NHTSA reinstates higher penalties for automakers failing to meet fuel efficiency requirements

tailpipe emissions

The U.S. National Highway Traffic Safety Administration (NHTSA) has reinstated higher penalties for automakers that fail to meet fuel efficiency requirements.

The agency announced the change on Sunday, which reverses a decision of the Trump administration and is one which could cost automakers tens of million of dollars.

The penalties are more than double what they were previously, and also apply retroactively to the 2019 model year.

For the 2019 to 2021 model years, the fine is $14, up from $5.50, for every 0.1 mile per gallon new vehicles fall short of required fuel-economy standards, multiplied by the number of noncomplying vehicles sold. For the 2022 model year, this rises to $15. (via Reuters)

How much will this translate to for automakers? Stellantis estimated they could be paying nearly $600 million in penalties.

On the other side of the coin, Tesla will likely see a boost to their bottom line. Since they only produce zero emission vehicles, they can sell their compliance credits to other automakers to help offset some of their penalties.

Tesla accumulated $1.465 billion in regulatory credit revenue in 2021.

Prior to leaving office in early 2021, the Trump administration delayed the regulation to only take effect in the 2022 model year.

Tesla took that decision to court, asking asking the Second Circuit US Court of Appeals to quickly reinstate higher penalties.

The court ultimately rejected the claim due to the ongoing review by the NHTSA.

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