Could New EPA Requirements Cause Headaches for Automakers?
Nicolas Loris /
The taxpayer-funded auto bailout was largely the result of a number of poor decisions made by General Motors and Chrysler. Along with the excessively high labor and legacy costs, Detroit’s dependence on big, non-fuel-efficient vehicles was its own doing and at one time, was a very profitable strategy. Detroit struggled to make competitive fuel-efficient vehicles that rivaled its Japanese counterparts. The government stepped in and took a controlling stake in General Motors and, more recently, attempted to provide more regulatory stability by mandating stricter fuel efficiency standards. The Environmental Protection Agency and National Highway Traffic Safety Administration announced fleet-wide requirements of 34.1 miles per gallon 2016 for all automakers in the U.S.
Automakers are supportive of the ruling since it provides some regulatory stability, but it doesn’t come with guaranteed consumer demand. Setting aside the other problems with the government mandate, the new government regulations become a problem if it forces car manufacturers to produce vehicles no one wants to buy. Gloria Bergquist of the Alliance of Automobile Manufacturers said, “We have a hill to climb, and it’s steep, so we will need consumers to buy our fuel-efficient technologies in large numbers to meet this new national standard.”