California to stop buying GM, Fiat Chrysler vehicles over mpg fight

Keith Laing | The Detroit News

Washington — The state of California will stop buying cars made by General Motors Co., Fiat Chrysler Automobiles NV and other automakers that have sided with President Donald Trump in a fight over fuel economy rules that has sharply divided the nation's automakers.

GM, Fiat Chrysler, Toyota and the Association of Global Automakers, which lobbies in Washington for foreign-owned automakers, have lined up with the president in a fight over gas-mileage rules with California, while Ford Motor Co., Honda Motor Co., Volkswagen AG and BMW AG have sided with the Golden State.

"Carmakers that have chosen to be on the wrong side of history will be on the losing end of CA’s buying power," California Gov. Gavin Newsom tweeted Saturday. "CA will stop purchasing vehicles from carmakers that have refused to protect our air & chosen to follow the regressive ways of@realDonaldTrump."

The California Department of General Services said beginning on Jan. 1, it will only purchase vehicles from carmakers that recognize the California Air Resources Board’s "authority to set greenhouse gas and zero emission vehicle standards, and which have committed to continuing stringent emissions reduction goals for their fleets."

Police departments and other safety agencies can continue to purchase cars from the manufacturers.

GM said in a statement: "It is unfortunate that California has announced it may remove the Chevrolet Bolt EV – the first affordable EV with a range of 259 miles on a single charge – from consideration for its statewide fleet.

"Removing vehicles like the Chevy Bolt and prohibiting GM and other manufacturers from consideration will dramatically reduce California’s choices for affordable, American-made electric vehicles and limit its ability to reach its goal of minimizing the state government’s carbon footprint, a goal that GM shares," the Detroit manufacturer said.

Fiat Chrysler said, also in a statement: "FCA fully embraces the goal of reducing vehicle emissions to ensure an environmentally sustainable future. To that end, we are investing 9 billion euros ($9,971,010,000) to launch more than 30 electrified nameplates by 2022. And we are delivering continual improvement in fleet fuel economy."

Toyota did not immediately respond to requests for comment.

From 2016 to 2018, California purchased 2,130 GM vehicles, 2,361 Fiat Chrysler vehicles and 366 Toyota vehicles, according to the state's General Services department. During the same period, California purchased 2,461 Ford products.

California's announcement is the latest salvo in a battle over auto emission rules that has been waged between the state and the Trump administration since the earliest days of Trump's presidency.

The state worked with the Obama administration to craft stringent gas mileage rules that would have required carmakers to produce fleets that average over 50 miles per gallon by 2025. Trump moved almost immediately after taking office to begin rolling back those rules, prompting California to reach a separate agreement with Ford, Honda, Volkswagen and BMW.

GM, FCA and other automakers resisted pressure from Congressional Democrats to join the voluntary agreement with California, ultimately siding with the Trump administration in a court case that is currently be adjudicated.

Carmakers had initially asked the Trump administration to take another look at fuel-economy rules for the 2022-25 model years. Those Obama-era standards would have required automakers to increase fleetwide fuel economy by about 5% annually toward a goal of 54.5 miles per gallon by 2025. The Obama administration moved to finalize the rules ahead of schedule after Trump's 2016 victory, setting off a chain of events that has led to today's dispute.

Trump went beyond what most automakers were seeking by proposing a freeze that would lock in mpg rates until 2026 at 2020 levels, when carmakers would be required to produce fleets that average about 39 miles per gallon.

California, which helped craft the Obama-era rules, sued over the rollback and has promised to also sue over the revocation of its right to set its own more-stringent mpg requirements. The nation's largest state accounts for 12% of the U.S. auto market. Thirteen states and Washington, D.C., have adopted California’s gas mileage rules.

Ford angered the White House in July when it reached an agreement with California to voluntarily increase the average fuel economy of their fleets from 2021 levels by 3.7% per year, reaching an average of nearly 50 mpg by 2026. Volkswagen, Honda and BMW were also part of that agreement. The U.S. Department of Justice launched an antitrust investigation.

A division within the industry opened in October when GM, Fiat Chrysler, Toyota and the Association of Global Automakers sided with the White House in the legal action between California and the federal government. They argue in favor of the White House's position that Washington should create one set of gas mileage rules for all the nation's cars.

Adding to the confusion, the Trump administration could be backing off the proposed freeze somewhat. Instead, the administration is now considering pushing for a 1.5% annual mpg increase, according to a person familiar with negotiations between the administration and congressional leaders. The new proposal, first reported by the Wall Street Journal, still would be a far cry from the 5% hikes enacted by the Obama administration.

The U.S. auto industry achieved a record average of 24.9 miles-per-gallon in the 2017 model year in "real world" testing, short of the Obama-era requirement that they achieve a fleetwide average of 29.3 miles-per-gallon, according to the U.S. Environmental Protection Agency. Preliminary data shows automakers are likely to have hit an industry-wide average of only 25.4 miles per-gallon for 2018, which would fall short of the 30.6 miles-per-gallon milepost for that year.

Ford, GM and Fiat Chrysler ranked 11th, 12th and 13th respectively among 13 manufacturers who were measured in 2017. Ford and GM fleets averaged 22.9 miles per gallon, while Fiat Chrysler averaged 21.2.

Honda Motor Co. led all automakers for 2017 with an average of 29.4 miles per gallon for its fleet, followed by Mazda Motor Corp. with 29 mpg and Hyundai Motor Co. with 28.6 mpg.

klaing@detroitnews.com

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Twitter: @Keith_Laing