Tesla Denied Request Seeking Higher Penalties on Automakers Failing U.S. Fuel Economy Standards

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Last spring and fall, Tesla asked a U.S. court to reinstate higher penalties for automakers that fail to meet the American government’s fuel economy standards.

It now appears Tesla’s efforts have been denied by a U.S. appeals court on Thursday, reports Reuters. The Second Circuit U.S. Court of Appeals has now rejected Tesla’s requests from both April and August, seeking higher penalties.

To meet U.S. vehicle emissions standards, automakers that can’t meet requirements purchase ‘green’ credits, from automakers such as Tesla. The electric automaker argued the credits are no longer as valuable due to changes made by former President Donald Trump.

The NHTSA said in August it could enact higher penalties on older model years, and sent a draft proposal to the federal government in December for review.

Automakers pushed back, saying increasing penalties could cost them at minimum $1 billion annually, from increased prices for credit and also for failing to meet rules.

During the final days of the Trump administration, it delayed a 2016 ruling that would have more than doubled penalties for automakers failing to meet Corporate Average Fuel Economy (CAFE) requirements. Tesla argued to the NHTSA in August it should reverse the Trump government’s decision, right away.

As expected, carmakers such as GM, Toyota, Ford and Volkswagen opposed Tesla’s argument.

“That Tesla might benefit from more certainty about the worth of the CAFE credits that it has amassed is hardly a reason to cut off an ongoing administrative process,” said a group representing automakers in appeals court.

Stellantis said hiking CAFE penalties would cost the company 521 million euros ($597 million). Fiat Chrysler, a subsidiary of Stellantis, paid close to $150 million for failing to meet 2016 and 2017 CAFE requirements.

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