The Trump administration proposed rolling back Obama-era fuel economy standards, including withdrawing California’s authority to regulate carbon dioxide emissions from cars and mandate electric vehicles.
The decision not only sets up the White House for another legal battle with California, it also pits the administration against business magnate Elon Musk and Tesla, his electric car company that’s made hundreds of millions of dollars off California’s electric car mandate.
The Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) released a proposal Thursday that included eliminating California’s Zero Emissions Vehicle (ZEV) mandate.
Tesla is a major beneficiary of California’s ZEV program because it generates millions of regulatory credits through manufacturing all-electric cars that can be sold to other auto companies forced to comply with state law. It’s basically a subsidy for electric car makers. (RELATED: UK Climate ‘Consultants’ Charge Third World Countries $2,000 A Day On Poverty Program)
In the first quarter of 2018, Tesla made $50 million from ZEV credit sales, Bloomberg reported. Tesla made about $280 million in ZEV sales throughout 2017 — only a small portion of the company’s more than $11.7 billion in revenue that year.
However, EPA’s successful repeal of auto regulations that were finalized by the Obama administration in 2012 could add to Tesla’s financial woes. While the company’s revenues increased, it posted its largest quarterly loss ever of $430 million Wednesday.
The company’s stock did not tumble, and in fact went up after Musk apologized for erratic behavior in recent months, including calling a diver who helped rescue Thai boys stuck in an underground cave a “pedo” — short for pedophile.
Tesla sold $610 million worth of ZEV credits between 2013 and 2016, according to Forbes. Sales vary widely based on how much other manufacturers, like GM or Ford, need to meet state law.
Tesla did not respond to The Daily Caller News Foundation’s request for comment in time for publication. Marlo Lewis, a senior fellow at the free market Competitive Enterprise Institute, cheered the announcement.
“Kicking California bullies out of the fuel economy playground will expand consumer choice while making new cars more affordable,” Lewis said in a statement.
Administration officials argue California’s policies to fight global warming through tailpipe regulations and electric vehicle mandates violate the Energy Policy and Conservation Act (EPCA), which preempts states from regulating fuel economy.
Environmentalists argue that federal courts have twice ruled that EPCA did not preempt California’s global warming regulations for cars since the rules were aimed at emissions, meaning fuel economy improvements were secondary.
EPA and NHTSA, however, argue regulating greenhouse gas emissions coming from tailpipes are “de facto fuel economy standards,” and said revoking California’s waiver authority on the matter would produce economic benefits.
“Further, elimination of California’s ZEV program will allow automakers to develop such vehicles in response to consumer demand instead of regulatory mandate,” reads the EPA and NHTSA proposal.
“This regulatory mandate has required automakers to spend tens of billions of dollars to develop products that a significant majority of consumers have not adopted, and consequently to sell such products at a loss,” the proposal reads. “All of this is paid for through cross subsidization by increasing prices of other vehicles not just in California and other States that have adopted California’s ZEV mandate, but throughout the country.”
California Democratic Gov. Jerry Brown vowed to fight the Trump administration’s coming rule change in court. Other states and environmentalists will likely join any legal action against EPA.
California will fight this stupidity in every conceivable way possible: https://t.co/OWqbFIUmUl https://t.co/qrH7gSaWDn
— Jerry Brown (@JerryBrownGov) August 2, 2018
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