Automakers Near a Victory on Rollback of Fuel Standards

Source: By BILL VLASIC, New York Times • Posted: Monday, March 6, 2017

A Dodge Journey. An expected White House announcement would clear the way for an overhaul of mileage and emissions targets. Daniel Roland/Associated Press 

DETROIT — Automakers appear to be on the verge of a rare victory in their long-term effort to reduce government regulations on new cars and trucks.

As soon as Tuesday, the Trump administration is expected to announce its agreement with the major auto companies that future mileage and emissions standards should be overhauled to reflect the growing consumer demand for larger, less fuel-efficient vehicles such as pickup trucks.

Any decision by the Environmental Protection Agency and Transportation Department to reopen a review of the regulations could ease the pressure on the industry to meet the current target of 54 miles per gallon for vehicle fleets by 2025.

Individual carmakers may react differently to a rollback of the federal standards. Some companies, for example, will continue to pursue electric car programs, while others may scale back their plans. And over all, the industry is likely to continue to make incremental fuel-economy improvements as new models are introduced, primarily as a selling point to consumers.

But the aggressive targets of the Obama administration, which signed off on the current rules in January, would no longer loom as an escalating cost for automakers, which estimate that fewer than 4 percent of today’s vehicles would meet the 2025 standards.

“Even under E.P.A.’s optimistic estimates, the automotive industry will have to spend a staggering $200 billion between 2012 and 2025 to comply,” Mitch Bainwol, the president of the Auto Alliance trade group, wrote in a letter to regulators last month.

Instead, auto companies will be given an opportunity to argue for less stringent standards during a government review period that could stretch into 2018.

Environmental groups are already crying foul that car companies are now opposing the standards many of them agreed to during negotiations with the Obama administration in 2012 — when gasoline prices were much higher, increasing demand for smaller cars, and after the administration had rescued General Motors and Chrysler in carefully choreographed bankruptcies.

“Auto manufacturers are attempting to backpedal on vital climate and consumer protections,” said Michael Brune, the executive director of the Sierra Club. “A new administration is no reason to go in reverse.”

Automakers are also hopeful that the new E.P.A. administrator, Scott Pruitt, will begin legal action to revoke California’s ability to enforce its tailpipe standards.

At least some of the administration’s moves to roll back regulations could face court challenges on environmental grounds.

While executives are reluctant to publicly discuss efforts to pare environmental regulations, the topic was reportedly addressed during President Trump’s initial meeting in January with the chief executives of the three Detroit automakers: General Motors, Ford Motor and Fiat Chrysler.

An executive of one of the Detroit companies, who spoke on the condition of anonymity because the meeting was confidential, said they had pressed Mr. Trump to abolish “dueling standards” for state and federal governments and to better align rules covering fuel economy and carbon emissions.

It is unclear how far the new leadership at E.P.A. will go toward dismantling the rules that were so integral to former President Barack Obama’s program to cut pollution that contributes to global warming.

Automakers say the 2025 target is unrealistic given the shift by consumers away from more fuel-efficient small cars to bigger pickups and S.U.V.s.

“No agency ever had set standards so far into the future,” Mr. Bainwol said. “No one could accurately project the circumstances affecting the technological and economic feasibility of these standards.”

With prices below $3 a gallon, the companies are eager to capitalize on the demand for larger vehicles. About three in five new vehicles sold in the United States are pickups and sport utilities, and analysts expect the trend to continue and expand into global markets as well.

The outlook for electrified vehicles, however, would be affected by weaker long-term standards.

Some automakers, such as Fiat Chrysler, have devoted few resources to electrified vehicles. Others are placing strategic bets on projects that tailor autonomous-driving technology to a new breed of electric cars.

G.M.’s new electric Chevrolet Bolt, for example, will be the preferred platform for the company’s self-driving systems. And industry analysts doubt that any change in fuel-efficiency rules would reduce the momentum at G.M. and rivals such as Tesla for self-driving, electric models.

But companies will be under less pressure to take dramatic steps to improve fuel economy on mass-market vehicles, such as shifting to lighter, more expensive materials or adding technology that improves performance without requiring more gasoline.

Environmental activists fear that any pause in the efforts to improve fuel economy would stall the momentum toward cleaner cars.

“These vehicle efficiency and emissions rules have helped us cut oil use, reduce pollution, save money at the pump and reduce the risk of climate change,” said Ken Kimmell, the president of the Union of Concerned Scientists.

Industry analysts have suggested that relaxing fuel-efficiency targets is only the first in a series of policy changes by Mr. Trump directed at the auto industry.

His vow to renegotiate the North American Free Trade Agreement has drawn concern from automakers that rely on factories in Mexico to help supply the United States market.

Reducing fuel-efficiency targets would save money for the car companies and usher in an unusual era of cooperation between the industry and Washington.

By giving the automakers the relief they are clamoring for on fuel regulations, Mr. Trump could then prod them to expand investments and add jobs in their American operations.