Automakers Could Face Huge Fines After Feds Boost Fuel Economy Penalties
Business is about to get much more expensive for automakers with thirsty fleets.
The penalties leveled by the National Highway Traffic Safety Administration against automakers who miss their annual corporate average fuel economy (CAFE) standards are about to go up in August. Way up.
According to Automotive News, the federal fine for missing a CAFE target will go from $5.50 to $14 for every tenth of a mile per gallon (multiplied by the automaker’s annual production). The penalty boost is allowed and encouraged under federal law — agencies like the NHTSA can update penalties as they see fit, to keep up with inflation and deter companies from undercutting targets.
For automakers, it means the potential for millions of dollars in fines, and a lot of budget uncertainty. The new CAFE targets also apply to 2015 model year vehicles without NHTSA compliance reports, adding to automakers’ financial risk.
Not surprisingly, the Alliance of Automobile Manufacturers — a lobbying group made up of 12 automakers — isn’t happy with the penalty increase. Recently, the group called on the federal government to rethink its 2025 CAFE target, describing it as difficult and costly. The target, which calls for a CAFE of 54.5 miles per gallon for cars and light trucks, is undergoing a midterm review.
One automobile executive summed up the industry’s feeling of shock over the unannounced penalty boost.
“You make your regulatory plans based on a certain set of assumptions,” the executive told Automotive News. “To have it change suddenly without notice and without the ability to respond is really troubling.”
More by Steph Willems
Comments
Join the conversation
It is hard to get people motivated to save fuel when gas is abundant and cheaper. That is not to say that conservation is not important but that message will fall on deaf ears for most people. Cleaner air will resonate much better.
Wait a minute @BigAlFromOz. I just did 30 seconds of Googling and found that the only automakers who have paid CAFE fines since 2010 were Jaguar, Daimler, Porsche, Volvo, and FIAT. So while they may be griping about the fines, it doesnt look like the US makers are having any difficulty meeting the target either. Perhaps they, as are a gaggle of non-us makers are concerned about the future. FIAT I'll give you half credit for.
Good Point VoGo.
And by the way VoGo, I am pretty far from you politically it seems but I typically enjoy and respect your comments and try to disagree respectfully when warranted. I try to deal in facts and I sense that you do the same.