A US appeals court is being pressured by Tesla to immediately reinstate an Obama regulation from 2016 that more than doubles penalties for automakers who cannot meet fuel efficiency requirements, according to an Automotive News report.
In a court filing, Tesla told the Second Circuit US Court of Appeals that the Trump administration’s delay of higher penalties until the 2022 model year is “unlawful.” The Biden administration supports tougher emissions standards but says Tesla has to wait until the NHTSA completes its review of Corporate Average Fuel Economy (CAFE) penalties in six months.
This is the second time in two months Tesla has asked the appeals court to act on the delay. The electric automaker claims the Trump administration’s delay hurts the company:
“egregious action presents a situation as extraordinary as it is unjustified and inflicts immediate and irreparable injury on Tesla.”
The NHTSA hasn’t even processed CAFE penalties for the 2018 and 2019 model years, so the Justice Department doesn’t think Tesla faces irreparable harm. Fiat Chrysler Automobiles, now known as Stellantis, paid a $79 million penalty for not meeting 2017 model year fuel economy requirements.
In 2020, Tesla made a whopping $1.58 billion from selling regulatory credits to other automakers, an increase from $594 million in 2019. Since Tesla EVs are zero-emission, they can sell regulatory credits to automakers who need them. Trump’s delay of higher penalties reduces the value of those credits.
Tesla isn’t the only one fighting the delay of higher fuel efficiency penalties. According to the Automotive News report:
Last month, 15 states sued NHTSA for delaying the adoption of the higher penalties for companies that fail to meet fuel efficiency requirements. The Sierra Club and National Resources Defense Council have also sued NHTSA for delaying penalties.
The penalty for failing to meet fuel efficiency requirements is $14 for every 0.1 mile per gallon a new vehicle consumes over the required amount. This was increased from $5.50 in 2015.
In October, when Stellantis was still Fiat Chrysler, the company said that if the higher penalties aren’t delayed, it could cost the automaker:
“up to 500 million euros ($581 million) depending on, among other things, our ability to implement future product actions or other actions to modify the utilization of credits.”