The US National Highway Traffic Safety Administration (NHTSA) has reinstated increased penalties for automakers whose cars do not meet fuel efficiency requirements.
The increased fines, which were introduced with a 2016 regulation, were delayed during the final days of President Trump’s administration.
Under President Obama’s administration, the higher penalties were set to start with the 2019 model year but the Trump government set the effective date as the 2022 model year following a court decision.
The regulations were supposed to more than double penalties for automakers that failed to meet the Corporate Average Fuel Economy requirements starting in the 2019 model year.
For the 2019 to 2021 model years, the fine is $14 for every 0.1 miles per gallon new vehicles fall short of fuel economy standards, before then being multiplied by the number of noncomplying vehicles sold. This was already an increase of $5.50 per 0.1 miles but, for 2022 model year cars, this rises again to $15.
The decision “increases the accountability of manufacturers for violating the nation’s fuel economy standards” and the penalty increase “incentivizes manufacturers to make fuel economy improvements,” the NHTSA told Reuters.
Automakers protested the penalty increase back in 2016, claiming that it could raise industry costs by at least $1 billion every year.
Stellantis, for example, has projected that the new rules will add an extra $572 million onto the company’s books.
However, EV-only automakers, such as Tesla, will benefit massively from the new rules thanks to compliance credits.
Automakers whose vehicles achieve higher fuel economy than required by the rules will be able to sell the credits to automakers who fall short.
The NHTSA estimated that, for the 2019 model year, car manufacturers would owe around $294 million up from $115.4 million under the prior rate. The NHTSA also said that manufacturers who made plans for 2019 through to 2019 thinking that the rules would not be reinstated “did so at their own risk.”
The head of a trade group representing nearly all major automakers except Tesla said Sunday it would be a “better outcome” if the penalties “were invested in electric vehicles, batteries and charging infrastructure instead of disappearing into the general fund of the Treasury.”
Stellantis said on Sunday that it would “like to work with the administration and Congress to allow the agencies to use the proceeds from the penalties to bolster investment in the technologies and infrastructure required to accelerate a robust US market for EVs.”
Keyword: US Regulators Hike Penalties for Automakers Missing Fuel Efficiency Targets