We have been hearing rumblings from Washington, DC for weeks now, that rules are about to change and those making the rules will be challenged. EPA Chairman Scott Pruitt will be making a major announcement on Tuesday that will certainly upset California and this will lead to a huge legal battle.
The battle is about CAFE (Corporate Average Fuel Economy) standards. Scott Pruitt announced on Monday that the aggressive fuel efficiency and emissions limits set under the Obama administration for model years 2022-2025 are 'not appropriate'. Manufactures have been pressing the administration and the past administration to lower the standards.
What does this mean? The EPA is expected to announce a rollback of corporate average fuel economy to hold the numbers to 34.5 mpg. However, California has set their own limits and has been setting the rules for the other 49 states for many years. The strict regulations imposed by California costs manufacturers more and those costs are passed down to all vehicles across the USA. California should no more dictate Oklahoma or Kentucky policy than the other way around.
What are some options? A solution might include automakers imposing an extra $2,000 or whatever per automobile in California. This would lower the cost of vehicles in other states. Why haven't automakers done this in the past? Because the automakers should not and cannot absolve themselves of changing their pricing to reflect such individual state conditions. The automakers should be easily able to handle this issue. They price a vehicle differently in Norway than in Sweden, in turn different than in Switzerland and in Russia.
California is not going to take this lightly, they are ready for a fight. The State of California has had a special waiver under the 1970 Clean Air Act, which allowed them to enforce stronger air pollution standards than those of the federal government.
All automakers have to realize that they can't allow California to de-facto tax the other states just because they want people living elsewhere to foot their subsidized EVs. By setting minimum quotas on EVs, it's a de-facto tax on the automaker. At a minimum, someone living in Kansas or Florida should not have to pay for this, which is what the situation is right now. We will follow the fight and keep you updated.
