Tesla calls for tougher US fuel economy rules opposed by rivals

TESLA is calling for President Joe Biden’s administration to sharply increase fuel economy standards, and also to wind down a programme allowing automakers to offset sales of petrol-powered vehicles with credits from electric vehicles (EV).

The Elon Musk-led EV maker said in comments posted online on Tuesday (Oct 17) by the US National Highway Traffic Safety Administration (NHTSA) that the agency should adopt its most stringent Corporate Average Fuel Economy (Cafe) proposal, which would require all carmakers to achieve an average of nearly 120 kilometres per gallon by 2032.

That goes far beyond NHTSA’s recommendation for a new vehicle fleet average of 93.3 kilometres per gallon by 2032, up from the current mandate for an average of 79 kilometres per gallon by 2026. The Washington-based Alliance for Automotive Innovation, which represents major automakers such as Ford Motor, General Motors, Stellantis, Honda Motor and Toyota Motor has said NHTSA’s proposal will cost manufacturers US$14 billion in fines.

Tesla also argued federal regulators should end a credit programme that some environmentalists say undercuts the Cafe programme’s pollution-fighting mandate. Carmakers have been allowed to claim an equivalent of more than 161 kilometres per gallon for each EV in their lineup, allowing them to meet fleetwide mandates even as they sell conventional gas guzzlers.

Tesla said in its comments submitted on Monday to NHTSA that it “creates asymmetry in the regulation favouring ICE vehicles, diverts research and development investment away from the best emissions reduction technology of electrification, and unnecessarily weakens the stringency of the standard”.

EV market leader Tesla has been one of the biggest beneficiaries of the credit system. Its revenue from the sale of regulatory credits to other automakers came to US$282 million in the quarter ended Jun 30, but the company has said it expects such revenue to shrink as competitors launch more of their own EVs. BLOOMBERG