Trump's Latest Move Will Make The Auto Industry Happy

Jan. 13, 2021 4:45 PM ET by Karl Furlong Industry News / 126 Comments

It's a decision that could save automakers millions of dollars.

Besides the impending ban on gas-powered vehicles being sold in certain US states, automakers have enough on their plate trying to meet existing fuel efficiency requirements. Back in 2018, Fiat Chrysler Automobiles had to fork out $77 million in US civil penalties due to inefficient vehicles in its stable such as V8-powered Dodge Challenger models.

But just days before the conclusion of Donald Trump's divisive tenure in office, the Trump administration has announced that it would be delaying the implementation of much higher penalties for automakers who can't meet fuel efficiency standards, following an auto industry request.

Dodge

According to Reuters, the Trump administration initially suspended a regulation to double the penalty for automakers who couldn't meet fuel efficiency regulations back in 2019, but in August last year, the US appeals court ruling overturned that. It all followed the National Highway Traffic Safety Administration (NHTSA) announcing an increase in fines from $5.50 to a much higher $14 per 0.1 mpg that new vehicles used over and above required standards.

Prior to this announcement, fines were last increased way back in 1997. Allegedly, environmental groups pushed for the increase since the 1997 increase was the first since all the way back in 1975, which means that fuel economy fines had dropped in value by close to 75 percent.

Dodge

NBC News/YouTube

The latest move by the Trump administration follows not only a divide between the Obama-era fuel economy rules and Trump but state-specific standards, too. California was one of the states to challenge the rule that stopped local governments from defining their own emissions regulations.

While several automakers will likely save a hefty chunk of cash following the latest delay of rising fines, this makes them less likely to prioritize the production of more efficient vehicles in the short-term, at least until a greater percentage of their fleets move over to electrification.