California rewards climate-friendly automakers amid NHTSA lawsuit
Tuesday, November 19, 2019
GM and Fiat side with nationally enforced emissions standards, while Ford supports states adopting their own standards. These decisions affect manufacturing orders, and therefore work conditions.
For decades, California has enjoyed a Clean Air Act waiver to set its own standards. Suffering under pollution from transportation, industry, and wildfires, California is seeking to reduce pollution to 66 million metric tons per year by 2030. The state has joined 23 others as lawsuit plaintiffs against the National Highway Traffic Safety Administration (NHTSA). The background here is about states’ rights to set standards.
When the Trump administration revoked this waiver, 23 states joined California’s lawsuit. This fight will influence states’ rights and pollutant-heavy industries in the climate change era, writes The New York Times: “The legal fight between the Trump administration and California over auto pollution rules has swelled into a battle over states’ rights and climate change that is likely to only be resolved once it reaches the Supreme Court.”
On the manufacturing side, GM and Fiat lose California state vehicle purchases in the battle. Between 2016 and 2018, the state: “…purchased $58.6 million in vehicles from General Motors Corp, $55.8 million from Fiat Chrysler Automobiles, $10.6 million from Toyota Motor Corp and $9 million from Nissan Motor Co.”
That’s $134 million in auto sales losses because companies side with the Trump administration’s climate agenda. Conversely, Ford has already enjoyed the heftiest recent sales to the Golden State at $69.2 million.
Now the state has announced it won’t be renewing GM, Fiat, Toyota, and Nissan orders. Meanwhile, the Justice Department is investigating a potential antitrust violation against the four companies — BMW, Volkswagen, Honda, and Ford — that have a manufacturing agreement with California.
The argument in favor of national emission standards without state waivers believes this that is the path to broader manufacturing reach and more flexible markets. A national standard might theoretically even support efficient manufacturing and lower prices, because new engine models will be more uniform. But does it benefit the demand side that wants to purchase green autos?
Consumers also pay for climate-friendly emissions standards; hybrid and electric vehicle tax credits are intended to offset this nuisance. Some car owners complain that tighter restrictions punish individuals instead of corporate polluters. This class warfare view argues that older car models face difficulty meeting standards, meaning lower-income people are punished by California-style standards.
The Association of Global Automakers (AGA), supports a national standards program because it allows more manufacturing efficiency that keeps costs down.
The AGA argues for a national program involving the National Highway Traffic Safety Administration, Environmental Protection Agency, and the California Air Resources Board: “A unified program provides benefits for the widest range of customers, while also continuing annual improvements in fuel efficiency. It reduces unnecessary redundancies and helps sustain manufacturers’ ongoing product investment, which in turn supports jobs, helps manufacturer production facilities, strengthens the U.S. economy, and makes fuel savings available to every American.”
The only catch here is that the national fuel efficiency standards are environmentally weaker, but somehow fuel efficiency standards will (magically?) improve.
GM and Ford auto workers may have ratified new contracts, but confusion around what kind of engines they will be building on factory floors continues. Also, Fiat Chrysler’s UAW-represented workers have not yet ratified their contract. FCA executives reportedly intend to maintain their steep profit margins, even in the context of losing California’s previous order and low wages for workers.
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