Gas War: GM Now Sucking Up to California to Maximize Fleet Sales

Matt Posky
by Matt Posky

General Motors has issued a letter to California Governor Gavin Newsom promising that the automaker is now fully committed to complying with the state’s aggressive emission regulations. This follows an earlier announcement from GM advancing plans to eliminate tailpipe emission from all light-duty vehicles by 2035 via electrification. The company had also increased global spending to develop EVs to $35 billion (USD) through 2025, which is roughly a third more than it had previously been targeting.

Of course, don’t think this has anything to do with altruism or formal commitments to some grand cause. California was simply planning to bar any automakers that hadn’t previously vowed to adhere to its strict regulatory policies from selling to state government fleets. While GM has been in the process of changing its allegiance, the business originally sided with automakers approving of the Trump administration’s regulatory revisions that were at odds with the region.

According to Reuters, the automaker has confirmed that its decision to become friendlier toward the State of California has made it eligible for government fleet purchases. Frankly, I’d criticize GM for kissing the ring to receive preferential treatment but there’s not much point. General Motors CEO Mary Barra has taken every position imaginable during our Gas War coverage and it’s not all that uncommon to see corporations bowing to government actors to get something in exchange.

Let’s take a look back to see how we got here.

In the days following President Donald Trump’s arrival at the Oval Office in 2017, Barra visited the White House with lead executives from Ford Motor Co. and Fiat Chrysler Automobiles (now Stellantis) to request the fueling rollback that would ultimately divide the industry. The State of California immediately became a rallying point for other states that likewise wanted to retain the stricter Obama-era regulatory rules pertaining to nationwide emissions and the Corporate Average Fuel Economy (CAFE). Court cases were launched and the following years offered seemingly unlimited examples of how childish and uncooperative government officials can be.

Back in 2017, American automakers claimed they couldn’t keep up with the emissions quotas under Obama without going bankrupt and Trump believed a rollback would pair well with his focus on lowing fuel prices by encouraging localized pumping. The White House also stated it was attempting to retain existing automotive jobs (as EVs require less physical labor to produce) and provide American consumers with greater choice by delaying regulatory provisions that would eventually make larger vehicles boasting V8 power harder to come by.

California insisted that it was within its rights to establish its own regulatory rules with state leadership explaining a desire to retain — if not surpass — the Obama-era targets the Trump administration was actively trying to scale back. However, this decision effectively set up the Golden State to have control of industry. California is responsible for selling more cars than anywhere else in the nation and, with stricter rules, it would be the region automakers would need to comply with in order to maximize volume in North America. But state officials, like Gov. Newsom, promised that stricter regulations would result in cleaner air and a deluge of high-tech American jobs as automakers transitioned toward electric vehicles.

As a result, Trump and company wanted to remove California’s ability to self-regulate. Meanwhile, California was building a coalition of like-minded states vowing to adhere to its emission laws — regardless of what the federal rules were. The ensuing legal battles were really something, with many public officials flat-out refusing to talk to each other because they were on different sides of the argument. California even managed to get a handful of automakers (BMW, Ford Motor Co., Honda Motor Co., and Volkswagen Group) to publicly promise that they would adhere to its proposed emissions requirements instead of what was coming out of Washington.

By November of 2020, the Trump rollbacks had been repeatedly softened in a misguided attempt to compromise and California had given up on fighting with the federal government because it looked like Joe Biden was to assume the presidency in 2021. His environmental plan was exactly what the Californian Air Resources Board (CARB) said it wanted, a strengthening of the emission proposals launched when he was still vice president.

General Motors took notice, with CEO Barra flipping the script by formally abandoning the automaker’s lukewarm support of the Trump initiatives while prolonged ballot-counting swung the presidency in favor of Biden.

“President-elect Biden recently said, ‘I believe that we can own the 21st century car market again by moving to electric vehicles.’ We at General Motors couldn’t agree more,” Ms. Barra wrote in a letter to some of the world’s largest environmental groups. “We are inspired by the President-elect’s Build Back Better plan which outlines a clear intention to expand vehicle electrification in the United States, create one million jobs, install 550,000 charging stations, and position American auto workers and manufacturers to win the race for electrification.”

“We believe the ambitious electrification goals of the President-elect, California, and General Motors are aligned to address climate change by drastically reducing automobile emissions. We are confident that the Biden Administration, California, and the U.S. auto industry, which supports 10.3 million jobs, can collaboratively find the pathway that will deliver an all-electric future to better foster the necessary dialogue, we are immediately withdrawing from the preemption litigation and inviting other automakers to join us.”

Now GM is reiterating its newfound commitment to California by openly stating that it has the right to establish any vehicle emission standards it likes under the Clean Air Act. While this is technically true, the EPA under Joe Biden has already moved to restore California’s authority to set whatever rules it likes on automobiles in April 2021.

From Reuters:

In July, 16 Republican state attorneys general urged the EPA to reject reinstating California’s authority. “The Golden State is not a golden child,” they wrote.

GM previously backed overall emissions reductions in California’s 2019 deal with rivals Ford Motor, Volkswagen , Honda and others, but asked the Biden administration to give automakers more flexibility to hit carbon reduction targets.

California plans to ban the sale of new gasoline powered passenger vehicles starting in 2035, a step the Biden administration declines to endorse. Biden has called for 50 [percent] of new vehicles sold by 2030 to be electric or plug-in hybrid.

Last month, the EPA finalized here new vehicle emissions requirements through 2026 that reversed Trump’s rollback of car pollution cuts and will speed a U.S. shift to more electric vehicles.

So we’re kind of back where we started. Despite the Trump fuel rollbacks being front and center throughout his tenure, they did little but delay the Obama-era targets automakers claimed were untenable a few years earlier. Build Back Better may have failed in Congress. But there’s still a chance it could be pushed through and automakers have found themselves confronting a federal government that’s now broadly in line with aggressive Californian proposals.

With that in mind, it’s easy to see why General Motors and its CEO have attempted to play all sides. Most other companies are doing the same, taking a stand only when they think there’s a strong chance of getting their way or there’s no alternative but to fall in line. I suppose the lesson to take away is that governments are fickle and corporations even more so.

[Image: General Motors]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • MitchConner MitchConner on Jan 10, 2022

    Lived in California for close to 40 years. Watched it go from a pretty cool place to a hell hole run by incredibly stupid people who think they’re better than everybody else as they push their cockeyed ideas based on fantasy down everybody else’s throats. What’s scary is the worst of the worst, the Silicon Valley rich, have so much money they can throw it around on a national level. They ruined California — and they’re starting to ruin the rest of the country. The co-CEO of Netflix supports hands off DAs who won’t prosecute anybody because they’re supposedly victims of a racist judicial system. Well, some skunk who should’ve been locked up for life yet was repeatedly let out wound up killing his own wife’s mother in her Beverly Hills home. Oops. BTW, the state has another huge surplus. Think Newsom is spending any of it on more reservoirs and desalination plants because he’s always screeching about droughts caused by climate change? Nah. But there’s $4.5B for a completely useless bullet train. Yet the dopes who live there just keep electing every donkey that comes along with a D next to their name. Trust me when I tell you that if California and its rectally inserted cranium, fiscally illiterate electorate thinks something is a good idea DO THE OPPOSITE. The state’s poverty rate is off the charts. Its quality of life stinks. The middle class is gone. Its pandemic recovery is amongst the worst of any state thanks to county health directors who were all trying to out stupid each other with their closures and lock downs. The taxes and fees are astronomical — and downright criminal when you look at the services you get in return. Litter strewn streets. Third world schools in all but the wealthiest enclaves. Overpaid government union goons who will rally to take anyone out who doesn’t cave to every one of their demands. Abusive regulations that punish businesses for minuscule environmental gains while the Chinese belch as much filth in the air as they want. And those forest fires? Predicted by scientists in the 90s thanks to zealots like the Sierra Club who didn’t want dead trees killed by a beetle infestation removed. No wonder GM thought jumped on board this bag of flatulent hot air. They’re just as dumb as that state.

    • See 2 previous
    • MitchConner MitchConner on Jan 12, 2022

      @Matt Moved to the Atlanta metro 13 months ago. Superior in every way, shape, and form. Feel reborn to be honest. In California the registration for my three cars alone was $1500 a year. Here? $135 — including $75 for the spay and neuter option. I see litter getting picked up weekly around here even though there isn’t much of it. In Silicon Valley there was a bumper from a Fusion laying in the bushes within sight of Google’s headquarters for six years when I left. Funny how you mentioned how you loved a place yet it didn’t love you back. That’s how I feel about California. Really used to love it. In return I got the equivalent of a girlfriend who’d take my cash, run up my credit cards, drink my booze, bang the neighbors, and go on benders that’d trigger visits from the cops once a quarter. Enough of that misery.

  • BSttac BSttac on Jan 10, 2022

    GM is a parasite. Never forget that this company tries to get out of paying the victims families who died from the ignition switch scandal during bankruptcy. Scum organization that I wish the worse

  • 3-On-The-Tree Lou_BCsame here I grew up on 2-stroke dirt bikes had a 1985 Yamaha IT200 2-strokes then a 1977 Suzuki GT750 2-stroke 750 streetike fast forward to 2002 as a young flight school Lieutenant I bought a 2002 suzuki Hayabusa 1300 up in Huntsville Alabama. Still have that bike.
  • Milton Rented one for about a month. Very solid EV. Not as fun as my Polestar, but for a go to family car, solid. Practical EV ownership is only made possible with a home charger.
  • J Love mine, but the steering wheel blocks dashboard a bit, can't see turn signals nor headlights icons. They could use the upper corners of the screen for the turn signals. Mileage is much lower than shown too, disappointing
  • Aja8888 NO!
  • OrpheusSail I once did. My first four cars were American made, and through an odd set of circumstances surrounding a divorce, I wound up with a '95 Nissan Maxima which was fourteen years old and had about 150,000 miles on it.It was drove better, had an amazing engine, and was more reliable than any of my American cars. This included a new '95 GMC pickup that went through five alternators in under two years while the dealership insisted that there was no underlying electrical problem while they tried to run the clock on the warranty.That was the end of 'buy American'. I've bought from Honda and VW since, and I'll consider just about anything except American now.