California Agency Rejects Stellantis’s Bid to Void Emissions Deal
A California agency has denied the request from Stellantis, the parent company of Chrysler, to revoke a state emissions deal with rival automakers that was established in 2019. According to a letter obtained on Tuesday, the California Office of Administrative Law declined to accept the automaker’s petition to overturn the agreement with the California Air Resources Board (CARB). The agency suggested that Stellantis could either file a lawsuit or address the issue directly with the air resources board.
In December, Stellantis sought to address the “competitive disadvantages” it faced as a result of being excluded from the emissions deal, in an effort to serve its customers more effectively. The deal was struck by Ford, Honda, Volkswagen, BMW, and later joined by Volvo Cars, which is owned by China’s Geely. Stellantis has since attempted to join the voluntary agreement but has been unsuccessful.
Stellantis recently announced that it would temporarily cut one shift at its Detroit assembly plant, which manufactures Jeep sport utility vehicles, and its Toledo, Ohio, assembly plant, which produces the Jeep Wrangler. These changes were made due to the strict emissions regulations in California. The automaker expressed concerns that CARB plans to enforce greenhouse gas emissions standards retroactively against Stellantis and other automakers in the emissions agreement, while not doing so with automakers outside the pact.
The voluntary agreement allows participating automakers to comply with national sales criteria, while Stellantis and other companies that adhere to the California rules are measured solely by sales in the 14 states that follow these regulations. This limitation prevents them from selling electric models in other states.
The Environmental Protection Agency held a hearing in January regarding CARB’s request for approval of its regulations, which aim to ban the sale of gasoline-only vehicles by 2035 and require at least 80% electric models by that time. Additionally, Stellantis faced a record penalty of $235.5 million in June for failing to meet U.S. fuel economy requirements.
Although Stellantis has not yet commented on the California agency’s decision, the company may explore legal avenues or continue discussions with the air resources board to address its concerns and seek a fair solution.
Analyst comment
Neutral News:
The California agency has rejected Stellantis’s bid to void an emissions deal with rival automakers. Stellantis may seek legal action or continue discussions with the air resources board. The market impact is uncertain as it will depend on the outcome of these actions and the potential resolution of concerns.
