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Trump policy could short-circuit automakers’ green strategy

  • November 18, 2016
  • , Nikkei Asian Review , 6:30 a.m.
  • English Press

By Toyoki Nakanishi and Tomoko Wakasugi, Nikkei staff writers

 

LOS ANGELES — With President-elect Donald Trump promising to loosen U.S. environmental regulations, gas-guzzling vehicles supported by cheap fuel may gain further momentum, undercutting automakers that have poured resources into green technologies.

 

Electric boom

 

For now, Japanese and European automakers are sticking with the strategy of pursuing environmental technologies. Ralf Speth, CEO of Jaguar Land Rover, showed off the British luxury automaker’s first electric vehicle model at the Los Angeles Auto Show this week. The I-Pace, with a range of 220 miles per charge, is to debut in 2018.

 

The Mini, a BMW brand, also unveiled its plug-in hybrid. Hyundai Motor announced plans to roll out 14 electric, hybrid and plug-in hybrid models in the U.S. by 2020. Mazda Motor will release its first diesel car in North America, and sell electric vehicles by 2019 and plug-in hybrids as early as 2021.

 

As cheap gasoline drives demand for larger autos, those like pickup trucks that lack fuel efficiency account for about 60% of new-vehicle sales in the U.S. Compact and pricey green cars are struggling to gain popularity.

 

Still, many automakers have invested heavily in green technology because of U.S. regulations. A federal rule demands that automakers improve fuel economy by 50% or more from current levels by 2025. The state of California will increase the percentage of an automaker’s new-vehicle sales that must consist of zero-emission products, starting from 2018 models.

 

Global warming

 

But under the U.S. president-elect, who once dismissed global warming as a Chinese hoax, environmental protection could take a back seat. Trump promised on the campaign trail to slash the Environmental Protection Agency’s budget.

 

Some American automakers more reliant on trucks and similar offerings than Japanese and European rivals see an opportunity. The Alliance of Automobile Manufacturers sent a letter to the Trump transition team Nov. 9, the day after the election, requesting that fuel-economy regulations be relaxed.

 

The shift could throw a monkey wrench into the strategy of automakers that have spent massive sums in developing environmentally friendly vehicles. Policy changes could create headwinds for Toyota Motor and Honda Motor, both pioneers in the effort.

 

An official from Honda’s North American operations said the company will develop eco-vehicles regardless of U.S. policies. Stricter environmental regulations are a legacy of President Barack Obama, and Trump could destroy the existing rules as a symbol of change in power.

 

The auto show here features more pickup trucks and sport utility vehicles than green vehicles, as has been the case before.

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