Fines Possible for GM, Stellantis, and Ford Under New CAFE Rules

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【Summary】The Biden administration's proposed fuel economy standards could result in billions of dollars in penalties for GM, Stellantis, and Ford. The new regulations aim to increase requirements by 2% annually for passenger cars and 4% for pickup trucks and crossovers, with the goal of achieving a fleet-wide average of 58 mpg by 2032. The Detroit Three could face fines of up to $2,151 per vehicle, compared to an average of $546 for other manufacturers.

FutureCar Staff Oct 04, 2023 6:23 AM PT

Fines Possible for GM, Stellantis, and Ford Under New CAFE Rules

The Biden administration has proposed a potential hike in fuel economy standards through 2032, which could result in significant penalties for General Motors, Stellantis, and Ford. According to reports, General Motors could face penalties of $6.5 billion, Stellantis up to $3 billion, and Ford $1 billion.

In July, the National Highway Traffic Safety Administration (NHTSA) suggested increasing Corporate Average Fuel Economy (CAFE) standards to a fleet-wide average of 58 mpg by 2032. The proposal outlined a 2% annual increase for passenger cars and a 4% annual increase for pickup trucks and crossovers.

The American Automotive Policy Council, representing GM, Stellantis, and Ford, expressed concerns in a letter to the U.S. Energy Department. They highlighted the potential fines the Detroit Three could face if they fail to meet the new CAFE regulations. The letter revealed that GM, Ford, and Stellantis could incur compliance costs of $2,151 per vehicle, significantly higher than the average of $546 per vehicle for other car manufacturers.

Another group representing major car manufacturers believes that the new regulations could result in the industry as a whole facing fines of up to $14 billion.

On September 14, the Department of Energy sent letters to the Detroit Three, requesting additional information to better understand the specific challenges regarding product development lead time.

The NHTSA has previously stated that car manufacturers have the option to use electric vehicles to comply with the regulations and avoid penalties altogether.

In recent years, Stellantis and GM have already faced significant fines for non-compliance with CAFE standards. Stellantis paid a total of $235.5 million in fines for the 2018 and 2019 model years, while GM was fined $128.2 million for the 2016 and 2017 model years. This marked the first time GM had paid fines in the 40-year history of the CAFE program, as the company chose to pay fines instead of purchasing credits.