Tesla calls for tighter emissions, fuel economy rules, a move opposed by ICE and EV rivals

In a noteworthy move, Tesla Inc., under the helm of CEO Elon Musk, is pushing the Biden administration for a significant upswing in fuel economy regulations, while simultaneously advocating for a revision in the program that allows automakers to offset sales of traditional gas-powered vehicles with credits from electric vehicles (EVs).

The electric vehicle giant made this plea through official comments posted online on Tuesday, addressing the US National Highway Traffic Safety Administration (NHTSA).

Tesla’s proposition calls for the adoption of the most rigorous Corporate Average Fuel Economy (CAFE) proposal, which, if implemented, would necessitate all automakers to achieve an average of approximately 75 miles per gallon by the year 2032.

This proposal stands in stark contrast to the NHTSA’s suggestion for a new vehicle fleet average of 58 miles per gallon by 2032, a notable increase from the current mandate of an average of 49 miles per gallon by 2026.

The Alliance for Automotive Innovation, a Washington-based organization representing major automakers like Ford, General Motors, Stellantis, Honda, and Toyota, has expressed concerns that NHTSA’s proposal could incur substantial fines of around $14 billion for manufacturers.

Tesla’s stance also encompasses the cessation of a credit program, which, while favoured by some environmentalists, has been criticized for undermining the pollution-fighting objectives of the CAFE program.

Under the current setup, automakers can claim an equivalent of over 100 miles per gallon for each EV in their product lineup, thereby enabling them to meet fleetwide mandates, even if they continue selling conventional fuel-inefficient vehicles.

In its comments submitted to the NHTSA on Monday, Tesla asserted that this credit system “creates asymmetry in the regulation favouring ICE vehicles, diverts research and development investment away from the best emissions reduction technology of electrification, and unnecessarily weakens the stringency of the standard.”

Tesla, a prominent player in the electric vehicle market, has historically been a significant beneficiary of the credit system.

The company raked in revenue amounting to $282 million in the quarter ending June 30 from the sale of regulatory credits to other automakers. Nevertheless, Tesla anticipates a reduction in such revenues as rival companies launch more of their own electric vehicles.