Think you owe the government big? Fiat Chrysler was fined $77 million for missing fuel economy requirements
Fiat Chrysler Automobiles revealed that it paid a $77 million civil penalty to the U.S. government in 2018 for missing Corporate Average Fuel Economy, or CAFE, targets in 2016, Bloomberg reports. The $77 million fine was the largest imposed on a single automaker in at least five years, Bloomberg notes, citing NHTSA data. FCA was also the only automaker to pay a fine for the 2016 model year.
The current rules, which allow automakers to accrue credits and buy credits from other automakers, were instituted in 2012 and mandate car companies to a reach fleet-wide fuel efficiency level greater than 50 mpg by 2025 -- nearly double the level in 2012. A number of automakers have lobbied the Trump administration to revise fuel economy targets in light of trends in the automotive market that favor larger vehicles. The administration has responded favorably, proposing to freeze CAFE requirements at the 2020 model year level, despite efforts in the last days of the Obama administration to cement the 2025 targets.
"We at FCA are committed to improving the fuel efficiency of our fleet and expanding our U.S. manufacturing footprint," FCA head of external affairs for North America Shane Karr said in a statement, according to Bloomberg. "Ultimately, both goals are better served by a CAFE program more closely aligned to the U.S. market than by requiring companies to make large compliance payments because assumptions made in 2011 turned out to be wrong."
Among other issues, the fine highlights the gap between the CAFE ratings as they were expected in 2012 and the reality of the automotive market today. A boom in large SUVs and return of cheaper gasoline was not seen as a likely scenario a decade ago.
Critics of the proposal to freeze CAFE targets at the 2020 levels have pointed out that fuel efficiency standards adopted by other countries are even more ambitious than the original 2025 targets enacted during the Obama administration and that a freeze at the 2020 levels risks making the U.S. a global outlier when it comes to fuel efficiency regulations.
Regardless of the trajectory of CAFE requirements, it does not appear that trucks and SUVs will fall out of popularity anytime soon, even as several automakers are launching the first major wave of electric vehicles. Proponents of maintaining the 2025 CAFE targets hope that, if nothing else, the fuel efficiency targets of other major countries will pull U.S. automakers in their direction even if the U.S. adopts more lax fuel efficiency targets.