Carmakers React To Freezing Of Fuel Efficiency Standards
DON GONYEA, HOST:
This week, the Trump administration made official its long-awaited proposal to freeze fuel efficiency standards. Under Obama-era rules, the fuel efficiency standards for new vehicles were supposed to go up significantly between now and the year 2025. This new proposal freezes the standards for six years. Let's now turn to someone who knows the auto industry well - John McElroy, host of the television show "Autoline Detroit."
John, thanks for being here.
JOHN MCELROY: Thank you, Don.
GONYEA: Environmental groups are angry, citing the increased amount of harmful emissions that'll be produced as a result of these Trump rules. But the surprise is that the auto industry doesn't seem too happy with these rollbacks, either, even though they'd previously asked for more lenient standards. What's going on here? What are the auto execs saying?
MCELROY: Well, what the auto industry wants to avoid is the black eye of being in favor of rolling back fuel efficiency and emissions standards. They did want some relief from the Obama administration's goals, but they didn't quite want the kind of relief that the Trump administration is giving them.
GONYEA: What exactly would they have liked?
MCELROY: Well, like, here's the deal. The Obama administration set very aggressive targets, especially from 2022 to 2025, provided that there would be a mid-term review. But, once it became apparent that Donald Trump had won the election, literally in the waning days of the Obama administration, they declared that they had done the mid-term review, and it was good to go. Well, this infuriated the automotive industry, and, when Trump got elected, they asked the Trump administration to reinstate the mid-term review.
What the auto industry was hoping, I think - because none of them will really talk publicly about it - is to ease the standards a little bit, or maybe, instead of making the end goal 2025, maybe move it back to 2030 so that they would have a little bit of breathing room. And when I say the industry, that's a little bit of a broad brush. We see some automakers, particularly General Motors and Ford, being very vocal about they really do not want to see this kind of a rollback. But, by and large, what the industry is saying is they would have liked a little bit of relief but not where they've got it right now.
GONYEA: Why are there different opinions from one auto company to the next?
MCELROY: Very interesting. You know, I'll tell you, General Motors, which has sort of told me on background information that they liked the plan that they had put in place to meet the Obama administration's fuel economy goals. They think, in fact, that they've got an advantage over other automakers, and they don't want to see a change because of that, if they think they've got an advantage. Probably, when you get down into smaller automakers that don't have quite the resources that the giant ones do, they were very concerned about being able to meet these standards. And especially when you throw in California's zero emission vehicle goal - very difficult for companies that don't have the deep pockets that the big ones do.
GONYEA: Well, let's talk about California here. You mentioned their own standard, which includes a zero-emissions standard. But other states are able to adopt the California standards if they were like - not just come up with their own but adopt the California standards. That has now been taken off the table by the Trump administration. So that's good news for the car companies. But can that also create other problems opening the door to all kinds of litigation?
MCELROY: Well, sure. They're very worried about this because this is going to get tied up in court. In fact, it's almost a certainty that this is going to have to be decided by the Supreme Court. And there's nothing that business dislikes more than uncertainty because, you know, these days, to do a new car is easily a billion-dollar investment. And, when you look at all the new models that have got to come out, especially electrifying them - the billions of dollars that are really at risk here - they don't like seeing that kind of uncertainty and not knowing which way this is going to go.
GONYEA: John McElroy of "Autoline Detroit."
Thanks for joining us, John.
MCELROY: Thank you, Don.
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