Prominent automakers such as Fiat Chrysler Automobiles NV (NYSE:FCAU), Toyota Motor Corp (NYSE:TM), General Motors Company, and Hyundai Mtr Co are supporting Trump Administration in its fight against the right of California to set the fuel standards. The move creates a split in the automakers.
Ford and Honda supports California
Industry giants Volkswagen, Honda, and Ford agreed with the California regulators to manufacture trucks and cars that are fuel-efficient. However, Trump administration is at a standoff with the California authority and set roll back fuel standards set during the Obama administration.
The coalition of global automakers is looking to compromise between the federal government and the Californian authorities to set a commonly acceptable fuel economy standard. However, the chance for compromise is remote.
President of Global Automakers Association, John Bozzella, said the coalition wants a unified program that comprises California. They support improvements in mileage standards year on year. Bozzella said the coalition intervened in the lawsuit on how to apply the standards. The coalition would ensure that concerns of manufacturers, retailers, automakers, and consumers are considered in the dispute.
Fuel standards under the Obama administration
According to the requirements set under the Obama administration, the average mileage of new vehicles should reach 30 miles per gallon in 2021 and 36 miles per gallon in 2025. The Trump administration strives to freeze the fuel efficiency at 2021 levels through 2025. Several automakers agree to increase fuel efficiency but not up to the extent of the Obama administration.
According to Trump administration, freezing the fuel standards would help reduce new vehicles price by $2,700 by the year 2025. By freezing the fuel standards, the automakers could manufacture affordable new vehicles and ensure road safety.
Environment activists said the Trump administration proposal ignores the savings achieved by the consumers on using the fuel-efficient cars. According to consumer reports released in August 2019, the user would have paid an additional $3,300 for 2026 vehicle’s gasoline for the entire life if the fuel standards are maintained at the 2021 level.
The officials in California are for enforcing the fuel efficiency standards through 2025. Environmental organizations and Democrats criticize the automakers that side with Trump Administration. Chairman (Air Resource Board of California), Mary Nichols said, would continue to maintain a mandate in ensuring national air quality standards and work with automakers that agree to deliver fuel-efficient and eco-friendly vehicles.