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Ford, VW, Honda, BMW strike deal with California to break fuel economy impasse

Ford Motor Company

In a surprise move, Ford Motor Company, Volkswagen, Honda, and BMW announced they have struck a deal with California on voluntary fuel economy standards for 2022-26.

That's after the Trump administration said it would move forward with a plan to roll back Obama era standards, freezing them after 2020, despite pleas from the automotive industry and other groups not to do that.

The voluntary agreement means the four automakers will build vehicles that meet the voluntary California standards and sell them in all states.

The agreement provides for a roughly 3.7% annual fuel economy improvement from 2022-2026, that includes credits for selling more electric vehicles, as well as credits for technologies that reduce emissions, such as making the car more aerodynamic at highway speeds or improving internal temperature controls. 

The Obama era standards would have required a 4.7% annual fuel economy from 2022-2025.

California has asked other automakers to join the voluntary program.  

General Motors said its focus remains "working with all parties on a deal that would involve a 50-state solution and a national electric vehicle program." 

Fiat Chrysler said, "We look forward to reviewing the details of this agreement, as well as the federal rule later this year."

Hyundai said it is evaluating the agreement.  Toyota and Nissan have not yet responded.

Meanwhile, the Trump administration's plan to freeze fuel economy standards puts it on a legal collision course with California, which has a waiver to set its own standards. 

Revoking the waiver as part of the fuel economy rollback could result in years of litigation between California and the U.S. government and uncertainty for the auto industry.

Tracy Samilton covers energy and transportation, including the auto industry and the business response to climate change for Michigan Radio. She began her career at Michigan Radio as an intern, where she was promptly “bitten by the radio bug,” and never recovered.
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