Biden administration's proposal to increase fuel economy standards could impose fines of US$6.5B on GM and US$3.0B on Stellantis, according to a letter from the American Automotive Policy Council; Ford could face around US$1.0B in penalties

Sample article from our Government & Public Policy

WASHINGTON , October 2, 2023 (press release) –

The proposal by President Joe Biden's administration to hike fuel economy standards through 2032 would cost General Motors $6.5 billion in fines and Chrysler parent Stellantis $3 billion, according to a letter from an industry group seen by Reuters.

The American Automotive Policy Council, representing GM, Stellantis and Ford, said in a letter to the U.S. Energy Department on Friday that the size of the expected penalties for not meeting proposed Corporate Average Fuel Economy (CAFE) requirements are "alarming." Ford separately faces about $1 billion in penalties, the letter said. GM and Stellantis declined to comment beyond the letter.

The previously unreported letter asked the Energy Department (DOE) to reconsider its plan to revise the "Petroleum Equivalency Factor" that will result in "disproportionately higher compliance costs" for U.S. automakers.

Detroit Three automakers face $2,151 per vehicles in compliance costs compared with $546 per vehicle on average sold by other automakers, the letter said, and the policy "would reward those auto manufacturers resisting the transition to a fully electric future the most."

The National Highway Traffic Safety Administration (NHTSA) in July proposed hiking CAFE standards by 2032 to a fleet-wide average of 58 miles per gallon by boosting requirements 2% per year for passenger cars and 4% annually for pickup trucks and SUVs.

DOE wants to significantly revise how it calculates the petroleum-equivalent fuel economy rating for EVs in NHTSA's CAFE program.

DOE sent Sept. 14 letters to the Detroit Three automakers "requesting additional information to help the DOE fully understand the 'specific challenges regarding product development lead time,'" the automaker group said.

"Encouraging adoption of EVs (electric vehicles) can reduce petroleum consumption but giving too much credit for that adoption can lead to increased net petroleum use because it enables lower fuel economy among conventional vehicles," DOE said in April. The agency did not immediately comment Monday.

A group representing nearly all major automakers said last week the industry as a whole could face $14 billion in CAFE fines.

NHTSA did not immediately comment Monday but previously said the estimate cited by automakers is "consistent with our statutory obligations" adding automakers "are free to use electric vehicles to comply and avoid penalties altogether."

Automakers buy credits or pay fines if they cannot meet CAFE requirements. In June, Reuters first reported Stellantis and GM paid a total of $363 million in CAFE fines for failing to meet U.S. fuel economy requirements for prior model years. 

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.

See our dashboard in action - schedule an demo
Dan Rivard
Dan Rivard
- VP Market Development -

We offer built-to-order government & public policy coverage for our clients. Contact us for a free consultation.

About Us

We deliver market news & information relevant to your business.

We monitor all your market drivers.

We aggregate, curate, filter and map your specific needs.

We deliver the right information to the right person at the right time.

Our Contacts

1990 S Bundy Dr. Suite #380,
Los Angeles, CA 90025

+1 (310) 553 0008

About Cookies On This Site

We collect data, including through use of cookies and similar technology ("cookies") that enchance the online experience. By clicking "I agree", you agree to our cookies, agree to bound by our Terms of Use, and acknowledge our Privacy Policy. For more information on our data practices and how to exercise your privacy rights, please see our Privacy Policy.