There seem to be cute buzzwords for everything in the corporate world, but is there a word for the practice of investing billions in a technology while simultaneously working to impede the adoption of that same technology? Perhaps there should be, because that’s what global automakers have been doing for years when it comes to electric vehicles. “Irrational” is the word that former EPA executive Margo Oge uses in a recent Fortune article entitled Why Can’t US Automakers Be More Like Tesla? However, “cynical” is another term that comes to mind.
Above: Automakers appear conflicted about which future they're really supporting (Image: Allstate Blog)
A recent article in Fast Company notes the bold promises automakers have been making to expand their offerings of electric vehicles (EVs): Volvo says all its models will be “electrified” by 2019; Ford plans to launch 13 new EVs and hybrids by 2023; VW promises a selection of 30 new EVs by 2025; and GM just announced a new family of EVs, to be introduced in 2021 that will actually - get this - be profitable!
But even as they tout these bright green plans in the press, complete with gushing statements about their reverence for “the planet” and “our grandchildren,” every one of these manufacturers, individually and/or through auto industry trade groups, is actively lobbying to weaken the federal and state standards that are driving the growth of electromobility.
A new report from the lobbying watchdog organization InfluenceMap details automakers’ efforts to delay, water down or hobble auto emissions and fuel efficiency standards. Hours after Trump’s election, automakers contacted the new administration to push for relaxed regulations. “They made contact quickly, and stated in no uncertain terms that they would welcome a repeal of the revisions to the efficiency standards and greenhouse gas standards that they nominally agreed to under the previous administration,” Dylan Tanner, Executive Director of InfluenceMap, told Fast Company.
Above: Big Auto and the industry associations it leverages in order to lobby against auto emissions and fuel efficiency standards (Source: InfluenceMap)
The federal CAFE (Corporate Average Fuel Economy) standards require automakers to meet mpg targets across their fleets. In 2016, the latest round of standards, which was put in place by the Obama administration in 2012, had increased average fuel economy by two miles per gallon, and the EPA said that car manufacturers were easily meeting the requirements. According to a report by the Union of Concerned Scientists, the standards have not only reduced air pollution, but saved consumers money - especially low-income and rural households - and have driven innovation that helps to keep America’s manufacturers competitive.
However, automakers have argued that the standards should get a mid-term reevaluation to reconsider how they should be applied in model years 2022-2025. As lawyer Michael Steel explains in a recent article in Charged, the process of changing the regulations is a long and complex one, but the automakers are united and committed. After the Climate Change Denier in Chief’s inauguration, he met with the CEOs of the US Big Three, and shortly thereafter, the leaders of 18 global carmakers sent him a letter opposing the standards. The Alliance of Automobile Manufacturers and Global Automakers wrote to new EPA head Scott Pruitt asking him to repeal finalization of the standards. The auto trade groups have also pushed for California to water down its more stringent standards, and they have been silent about Congress’s plans to eliminate the federal EV tax credit (Tesla, GM and VW, alone among automakers, have issued statements in support of the tax credit).
Some of the automakers’ public statements are particularly jarring in contrast to their actions to gut fuel economy standards. Ford Chairman Bill Ford said that the company believes “climate change is real, and remains deeply committed to reducing greenhouse gas emissions,” while at the same time arguing that efficiency standards would reduce the affordability of new vehicles. Toyota has also warned that the standards would raise prices for customers. However, a recent report from Consumers Union directly contradicts this claim, finding that existing fuel economy standards have saved the average consumer $523 in annual fuel costs, while new car prices have remained relatively flat over the past 20 years.
Above: CAFE standards have led to improved fuel economy in recent years (Source: Consumers Union)
The lobbying by industry trade groups is “really counter to what a lot of these companies, like Toyota and Volkswagen, have been posturing on their websites,” says InfluenceMap’s Tanner. “The Toyota Prius really benefited from California’s electric vehicle regulations a decade ago, [which] enabled it, really. To now stand by while their two key trade groups push this agenda is startling.”
How does all this relate to the one automaker that really is building and selling substantial numbers of EVs, and that is not participating in the anti-regulation lobbying efforts? Many anti-Tesla pundits predict that, if the major automakers ever get serious about electrification, they will use their market clout and economies of scale to bury little Tesla. Ironically, the weakening of fuel economy standards and other pro-EV measures is likely to move things in the opposite direction. Tesla will go on improving its electric technology regardless of shifts in government policy, while the Dinosaurs of Detroit, freed of incentives to develop EVs, could fall farther behind.
As the automakers’ continuing efforts to hold back the electric tide demonstrate, the day that they are committed to electrification is still nowhere in sight. As other venerable corporations have, they could find themselves on the wrong end of a classic disruption scenario - foot-draggers such as Toyota, Honda, Ford and Fiat Chrysler could follow in the pawprints of Kodak, Blackberry and Blockbuster as standard-bearer Tesla, joined by younger and nimbler startups such as Faraday Future, Nio, Lucid and Fisker, sieze the future.
Written by: Charles Morris