San Francisco, United States – Earlier this month, United States President Donald Trump announced plans to lower fuel efficiency standards for cars, a move that, he said, would make cars more affordable for Americans, and give them freedom to choose large cars.
But the proposed change in policy has also laid to waste the years and billions in investments in cleaner cars, including electric vehicles (EVs), even while the idea that it would save US drivers money is “highly speculative”, experts say.
The proposed new standards will allow cars to run at 34.5 miles per gallon (14.7km per litre) compared with the 50.4 miles per gallon (19km per litre) set under the previous administration of President Joe Biden.
Trump has called it the “Freedom Means Affordable Cars“ proposal, saying the lower fuel efficiency norm could make each new car up to $1,000 cheaper and support US manufacturing.
But Severin Borenstein, faculty director at the University of California at Berkeley’s Haas School of Business, says US carmakers “have already made investments to meet old norms. The idea that this will save consumers a lot of money is highly speculative.”
These fuel efficiency measures, along with the US consumers’ continued preference for SUVs and other petrol guzzlers, have led Ford Motors to announce a $19.5bn hit as it cut back plans to produce EVs. General Motors also announced a $1.6bn impact related to its EV pullback in quarterly results declared in October and warned there could be more hits. It also announced 3,400 layoffs across its EV sites.
Federal cutbacks will hinder an already slow transition to EVs in the US, where they form less than 10 percent of the market, well below the global EV sales, which made up 25 percent of all cars sold this year.
“The government can assist markets in this transition,” says Andrew Hoffman, Holcim professor of sustainable enterprise at the University of Michigan’s Ross School of Business.
The US is a “unique market”, Hoffman says, in liking SUVs and pick-up trucks because of the long distances that can cause range anxiety for electric car drivers. It underscores the need for a charging station network, another area where the Trump administration has made cuts that impact business plans. On Tuesday, 16 states sued the Trump administration for withholding billions in grants for EV charging station infrastructure.
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