Stellantis has taken a bold stance by challenging the stringent emission standards set forth by California and 13 other states following the California Air Resources Board (CARB). The crux of the contention lies in what the automaker claims to be the incorrect application of a 2019 agreement reached by state regulators and four automakers, permitting manufacturers to voluntarily elevate the average fuel consumption of their fleets to approximately 49 MPG by the culmination of 2026 for a specific model year.
Carlos Tavares, CEO of Stellantis, revealed the company’s attempts to become part of this deal, but their efforts were thwarted as the CARB board rejected their inclusion. The agreement initially inked by CARB and leading automotive entities such as Ford Motor Co., Honda Motor Co., BMW AG, and Volkswagen AG is considered a precursor to a subsequent rule implemented during the Biden administration in 2022. This latest ruling mandates automakers to boost their average fuel consumption to about 49 MPG by 2026 on a national scale.
However, Stellantis has raised objections, citing what they perceive as preferential treatment for manufacturers within the 2019 agreement. The company contends that included automakers can meet standards based on their nationwide sales. At the same time, excluded counterparts are evaluated solely on sales within the 14 states adhering to the California rules. According to a spokesperson from the automaker, this has led to an overstock of unsold electric vehicles (EVs) in California for Stellantis.
In a statement, Stellantis highlighted concerns over the secretive nature of the California framework agreement, alleging a violation of the California Administrative Procedure Act due to its drafting in confidentiality with select competitors. These states, which follow California standards, collectively constitute over a third of the U.S. automotive market.
In response to this discord, Stellantis announced plans in June to curtail the sales of gasoline-fueled vehicles in California and other states, aligning with the emissions standards. Although the company assured buyers in these 14 states of the possibility of requesting gasoline vehicles, Stellantis intended to limit the allocation of cars, SUVs, and pickups with internal combustion engines to its dealer network in these regions.
The challenge put forth by Stellantis against the California emissions deal presents a notable upheaval in the automotive sector, shedding light on the complexities and disparities within environmental regulations across states and their implications for major industry players.