Automakers have been facing a significant increase in fuel economy penalties in recent years, one that President Donald Trump tried to suspend back in 2019, but that decision was overturned in appeals court. The new regulation, which would have more than doubled the current fuel economy penalty for automakers that fail to meet efficiency requirements, has now been delayed by the Trump administration, according to Reuters.
Back in 2015, Congress ordered federal agencies to make adjustments to civil penalties to make them more in line with inflation, at which time the National Highway Traffic Safety Administration (NHTSA) raised its fines from $5.50 to $14 for every 0.1 mile-per-gallon new vehicles consumed in excess of its standards. At the time, automakers said that the change would cost the industry upwards of $1 billion each year.
Meanwhile, environmental groups urged the Trump administration to retain the new regulation, citing the fact that fuel economy penalties had only increased once since 1975, and that was a mere $0.50 back in 1997. At the time, Fiat Chrysler, which paid $77.3 million in fines in 2016 and $79 million in 2017, said that it would need to set aside $608 million as a result of the new regulation.
At the time of FCA’s announcement, the NHSTA noted that “increasing the rate is likely to lead to an increase in the price of credits,” and said, “to disregard the industry’s serious reliance interests would be unfair and improper.”
This decision now gives automakers a little more time to prepare for the increase, as well as save the automotive industry hundreds of millions of dollars in the short term, though it’s currently unclear as to when the new fuel economy regulation will now take effect.