Automakers are facing a crushing $14 billion in fines under the Biden administration’s proposal to hike fuel economy standards through 2032.
An automotive group called Biden’s proposal “unfeasible.”
The Alliance for Automotive Innovation said the National Highway Traffic Safety Administration Corporate Average Fuel Economy proposal “exceeds maximum feasibility,” adding that the agency projects automakers will pay over $14 billion in non-compliance fines “between 2027 and 2032.”
According to a report from the Epoch Times, the group added that those fines would impact one in every two light trucks and one in every three passenger cars in 2027–2032.
Amid global efforts to push for reduced vehicle emissions and shift to electric vehicles, the cost is creating resistance in the industry.
As The Daily Fetched reported earlier this year, Ford Motor Company projected a $4.5 billion loss for electric vehicles in its second-quarter financial results for 2023.
The figure is nearly twice its $2.1 billion loss on its Model E division in 2022.
Despite the EV losses, Ford posted a $1.9 billion net income, bringing in $45 billion in net revenue.
The company also earned $2.4 billion in its commercial division, Ford Pro, while its gas and hybrid division, Ford Blue, earned $2.3 billion.
Ford CEO Jim Farley said, “The near-term pace of EV adoption will be a little slower than expected, which is going to benefit early movers like Ford.”
“EV customers are brand loyal, and we’re winning lots of them with our high-volume, first-generation products; we’re making smart investments in capabilities and capacity around the world; and, while others are trying to catch up, we have clean-sheet, next-generation products in advanced development that will blow people away.”
“The shift to powerful digital experiences and breakthrough EVs is underway and going to be volatile, so being able to guide customers through and adapt to the pace of adoption are big advantages for us,” Farley added.
“Ford+ is making us more resilient, efficient, and profitable, which you can see in Ford Pro’s breakout second-quarter revenue improvement (22%) and EBIT margin (15%).”
On Monday, European Union ministers agreed to dilute a proposal on new vehicle emissions.
A NHTSA spokesperson said the estimate represents the agency forecast and is “consistent with our statutory obligations.”
The spokesperson also noted automakers “are free to use electric vehicles to comply and avoid penalties altogether.”
“The number of non-compliant vehicles and manufacturers projected exceeds reason and, simply put, will increase costs to the American consumer with absolutely no environmental or fuel savings benefits,” the auto group said.
The “projected $3,000 average price increase over today’s vehicles is likely to decrease sales and increase the average age of vehicles on our roads.
According to a Reuters report from June, Stellantis and GM paid a total of $363 million in CAFE fines for failing to meet U.S. fuel economy requirements for prior model years.
The record-setting penalties include $235.5 million for Stellantis for the 2018 and 2019 model years and $128.2 million for GM covering 2016 and 2017.