It turns out there's more than one way for automakers to meet fuel-economy targets. One is to develop and sell more fuel-efficient cars and trucks. The other—as demonstrated over the years by quite a few automakers—is to pay fuel economy fines to the U.S. Treasury as a course of doing business.
That's the course Fiat Chrysler took for the 2016 model year, the company reported last week.
According to compliance numbers released by the NHTSA in December, Fiat Chrysler was the only automaker that didn't reach its fleet-calculated fuel-economy targets for 2016. Consequently it will pay a $77 million fine, the largest paid by any automaker in the last five years.
Paying fuel economy fines isn't anything new for automakers. In the late 1990s and early 2000s, when gas prices were low, and consumers were replacing economical sedans with increasing numbers of SUVs, paying the fines became a business strategy for some automakers such as Land Rover, BMW, Ford, and some exotic-car brands whose main business was selling big, powerful SUVs or cars.
Detroit automakers have complained to the Trump administration about rising fuel economy standards, and the EPA (in conjunction with NHTSA, which officially has authority over fuel economy) released a controversial proposal to cap fuel economy increases after 2020.
The agency is set to finalize the proposal by April 1, but several states, led by California have sued to block the rollback.
In a statement, FCA's head of external affairs Shane Karr said, "We at FCA are committed to improving the fuel efficiency of our fleet and expanding our U.S. manufacturing footprint. Ultimately, both goals are better served by a CAFE program more closely aligned to the U.S. market, than by requiring companies to make large compliance payments because assumptions made in 2011 turned out to be wrong.”
Fiat Chrysler dropped most of its car lineup in 2016 to concentrate on building larger and thirstier pickups and SUVs. Ford followed suit last year.