4 Automakers Agree to Cleaner California Air. Now They May Be Sued.

Is this crazy, or what: Four automakers face a Department of Justice investigation and possible lawsuit because they possibly conspired to, uh, build more fuel-efficient cars and help make California’s air cleaner. BMW, Ford, Honda, and Volkswagen are the reported targets of a Justice Department investigation into whether they skirted federal competition laws by agreeing with each other to agree to stricter emissions standards in California.

President Trump is mad at California and automakers standing in the way of his administration’s plan to roll back climate change regulations. It’s possible the DOJ is onto something if it can show the automakers agreed among themselves to act in a way that limits competition or product choices without involving the government beforehand. For instance, reducing the number of big SUVs sold there may be good for the air, but it might be seen as collusion.

States’ Rights vs. Executive Power

At a high level, the disagreement is over the rights of states to set a higher standard for higher fuel efficiency and lower air pollution–in this case, a right granted by federal laws (rather the 10th Amendment holding the “powers not delegated to the United States [are] reserved to the States respectively, or to the people”), and on the other hand, the powers of the executive branch.

The law at play here is the federal Clean Air Act, which dates to the 1960s. It has been modified over the years. It says the feds, not individual states, get to set clean air regulations. But there’s a huge loophole: Because California is the state most affected by car-driven air pollution since the end of World War II, the act lets California set more stringent standards. And it allows the other states to follow the same rules California sets (but not its own rules). Colorado, Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Jersey, New Mexico (model year 2011 and newer), New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington currently use California’s rules. These states represent the entire Pacific West Coast as well as the eastern seaboard from Maine to Washington, DC, and about a third of the US population. For what it’s worth, every California-rules state except Pennsylvania went for Clinton, not Trump, in the 2016 election.

In 2018, President Trump sought to roll back or freeze some fuel economy and air pollution standards. California wants to keep stricter rules. California Air Resources Board Chairwoman Mary Nichols, who was involved in the July agreement with the four automakers, says California’s emissions goals are achievable and they help US automakers because other countries, particularly China, hew closely to California’s rules. In other words, even if the US were to roll back standards, any automaker that wants a global footprint still has to engineer cars to meet the most stringent standards.

Trump “Enraged.” California Gov: “Political Interference.”

The President used his bully pulpit — Twitter — to excoriate BMW-Ford-Honda-VW. He called them “politically correct Automobile Companies [capitalizations his]” run by “Foolish executives” while the Golden State “will squeeze … [automakers] to a point of business ruin.”

Trump also tweeted that “Henry Ford would be very disappointed if he saw his modern-day descendants wanting to build a much more expensive car, that is far less safe and doesn’t work as well.” Pollution controls will increase vehicle cost — $3,000 a car according to Trump, or $2,100 a car by the Trump administration’s earlier statements. Factcheck.org said there’s little or no evidence that cars with higher mpg are less safe in accidents.

Lighter cars in accidents with heavier vehicles fare less well, but economy improvements could come from greater efficiencies rather than lightening a vehicle. At the same time, a lighter car does less damage to another lighter-weight car.

Consumer Reports weighed in and said Americans as a group will lose $460 billion in fuel savings “in the coming years if the federal government goes forward with plans to roll back the nation’s fuel economy and emissions standards for new cars and light-duty trucks.”

When The New York Times reported Trump was “enraged” by the audacity of California, his handlers opted to alert others in the media that The Times has correctly captured the President’s mood, according to Politico. California Gov. Gavin Newsom fired back at Trump’s “blatant political interference.”

Administration critics of the BMW-Ford-Honda-VW deal with California say the deal to raise fuel efficiency could mean the end of big SUVs and crossovers. Here, the 2019 Ford Expedition, with three rows of seats, room for eight, and EPA ratings of 18-20 mpg overall. The pact would raise efficiency to almost 50 mpg by 2026, although fuel efficiency mpg is higher than real-world mpg.

How It Came to This

The backstory dates to the early 1950s and the understanding almost 70 years ago of how smog affects California, to California clean air legislation signed by then Gov. Ronald Reagan, federal fuel economy and clean air legislation of the 1960s, and the California-US agreement thanks to the unique status of California and, in particular, the Los Angeles basin that traps smog.

California’s authority to act comes from the Clean Air Act, which was signed by President Richard Nixon.

When the Trump administration sought to ease some of the clean air standards, 17 automakers urged the White House to continue talks with California and avoid a legal battle. They warned that failure to reach agreement would lead to “an extended period of litigation and instability.” Of the 17, BMW, Ford, Honda, VW continued to discuss with California their support for strong clean-air/higher-mpg standards. They announced an agreement in late July. That’s what enraged the President.

The agreement has the four automakers agreeing to increase fuel efficiency standards by model year 2026, just six years away, to almost 50 mpg (fleet average). Note that what the government calls miles per gallon is considerably higher than the real-world mpg compliant cars would actually get. Between credits and dispensations that are the work of accountants and legislators, not engineers, a vehicle that gets roughly 35-40 mpg would be, roughly, a 50-mpg car for sake of the rules.

According to a Sept. 6 Wall Street Journal story by Timothy Puko and Ben Foldy with the tagline Politics (not Cars):

The four companies [BMW, Ford, Honda, VW] and the California Air Resources Board announced the deal in July to signal support for keeping one, nationwide emissions standard. Justice Department officials believe the agreement could effectively restrict competition by potentially limiting the types of cars and trucks the auto companies offer to consumers, according to people familiar with the department’s thinking. Such an impact of the deal—potentially cutting production of sport-utility vehicles and crossovers that burn more gasoline—could cross legal lines, the people said. Courts have prohibited such deals even if the motivation was for a public good, the people said.

The automakers would also be hurting themselves because big SUVs and pickups often have profit margins on the order of $10,000 per vehicle. To keep selling them, they’ll need to sell even more compact cars and hybrids, plug-in hybrids, and EVs.

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Inside Voyage’s plan to deliver a driverless future – gpgmail

In two years, Voyage has gone from a tiny self-driving car upstart spun out of Udacity to a company able to operate on 200 miles of roads in retirement communities.

Now, Voyage is on the verge of introducing a new vehicle that is critical to its mission of launching a truly driverless ride-hailing service. (Human safety drivers not included.)

This internal milestone, which Voyage CEO Oliver Cameron hinted at in a recent Medium post, went largely unnoticed. Voyage, after all, is just a 55-person speck of a startup in an industry, where the leading companies have amassed hundreds of engineers backed by war chests of $1 billion or more. Voyage has raised just $23.6 million from investors that include Khosla Ventures, CRV, Initialized Capital and the venture arm of Jaguar Land-Rover.

Still, the die has yet to be cast in this burgeoning industry of autonomous vehicle technology. These are the middle-school years for autonomous vehicles — a time when size can be misinterpreted for maturity and change occurs in unpredictable bursts.

The upshot? It’s still unclear which companies will solve the technical and business puzzles of autonomous vehicles. There will be companies that successfully launch robotaxis and still fail to turn their service into a profitable commercial enterprise. And there will be operationally savvy companies that fail to develop and validate the technology to a point where human drivers can be removed.

Voyage wants to unlock both.

Crowded field

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Car2go hikes hourly rental rates by as much as a third – gpgmail

By-the-minute car rental service Car2go is raising its rates for short trips under the guise of variable pricing, the company announced to its users today. As we’ve seen with other variably priced services like delivery and ride hailing, in practice this means you never really know what it will cost but will have little choice but to pay.

In an email to users of its service, Car2go said that as a result of “constantly evaluating our product, packages, and pricing strategies” it had arrived at the new system, under which price will depend on time, location, and day. The new cost structure takes effect next month.

For Car2go users, this will generally mean paying more. The company highlighted a new cheaper possible per-minute rate of 35 cents, significantly lower than the current $0.45 rate. But it’s easy to guess when that lower rate will be available: “times, locations, and days” that no one is using the service. Meanwhile, it’s also possible to encounter a new higher per-minute rate of up to 49 cents when cars are in demand or in a high-use location.

Blocks of time from half and hour to four hours are all increasing in price: The current flat rates are now floor rates, with the possibility you’ll be paying as much as a third more than before. For example, a two-hour block currently costs $29; soon it will cost somewhere between $30 and $39. Again, you won’t know until you open the app to check it out, at which point you’re probably already committed.

Day-length packages are actually cheaper under the new system, but no longer include miles, so while a 24-hour pass used to be $79, now it’s $70 — but at 19 cents per mile, you’ll be in the red after less than 50 miles. And the price only goes up from there. Still, it’s conceivable you’ll pay less for a 2- or 3-day rental if you’re not actually going anywhere distant, but just need a car for the weekend.

A newly instituted zone-based charge and refund system punishes drivers for leaving the city center and rewards those at the periphery for driving back towards heavy usage areas. There’s a $5 charge if you leave the central zone, and $5 refund — or the price of the trip, if less — if you bring a car in from the outer one. (Consult your local Car2go to see what the zones are in your city.)

Count the cards here and you can see the house always wins. If you’re going out, the full $5 fee always applies. If you’re coming in, it will be very difficult to nail that $5 ride — go under and Car2go is reimbursing less than the $5 (and thus comes out ahead), go over and you end up paying money anyway. It’s just one of those clever little traps businesses set up.

You can see the full changes in the chart below:

Oh, and your first 200 trips this calendar year have an additional $1 fee. You’re welcome!

In case you can’t tell, this is bad news for consumers, though it would be too much to expect that these prices would stay stable for years. But variable pricing is fundamentally anti-consumer because of a lack of transparency under which the companies controlling it can pull all kinds of shenanigans. Sadly, that makes it a great choice for the bottom line.

These unwelcome changes come six months after Car2go joined the BMW-Daimler joint venture Share Now, which has a variety of car-share services around the world it intends to unify under a single brand soon (it already killed ReachNow, rather abruptly). Apparently larger scale and reduced competition don’t actually lead to lower prices — unfortunate for their customers. But overall the floating car-share services are an important one. Just not as cheap as they used to be.

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