely matches the cleaner vehicle plan put in place by the Obama-era Environmental Protection Agency.”
The truth is the world is burning not because of the coronavirus but because humans have spewed so much pollution into the Earth’s atmosphere, into its oceans, and across its lands that climate change will cause drastic, often deadly, changes around the world that will impact every single man, woman, and child on the planet. Average temperatures across the globe have continued to spike, droughts have become worse, envigorated storm systems have ravaged people’s homes and cars, and new viruses spurred on by the worsening conditions have had terrifying impacts on society. We still have the opportunity to change it if we so choose.
We’ve seen how people driving less—even if they’re forced to do so—has an immediate and palpable effect on air pollution. Imagine what’s possible if we all committed to driving much cleaner cars, and we had a government willing to make automakers do the right thing.
Instead, we’ve seen several automakers side with Trump on this. It’s incredibly disappointing, and proof of what we all know—that most companies won’t do the right thing unless they’re made to do so. And as that Times story notes, it’s actually made the auto business less stable, because this decision is about to be challenged in court probably a dozen different ways.
These automakers have traded our future for short term cost-savings and the chance to push more SUVs and trucks down our throats. It is not a transgression that should be forgotten anytime soon. That this was snuck past everyone during a devastating global pandemic is especially shameful.
There’s no escaping that reality. And what Trump’s reinvigorated blustering means is, as one Ford spokesperson so eloquently put it, that the President of the United States and General Motors, Toyota, and Fiat Chrysler are all “on the wrong side of history. Sad.”
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