California won't buy cars from GM, Chrysler or Toyota because they sided with Trump over emissions

CNN Finance 2 weeks ago
California Gov. Gavin Newsom slammed the Trump administration and Republicans for their "complete silence on state's rights, but also free enterprise" in light of President Donald Trump's decision to curtail state-set emissions standards.

The state of California is taking aim at GM (GM), Chrysler, Toyota, Nissan and other automakers that are aligning with the Trump administration in its battle over emissions rules.

California issued a statement late Monday saying that as of January the state would only buy vehicles from automakers that recognize the California Air Resources Board's authority to set tough greenhouse gas emissions standards for vehicles. California also pledged only to do business with automakers that committed to stringent emissions reduction goals.

Separately, the state also said it will no longer buy sedans that are powered only by internal combustion engines, no matter who manufactures the car. It will buy only plug-in electric or hybrid sedans, although California would make an exception for certain public safety vehicles. That rule does not apply to SUV or truck purchases.

    "Car makers that have chosen to be on the wrong side of history will be on the losing end of California's buying power," said California Governor Gavin Newsom in a statement. "In court, and in the marketplace, California is standing up to those who put short-term profits ahead of our health and our future."

    General Motors, Fiat Chrysler (FCAU), Toyota (TM) and Nissan (NSANF), among others, formed a group to intervene in federal court cases to argue that there should be a single set of emissions and mileage rules nationwide. Currently, the Trump administration and the Environmental Protection Agency are seeking to strip the right of California to set tougher emissions rules for itself and for 13 other states that follow the rules California sets. The 14 states that follow California's rules have about a third of the US population.

    California's ban could take a bite out of affected automakers' sales, particularly GM and Chrysler. Between 2016 and 2018, California purchased $58.6 million in vehicles from GM, $55.8 million from Fiat Chrysler, $10.6 million from Toyota and $9 million from Nissan, according to Reuters.

    Four automakers — Ford (F), Volkswagen (VLKAF), Honda (HMC) and BMW (BMWYY) — have reached a deal with CARB to cut emissions through improved fuel mileage and use of electric vehicles, even as the EPA rolls back national rules to cut emissions. Those automakers could benefit from California's rules on who it will buy from in future. Tesla (TSLA), the only California-based automaker, makes nothing but electric vehicles and thus also complies with the rules.

    The automakers that are pushing for a single set of emissions rules say they believe the EPA and California should reach a deal that both sides can live with. They say in court filings they're willing to have rules more stringent than current mileage and emissions standards, but they're not able to meet the ambitious targets that California has set for the future.

      Although details of California's vehicle purchase rules are not yet spelled out, they could prevent the state from purchasing all-electric vehicles made by the automakers challenging it court, including GM's Chevrolet Bolt, in favor of a gasoline-and-electric hybrid vehicle made by Ford, which does not currently have any electric-only vehicles available for sale. Volkswagen does have an electric version of the Golf available for sale in California, but it is imported and not made at its sole US plant in Tennessee.

      "Removing vehicles like the Chevy Bolt and prohibiting GM and other manufacturers from consideration will dramatically reduce California's choices for affordable, American-made electric vehicles and limit its ability to reach its goal of minimizing the state government's carbon footprint, a goal that GM shares," GM said in a statement. "GM is committed to an all-electric future which is why we support California's initiative to electrify their fleet."


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