Tesla Is Taking Another Controversial Proposal To The Government

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Ford, General Motors, Toyota, and Volkswagen are not happy about this.

Last month, the US National Highway Traffic Safety Administration (NHTSA) announced a controversial proposal introducing tougher penalties for car manufacturers that previously failed to meet fuel economy requirements. Since it has no EVs and sells gas guzzlers like the Dodge Challenger SRT Hellcat, Fiat Chrysler was forced to pay $150 million for failing to meet 2016 and 2017 requirements. The higher penalties could cost automakers over $1 billion annually. Tesla is pushing for the Biden administration to increase fuel economy penalties sooner rather than later, according to Reuters.

In 2016 the Trump administration delayed a regulation that more than doubled penalties for automakers failing to meet Corporate Average Fuel Economy (CAFE) requirements. Higher penalties were due to start in the 2019 model year under the Obama administration but were delayed until the 2022 model year by President Trump.

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In a memo sent to the government, Tesla argues this delay "produces continuing uncertainty in investments and transactions across the industry, and any delays will continue to have deleterious effects on the credit market until the issue is resolved."

The company also requested the Second Circuit US Court of Appeals to reinforce the higher penalties. "The uncertainty perpetuated by NHTSA's sluggish rulemaking pace is thus compounded by the likelihood of yet another round of litigation," Tesla wrote in a statement.

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Of course, Tesla also has an ulterior motive here. Since it doesn't sell single combustion car, Tesla won't be affected by the penalties. It has also made more than $1 billion selling credits to other automakers to help them meet emissions requirements. Enforcing higher fuel economy penalties will increase the value of these credits, which hasn't gone unnoticed by other manufacturers.

A group representing General Motors, Toyota, Ford and Volkswagen is urging the court to reject Tesla's request. "That Tesla might benefit from more certainty about the worth of the CAFE credits that it has amassed is hardly a reason to cut off an ongoing administrative process," the group wrote in a court filing. We'll be following this as it progresses.

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