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Automotive fuel economy penalties pushed back to the 2019 model year

Automakers got an early holiday present, according to both The Detroit News and Automotive News: NHTSA has decided to postpone increased fines for fuel economy violations. The original ruling, which was made this past July, would have gone into effect this year and applied to 2015 model year vehicles. Now the fine increase won’t be enforced until the 2019 model year.

The increase the automakers were facing was substantial. The way the fine works currently is that for every tenth of a mile per gallon the automaker is over the limit, it is charged $5.50. That cost is then multiplied by every car the company sold in that model year. The increase would have brought the $5.50/car fine to $14, with NHTSA’s reasoning being that the fine hadn’t changed since the 1998 model year. Even with the current $5.50 figure, though, fines can reach into the millions, based on past NHTSA fines. The increase would make those fines even more massive. For example, Jaguar Land Rover was fined $14,110,470 in 2013 using the current method. Substituting the $14 figure into the equation, and the fine would become $35,917,560. So, when we said “substantial,” we meant it.

According to The Detroit News, a NHTSA spokesperson told them that the fine increase was delayed in part due to lobbyists, which Automotive News identified as the Alliance of Automotive Manufacturers and the Association of Global Automakers. The lobbyists argued that the retroactive application, plus the fact that car companies had finalized plans for models up to 2018 before this new rule was made, made it so that automakers were unable to adjust to and address the rule.

This news comes at an interesting time for fuel economy regulation. Currently, the EPA is trying to finalize the proposed 2025 CAFE target of 54.5 mpg. Meanwhile, automaker lobbyist groups are pushing to bring that number down. The next few months should be pretty interesting.

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