US Regulators Announce Suspension of Fuel Efficiency Penalties for Automakers

According to Reuters, U.S. regulators have announced that automakers will not have to pay fines for failing to meet fuel efficiency standards for 2022 models and beyond, based on a law signed by President Trump this month. This law terminates the penalty mechanism under the 1975 Energy Policy and Conservation Act for not meeting Corporate Average Fuel Economy (CAFE) standards. The National Highway Traffic Safety Administration (NHTSA) revealed in a letter to automakers that it is reassessing fuel efficiency regulations. This decision is part of a series of policies implemented by the U.S. government to ease restrictions on gasoline vehicle production and elevate the costs of electric vehicle sales. The new regulation explicitly states that any fines related to vehicles from years not finalized by the NHTSA are waived. Last month, Trump also signed a disapproval resolution under the Congressional Review Act, blocking California's landmark plan to stop selling pure gasoline cars by 2035. Jonathan Morrison, Trump's nominee for NHTSA Director, stated at a U.S. Senate hearing, "In the end, consumers will pay for this." Dan Becker, Director of the Safe Climate Transportation Campaign at the Center for Biodiversity, criticized this decision, calling it a retroactive policy that rewards automakers like General Motors and Stellantis for violating pollution laws, ultimately costing U.S. taxpayers. The Automotive Innovation Alliance, representing almost all major automakers, thanked Congressional leaders for addressing fuel efficiency standards, stating that "given the current market conditions, the existing standards are difficult for many manufacturers to achieve." General Motors and Stellantis have yet to comment on the report. Republican senators estimate that this regulation will save automakers $200 million. Notably, last year, Stellantis paid $190.7 million in civil penalties for failing to meet U.S. fuel efficiency requirements in 2019 and 2020, having previously paid nearly $400 million in fines between 2016 and 2019. General Motors also paid $128.2 million for fuel efficiency violations in 2016 and 2017. Tesla reported that last year, it generated $2.8 billion in global revenue from regulatory credits earned by selling zero-emission electric vehicles, which can be sold to other manufacturers looking to meet carbon emission targets. In 2023, during the administration of President Joe Biden, the NHTSA indicated that its proposed increase in fuel efficiency standards until 2032 could lead to $14 billion in penalties for the U.S. auto industry, including $6.5 billion for General Motors, $3 billion for Stellantis, and $1 billion for Ford. The final regulations passed in 2024 relaxed fuel efficiency requirements, capping the total fines the U.S. auto industry would face between 2027 and 2031 at $1.83 billion.