Trump Takes Aim at Fuel Efficiency Requirements, Prompting Concern US Automakers Will Lag on Innovation

Donald Trump

In a suburb of Detroit, Michigan, Wednesday (March 15), President Donald Trump handed a victory to the oil industry, in a move that will have severe and long-lasting ramifications for the climate — and could leave American automakers lagging far behind in the emerging world market for highly fuel-efficient vehicles.

Trump announced he was taking the first steps to rollback rules requiring automakers to build increasingly fuel-efficient cars in a speech delivered to CEO's from some of the nation's largest automakers, including GM, Fiat Chrysler, and Toyota of North America.

“We're going to work on the CAFE standards so you can make cars in America again,” Trump said in his speech. “We want to be the car capital of the world again.”

But Trump's plan to make that happen involves doubling-down on fossil fuels instead of prodding automakers to build more efficient cars and trucks. His administration will spend an additional year reviewing rules requiring automakers to improve average new vehicle fuel efficiency to 54.5 miles per gallon by 2025, it said in an announcement timed to coincide with Trump's speech.

Trump hinted that this was only his first move. “And, by the way, we're going to have a very big announcement next week having to do with your industry,” he told the crowd. “Very, very big. Very important.”

For automakers, pick-up trucks and SUV's have become enormously profitable. “These are the cash cows for Detroit,” Michelle Krebs, an analyst with Autotrader.com, told The New York Times last month. But the vehicles are also notorious gas guzzlers — and often cited as a drag on fleet wide fuel efficiency.

Raising fuel efficiency by tightening CAFE standards would require the auto industry to spend about $200 billion over 13 years, the Obama administration has estimated, but would ultimately save U.S. drivers a staggering $1.7 trillion at the pump.

If Trump does roll back CAFE standards, that would keep American demand for gasoline high, a boon to the oil drilling industry, which has been hammered by low oil prices in recent years. The Obama-era polices now under fire were projected to slash demand for oil from U.S. drivers by 12 billion barrels by 2025, keeping six billion metric tons of carbon dioxide out of the atmosphere.

“Better fuel economy saves consumers money,” said Andre Boehman, a University of Michigan mechanical engineering professor and director of the W.E. Lay Automotive Laboratory, explaining that gas prices might be low right now but are expected to rise.  “Whether or not you see fuel economy standards as a response to global warming, it makes sense to support strict fuel economy standards because they lead to savings in fuel costs and improvements in the nation's energy security.”

Left in the Dust

If U.S. automakers focus on building fleets of less efficient gas guzzlers, they risk not only leaving drivers in the lurch when gas prices rise, but also being left in the dust while the rest of the world rushes onwards to develop high-tech cars that cost less to drive and pollute less.

“As a private citizen, I looked really with sadness as massive shipments of foreign cars have been dumped onto our shores, while those same countries have shut their borders to our cars,” Trump said in his Wednesday speech. “We make cars, they don't take ours.”

But that could get worse if U.S. manufacturers fail to keep up with technological developments on the electric vehicle front. Several European countries have tentatively raised the prospect of banning the sale of new gasoline-burning cars by 2030, The New York Times reported the day before Trump was elected.

Worldwide, electric vehicle sales jumped 41 percent in 2016 — and demand for electric vehicles is a key reason that the International Energy Agency predicted in November that gasoline consumption will drop over the next five years, a major reversal given that gas sales have climbed 20 percent over the past quarter century, according to the MIT Technology Review. U.S. electric vehicle sales lagged somewhat slower than the world average, clocking in at 37 percent for 2016.

Last year, the number of electric vehicle charging stations in Japan surged past the number of gas stations in the country. In Norway, roughly a quarter of the cars on the road are electric. The first Mexican-made electric cars aimed at Mexico's domestic market are scheduled to roll off the assembly line in 2018.

Consumers in China can choose between 70 different models of electric cars. China is currently on track to surpass the U.S. in new patent applications in just two years, according to a new report by the World Intellectual Property Ownership announced the same day as Trump's speech — which would end a roughly four decade streak of American leadership in a worldwide benchmark of innovation.

Meanwhile, enthusiasm for electric cars continues to spread across Europe, with German automaker Volkswagen announcing that it will offer 30 different electric vehicles by 2025.

American automakers have certainly made progress on the electric front. One of the cars that automakers chose to showcase on the stage with Trump was a blue Chevy Volt, the second-most popular American electric car after the Tesla Model S, attendees reported on Twitter. But critics fear that Trump's latest move will put a drag on fuel efficiency improvement in the U.S.

“We should be moving forward with new clean technology and not grinding progress in the transportation sector to a halt,” Congressman Frank Pallone, Jr. (D-NJ) said. “Today, the Trump Administration threw the gears firmly into reverse, slowing the drive toward improved air quality, lower consumer costs, and reduced dependence on foreign oil.”

Alternative Facts

At the speech in Ypsilanti, Michigan, Trump was greeted by a crowd of several hundred protesters. Inside the event, a crowd of auto workers served as a backdrop for the speech — after being bused in by their employers, with Fiat Chrysler Automobiles and General Motors offering their workers a day's pay to attend, a move that drew sharp criticism from the United Auto Workers.

“I find it amusing that Trump’s camp always likes to say Democrats are paying people to attend rallies,” Local 373 President Gabe Solano told the Detroit Free Press. “It’s kind of ironic now that companies are paying people to attend Trump rallies.”

That said, the union estimates that perhaps a third of its members voted for Trump, who has aggressively attempted to market himself as a protector of American jobs.

Automakers have argued that meeting the CAFE standards will be extraordinarily difficult and more expensive than the Obama administration predicted — and that this in turn will cost jobs. “If left unchanged, those standards could cause up to 1.1 million Americans to lose jobs due to lost vehicle sales,” Mitch Bainwol, the chief executive of the Alliance of Automobile Manufacturers, which represents a dozen automakers, including Ford and General Motors, wrote in a February letter to Scott Pruitt and other Trump appointees.  

Those rules, however, have been slowly ratcheting up fuel efficiency standards since 2009 — and so far fears of devastating the auto industry have not been borne out. “The industry has now seen six consecutive years of increases and a new all-time sales record in 2015, reflecting positive consumer response to vehicles complying with the standards,” a 1,200-page report on the CAFE standards' effectiveness, authored by the Environmental Protection Agency (EPA), California’s Air Resources Board, and the National Highway Traffic Safety Administration, concluded last year. Over that same time, the industry added roughly 700,000 jobs, according to the Blue Green Alliance.

 “I worry that we are again hearing 'alternative facts' by a segment of the industry that is after quick returns,” said Anna Stefanopoulou, director of the University of Michigan Automotive Research Center, “instead of pursuing the hard work needed to remain the leaders in our global race for cleaner and more efficient transportation.”

No U-Turns?

Rolling back the rules might prove challenging for the Trump administration. “Despite industry’s picture of a deeply flawed process, the EPA in fact developed a comprehensive technical record, conducted a thorough assessment of the issues, solicited public comment on multiple occasions, and responded at length to the industry critique of its draft analyses,” the Brookings Institute's Bob Sussman wrote in February, explaining that the CAFE standards were the product of an agreement between the federal government, automakers, and California.

And California plays a key role when it comes to fuel efficiency rules. Under the Clean Air Act, the state is allowed to set independent auto emissions targets — which are also relied on by 15 other states, making them enormously influential, covering about 40 percent of the U.S. auto market.

There are rumors that the Trump administration is already exploring ways to ax California's unique status, according to The Atlantic.

But that would spark an enormous legal battle — one of many that could be coming down the pipeline for the Trump administration on CAFE standards. “They’re going to get sued at every step,” Stanford Law associate professor Michael Wara, told Scientific American.

Environmental groups are already gearing up for lawsuits. “Donald Trump’s executive order is reckless and puts the health and safety of American families in jeopardy,” Sierra Club executive director Michael Brune said. “As we fight back against any efforts to scrap these life-saving emissions reductions, we will be on strong legal footing.”

Main image: Donald Trump speaking at a drilling industry conference. Credit: © 2016 Laura Evangelisto