The world’s automakers want President Trump to strike a deal with California. Last week, 17 car companies, including General Motors, Ford, Honda and Toyota, sent a letter to the White House urging the president to find a middle ground in his planned rollback of tailpipe pollution standards. They warned the current path would put the auto industry in the untenable position of operating in a divided American market.
The hope is the president will heed the concerns of automakers. The industry faces enough turmoil without having to contend with the split it foresees.
What is driving the division? The answer goes back to the Obama presidency and the agreement with automakers to raise the standard for average fuel economy to 54.5 miles per gallon by 2025. The process included a midway review. Thus, early in the Trump administration, the companies asked the president to make some changes. He returned with a plan that essentially freezes the mileage standard at 37 miles per gallon, with the final rule set for release soon.
That is more change than automakers want. They see the president’s proposal triggering a mammoth and distracting legal battle.
Under the Clean Air Act, California long has had authority to set its own more strict regulations for auto emissions. Thirteen states have followed its lead. Alter the mileage standard as the president proposes, and all are certain to file a lawsuit with the goal of preserving their capacity to act as they deem fit. Which promises a prolonged headache for automakers as they seek to meet two sets of standards, those defined by California and those set by the federal government.
The complications are easy to imagine as automakers seek the right balance of products and pricing, depending on the standards applied. Add the popularity of SUVs, and you have a layer of competing pursuits, consumers preferring vehicles with lower fuel economy while the standards push for improved efficiency. What about some car buyers crossing state lines to make their purchase? Automakers would remain on the regulatory hook.
This gets to why the automakers let the president know his proposal would deliver more harm than good. In the past, they have advised the White House to reach an agreement with California. Now they are pleading. They sent a similar message to the California governor. The companies want the two sides to reach a compromise — a mileage standard somewhere between the Obama standard and Trump proposal.
That will require both California officials and the president to back away from harsh words and hard positions. Actually, they had been talking until the White House ended the discussions in February. Now a deadline is near. The responsible thing would be to do as the automakers request, knowing the direction of the industry tilts toward improved gas mileage over time.
More, automakers do not need this contentiousness in view of the other challenges they face, evident in what has happened at Lordstown, General Motors shutting down the plant as it seeks to keep pace in a changing industry. The past year auto sales declined for the first time since 2009. The president’s tariffs have hit the industry, Ford and GM putting the cost at roughly $1 billion, and he has threatened additional such duties. Then, there is the major realignment across the sector, automakers on a course to investing more than $400 billion the next five years in electric cars, digitalization and automation.
That means upheaval for companies and their workers, not to mention the many communities affected, especially in this part of the country. It also argues for paying attention to automakers and reaching a deal on fuel economy.