Carmakers, Don’t Pick A Fight With California
Reprinted with permission from Creators.
News flash: The Obama-era fuel-economy standards would add $875 to the average price of a new vehicle. But proposed border taxes or other tariffs on Mexican imports would add $2,000. President Donald Trump wants a weaker mandate on mileage, and he also wants the tariffs.
Digest those numbers when assessing Trump’s claim to be helping U.S. carmakers control their manufacturing costs. As for that $875 for new technology, drivers would save three times as much at the pump over the lifetime of the vehicle.
Trump has ordered a review of the rule that new cars and light trucks must achieve a real-world average of 36 miles per gallon, up from today’s 25 miles, by 2025. It’s true that lower gas prices have spurred demand for larger vehicles that burn more fuel, but no one seriously argues that the tighter standards are not attainable.
Rather, this would seem part and parcel of Trump’s general contempt for environmental protections — especially any related to climate change. Transportation is the largest source of planet-warming gases in the U.S. Trump says this deregulation is all about the economy and jobs.
A warming climate, meanwhile, could put Southern Florida and much of the East and Gulf coasts under water. It could lead to more devastating droughts inland. And if temperatures continue their rise, a heat wave in 2030 could kill 11,000 Americans, according to scientists. Consider what these disaster-movie events might do to the Dow Jones Industrial average.
U.S. automakers have made enormous strides raising mileage, including on trucks and SUVs. Do they want to blow all that goodwill and respect by going to war with California, their biggest car market? For that will surely happen if Trump does what he’d have to do to truly lower fuel-economy standards.
Some background: For historic reasons, California has a right to set its own standards. Trump could instruct the head of his Environmental Protection Agency, Scott Pruitt, to pull the federal government waivers that let California go its own way. That would not happen without a fight: Right after Trump announced plans to lower the standards, California finalized new vehicle emissions rules roughly along the lines of Obama’s.
When you pick a fight with California on emissions, you’re also picking a fight with the 12 states, plus the District of Columbia, that have adopted California’s rules. We’re talking nearly 35 percent of the U.S. car market.
Then there are the nine states that follow California’s mandate for selling more “zero-emissions vehicles.” Without it, the market for U.S. electric cars would freeze.
Other countries are setting rules for tighter fuel efficiency. California would actually be doing the industry a favor by pushing it to make products more competitive in other markets.
Carmakers should stop their boohooing over how the more stringent Corporate Average Fuel Economy standards are all but bankrupting them and hurting their workers. “On the contrary,” a recent editorial in Automotive News stated, “the latest CAFE round has coincided with rather robust growth in jobs, sales, profits, horsepower and fuel economy.”
One more point. There’s not been enough discussion on how Mexican and U.S. factories complement one another in the production of cars. Lower-wage Mexican workers tend to do the labor-intensive tasks, helping manufacturers keep the prices of their products in check. This shared manufacturing protects the jobs of Americans doing the higher-skilled jobs. Populists on the Democratic side, please take note.
The public wants cars that are technologically cool and Earth-friendly. In this, California is the spokes-state for the desires of over a third of the U.S. car market. California is not the enemy. If automakers make it one, they will lose.