Donald TrumpEnlarge Photo
Automakers may complain about rising gas mileage standards, but as several have proved over the years, they don't always have to meet them.
Another strategy, employed regularly over the years by a few automakers is to ignore the fuel economy standards and just pay the penalties for missing them.
Those penalties aren't cheap, and they're now set to go up, following a court ruling that rejected a Trump Administration plan to roll them back.
Since Corporate Average Fuel Economy (CAFE) standards are based on an average of every car an automaker sells across the country in a given year, any penalties are also paid per car, and per mpg below the target average that the automaker achieves across all the vehicles it sells in a given model year.
In response to a 2015 Congressional mandate that such fines in all government agencies be reset for inflation, the National Highway Traffic Safety Administration (NHTSA), which administers the program, had set a timetable to increase the fines. They were set to rise from $55 to $140 per mpg per car sold.
That would dissuade automakers such as Jaguar-Land Rover from concluding that paying the fines would be cheaper than designing its cars to get better mileage. Jaguar Land Rover paid more than $14 million in penalties for its 2013 model year SUVs, for example.
2018 Land Rover Range RoverEnlarge Photo
When the Trump Administration announced last July that it would cancel the increase, New York state sued, and yesterday a federal appeals court sided with the state and allowed the increase to stand, according to a Bloomberg report.
The ruling will likely put more pressure on automakers in the fight over fuel economy standards which are now being reviewed for model years 2022 through 2025.
At the automakers' request, EPA Administrator Scott Priutt has announced that the agency will review its emissions standards tied to the fuel economy standards and reduce or eliminate a scheduled increase for those model years. However, automakers are already locking in supply contracts to build cars for the 2022 model year, so any rollback won't have an immediate effect on vehicles' actual fuel economy.