The Trump administration's recommendation that America slam the brakes on improving pollution and fuel economy standards for cars and trucks will put our nation's automotive industry at risk.
Especially in an age when the rest of the world is speeding toward cleaner cars and the automobile market is increasingly global, weakening fuel economy standards would make the U.S. automotive industry less competitive and cost a lot of Americans their jobs.
Automotive suppliers would be hit especially hard. They employ twice as many Americans as the auto manufacturers themselves and have invested heavily in a more fuel-efficient future that would be delivered by the current federal vehicle emissions and efficiency standards.
For example, Denso is spending $1 billion to turn a Tennessee facility into a major source of components for electric, hybrid and autonomous cars, allowing the company to switch production of key product lines from Japan to the U.S. BorgWarner is expanding into EV and hybrid parts, making two acquisitions worth about $1.3 billion to develop products for electric powertrains. Bosch is investing $450 million per year to develop EV components and technologies.
An article last month in Automotive News quotes Sujit Jain, president of Bosch's Powertrain Solutions North America business, as saying: "We aim to lead the global market for electromobility that will emerge after 2020."
The Trump administration's proposal calls for freezing the standards in 2020. This proposal seems completely disconnected from what is happening in the industry.
Since 2012, when the standards were established, the pace of technological change has accelerated. Companies such as Volvo and Jaguar Land Rover have announced plans to never build a car without some level of electrification in the powertrain. In Europe and China, the vast preponderance of new cars sold in 2020 will have some level of mild hybridization.
U.S. carmakers have had a good run of strong annual sales and profit numbers over the past several years, even as the cars, trucks and SUVs they make have become increasingly fuel-efficient. That makes sense: Who wants to drive a vehicle that guzzles more gas?
These days, any automaker that wants to ensure success has to offer cleaner, more efficient vehicles that can compete on the world stage. Strong, consistent standards create a level playing field and help them do this. Unraveling existing standards creates chaos and creates business uncertainty, undermining investments and long-term planning.
When standards are set at aggressive but attainable levels — like the targets now on the chopping block — they spur technological innovation, catalyze competitiveness and support jobs. Researchers at Indiana University looked at the impact of fuel-efficiency standards now on the books and estimated that investment in innovation could increase jobs by between 200,000 and 375,000 in 2025, and add between $138 billion to $240 billion in GDP between 2017 and 2025.
At Calstart, our 185-plus member companies include vehicle manufacturers, automotive suppliers, investors and fuel providers, and they all understand the large and growing global opportunity that clean transportation technology represents. When we asked major automotive suppliers about the existing national fuel economy standards, four out of five said the current strong standards, which carry through the 2025 model year, should be maintained or strengthened.
They understand that consistent and far-sighted miles-per-gallon targets help grow companies and the economy, and create jobs. And they don't want a rollback.
The auto manufacturers and suppliers want to create jobs and compete globally, and they want their country to help them succeed. They want the U.S. to be a leader, not a laggard. They know the future is about innovation and vehicle efficiency. They know that's good for business — and good for America, as well.
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