EuroWire July 2018

Transatlantic cable

Reckoning with California On another front, the automakers at the White House meeting were hoping to persuade the president to cooperate with Jerry Brown, the governor of California, who had invoked biblical references when calling the Trump administration’s proposal to roll back auto e ciency regulations “profoundly dangerous.” “We support standards that increase year over year that also are consistent with marketplace realities,” Mitch Bainwol, chief executive o cer of the Alliance of Automobile Manufacturers, told a House panel on 8 th May. The same tone of bland reasonableness just might be detectable in this statement from Lindsay Walters, White House deputy press secretary: “The President will hear from the automaker CEOs about the impact of the rulemaking on the auto industry and their e orts to negotiate a ‘National Program’ with the state of California.” In fact, the auto executives were in an uncomfortable position: wanting to emphasise their support for easing the rigorous Obama-era mileage standards mandated by the Environmental Protection Agency; but not so much as to trigger con ict with California, which favours the tougher standards, and risk the emergence of a split market of environmental regulations set by Washington and Sacramento. As in the Energy item above (“Quick-marching into a clean energy future”), California has demonstrated a determination to take the lead in environmental matters. And, as the world’s fth-largest economy, the headstrong state is not easily ignored. “We are not asking the administration for a rollback,” Ford chairman Bill Ford said on 10 th May during the automaker’s annual meeting. “We want California at the table and we want one national standard.” Mr Jonas of Bloomberg TV asserted that the automakers de nitely want one standard. “And they don’t want this going to the Supreme Court and being dragged out in the media,” he said, becoming linked in the public mind with “some kind of” hostility toward California. † Bloomberg reporters Ryan Beene and John Lippert pointed out that the meeting with the carmaker chiefs came against a background of occasionally bumpy relations between Mr Trump and an industry that he championed before his inauguration. Candidate Trump repeatedly attacked Ford over its decision to build an automobile plant in Mexico. And he attacked GM and Toyota over manufacturing plans for Mexico, both of which responded by announcing billions of dollars in (already planned) investments in American plants. “Trump trade-related tirades also have been a routine issue for the likes of Volkswagen AG, Daimler AG, and BMW AG,” wrote Messrs Beene and Lippert, with Mr Trump excoriating Europe’s auto trade imbalance with the USA and threatening to tax German car imports. Elsewhere in automotive . . . † According to a study conducted in Sweden, rust cuts deep – literally. As reported in The Car Connection , the insurance company Folksam and the homeowner organisation Villaägarnas Riksförbund, both Swedish, performed crash tests on a handful of used Mazdas and Volkswagens that showed signs of typical rust. (“The Ugly Truth: Rusty Used Cars Aren’t As Safe As They Were When New,” 30 th April)

“It all adds up,” Mr Waldman said. “Ten thousand dollars is the di erence in getting a home and not getting a home for some home buyers. There is only so much the banks will nance.” In defence of the new rules, Mr Knutsen of the trade group which promotes solar use said that they should result in more jobs in the state’s solar industry and promote emerging technology by letting builders meet other energy-e ciency requirements through batteries that store a home’s solar-generated power. † In a related article in the New York Times (“California Will Require Solar Power for New Homes,” 9 th May) Ivan Penn pointed out that utilities in California were not taken by surprise by the new rules. The industry has been preparing for the proliferation of energy-producing homes by studying the impact on the electric grid at test sites like the community of net-zero houses in Fontana, east of Los Angeles. These grid-tied homes are so air-tight, well insulated, and energy e cient that they produce as much renewable energy as they consume over the course of a year, presenting the occupants with a net zero energy bill. The utilities are trying to determine how best to manage a system in which these houses put electricity onto the grid during the day and consume it at night. † At the end of 2017, California was by far the USA leader in installed solar capacity. Solar power provides almost 16 per cent of the state’s electricity, and the industry employs more than 86,000 workers. Told by Washington that they should build more cars in the United States, automakers must rst deal with some challenges President Donald Trump informed top auto executives at a meeting in the White House that he wants them to build “millions more cars” in the USA. “We have at this table the biggest car manufacturers in the world,” Mr Trump said at the start of the 11 th May meeting. “We’re working on how to build more cars in the United States.” Executives of General Motors Co, Honda Motor Co, Ford Motor Co, Fiat Chrysler Automobiles NV and other companies were told by Mr Trump that they would be discussing environmental regulations such as auto e ciency standards; and also trade – especially the North American Free Trade Agreement currently under renegotiation. “I’ve never been a NAFTA fan,” Mr Trump said, in an uncharacteristic understatement. As reported by Bloomberg News , automakers, parts suppliers and dealers have been wary about the administration’s renegotiation of NAFTA, warning that higher local content requirements could be unworkable and raise vehicle prices. “Their hand is a bit stronger than perhaps the administration realises,” Adam Jonas, an auto analyst at Morgan Stanley, said on 11 th May on Bloomberg Television . “Those ten CEOs might represent the better part of a million jobs in the United States and indirectly support many, many millions more, particularly in states that supported the administration, such as Michigan.” Automotive

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July 2018