19 Nov 19

California stops buying cars from ‘Trump-friendly’ OEMs

California will no longer stock its state government fleets with vehicles produced by GM, Toyota, FCA and other OEMs. These automakers support President Trump in his fight to strip California of the authority to set vehicle emissions standards. 

For several years now, California and the Trump administration have been battling over vehicle emission standards. 

Planned increases
In August 2018, the Trump administration proposed freezing fuel efficiency requirements at 2020 levels up until and including 2026. This will reverse planned increases in fuel efficiency (as proposed by the Obama administration) of 5% per annum. A coalition of 14 U.S. states led by California favours stricter emissions standards, imposed at the state level. 

The battle essentially pits the interests of the U.S. automotive industry against those of the environment; but it has divided the auto industry itself – some OEMs are in the pro-Trump camp, others in the pro-California camp. 

Federal prerogative
Trump has been fighting California’s authority to set vehicle emission standards, arguing that this is a prerogative of the U.S. federal government. Last month, GM, Toyota, Fiat Chrysler and members of the Global Automakers trade association picked Trump’s side in that fight. 

California’s decision represents the latest escalation in that battle, which is turning into an all-out war. “Carmakers that have chosen to be on the wrong side of history will be on the losing end of California’s buying power,” said California Governor Gavin Newsom (pictured).

Far-reaching consequences
As a result, the state of California from next January will only buy vehicles from OEMs that recognise its authority to set emissions standards. These include Ford, Honda, BMW and VW Group. Past July, these automakers agreed to follow California’s vehicle emission standards.

California’s decision will have far-reaching consequences for the sales of the two groups of brands. Here is an overview of vehicle purchases by the state of California (2016-18) from the now-banned OEMs: 

  • $58.6 million in vehicles from GM; 
  • $55.8 million from FCA;
  • $10.6 million from Toyota.

If the ban will be executed, those figures will fall to zero from 2020 onwards. On the other hand, OEMs that have chosen California’s side may expect to sell more than before: 

  • $69.2 million in vehicles from Ford;
  • $565,000 from Honda;
  • none from German automakers.

Emissions battle
California’s decision is just one in a number of manoeuvres in its emissions battle with the Trump administration.

  • The state has also decided no longer to allow its government agencies to acquire sedans solely powered by an internal combustion engine (with exceptions for some public-safety vehicles). 
  • On Friday, California and 22 other U.S. states challenged the Trump administration’s decision to revoke California’s legal authority to set vehicle emissions rules.
  • This follows a similar lawsuit, filed in September, against the National Highway Traffic Safety Administration, which set similar limits on California’s authority to regulate emissions. 
  • In the coming months, the Trump administration will publish its vehicle emissions requirements. While expected to be a little stricter than the original proposal (i.e. the five-year freeze), the modest boost in fuel efficiency requirements will fall far short of the requirements as formulated by the Obama administration.
Authored by: Frank Jacobs