California, Automakers Agree to New Fuel Economy Standards

What’s happening for automakers in California? Here’s the rundown.

August 05, 2019

ALEXANDRIA, Va.—Ford Motor Co., Volkswagen AG, Honda Motor Co., and BMW AG struck a voluntary agreement with the California Air Resources Board to meet tougher tailpipe-emissions standards than proposed by the Trump Administration and increase fleet fuel economy by 3.7% year over year between model year 2022 and 2026, Vox details.

These four companies cover nearly one-third of new car, light truck and SUV sales in the U.S. so it’s no small feat. However, the benchmarks are determined by a car company’s national fleet, rather than simply within the state.

California has an exemption under the federal Clean Air Act to set its own rules for vehicle emissions. California’s new standards aren’t as strict as those set by the Obama Administration in 2012 but are tougher than what the Trump White House has proposed. The Trump Administration wants to freeze Obama-era federal emissions targets at 2020 levels, or about 37 miles per gallon, through 2026, instead of lifting them 5% annually, the Wall Street Journal reports.

As Vox explains, “Faced with the prospect of different sets of rules across the country with changes hinging on the uncertain outcome of long, drawn-out litigation, some car companies decided to establish a backchannel with California to see if they could reach an agreement of their own.”