Archive for September 3rd, 2019

Service of Should One Manufacturing Car Rule Fit All?

Tuesday, September 3rd, 2019

Photo: ford.com

When it comes to rules governing clean air and other environmental issues, health care too, California has been ahead of the curve as long as I can remember. I’ve worked with associations and companies that would cringe when the state proposed a new regulation governing the industries in which they were involved because they feared it would cost them money and catch on universally.

The state currently has a federal waiver that allows it to set its own auto emission standards.

The Trump administration is proposing to ease fuel economy standards to save manufacturers money and encourage them to sell gas-hungry trucks and sport utility vehicles the public prefers. According to Ben Foldy and Mike Colias in The Wall Street Journal “the rollback being pushed by the administration is so extensive that car companies are worried it will set off a protracted legal battle with California—the nation’s most populous state and the biggest auto market—and ultimately conclude with manufacturers having to meet two different sets of requirements for selling cars in the U.S.”

Photo: bmwusa.com

Federal rules agreed upon in 2012 called “for increases in fuel economy annually through mid-decade to an average of about 50 miles a gallon.” The administration wants to freeze them at 37 miles a gallon.

Meanwhile Ford, Volkswagen, Honda and BMW signed a separate agreement with California for standards more rigorous than this administration’s and not as severe as the last one’s. Mr. Trump reacted: “Car companies should know that when this administration’s alternative is no longer available, California will squeeze them to a point of business ruin.”

Photo: vw.com

Foldy and Colias wrote: “In a statement responding to the tweets, Ford said: ‘We have consistently supported one 50-state solution for regulating fuel economy standards, and this agreement with California provides regulatory stability while reducing CO2 more than complying with two different standards.’”

Its obvious why a 50-state solution is ideal. Tweaking cars for different markets is onerous and far more costly than, say, manufacturing pillowcases in different sizes for European and U.S. beds.

Other manufacturers that didn’t join the four wanted to wait for the final federal ruling anticipated for later this year. Foreign manufacturers didn’t participate in the pact, according to Foldy and Colias, was because they were afraid the president would impose tariffs on their cars as he’d threatened.

The administration also wants to “revoke California’s federal waiver to set its own emissions standards.”

Outlier GM is “pushing for rules to require car companies to sell battery-powered cars across all 50 states,” and feels that the Golden State doesn’t give “enough credit for sales of fully electric vehicles.”

Should car manufacturers be encouraged to produce more fuel efficient vehicles or is it better to loosen up the rules to keep them increasingly profitable so that they can share profits with investors and employees and in theory pay more taxes contributing to the greater good? Is the administration right to rescind California’s exemption from federal emission standards so that manufacturers can make one car that fits all rules?

Photo: hondanorth.com

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