GM and other manufacturers who are members of the Alliance for Automotive Innovation told the administration of President Joe Biden that proposed fuel economy standards are currently impossible to meet in the timeframe indicated.
Enforcement of the fuel economy requirements would result in a situation where “manufacturers will pay over $14 billion in non-compliance penalties between 2027 and 2032,” Reuters reported GM and several other automakers as claiming.
The lion’s share of the penalties would be paid by the Big Three or Detroit Three car companies – GM, Ford, and Stellantis – amounting to approximately $10 billion. Other Alliance for Automotive Innovation members such as Volkswagen, Hyundai, and Toyota would shell out the remaining estimated $4 billion or thereabouts between 2027 and 2032.
The fines would accrue because an expected 50 percent of light trucks and one-third of passenger cars will be unable to meet the proposed fuel economy standards in the years leading up to 2032. The NHTSA called for an annual increase in fuel efficiency of 2 percent for passenger vehicles and 4 percent for trucks from 2027.
The standard advanced by the NHTSA would raise fuel efficiency requirements to 58 miles per gallon if implemented. The NHTSA itself does not have the authority to regulate fuel efficiency, but its proposed guidelines can be adopted by other governmental bodies that can issue legally binding regulations, such as the EPA.
While similar complaints about stringent standards and the potentially massive fines resulting from them prompted European lawmakers to ease upcoming vehicle emissions requirements, the NHTSA seemed unfazed by the objections of GM and other major automakers.
In fact, an NHTSA representative vouched for the accuracy of the total fines GM and other automakers expect, stating the multi-billion dollar penalties are “consistent with our statutory obligations.” The car companies “are free to use electric vehicles to comply and avoid penalties altogether” according to the same representative.
GM and Stellantis have already been hit with hundreds of millions in fines for 2016 through 2019 model-year vehicles. Stellantis claims the current proposal “exceeds reason and simply put, will increase costs to the American consumer.” The penalties are expected to raise new car prices by $3,000, which the automakers say will push more people towards driving older, less fuel-efficient vehicles for longer, canceling out any environmental benefits.
Earlier this summer, the EPA proposed a rule that would mandate 67 percent of new vehicles produced for sale in the USA must be EVs by 2032. The Alliance for Automotive Innovation called this plan “neither reasonable nor achievable,” though GM continues to work toward its goal of launching 30 EV models worldwide by 2025 and has developed its Ultium batteries, electric Ultium Drive motors as well as highly scalable BEV3 and BT1 platforms to support its ongoing electrification.