Car companies are facing major disruptions to their business models, because of new transportation entrants like Uber, climate change and the rise of electric vehicles, and changing customer tastes. The uncertainty caused by regulatory tumult threatens to set them back.
A group of 17 leading automakers from around the world wrote to President Donald Trump on Thursday asking him to abandon his plans to scrap the emissions standards. Instead, it wants the administration to restart talks on a compromise with a group of 13 states — led by California — that are committed to tougher standards.
The automakers had initially supported the tougher standards, which were first announced in 2011, but the companies raised questions before President Barack Obama left office. The central issue is: Are the rules still practical given relatively low gasoline prices and car buyers’ preference for SUVs? Despite the industry objections at that time, the Obama administration confirmed the standards just before leaving office.
So the automakers asked the Trump administration to reconsider implementing the tougher rules. And the incoming administration quickly agreed to do so.
But the automakers are spending billions to develop electric vehicles and more efficient gasoline cars. They fear the regulatory uncertainty that could come from years of litigation, especially if it resulted in two different sets of emission rules for different parts of the country.
“The question of the right level of regulation is complex,” the industry said in the letter to Trump. “What works best for consumers, communities, and the millions of US employees that work in the auto industry is one national standard that is practical, achievable, and consistent across the 50 states.”
The letter said the uncertainty caused by protracted litigation would be as “untenable” as the tougher rules. The automakers also said they need regulatory certainty in order to make needed investment in the next generation of vehicles.
But California has fought to keep the tougher rules in place for itself and 12 other states that follow its lead. Those 13 states include about a third of the nation’s population.
California and the federal government are already fighting in court over the emissions rules and whether or not California will be able to maintain the tougher standards.
The automakers also sent a letter to California Governor Gavin Newsom on Thursday asking for a compromise with federal regulators. That letter said the automakers believe the best deal would be one that “includes annual reductions in greenhouse gas emissions midway between the existing standards and the preferred path outlined in the recent Environmental Protection Agency proposal.”
California has so far shown no interest in backing off its tougher standards. White House spokesman Judd Deere said the blame for the lack of a single national standard rests not with the federal government but with California’s refusal to negotiate with Trump administration to reach a compromise.
Deere also said the California Air Resources Board, the environmental regulator there, “failed to put forward a productive alternative, and we are moving forward to finalize a rule with the goal of promoting safer, cleaner, and more affordable vehicles.”