Automakers Express Concern Over Potential Impact of New US Regulations on Gas-Powered Vehicles Production

Dec 15, 2023 11:22 PM EST

TIME LAPSE PHOTOGRAPHY OF CITY ROAD AT NIGHTTIME — (Photo : PEXELS/zhang kaiyv )

Many of major automakers are very worried about what new rules in the US might mean for the production of gas-powered cars. There is a group called the Alliance for Automotive Innovation that speaks for big automakers. They want the Biden administration to make big changes to three planned rules for vehicles.

Going Electric Hastily, Threat to Gas-Powered Vehicles Production

If these rules are put into effect as they are now, car companies might have to stop making some gas-powered cars all of a sudden. U.S. News shared reports by Reuters. According to the report, among the stringent regulations put forward by the administration is a proposal estimating that by 2032, as much as 67% of new vehicles must be electric.

In a recent letter addressed to three cabinet agencies and the White House, the Alliance for Automotive Innovation cautioned that these proposed rules might prematurely force automakers to abandon their internal combustion engine vehicles.

A move like this might negatively impact related income streams, making it harder for automakers to secure the funding they require to transition to electric cars (EVs) under the influence of these new U.S. regulations.

Notably, this partnership includes big names in the business world like General Motors, Toyota Motor, Volkswagen, Ford Motor, Stellantis, and more. Automakers are concerned about the stringent regulations proposed by the Energy Department, the National Highway Traffic Safety Administration (NHTSA), and the Environmental Protection Agency (EPA).

As reported, if these new U.S. regulations are implemented, they could result in substantial fines for Corporate Average Fuel Economy (CAFE), potentially reaching billions of dollars. General Motors and Stellantis alone could face fines of .5 billion and billion, respectively.

The letter, signed by Alliance CEO John Bozzella, underscores the pivotal role that these new U.S. regulations will play in shaping the pace of automotive evolution into electric vehicles. With the final rules expected in early 2024, automakers are anxiously awaiting revisions that will determine the industry's future landscape.

He stressed the "vital necessity" of full coordination across the whole government at the highest levels and asked if there were any real efforts being made to change the suggested rules in a meaningful way.

On Wednesday, GM CEO Mary Barra held discussions with White House Chief of Staff Jeff Zients and environmental adviser Ali Zaidi, covering various topics, including vehicle regulations, according to Reuters sources.

Biden Administration: U.S. Regulations on EVs

The U.S. has introduced regulations to limit Chinese components in domestically sold electric vehicles (EVs). This law disqualifies EVs made outside the U.S. from tax credits. Starting in 2024, vehicles with battery components produced or assembled by a "foreign entity of concern" will also lose tax credits.

By 2025, these rules will also apply to cars that have important parts connected to these groups. The rules are meant to increase production of electric vehicles (EVs) in the United States and lower reliance on foreign makers, which are seen as security and economic risks.

BBC News reported that the Alliance for Automotive Innovation (AAI), which represents car manufacturers, just under 20 out of over 100 electric vehicle models currently available in the United States meet the criteria for the tax credit.

The AAI president, John Bozzella, emphasized that the transition to electric vehicles necessitates a complete overhaul of the U.S. industrial base. He described it as a formidable undertaking that cannot be accomplished overnight. Bozzella also noted that the guidance from the Treasury acknowledges the complexity of this endeavor and attempts to strike a reasonable balance, considering the challenges faced by automakers.