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Concentration of CO2 in the Atmosphere

Automakers Forsake the Future by Caving to Trump’s Emissions Push

Carl Pope

The first comment that came across my screen after the news that General Motors Co. and Fiat Chrysler Automobiles NV, along with Toyota Motor Corp. and some smaller foreign automakers, had signed on to President Donald Trump’s legal assault on technological progress in the auto industry was this: “Wimps.” The administration aims to strip California and other states of their ability to regulate vehicle emissions in their fight against global warming. It has split the global auto industry into two camps, with U.S. manufacturers on both sides. The stakes are nothing less than the technological and geographical future of auto making.

Fear of presidential retribution, particularly in the form of tariff discrimination, is the obvious and perhaps only logical explanation for the move by GM, which has bet its future on electric vehicles (EV), to join Trump’s jihad against EVs. Fiat Chrysler, on the other hand, is behaving predictably. It remains far behind its competitors in preparing for a world without internal combustion cars and trucks. Toyota’s case is more complicated; the company believes in fuel cells, not batteries, but fear of Trump retaliating against the company seems likely a major factor for its backing as well.

GM President Mary Barra met with Trump a few weeks ago, so the president had ample private opportunity to signal to her that if GM didn’t join Fiat Chrysler in supporting him against California, there might be unpleasant consequences.

These fears of retribution are well-founded. The Justice Department launched an antitrust investigation into the four auto companies, Ford Motor Co., Volkswagen AG, BMW and Honda Motor Co. Ltd., that struck a deal with California to produce cleaner cars in upcoming model years than Trump’s Environmental Protection Agency proposed. Calling a company’s decision to improve its products an antitrust violation because consumers will no longer be able to buy inferior products is a stretch, but the threat remains. When Microsoft Corp. beat out Amazon.com Inc. for a new $10 billion federal cloud-computing contract, it soon was revealed that Trump had instructed the secretary of defense to “screw Amazon” out of getting the work, making public what every major company fears: cross Trump and the government comes after you, however weak its case.

Image: www.scitecheuropa.eu

Assuming they are “wimps,” and that fear of Trump explains why GM and Toyota have chosen to side in court with the president, their secret hope may be that either Trump loses this lawsuit (highly likely), fails to be re-elected (also better than 50%) or both. It’s hard to believe they relish a situation in which the federal government uses tariffs, taxes and antitrust policy to punish any company that challenges it. But a domestic U.S. auto market that falls steadily further behind global technology is even worse. Trump’s “offer” to California to consider allowing a 1.5% annual improvement in emission standards would reach the current 2025 goals only in 2040, putting American automakers more than 15 years behind Japanese and European ones in their respective home markets and marking the end of competitiveness for domestic auto factories.

Indeed, for GM and Ford, an outcome in which Trump is re-elected and the courts permit him to freeze pollution and efficiency standards is catastrophic. European and Chinese regulators will continue their urgent push to shift their markets from consuming polluting and imported gasoline and diesel to clean, domestic electricity. Japan and India will be close behind, because they are also facing air pollution and energy security threats from oil imports and seek access to Chinese and European customers.

In this world, the U.S. market would become a dumping ground for inferior, outmoded combustion drive trains, and Trump’s policies will ensure continued stagnation. Making such combustion vehicles on cheaper assembly lines in Mexico won’t solve this problem. GM needs a way to sell competitive cars in the U.S., not obsolete ones.

Trump is committed to ensuring that the oil industry doesn’t lose its U.S. gasoline and diesel markets. A second Trump term will mean that GM’s electric fleet, on which GM’s Barra has bet the company’s prospects, will be unable to achieve competitive market share. Just as Trump has intervened with federal regulators to try to keep uncompetitive coal plants in operation, his second term will enable him to strangle market share for EVs. If GM is to have a future, it will have to take on government-supported Chinese, Japanese and European manufacturers in their home markets. It won’t work.

Chairman Bill Ford has figured this out, which is why, even though his company has not progressed as far as GM in developing its own EV models, Ford signed up for the California agreement. Once again it appears that two major automakers seem determined to ignore that domestic markets will eventually demand cleaner, more efficient vehicles that will reduce pollution, climate risk and reliance on oil.

To learn more about Carl’s views on the environment, energy and climate, read Climate of Hope, which he has co-authored with former NYC Mayor Mike Bloomberg. The link is https://www.climateofhope.com.

A veteran leader in the environmental movement, Carl Pope is the former executive director and chairman of the Sierra Club. He’s now the principal advisor at Inside Straight Strategies, looking for the underlying economics that link sustainability and economic development. Pope serves as a Senior Climate Advisor to former NYC Mayor Michael Bloomberg. He has served on the Boards of the California League of Conservation Voters, Public Voice, National Clean Air Coalition, California Common Cause, Public Interest Economics Inc, and Zero Population Growth.

 

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