GM, Stellantis, And Ford Could Be Fined Billions If New CAFE Rules Are Implemented

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A potential hike in fuel economy standards through 2032 proposed by the Biden administration could cost General Motors $6.5 billion, Stellantis up to $3 billion, and Ford $1 billion in penalties.

In July, the National Highway Traffic Safety Administration proposed hiking Corporate Average Fuel Economy (CAFE) standards by 2032 to a fleet-wide average of 58 mpg. It proposed doing this by increasing requirements by 2% per year for passenger cars and by 4% annually for pickup trucks and crossovers.

A letter penned by the American Automotive Policy Council that represents the likes of GM, Stellantis, and Ford addressed to the U.S. Energy Department noted that the Detroit Three would also face significant fines if they were unable to meet new CAFE regulations. The letter noted that GM, Ford, and Stellantis face $2,151 per vehicle in compliance costs compared to the $546 per vehicle on average for vehicles sold by other car manufacturers.

Auto News reports that another group representing most major car manufacturers believes the new regulations could cause the industry as a whole to face $14 billion in fines.

The Department of Energy sent letters to the Detroit Three on September 14 to request “additional information to help the DOE fully understand the ‘specific challenges regarding product development lead time.”

Read: Toyota And Stellantis Aren’t Happy About The EPA’s Proposed BEV Sales Targets

The NHTSA has previously said that car manufacturers “are free to use electric vehicles to comply and avoid penalties altogether.”

In June it was revealed that Stellantis paid a total of $235.5 million in CAFE fines for the 2018 and 2019 model years while GM was fined $128.2 million covering 2016 and 2017. This was the first time that GM had paid fines in the 40 years the CAFE program has been in force and came after it decided against purchasing credits and opted to pay fines instead.