By on July 25, 2019

While we’ve dinged the media for erroneously reporting that automakers were unilaterally “backing” California in the fuel-economy fracas that’s currently taking place within American politics, it appears four of them actually are starting to choose a side. However, this again requires a bunch of clarification. Despite not adhering fully to the state’s ideal emissions scenario, Ford Motor Co., BMW Group, Volkswagen Group, and Honda Motor Co. released a joint announcement stating they have reached a voluntary agreement with the state of California to adopt compromised vehicle emissions rules.

Since there’s nothing binding in the joint agreement and automakers make (and break) promises all the time, the deal is largely meaningless. Doubly so, since the fuel-economy rollbacks have yet to be finalized. But this does illustrate how a handful of manufacturers are willing to accommodate others in order to get a nationwide solution. It also shows a softening of California’s previously ironclad environmental stance, which is much more interesting. 

According to The Washington Post, California Air Resources Board (CARB) matriarch Mary Nichols said that the automakers approached her with the plan last month. “What we have here is a statement of principles intended to reach out to the federal government to move them off the track that they seem to be on and onto a more constructive track,” she said, saying it was a better proposal than the White House’s plan to halt creeping mileage standards between 2020 and 2026.

While California still wants to maintain its ability to self-regulate, the newly suggested deal is a compromise to the Obama-era standards the state previously vowed to adhere to by any means. Participating automakers will improve their fleet-wide efficiencies by 3.7 percent per year (starting in 2022), with California allowing for 1-percent of that to be covered by simply building electric vehicles (which includes plug-in hybrids and hydrogen-powered cars). In addition to those EV breaks, the deal raises the cap for winning credits for fuel efficiency improvements not captured by traditional testing. The compromise would also remove a requirement to account for upstream emissions of fuels — which seems counterintuitive when you’re hoping to regulate air pollution.

Nichols claimed CARB floated a similar proposal by the Trump administration months earlier. However, since both sides claim the other can’t compromise, it’s hard to know who is actually telling the truth. Talks were relentlessly unproductive and totally broke down in February. This single factor is every automaker’s primary concern. Regardless of which side manufacturers appear to be on in any given moment, their primary goal is achieving a national plan that avoids splitting the U.S. market in twain.

“A 50-state solution has always been our preferred path forward and we understand that any deal involves compromise,” reads the automakers’ joint statement.”These terms will provide our companies much-needed regulatory certainty by allowing us to meet both federal and state requirements with a single national fleet, avoiding a patchwork of regulations while continuing to ensure meaningful greenhouse gas emissions reductions.”

While stringent emission regulations in Europe and Asia are already shaping the vehicles we buy in North America, some of those trends don’t mesh with consumer tastes and the United States’ lower fuel prices. The Alliance of Automobile Manufacturers reported 69 percent of U.S. new vehicle sales were light trucks (SUVs, pickups, vans, etc.) in 2018. As a result, sales-weighted vehicle efficiencies have stagnated over the last few years. In fact, improvements in real-world economy over the last decade seem to be dictated more by gas prices and national finances than the Obama-era standards. The regulatory framework that’s being developed by the Environmental Protection Agency and the National Highway Traffic Safety Administration have attempted to address that at the expense of rising efficiency targets.

“This voluntary framework is a PR stunt that does nothing to further the one national standard that will provide certainty and relief for American consumers,” said Michael Abboud, a spokesman for the EPA, in an email to The Washington Post.

If you made it this far, the takeaway should be that California appears to be softening its hardline stance, which is good news if you’re rooting for compromise. The state’s leadership has called on other automakers to join the plan while urging the White House to play ball. California Governor Gavin Newsom has recently been asking that talks be reopened so that his state can avoid a lengthy legal battle with the federal government. He praised the new deal, suggesting it would improve air quality. “I now call on the rest of the auto industry to join us, and for the Trump administration to abandon its regressive proposal and do what is right for our economy, our people, and our planet,” he said.

As for the automakers, they’re still technically playing both sides while throwing California a bone. Ford, Volkswagen, Honda, and BMW all have a vested interest in appeasing the Golden State — especially if it is allowed to continue self-regulation. However, if the federal government strips it of that power and commences with an aggressive rollback, they’ll still be in the clear. All four already have a vested interest in electrification and will have to build increasingly efficient cars to adhere to regulations in China and Europe. But they also wan’t the best deal for their U.S. business. That’ll be the lowest possible standards available on a national level. After all, it wasn’t all that long ago when Trump was new to the Oval Office and the auto industry sent its top executives specifically to ask that he torpedo existing efficiency mandates and other pesky regulations.


[Image: CC7/Shutterstock]

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37 Comments on “Four Automakers Make a Deal With California Regarding Vehicle Emissions...”

  • avatar

    I am just here for the comments. This is going to be great.

    Ford, Honda, BMW, VW — haha B&B brains are exploding.

    • 0 avatar

      I read that on my WSJ feed earlier. But who didn’t see this comin’?

      The goal is to make money, any which way they can. Even if that includes making “deals”.

    • 0 avatar


      No explosion – these are clearly the leading companies in the industry.

      snort… chuckle… BWHAHAHAHAHAHAHAHAHA!!!!

  • avatar

    Here we go again…..


  • avatar

    In other news 1 brand new FJ cruiser sale was recorded for Toyota in the month of June.

  • avatar

    “After all, it wasn’t all that long ago when Trump was new to the Oval Office and the auto industry sent its top executives specifically to ask that he torpedo existing efficiency mandates and other pesky regulations.”

    Yeah, and then just as swiftly they came back to say “whoah, we didn’t mean roll em back THAT much”.

    It’s honestly ridiculous how far in right field the EPA is on this one. Even the car makers know they need some sort of efficiency, they just wanted it eased a bit.

    • 0 avatar

      They’re just hedging their bets. Unless you believe they don’t mind being fined. After all, they can fill their showrooms with the finest hybrids and electrics, but what if most still just want trucks and devil cars that only run on dino juice?

      • 0 avatar

        For the automakers, it boils down to a game of chicken.

        They all know they need to make more fuel efficient vehicles. But nobody wants to be the guy who sinks billions into R&D while some asshole just sells the same old same old and soaks in all the profit. They want the playing field level so EVERYONE has to spend a bit to stay compliant.

      • 0 avatar

        Off topic I’d suppose, but I am amazed at how common Teslas are up here in ever more gentrified Summit County winter or summer. It seems that trendy rich folk here like their Teslas as much as their hunky huge dino juice thirsty 4WD vehicles.

    • 0 avatar

      No, they don’t need “some sort of efficiency”, they need vehicles the public will buy. The public should decide how much fuel economy they need, and choose the vehicle and engine accordingly.

      What most people REALLY want is cheap gas so they don’t have to care about fuel economy, just the right size and comfort level of a vehicle, and enough power to move it as fast as they want.

      What the automakers need is minimal rules that allow them to build a range of vehicles for the public to choose from, that they can sell in sufficient numbers to make money. A corporate average of dissimilar vehicles and a gradually tightening economy standard does a disservice to both the automakers and the driving public.

  • avatar

    …Nichols claimed CARB floated a similar proposal by the Trump administration months earlier. However, since both sides claim the other can’t compromise, it’s hard to know who is actually telling the truth…

    Based on the incessant flood of lies from the Oval Office, I know where I’d place my bet on who is being the most truthful.

    A good compromise means both sides have to be willing to acquiesce and neither will get everything they want. This is how things should work. Ignoring the upstream emissions from fuels does seem like a bad move, however…

    • 0 avatar

      I bet you really enjoyed Bob Mueller echoing how clever and reality-based your views on Trump have been, didn’t you? Self-awareness may be yours someday. You better steal yourself for it!

      • 0 avatar

        golden2husky – Congrats, you get a little gold star embossed with the letters SJW for your fake claim backed up with no actual facts. If you have faith in the statements of CARB, I’ll just agree to not even debate.

        • 0 avatar

          If caring about those around you as well as caring for yourself means a gold SJW star, I’ll wear it proudly. Rather that than being viewed as selfish f-head that thinks only of themselves and thinks patriotism is wrapping the flag around them, or, as the moron-in-chief did, kissing it.

          Regarding “facts” about the CARB story, we all read the same thing. Non-binding. All I said was compromise means that not everybody at the table gets all that they want.

      • 0 avatar

        Or even steel himself, huh?

      • 0 avatar

        New Yorkers knew Drumpf was a FRAUD long ago – really nothing new.

      • 0 avatar

        Yeah, and Russia had no impact on our election. Really, get you head out of your a$$ and go beyond Faux “News” But keep it up. They are counting on people like you to keep America looking backward.

  • avatar

    Honda is going from weakness to weakness now. Is anyone alive at the helm? Here’s a clue: do you really want to be in a group where the other members are BMW, Ford and Volkswagen? This is what the company that changed the American mass market twice has come to?

  • avatar

    I don’t see what the issue is here. The Federal Government has usurped power not granted to it by the Constitution to create a FEDERAL rule that governs by default the US air quality standards. At no time was it ever meant to be the ONLY solution and states are free to pass whatever they want; and with four automobile companies pandering to California’s nut standards, then the free market has spoken. Good news is that cars will be built to the artificial and bogus California standard and the rest of us will pay through the nose for it. At no time was the EPA ever envisioned as the final solution.

  • avatar

    Why BMW and VW are groups and Ford is corporation?

    Next bloody civil war in America will be about emission standards. Brother will kill brother for regulations.

  • avatar

    So these four will sell most of their electric vehicles in Cali-fornia, to keep the democrat/socialists happy there, and will sell the rest of their vehicles in the other 49 states. What’s the big deal ? Even without this agreement, that is what they would have done anyway, due to customer preference in Cali for the greener, electric vehicles. They only put in writing what they think will happen anyway.

    • 0 avatar

      The problem is that there are no green or greener cars in California and elsewhere. All cars are either Black’n’White or some shade of gray. Few are bright blue and some red.

      • 0 avatar

        @inside: You’re right. I checked out Tesla’s configurator and there is no green for either the Model 3 or S. No wonder there’s an unmet demand for greener EVs!

        • 0 avatar

          I remember green cars were popular in 90s exactly for the reason of being environmental movement symbol. I even owned emerald ’94 Taurus which is kind of greenish color. Car itself was old tech (like OHV engines when every other car on the planet had DOHC) and poorly made as if technology did not advance since 1985.

  • avatar

    Including upstream emissions in a vehicle emissions/CO2 regulation doesn’t make any sense and will hopefully also be removed from the federal regulation when it is released this fall.
    The upstream emissions rule requires automakers to include the CO2 emitted from the electricity production by the electrical utility for charging PHEVs and BEVs in the total of CO2 emitted from the vehicle over it’s lifetime. The rule assumes an average CO2 g/KWh for the entire country, regardless of how clean your local utility is.
    This would be equivalent to washing machine or light bulb manufactures being required by law to offset the CO2 emitted due to the electricity consumed by their products after they are sold.
    I think we need to regulate the CO2 produced due to electricity production (we don’t currently), but trying to do it through car emissions regulations is stupid.

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