WASHINGTON — The federal government is ceding its leadership role in squeezing more fuel efficiency out of the auto industry.
But the pressure is still on.
Automakers, which successfully petitioned the Trump administration in 2017 to reopen a review of the standards, welcomed the administration's proposed relaxation of fuel economy standards last week and the potential relief from penalties for missing escalating fuel-economy targets established in conjunction with the Obama administration and California regulators.
The Trump administration based its proposal on the premise that consumer safety should be a bigger priority than fuel economy, since consumers aren't buying electric or alternative-powertrain vehicles in large enough numbers to move the needle on carbon emissions.
But with California and other states mobilizing in the courts to fight the new proposal on public-health grounds, automakers can't risk too much of a pullback.
They remain under pressure to treat federal fuel economy and emissions rules as a floor and to pursue a resolution with the states to avoid costly, protracted litigation that could throw product plans and supplier relationships out of whack.
Billions of dollars have already been invested in advanced vehicle technologies and product plans, including pledges by several brands to offer electrified vehicles across their lineups. As a result, experts say, there is plenty of motivation in the industry to continue developing low- and zero-emissions vehicles, despite thin demand.
"Manufacturers aren't saying 'We're going to stop all our r&d.' That's a fallacy," said Rebecca Lindland, executive analyst at Kelley Blue Book. "Twenty percent of Generation Z says it is interested in an environmentally friendly vehicle. Demand is coming, so that's why manufacturers will continue to develop these types of vehicles.
"But to push unrealistic goals when there isn't that kind of pull from the market is an expensive challenge," she added.