Tesla Lobbies for Higher Penalties on Automakers Failing Fuel Economy Requirements

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After Tesla pressed a U.S. court to reinstate previous high emissions penalties in March, the company is doing it again – this time following similar plans.

Tesla has asked President Biden’s administration, as well as a U.S. appeals court, to increase penalties for vehicle manufacturers that don’t meet fuel emissions standards, according to Reuters.

A document filed last week showed that Tesla requested this of the National Highway Traffic Safety Administration (NHTSA) in a virtual meeting on August 30, following the NHTSA’s August 18 notice that it might increase penalties for automakers not meeting fuel efficiency standards – but not before first hearing public comments.

Tesla makes a decent amount of its income from selling “green credits” or “emissions credits” to companies that wouldn’t meet the emissions standards normally.

Former President Donald Trump changed the rules for this system by delaying a 2016 regulation that would more than double these penalties – ultimately making the credits less valuable for Tesla. In 2020, when Tesla earned its first annual profit, the company had made $1.3 billion USD in credits, and without them, the company wouldn’t have profited at all that year.

On August 27, Tesla separately asked the Second Circuit U.S. Court of Appeals to reinstate the higher penalties, despite the court denying a request from Tesla in April.

Outside of the U.S., Tesla sold nearly $362 million USD (300 million euros) in emissions credits in Europe to Fiat Chrysler in 2020.

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