Editorial: Hotel California will be nightmare for Ford
Ford Motor Co. is leading more than half of the auto industry into bed with California, rather than snuggling up to President Donald Trump and the regulatory relief he is promising them. And while the choice may deliver the stability they crave for the short term, it is bound to bring sleepless nights down the road.
Ford panicked in agreeing to strike its own deal with California on fuel economy standards, a bargain since joined by three foreign-based automakers. Worried the deeper cuts offered by the Trump administration would lead to lengthy lawsuits and harassment by environmentalists, Ford abandoned the data-driven process for establishing Corporate Average Fuel Economy (CAFE) targets, and instead will accept what assuredly will be more arbitrary numbers from California's detached-from-reality regulators.
The irony is that Trump is giving the automakers exactly what they asked for when they sat down with him at Willow Run Airport in the winter of 2017.
All of the major car companies, including Ford, signed a letter to the president asking him to restore the promised mid-term review of mileage standards they negotiated with President Barack Obama in 2012. Obama tore up that commitment on his way out the door and declared the original standard of 54.5 miles per gallon by 2024 set in stone.
The mid-term review was supposed to examine such things as technology, market conditions, consumer attitudes, impact on employment and profits, safety and other factors to determine whether the CAFE demand was attainable. The number was pulled from thin air by Obama's regulators, without regard to whether it could be achieved.
Despite the spin from environmentalists and much of the media, the automakers never asked Trump to roll back the standard, but simply to give them what they were promised: a data-driven review.
The administration complied, and appears to be moving toward a sharply lower target of roughly 37 mpg. It's a standard automakers can meet without abandoning their highly profitable pickups and sport utility vehicles, and without trying to force an artificial market for the electric vehicles that California demands, but consumers don't want.
But Ford and the other automakers worried California would march into court the minute the new standards were issued and assert its right under a 2006 law to draft its own regulations, setting up a dual automotive market. They also worried environmentalists would declare war on them, which, by the way, will happen one way or the other.
So in the name of attaining regulatory certainty, they struck a deal with California.
In doing so, they are abandoning a regulatory regime based on technological and market data, and accepting California's arbitrary process designed to bolster the state's green agenda. It would seem Ford and the others have given themselves up to their worst nightmare of having California as their defacto regulator.
General Motors, Fiat Chrysler and the remaining automakers have yet to decide whether they'll join the California bargain.
They should stick with the federal rulemaking, and let the fight be about the data.
Trump was not far off when he warned, "Car companies should know that when this administration's alternative is no longer available, California will squeeze them to a point of business ruin."
Empowering California is dangerous and will lead to automotive products that have no connection to market demand, and thus slumping sales and job losses.