The Alliance for Automotive Innovation, a prominent advocacy group representing major automakers including General Motors, Toyota Motor, Volkswagen, and Hyundai, issued a strongly worded statement on Friday, expressing deep concerns over the Biden Administration’s proposed fuel economy standards, which were unveiled in March. The group’s statement categorically labeled the plan as “not feasible” and projected that it could lead to over $14 billion in fines for automotive companies, particularly targeting the Detroit Three, comprising General Motors (GM), Ford Motor, and Chrysler-parent company, Stellantis.
According to estimates from the National Highway Traffic Safety Administration (NHTSA), these staggering penalties would be imposed on manufacturers between 2027 and 2032. Alarmingly, one in every two light trucks and one in every three passenger cars are anticipated to be affected by these penalties.
The Alliance for Automotive Innovation further highlighted that this proposed plan would inflict an additional financial burden of $3,000 on new vehicles, with no discernible environmental or fuel savings benefits for consumers.
The Biden Administration’s proposal represents a significant push towards increasing automobile fuel economy standards, with a lofty target of achieving a 39% increase from current levels by the year 2032. However, it is worth noting that the Environmental Protection Agency (EPA) took an even more aggressive stance in January, calling for an ambitious goal of having 67% of new vehicles sold by 2032 to be electric.
The automotive industry’s response to these proposals has been marked by strong opposition. In June, the Alliance for Automotive Innovation issued a statement deeming the EPA’s requirements as “neither reasonable nor achievable.” Notably, specific automakers, including Toyota, went a step further by describing the proposed requirements as “extreme and outside historical norms.”
The criticism facing the Biden Administration’s current plan is reminiscent of earlier objections, with automakers citing concerns over the introduction of new fees, rising vehicle prices, particularly affecting cars and light trucks, and the potential for a decrease in sales due to the necessary price hikes.
Responding to the Alliance for Automotive Innovation’s claims, a spokesperson from NHTSA emphasized that automakers have the option to utilize electric vehicles to ensure compliance and thereby avoid penalties altogether.
In response to the EPA’s proposal in January, some automakers signaled their interest in pursuing large-scale conversions to electric vehicles, which could put them in a more favorable position in terms of compliance with the government-imposed fuel economy standards.
In June, Reuters reported that Stellantis and GM had collectively paid a substantial sum of $363 million in Corporate Average Fuel Economy (CAFE) fines. Of this amount, Stellantis was required to pay $235.5 million for the 2018 and 2019 model years, while GM incurred fines totaling $128.2 million in relation to their 2016 and 2017 models.
The Biden Administration’s plan undeniably necessitates a stringent adherence to fuel economy standards, but automakers retain the opportunity to circumvent exorbitant fines by opting for the utilization of electric vehicles to achieve compliance. The future will reveal whether these automakers can successfully meet the challenging demands established by the government.