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Auto manufacturers’ non-market responses to vehicle CO2 standards - Introduction
Vehicle CO2 standards represent one of the clearest regulatory pathways to passenger vehicle decarbonization. In the United States (US), the most recent standard, proposed and finalized under the Biden administration, requires auto manufacturers to achieve a combined fleet average of 85 gCO2/mile by model year 2032 (EPA, 2024); The most stringent and ambitious US target to date. This study seeks to explore and characterize the non-market strategies employed by the auto manufacturing industry to slow down, support, or shape this policy since its inception in model year 2012. The authors adapt the Wesseling et al. (2015) corporate response strategies framework to analyze the responses of ten car manufacturers that represent over 90% of the US auto industry by sales.
Methods & Data
To capture the non-market responses of auto manufacturers, a content analysis of public comment documents and company announcements was conducted (Hillman et al., 2004). This analysis encompassed documentation from 2009 to 2024 and included ten manufacturers that sell cars in the US.
Results
We found that despite auto manufacturers pushing harder to oppose increasingly stringent CO2 standards, almost all manufacturers were opposed to the removal or stagnation of the standards, as was proposed under the first Trump administration. We also found that US manufacturers were more supportive of stronger regulations compared to foreign owned manufacturers.
Discussion
Auto manufacturers value policy predictability and make research and development investments based on finalized future regulations. Stagnation and reversal of these standards represents a disruption to auto manufacturers’ market strategy and can be destabilizing to the market more broadly. While manufacturers increasingly exert influence to relax the CO2 standard finalized during the Biden administration, the need for policy certainty among auto manufacturers is evident. Given that this regulation represents an important step toward passenger vehicle decarbonization in the US, understanding the ways in which manufacturers try to shape regulation is more important than ever before.
References
EPA, O. Regulations for Greenhouse Gas Emissions from Passenger Cars and Trucks. https://www.epa.gov/regulations-emissions-vehicles-and-engines/regulations-greenhouse-gas-emissions-passenger-cars-and. Accessed Jun. 10, 2024.
Hillman, A. J., G. D. Keim, and D. Schuler. Corporate Political Activity: A Review and Research Agenda. Journal of Management, Vol. 30, No. 6, 2004, pp. 837–857. https://doi.org/10.1016/j.jm.2004.06.003.
Wesseling, J. H., J. C. M. Farla, and M. P. Hekkert. Exploring Car Manufacturers’ Responses to Technology-Forcing Regulation: The Case of California’s ZEV Mandate. Environmental Innovation and Societal Transitions, Vol. 16, 2015, pp. 87–105. https://doi.org/10.1016/j.eist.2015.03.001.
