Staff Reports
The Biden administration’s proposal to increase fuel economy standards has automakers in a panic, as they are now facing a crushing $14 billion in fines. The Alliance for Automotive Innovation, an automotive group, has deemed the proposal “unfeasible” and claims that the fines exceed what is economically possible for automakers to pay. According to the group, these fines will impact a significant number of vehicles, with one in every two light trucks and one in every three passenger cars being affected from 2027 to 2032.
This push for reduced vehicle emissions and a shift to electric vehicles is coming at a high cost for the industry. Ford Motor Company, for example, is projected to face a $4.5 billion loss for electric vehicles in its second-quarter financial results for 2023. This is nearly double the $2.1 billion loss the company experienced in its Model E division in 2022. Despite these losses, Ford’s overall net income was $1.9 billion, with significant revenue generated from its commercial division and its gas and hybrid division.
Ford’s CEO, Jim Farley, remains optimistic about the future of electric vehicles, stating that the “near-term pace of EV adoption will be a little slower than expected,” but believes that Ford’s investments in capabilities and next-generation products will help them succeed in the market. However, the auto group argues that these fines will ultimately increase costs for American consumers without providing significant environmental or fuel savings benefits.
While the European Union has diluted its own proposal on new vehicle emissions, the NHTSA stands by its estimate of fines, stating that automakers have the option to use electric vehicles to comply and avoid penalties. Nevertheless, the auto group contends that the projected $3,000 average price increase on vehicles will deter sales and lead to an increase in the average age of vehicles on the road.
In the end, these fines may end up hurting both automakers and consumers, with no real environmental or fuel savings benefits to show for it. It seems like another case of government overreach and unnecessary regulation, all in the name of “climate change” and virtue signaling. It’s time for the Biden administration to rethink its approach and consider the negative consequences that these fines will have on the American economy and individual car buyers.
