GM Now Sucking Up to California to Maximize Fleet Sales

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General Motors has issued a letter to California Governor Gavin Newsom promising that the automaker is now fully committed to complying with the state’s aggressive emission regulations. This follows an earlier announcement from GM advancing plans to eliminate tailpipe emission from all light-duty vehicles by 2035 via electrification. The company had also increased global spending to develop EVs to $35 billion (USD) through 2025, which is roughly a third more than it had previously been targeting.

Of course, don’t think this has anything to do with altruism or formal commitments to some grand cause. California was simply planning to bar any automakers that hadn’t previously vowed to adhere to its strict regulatory policies from selling to state government fleets. While GM has been in the process of changing its allegiance, the business originally sided with automakers approving of the Trump administration’s regulatory revisions that were at odds with the region. 

According to Reuters, the automaker has confirmed that its decision to become friendlier toward the State of California has made it eligible for government fleet purchases. Frankly, I’d criticize GM for kissing the ring to receive preferential treatment but there’s not much point. General Motors CEO Mary Barra has taken every position imaginable during our Gas War coverage and it’s not all that uncommon to see corporations bowing to government actors to get something in exchange.

Let’s take a look back to see how we got here.

In the days following President Donald Trump’s arrival at the Oval Office in 2017, Barra visited the White House with lead executives from Ford Motor Co. and Fiat Chrysler Automobiles (now Stellantis) to request the fueling rollback that would ultimately divide the industry. The State of California immediately became a rallying point for other states that likewise wanted to retain the stricter Obama-era regulatory rules pertaining to nationwide emissions and the Corporate Average Fuel Economy (CAFE). Court cases were launched and the following years offered seemingly unlimited examples of how childish and uncooperative government officials can be.

Back in 2017, American automakers claimed they couldn’t keep up with the emissions quotas under Obama without going bankrupt and Trump believed a rollback would pair well with his focus on lowing fuel prices by encouraging localized pumping. The White House also stated it was attempting to retain existing automotive jobs (as EVs require less physical labor to produce) and provide American consumers with greater choice by delaying regulatory provisions that would eventually make larger vehicles boasting V8 power harder to come by.

California insisted that it was within its rights to establish its own regulatory rules with state leadership explaining a desire to retain — if not surpass — the Obama-era targets the Trump administration was actively trying to scale back. However, this decision effectively set up the Golden State to have control of industry. California is responsible for selling more cars than anywhere else in the nation and, with stricter rules, it would be the region automakers would need to comply with in order to maximize volume in North America. But state officials, like Gov. Newsom, promised that stricter regulations would result in cleaner air and a deluge of high-tech American jobs as automakers transitioned toward electric vehicles.

As a result, Trump and company wanted to remove California’s ability to self-regulate. Meanwhile, California was building a coalition of like-minded states vowing to adhere to its emission laws — regardless of what the federal rules were. The ensuing legal battles were really something, with many public officials flat-out refusing to talk to each other because they were on different sides of the argument. California even managed to get a handful of automakers (BMW, Ford Motor Co., Honda Motor Co., and Volkswagen Group) to publicly promise that they would adhere to its proposed emissions requirements instead of what was coming out of Washington.

By November of 2020, the Trump rollbacks had been repeatedly softened in a misguided attempt to compromise and California had given up on fighting with the federal government because it looked like Joe Biden was to assume the presidency in 2021. His environmental plan was exactly what the Californian Air Resources Board (CARB) said it wanted, a strengthening of the emission proposals launched when he was still vice president.

General Motors took notice, with CEO Barra flipping the script by formally abandoning the automaker’s lukewarm support of the Trump initiatives while prolonged ballot-counting swung the presidency in favor of Biden.

“President-elect Biden recently said, ‘I believe that we can own the 21st century car market again by moving to electric vehicles.’ We at General Motors couldn’t agree more,” Ms. Barra wrote in a letter to some of the world’s largest environmental groups. “We are inspired by the President-elect’s Build Back Better plan which outlines a clear intention to expand vehicle electrification in the United States, create one million jobs, install 550,000 charging stations, and position American auto workers and manufacturers to win the race for electrification.”

“We believe the ambitious electrification goals of the President-elect, California, and General Motors are aligned to address climate change by drastically reducing automobile emissions. We are confident that the Biden Administration, California, and the U.S. auto industry, which supports 10.3 million jobs, can collaboratively find the pathway that will deliver an all-electric future to better foster the necessary dialogue, we are immediately withdrawing from the preemption litigation and inviting other automakers to join us.”

Now GM is reiterating its newfound commitment to California by openly stating that it has the right to establish any vehicle emission standards it likes under the Clean Air Act. While this is technically true, the EPA under Joe Biden has already moved to restore California’s authority to set whatever rules it likes on automobiles in April 2021.

From Reuters:

In July, 16 Republican state attorneys general urged the EPA to reject reinstating California’s authority. “The Golden State is not a golden child,” they wrote.

GM previously backed overall emissions reductions in California’s 2019 deal with rivals Ford Motor, Volkswagen , Honda and others, but asked the Biden administration to give automakers more flexibility to hit carbon reduction targets.

California plans to ban the sale of new gasoline powered passenger vehicles starting in 2035, a step the Biden administration declines to endorse. Biden has called for 50 [percent] of new vehicles sold by 2030 to be electric or plug-in hybrid.

Last month, the EPA finalized here new vehicle emissions requirements through 2026 that reversed Trump’s rollback of car pollution cuts and will speed a U.S. shift to more electric vehicles.

So we’re kind of back where we started. Despite the Trump fuel rollbacks being front and center throughout his tenure, they did little but delay the Obama-era targets automakers claimed were untenable a few years earlier. Build Back Better may have failed in Congress. But there’s still a chance it could be pushed through and automakers have found themselves confronting a federal government that’s now broadly in line with aggressive Californian proposals.

With that in mind, it’s easy to see why General Motors and its CEO have attempted to play all sides. Most other companies are doing the same, taking a stand only when they think there’s a strong chance of getting their way or there’s no alternative but to fall in line. I suppose the lesson to take away is that governments are fickle and corporations even more so.

[Image: General Motors]

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