What Trump’s Revision to Emissions Regulation Means for the Auto Industry

In the wake of the Trump administration’s decision to review regulations that would lower standards for greenhouse gas emissions, automotive manufacturers including Ford, GM, and Chrysler plan to focus more effort on manufacturing in the U.S.

In 2011, the Obama administration set standards with the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) that would require auto makers to create vehicles that would produce less emissions, set to take full effect by 2025. This would lead to “an average industry fleetwide level of 163 grams/mile of carbon dioxide (CO2) in model year 2025, which is equivalent to 54.5 miles per gallon (mpg) (if achieved exclusively through fuel economy improvements),” according to the original regulation.

On January 15, 2017, the administration announced that current regulations will be reviewed and possibly revised to ease the standard for  auto emissions. The EPA estimated that compliance with the previous standards would cost $200 billion from 2012 to 2025. Any revisions made could act as an incentive for companies to focus manufacturing efforts in the U.S.

In combination with low gas prices, the rollback of auto emissions may further set back demand from consumers for electric cars, putting manufacturers like Tesla in a tough spot.

“Americans are increasingly understanding that driving electric vehicles helps reduce pollution, protect public health and ensure a more sustainable future, all without sacrificing performance. The recent success of auto manufacturers in responding to the growing demand for electric vehicles is proof that the nation’s current fuel economy standards are practical, achievable and having their intended effect,” according to a Telsa spokesperson.

However, California’s Zero Emission Vehicle state regulation allows the state to set its own emissions standard. It requires electric, hybrid, or hydrogen fuel vehicles to represent 15 percent of cars sold by 2025. Nine other states have adopted this standard. It’s unclear whether the administration will override those states’ decision to do so.

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