Automakers Tell Trump His Pollution Rules Could Mean ‘Untenable’ Instability and Lower Profits

WASHINGTON — The world’s largest automakers warned President Trump on Thursday that one of his most sweeping deregulatory efforts — his plan to weaken tailpipe pollution standards — threatens to cut their profits and produce “untenable” instability in a crucial manufacturing sector.

In a letter signed by 17 companies including Ford, General Motors, Toyota and Volvo, the automakers asked Mr. Trump to go back to the negotiating table on the planned rollback of one of President Barack Obama’s signature policies to fight climate change.

The carmakers are addressing a crisis that is partly of their own making. They had sought some changes to the pollution standards early in the Trump presidency, but have since grown alarmed at the expanding scope of the administration’s plan.

Mr. Trump’s new rule, which is expected to be made public this summer, would all but eliminate the Obama-era auto pollution regulations, essentially freezing mileage standards at about 37 miles per gallon for cars, down from a target of 54.5 miles per gallon by 2025. The policy makes it a near certainty that California and 13 other states will sue the administration while continuing to enforce their own, stricter rules — in effect, splitting the United States auto market in two.

But they also fear the costs of the uncertainty and regulatory headaches that potentially await them should Mr. Trump’s rollback go through as planned.

For example, automakers would have to demonstrate that the average mileage of all the cars they sell in California is much higher than in states like Utah, where the new Trump standard of about 37 miles per gallon would be in effect.

But because Americans increasingly prefer SUVs over thriftier vehicles, manufacturers might have to significantly cut prices on electric vehicles in the high-mileage states, a potentially money-losing proposition, while raising the prices of gas guzzlers. At the same time, auto lots in low-mileage states might hold a completely different mix of vehicles at different prices.

If car buyers simply cross state lines to buy gas-guzzlers and bring them into the cleaner-standard states, it could create more regulatory headaches for the companies, which could also be subject to fines from high-mileage states if they fail to comply.

In asking Mr. Trump to revise his proposal, the automakers effectively withdrew their support for the current plan and asked the president to make a deal with California, a state that he appears to relish antagonizing. Mr. Trump has variously described California as “ridiculous,” “out of control” and “the state that has wasted billions of dollars.”

California has been equally vocal in taking on Mr. Trump. Xavier Becerra, the California attorney general, has said repeatedly that the state intends to sue over the weakening of the auto pollution rules. In one such remark this year, he said he was “prepared to defend our national clean car standards even if the Trump administration intends to go AWOL.”

While two of the nation’s Big Three companies signed the letter, the third, Fiat Chrysler, did not. Other automakers who signed the letter include BMW, Honda, Mazda, Nissan, Subaru and Volkswagen.

The automakers conceded in their letter that they were seeking to solve a crisis that they helped set in motion. Soon after Mr. Trump took office, chief executives from Detroit’s top automakers personally asked the president to loosen the some elements of the Obama-era regulations.

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