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Automakers Just Scored A Big Win Under Trump

Mar 15, 2017

The Trump administration on Wednesday ordered a review of tough U.S. vehicle fuel-efficiency standards put in place by the Obama administration, handing a victory to auto industry executives and provoking criticism from Democrats and environmental groups.

Republican President Donald Trump was expected to announce his decision at an event Wednesday afternoon in suburban Detroit attended by auto industry executives and workers in a setting that underscored his efforts to lock down support in industrial states such as Michigan that put him in the White House.

The setting was the site of the former Willow Run bomber factory in Ypsilanti, Mich., which won fame for building an operational B-24 heavy bomber every 59 minutes during the Second World War. Now, the site is being redeveloped as a testing ground for autonomous vehicles.

Trump's event was attended by around 1,000 people, including automotive executives and workers from Detroit's "Big Three" automakers: General Motors (gm), Ford Motor Co., (f) and Fiat Chrysler Automobiles (fcau). Automakers lined up examples of vehicles they build in the United States for the president to see.

The U.S. Environmental Protection Agency confirmed it would reopen a review of whether the Obama administration's 2022-2025 vehicle emission rules are feasible, a win for automakers which have urged the Trump administration to reverse a January decision to uphold the standards.

The EPA said it would make a determination by April 2018 after the Obama administration sought in January to lock in the rules. Environmentalists say the rules save fuel and reduce greenhouse gases.

Reopening the fuel efficiency rules put in place by Democratic President Barack Obama just a few weeks before he left office is one of the top items on the industry's agenda. Automakers, through their lobbying groups, have said the Obama rules were too expensive and could cost American jobs.

“These standards are costly for automakers and the American people,” said Environmental Protection Agency Administrator Scott Pruitt. “We will work with our partners at DOT to take a fresh look to determine if this approach is realistic," he said, referring to the Department of Transportation.

At the same time, automakers are wary of being seen as out of touch with environmental concerns, or unwilling to invest in new technology. Ford, for example, used its Twitter account on Wednesday to highlight previously announced commitments to develop electric vehicles.

It could take a year for the review process to play out, and Wednesday's event was effectively a starting gun for intense lobbying efforts over how government policy will drive technology investment decisions in the auto sector.

Critics like Democratic U.S. Senator Edward Markey of Massachusetts said Trump's move could hurt consumers.

"Filling up their cars and trucks is the energy bill Americans pay most often, but President Trump's roll-back of fuel economy emissions standards means families will end up paying more at the pump," Markey added.

The president is not seeking to revoke California's authority to set vehicle efficiency rules even stricter than federal rules, including mandated sales of electric vehicles, as part of this move, a White House official said. The official did not rule out seeking to withdraw California's authority in the future. Pruitt, an ally of the fossil fuel industry, would not commit during his Senate confirmation hearing to allowing California to continue its own clean vehicle rules.

The Obama administration's rules, negotiated with automakers in 2012, were aimed at doubling average fleetwide fuel efficiency to 54.5 miles per gallon by 2025, although the real-world mileage figures would be lower.

'Thoughtful and Coordinated'

Automotive industry executives and lobbying groups were quick to praise the administration's announcement.

"The Trump Administration has created an opportunity for decision-makers to reach a thoughtful and coordinated outcome predicated on the best and most current data," said Mitch Bainwol, chief executive of the AutoAlliance, an industry lobby group.

Automakers have signaled they want the government to give manufacturers more credit toward achieving fuel efficiency targets for technologies such as "stop-start" systems that shut down a car’s engine at a traffic light.

Regulators should also look at whether ride hailing and vehicle-to-vehicle communications systems designed to prevent accidents and alleviate road congestion could be counted toward the industry’s greenhouse gas emissions goals, the Alliance for Automobile Manufacturers proposed in comments to the EPA last year. The group represents a dozen automakers, including GM, Ford, and FCA.

Under the 2012 agreement with the industry, the EPA was given until April 2018 to decide whether the standards were feasible under a "midterm review," but the agency moved up its decision to a week before Obama left office in a bid to maintain a key part of his administration's environmental legacy.

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