Photo: White House
In January 2021, Donald Trump did not leave the White House without taking one last measure about the automotive industry: he delayed a 2016 regulation that increased the penalty for automakers that failed to comply with CAFE (Corporate Average Fuel Economy) requirements. The Biden administration just reinstated it.
That means automakers will have to pay $14 for every additional 0.1 miles compared to the required fuel economy times for all non-compliant vehicles sold from 2019 until 2021. In 2022, automakers will have to pay $15 instead of $14 and follow the same calculation rules. That can represent millions of dollars in fines. At the same time, it can increase revenue for companies willing to sell credits, like Tesla.
Reuters confirmed that NHTSA's top official, Steven Cliff, signed the final rule on March 24. After it gets published, it will take effect in 60 days. It is not clear when the companies that fail to comply with the CAFE requirements will have to pay the fines. According to Reuters, NHTSA said that the companies that planned without considering possible higher penalties “did so at their own risk.” Ouch…
Carmakers were not willing to accept that higher value since 2016, arguing that the penalty would raise industry costs by $1 billion per year. Reuters mentioned that Stellantis alone could have to pay $572 million. It seems that this value is what is due by the company for these years in which NHTSA did not collect the fines because the subject was still under discussion.
The fine hike was due to a monetary correction. Congress ordered agencies to adjust civil penalties to inflation rates during the years in which these values remained the same. Regarding fuel economy fines, they were adjusted only once since they were established in 1975. Instead of paying $5, the weight changed to $5.50 in 1997. Reaching $15 in 2022 almost triples that value. Selling well and exceeding the CAFE requirements will cost the automakers that failed to comply dearly.
Reuters confirmed that NHTSA's top official, Steven Cliff, signed the final rule on March 24. After it gets published, it will take effect in 60 days. It is not clear when the companies that fail to comply with the CAFE requirements will have to pay the fines. According to Reuters, NHTSA said that the companies that planned without considering possible higher penalties “did so at their own risk.” Ouch…
Carmakers were not willing to accept that higher value since 2016, arguing that the penalty would raise industry costs by $1 billion per year. Reuters mentioned that Stellantis alone could have to pay $572 million. It seems that this value is what is due by the company for these years in which NHTSA did not collect the fines because the subject was still under discussion.
The fine hike was due to a monetary correction. Congress ordered agencies to adjust civil penalties to inflation rates during the years in which these values remained the same. Regarding fuel economy fines, they were adjusted only once since they were established in 1975. Instead of paying $5, the weight changed to $5.50 in 1997. Reaching $15 in 2022 almost triples that value. Selling well and exceeding the CAFE requirements will cost the automakers that failed to comply dearly.
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