Auto Makers Compromise with California Air Resources Board
At the end of July, the California Air Resources Board (CARB) reached a compromise with Ford Motor Company, Volkswagen AG, Honda Motor Company LTD., and BMW of North America to voluntarily increase fuel efficiency standards from 35 miles per gallon to approximately 50 miles per gallon by 2026. This represents an average increase of 3.7% per year, one percent less than the former federal/CARB regulations calling for increases averaging 4.7% per year. While automakers had been seeking a relaxation of the former regulations and increased flexibility, the compromise was reached in order to provide market certainty.
Ford, Volkswagen, Honda, and BMW account for 30% of U.S. auto sales. While the increased fuel efficiency standards apply only within California, the benchmarks are determined based on each car company’s national fleet rather than just within the state, providing the automakers with increased flexibility.