Trump’s Election and What it Might Mean for EVs and Fuel-Economy Standards

It might be tempting to worry about the future of EVs after the election of Donald Trump to the presidency of the United States last week.

According to Bloomberg, that’s because Trump has indicated his administration would ease up on the outgoing Obama administration’s agreement with automakers to increase the fuel-efficiency of the vehicle fleet by 2025. That plan, hatched in 2011, has forced automakers to invest in smaller, more fuel-efficient vehicles, as well as plug-in cars, in order to offset the poorer fuel economy of popular trucks and SUVs.

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Automakers, represented by the Alliance of Automobile Manufacturers, are already urging the new administration to relax the rules. The current rules – now undergoing a “midterm review” for 2022-2025 model years – are scheduled to be reviewed by the EPA and the National Highway Traffic Safety Administration (NHTSA) in 2018, to determine if they need to be tightened, relaxed or left alone.

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Automakers argue that in the face of cheaper gas and low demand for EVs, the rules should be relaxed.

Automotive companies also want to make sure that the EPA and NHTSA are “harmonized” when it comes to the rules, to avoid being in compliance with one set of rules but subject to fines for not complying with the other. General Motors cut 2,000 jobs this week due to slowing sales of small cars, noted Bloomberg of an implicit indicator.

The Alliance sent a letter to the Trump administration that read in part “[automakers] may be in compliance with the EPA program, yet subject to fines in the NHTSA program … Potentially billions of dollars in fines under the NHTSA (fuel economy) program are anticipated.”

Automakers did back the rules in 2011, but only if a mid-term review was included.

Others argue that the rules incentivize automakers to build more EVs, something they might not otherwise do, thanks to falling fuel prices at the pump and insatiable consumer appetites for SUVs and pickup trucks. Trucks and SUVs have higher profit margins for automakers than small cars.

While it may seem that a loosening of fuel-economy regulations combined with the high demand (and high profit margins) of trucks and SUVs could be bad news for EVs, Bloomberg says not so fast. Its article suggests that with EVs getting better technology and longer driving ranges, as well as lower prices, sales of EVs are forecast to rise, and automakers such as GM and Tesla remain committed to investing in them.

The article also posits that other global regions will show strong demand for EVs, especially as a way of fighting pollution in urban cores. Finally, Bloomberg reminds readers that one in eight American vehicle registrations are in California, which is allowed to set stricter rules than the federal government does under the Clean Air Act.

What this means, says Bloomberg, is that even if the rules are loosened, any momentum gained toward getting more EVs on the road may slow but it won’t be stopped.

The article adds one more note: The profits from all those trucks and SUVs could be used to fund into research and development of EVs. This is sort of like the idea that Porsche is able to continue building its sports cars thanks to the profits of its SUVs.

Many aspects of an already uncertain future became even murkier after last week’s election, and the impact of Trump’s election on EVs remains to be seen.

Bloomberg