New Tailpipe Rules Will Choke Big Auto’s Profits
Detroit is in for a rough ride as carmakers are squeezed by the conflicting demands of consumer tastes, tighter emissions standards and restrictions on supply chains.
An attendee views a Ford Mustang Mach-E GT vehicle during the 2022 North American International Auto Show in Detroit, Michigan in September.
Photographer: Bloomberg/BloombergHaving secured a bag of carrots for electric vehicles in the form of the Inflation Reduction Act, the stick has arrived.
The Environmental Protection Agency just unveiled sharply tightened tailpipe emissions standards, beginning with model year 2027 through 2032. While the EPA doesn’t dictate how vehicle manufacturers get there — not with this Supreme Court — all feasible pathways lead to a plug. The agency’s own analysis theorizes battery-electric vehicles rising from less than 6% of new light-duty vehicle sales last year to 67% in 2032. Big Auto is in for a rough ride, mainly because they are conflicted, as are the objectives of the White House.