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The U.S. National Highway Traffic Safety Administration (NHTSA) recently reinstated high penalties for automakers whose vehicles do not meet fuel efficiency requirements for models made in 2019 and on.

The decision could cost automakers hundreds of millions of dollars or more.

NHTSA reported 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."

The move comes after the Trump Administration delayed a 2016 regulation that more than doubled penalties for automakers failing to meet Corporate Average Fuel Economy (CAFE) requirements as of the 2019 model year.

The final rule, which goes into effect 60 days after it is published, reinstates the higher penalties and and increased them further for the 2022 model year. The agency did not collect penalties for 2019 to 2021 model years while the rule was under review.

The change puts the fine at $14 for 2019 to 2021 model years for every 0.1 mile per gallon new vehicles fall short of required fuel economy standards. This amount is multiplied by the number of noncomplying vehicles sold. The fine rises to $15 for the 2022 model year.

Automakers warned in 2016 the fines could increase industry costs by at least $1 billion annually.  

Automakers whose vehicles achieve higher fuel economy than required, such as Tesla, can sell credits to automakers that do not meet CAFE rules.

NHTSA estimates that for the 2019 model year alone, automakers will owe $294 million at the new rate, up from $115.4 million under the old rate.

The organization hopes to continue raising these fines. In August, NHTSA proposed boosting CAFE requirements by 8% annually for 2024 through 2026. NHTSA will issue its final CAFE rules through 2026 this week.

Originally posted on Auto Dealer Today

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