NHTSA Increases Fines for Fuel Economy Violations

The National Highway Traffic Safety Administration (NHTSA) on Sunday reinstated a sharp increase in penalties for automakers whose vehicles do not meet fuel efficiency requirements for model years 2019 and beyond.

For the 2019 to 2021 model years, the fine would be $14, up from $5.50, for every 0.1 mile per gallon that vehicles fall short of required fuel economy standards, multiplied by the number of noncomplying vehicles that were sold. As per a Reuters report, the penalties would rise to $15 for the 2022 model year.

NHTSA said the decision "increases the accountability of manufacturers for violating the nation’s fuel economy standards" and the penalty increase "incentivizes manufacturers to make fuel economy improvements."

NHTSA added automakers that made plans for 2019 through 2021 "thinking that penalties would not increase did so at their own risk."

The decision was signed on Thursday by NHTSA's Deputy Administrator, Steven Cliff, ahead of its formal publication.

The decision benefits Tesla (NASDAQ: TSLA), as it could cost other automakers hundreds of millions of dollars or more. The decision is expected to cost Stellantis (NYSE: STLA), for instance, as much as $572 million by the company's prior estimates, while boosting the value of compliance credits sold by Tesla.

On Sunday, Stellantis said it would "like to work with the administration and Congress to allow the agencies to use the proceeds from penalties to bolster investments in the technologies and infrastructure required to accelerate a robust U.S. market for EVs."

By Michael Elkins

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