Ford, GM, Stellantis face US$10 billion hit from Biden fuel proposals

© Reuters. Ford, GM, Stellantis face US$10 billion hit from Biden fuel proposals

Proactive Investors - Ford Motor (NYSE:F) Company (LON:0P4F), General Motors Company (NYSE:GM) and Stellantis NV (LON:0QXR) could collectively be hit with fines worth well over US$10 billion under proposals on fuel economy standards in the US.

'Revisions to Corporate Average Fuel Economy' requirements, aimed at encouraging the production more efficient, or electric, vehicles, could see the manufacturers paying US$2,151 per vehicle.

This would equate to fines worth US$6.5 billion for Crystler parent Stellantis, alongside US$3 billion and US$1 billion for General Motors and Ford respectively by 2032, a letter from trade group The American Automotive Policy Council said.

The proposed rule changes relate to the petroleum equivalency factor of vehicles, essentially meaning manufacturers' fleets would have to average 58 miles per gallon by 2032.

Requirements would be lifted incrementally over the coming years, with those failing to meet the efficiency standards hit with fines.

According to the trade group, the “alarming” changes would “reward those auto manufacturers resisting the transition to a fully electric future the most”.

This echoes the US Department of Energy’s own concerns that a balance had to be found with such penalties.

"Encouraging adoption of EVs can reduce petroleum consumption but giving too much credit for that adoption can lead to increased net petroleum use because it enables lower fuel economy among conventional vehicles,” the department said in April.

Either way, The National Highway Traffic Safety Administration - which would ultimately implement the rules - previously said carmakers were "free to use electric vehicles to comply and avoid penalties altogether".

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