| DETROIT, March 23
DETROIT, March 23 When U.S. President Donald
Trump announced a review last week of tough Obama-era vehicle
emissions and fuel-efficiency standards, he proclaimed that the
"assault on the American auto industry is over."
But rules set by the Environmental Protection Agency may
take a backseat to consumers demanding vehicles that guzzle less
gas and automakers having to meet tougher standards if they want
to export cars overseas, according to auto industry analysts.
In the end, U.S. carmakers may just gain a few more years to
meet the more stringent targets that former President Barack
Obama's administration negotiated with the companies in 2012,
If Europe and China continue to toughen their emissions
standards, "the U.S. might become an outlier," American Axle
President Mike Simonte told Reuters on Thursday.
Trump's move was widely seen leading to a rollback or
loosening of more stringent targets, which would slash vehicle
exhaust emissions while effectively doubling average fuel
economy to 54.5 miles per gallon by 2025.
Automakers have argued the rules for 2022-2025 are too
expensive and could cost American jobs, so the Trump
administration’s review was seen as a win for them.
On a conference call Thursday with investors, Bob Shanks,
Ford Motor Co's chief financial officer, said, “We are not
seeking a rollback in any way. We just want to have a
conversation around the levels we want to achieve.”
Despite what the EPA may want, California and nine other
states in the Zero Emission Vehicle program — eight in the
northeast, plus Oregon — are expected to move ahead on Friday
with the previously established targets.
Those states account for nearly 30 percent of U.S. auto
The potential divide with the rest of the country could
create a “two-tiered environment with two sets of regulations,”
said Mark Wakefield, managing director of AlixPartners’
automotive practice. This “could drive costs higher if
automakers have to build two versions of the same vehicle to
meet the two different standards.”
The Alliance of Automobile Manufacturers, a trade group that
sued to overturn the Obama-era rules on behalf of several big
automakers, wrote the White House on Thursday urging talks to
begin quickly with California to ensure that national standards
remain in place.
“Automakers seek certainty, predictability and rationality –
over time – from the regulatory process,” the group's CEO Mitch
“EPA A DISTANT THIRD”
Kristin Dziczek, director of the Center for Automotive
Research’s labor and industry group, said U.S. automakers could
find it hard to export cars to markets such as China and Europe
with tougher regulatory regimes if the U.S. targets were
“I don't think we’re going to see a rollback,” she said. “At
most, I think we may see a slowing of the timetable” for
implementing the tougher standards.
AlixPartners’ Wakefield said if China, the world’s largest
market, continues pushing electric vehicles while America
backpedals, it could lead to “some movement of investment from
the U.S. to China, especially as the latter market continues to
General Motors Co and Fiat Chrysler Automobiles NV
referred Reuters to public comments made by the
industry’s lobbying group, the Alliance of Automobile
EPA Administrator Scott Pruitt, a climate change skeptic,
said the Obama administration estimated it would cost $200
billion over 13 years to comply with stricter standards, which
he believes will lead to higher prices for consumers and jobs
leaving the country.
Morgan Stanley analyst Adam Jonas said the auto industry
expected to miss the 2022-2025 targets regardless of who
occupied the White House, but he believes the EPA’s recent move
may carry relatively little weight.
“Of all the things that are likely to drive fuel economy, I
would rank the EPA a distant third on the list, behind consumer
preferences and the direction of technology,” he said.
United Auto Workers union President Dennis Williams said
while around 60 percent of U.S. auto sales are currently trucks
and SUVs, consumers value fuel-economy improvements for those
“The automakers shouldn’t make the mistake of sliding
backward,” Williams said. “We’re here to protect our (union)
members, but we understand that in doing so we also have to look
at the future.”
(Reporting by Nick Carey and Paul Lienert in Detroit;
Additional reporting by David Shepardson in Washington; Editing
by Lisa Shumaker)