Trump and California are about to go to war over auto MPGs - and carmakers are caught in the middle

Associated Press/Pablo Martinez Monsivais

President Donald Trump tosses his folder on the table before the start of a meeting with automobile leaders in the Roosevelt Room of the White House.

• The Trump EPA has rolled back Obama-era fuel-efficiency goals.
• Automakers had lobbied Trump for the change in 2017.
• But the move has set up a battle between the EPA and California, one of the automakers' biggest markets.

The US Environmental Protection Agency on Monday rejected an Obama-era plan to make automobiles more fuel efficient in a win for car and oil companies and the latest move by the Trump administration to roll back environmental regulations.

EPA Administrator Scott Pruitt said that agency must revise the rules, known as corporate average fuel economy, or CAFE standards, on model year 2022 to 2025 vehicles, agency spokeswoman Liz Bowman said.

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Pruitt did not offer any specifics on doing so. The standards called for roughly doubling by 2025 the average fuel efficiency of new vehicles sold in the United States to about 50 miles (80 km) per gallon, and were seen by proponents as a way to spur innovation in clean technologies.

US automakers lobbied the Trump administration shortly after the President's inauguration to re-open a review of CAFE standards to assess objectives that had been locked in late in the Obama administration.

It looked like a good deal for the car companies - and perhaps a bad one for Trump, who needed headlines about automakers hiring and opening new factories. Detroit was committed to some new investment, but with US sales at record high level, hiring sprees and additional plant construction was unlikely.

The California factor

Kevork Djansezian/Getty

Traffic in Los Angeles.

As some industry analysts have noted, the moves by the EPA might ultimately create more difficulty for the automakers than they solve.

It boils down to fight between the Trump EPA and California, where 13% of new vehicles are sold and whose more stringent regulations have a huge impact on what automakers decide to do.

"Automakers will get the flexibility they wished for, but at what cost?" said Jessica Caldwell, an analyst at Edmunds.com, the consumer auto website, said in a statement.

"The unfortunate reality is that this decision comes with a logistical nightmare in the short term. California has made it very clear that it's ready to fight for the right to maintain its own standards, and when you consider how long a court battle could take, it puts automakers in a very challenging scenario from a product development perspective."

Caldwell added that because carmakers aren't going to build vehicles to two different US standards, California will retain the upper hand until legal disputes are resolved.

(Reporting by Timothy Gardner; Editing by James Dalgleish)