Trump administration finalizing fuel economy rollback plan, automakers prepare for ‘split’ market

The Trump administration has “settled on the key details” of its plan to roll back fuel economy standards, according to a new report. And automakers are now preparing for a future where some states purposely follow stricter rules than others.

The plan, from the Environmental Protection Agency and the Transportation Department, will ultimately require automakers to raise the average fuel economy of their fleets “by about 1 percent annually between 2021 and 2026,” The New York Times reports.

If true, this would be a slight difference from the much-publicized EPA proposal to freeze the average fuel economy entirely during that same time period. That proposal would have set the fuel economy average for passenger cars at 43.7 mpg (5.38 l/100 km) and 204 g CO₂/mile, down from the 54.5 mpg standard for 2025, set during the Obama administration. For all vehicles, the average would have been 37.0 mpg, down from the 46.7 mpg Obama standard.

Exact year-to-year numbers for the new proposal are unknown, but a few quick calculations show the average fuel economy standard for passenger cars may end up around 45.4 mpg by 2026 under this plan.

The Times also reports the new plan will also “give automakers credits for using for using cleaner technologies, like more modern refrigerants in air-conditioners, something that most already do.”

The plan should be published “in the next few months,” when it will go into effect.

As expected, the Trump administration’s plan would also create a “50-state solution,” aiming to prevent states from setting their own standards. California and 13 other states plan on following their own stricter standards, which will set up a legal battle as they plan to sue the White House.

‘Logistical and Financial Nightmare’

With 14 states set to follow stricter fuel economy standards than the rest of the country, automakers are expressing concern about what may become a “split” national market.

Gloria Bergquist, a vice president at the Alliance of Automobile Manufacturers, told the Times, “We could see a scenario where there are limited choices for consumers in the high-fuel-economy states, or a stampede at the border to buy cars in the states that follow the federal standards.”

That scenario creates the possibility that some states may place restrictions on residents from buying cars out of state. Automakers could even be subject to fines.

But the Times also notes a potential silver lining for those who may be interested in buying electric vehicles:

But because Americans have shown a growing preference for SUVs over thriftier vehicles like electrics, manufacturers might have to significantly cut prices on electric vehicles in the high-mileage states, a potentially money-losing proposition for them, while raising the prices of gas-guzzlers.

Margo T. Oge, a former senior EPA official, told the Times that automakers will have to choose: Trump or California. Oge said,

“If you go with Trump, it solves the short-term temper tantrum and the threat of trade wars on the horizon. But that is also taking a big legal risk. Because in the long term, California could win the legal fight to keep its state standards. Trump is right now, but California is forever.”

Electrek’s Take

There’s a lot to take in here, so we’ll go with one item at a time. First, the fuel economy standards. If it happens, the annual 1% increase from 2021 to 2026 would be window dressing, and is still a lot less than Obama regulations. It will do almost nothing to stop climate change nor get anywhere close to Paris, let alone help solve the greenhouse situation the world is in.

As for automakers, an old adage comes to mind: be careful what you wish for, because you just might get it. Carmakers who lobbied for years to roll back the standards now look to be faced with a completely new quagmire, largely of their own making.

Here’s some free advice for automakers: Try to think longer term.

Instead of investing in lobbying, and trying to rollback standards which benefit us all, why not use that money to innovate and compete? Invest in R&D. Invest in electric vehicles and infrastructure. Invest in technology.

Instead of trying to hold everyone to lower standards, why not try to raise your own, and challenge others to compete on a higher level?

Automakers still have a choice here. Maybe they’ll finally see the “easy way” of doing things isn’t so simple after all.