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

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【Summary】Proposed fuel economy standards by the Biden administration could result in fines of billions for GM, Stellantis, and Ford. The standards aim for a fleet-wide average of 58 mpg by 2032, with penalties for non-compliance. The Detroit Three would face significant fines, with compliance costs of $2,151 per vehicle compared to the average of $546 for other manufacturers. The industry as a whole could face $14 billion in fines.

FutureCar Staff Oct 03, 2023 4:15 PM PT

Potential Fines 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, GM could face penalties amounting to $6.5 billion, Stellantis up to $3 billion, and Ford $1 billion.

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

The American Automotive Policy Council, representing GM, Stellantis, and Ford, wrote a letter to the U.S. Energy Department, highlighting the potential fines that 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 manufacturers.

Another group representing major car manufacturers has expressed concerns that the new regulations could lead to the industry as a whole facing fines totaling $14 billion.

On September 14, the Department of Energy sent letters to the Detroit Three, requesting additional information to better understand the specific challenges related to 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 June, it was reported that Stellantis had paid a total of $235.5 million in CAFE fines for the 2018 and 2019 model years, while GM was fined $128.2 million for the 2016 and 2017 period. This marked the first time GM had paid fines in the 40 years since the inception of the CAFE program, as the company chose to pay fines instead of purchasing credits.