Stellantis (STLA) and General Motors (GM) hit with $363M in penalties for fuel economy violations
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An exclusive story by Reuters on Friday revealed that Stellantis (NYSE: STLA) and General Motors (NYSE: GM) have paid a combined sum of $363 million in civil penalties. These penalties were imposed due to their failure to meet the fuel economy standards set by the United States for previous model years.
According to the National Highway Traffic Safety Administration (NHTSA), which administers the Corporate Average Fuel Economy (CAFE) program, the record-setting penalties include $235.5 million for Stellantis for the 2018 and 2019 model years and $128.2 million for GM covering 2016 and 2017.
Stellantis, the parent company of Chrysler, Fiat, Peugeot and other brands, said the penalty "reflects past performance recorded before the formation of Stellantis, and is not indicative of the company’s direction."
GM said Friday as "we work towards the goal of a zero-emissions future, we may use a combination of credits from prior model years, expected credits from future model years, credits obtained from other manufacturers, and payment of civil penalties to comply with increasingly stringent CAFE regulations."
In the 40-year history of the CAFE program, General Motors had never paid a fine before. Initially, the company had intended to utilize credits to fulfill its compliance gap, but the NHTSA said that the automaker chose to pay penalties instead.
Back in March 2022, the NHTSA reinstated a sharp increase in penalties for automakers whose vehicles do not meet fuel efficiency requirements for 2019 and beyond. For the years 2019 to 2021, the fine has jumped to $14 (previously $5.50) for every 0.1 mile per gallon that new vehicles fall short of the required fuel-economy standards. This multiplied by the number of non-complying vehicles sold. And for the 2022 model year, the penalty has gone up even more to $15.
In April 2022, NHTSA raised fuel efficiency requirements by 8% for both the 2024 and 2025 model years and 10% in 2026.
Automakers whose vehicles achieve higher fuel economy than required can sell credits to automakers that do not meet CAFE rules.
Shares of STLA and GM are up 2.45% and 3.89% respectively in mid-day trading on Friday.
By Michael Elkins | [email protected]
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