California pressures auto makers to join CAFE deal

Four auto makers down and 14 to go.

That's the view from California as it leads the charge to pressure more manufacturers to join a compromise deal on tougher fuel economy and emissions standards that the Trump administration has rejected as a "PR stunt."

Sen. Dianne Feinstein of California sent a letter last week signed by 29 additional Democratic senators calling on auto manufacturers to join what the law makers are hoping would be a 50-state solution to the stalemate between California and Trump administration regulators, who want to freeze fuel economy standards rather than allow them to become increasingly strict.

"In the absence of an agreement between the federal government and states, the California agreement is a commonsense framework that provides flexibility to the industry to meet tailpipe standards while also taking important steps to reduce greenhouse gas emissions and save money on fuel for consumers," the letter said.

Voluntary agreement

Ford, Honda, Volkswagen and BMW signed a voluntary agreement in early August with the California Air Resources Board that gives auto makers a little more time and a little more flexibility to achieve the tougher standards that were set under the Obama administration for the 2025 model year.

In the Feinstein letter, the senators urged Aston Martin, Fiat Chrysler Automobiles, General Motors, Hyundai, Jaguar, Kia, Mazda, Mercedes-Benz, Mitsubishi, Nissan, Porsche, Subaru, Toyota and Volvo to join the compromise framework. As of last week, none have taken up the senators on their request, but industry groups and auto makers have said they want a 50-state solution of some kind.

The Trump administration has rejected the California deal with the four auto makers and wants to strip the state of its ability to set its emissions standards, which have been adopted by a dozen other states.

So, California and Washington remain on a collision course, with the auto makers stuck in between.

What's the cost?
One of the main arguments made by the regulators at the Environmental Protection Agency and National Highway Traffic Safety Administration is that the Obama rules would make vehicles more expensive and, therefore, make it more difficult for owners of older vehicles to upgrade to newer, safer ones.

But Consumer Reports recently released an analysis that contradicted the regulators' theory. Rather than saving money for consumers, the fuel standards rollback will cost them money at the pump because their vehicles—on average—would be significantly less efficient.

Consumer Reports puts the cost of the rollback at $3,300 per vehicle over its lifetime.

But the consumers are the only ones who would be impacted.

"The rollback would hurt the auto industry, decreasing sales by more than 2 million vehicles between (model year) 2021 and 2035," the analysis said.

Further, Consumer Reports reports noted that "the rollback would not improve auto safety and could have a small negative impact."

In addition to rolling back corporate average fuel economy standards, the Trump administration wants to lower penalties for not meeting them. The Obama administration had more than doubled the fines to keep up with years of inflation, but NHTSA set a final rule last month rolling them back.

As part of the back-and-forth, California and a dozen other states said last week they are suing the regulator to get the old CAFE penalties reinstated. Auto makers had argued, and the government agreed, that the increased fines would cause them significant economic harm.

NHTSA said recently it would defend the rollback of the penalties.