Trump administration EPA cuts yield regulation shifts

0
59

Trump’s latest round of EPA cuts targeted the automotive sector and the Corporate Average Fuel Economy, or CAFE, regulations instilled by President Obama, which stated that car companies must average 54.5 mpg across their entire line up of cars by 2025. These regulations were introduced to more closely match the rigorous standards in Europe, Canada, Australia and many other first world countries, all of which are markets that the Big Three American car companies trade in.

The midterm report for the agreement showed American companies making great progress, with average fuel economies hovering around 36 mpg, varying slightly from manufacturer to manufacturer. Trump is trying to cut the research and development costs to allow auto makers to save money.

However, with other large markets having such stringent standards, companies are throwing money away by not offering those efficiency benefits to their customers in America. Most of the money being spent by Ford, and other companies, on better fuel economy would be done so anyway because better gas mileage is always a selling point to customers.

Fuel economy as a selling point will be an even bigger deal to customers if gas prices go up again, which is likely to happen in 2017. Companies like Ford will not spend money trying to meet the standards of Europe only to turn around and build a completely new manufacturing plant for a less efficient American market model.

Car companies also are not likely to invest in new plants that create less efficient cars when policy changes happen rapidly, possibly every 4 years, and the cost of return on a new assembly line can be as high as 10 years of production. This is, sometimes, even more if the model the plant makes is selling slow.

NO COMMENTS

Leave a Reply