GM Drops Out of Air Pollution Lawsuit, Doubles Down on Electric Vehicles

By Mariliana Fotopoulou Tuesday, November 24, 2020

US automaker General Motors (GM) said it is pulling out of the legal battle to prevent California from setting its own fuel economy standards. The company has also boosted investment in electric vehicles by committing to offer 30 all-electric models globally by mid-decade.

GM Pulls Out of California Lawsuit

Chief Executive of GM, Mary Barra, issued a letter to environmental groups in which she said that the carmaker would drop support for the lawsuit and asked other automakers to follow suit. Barra added that GM supports President-Elect Joe Biden’s plan to increase the use of electric cars.

"We believe the ambitious electrification goals of the President-elect, California, and General Motors are aligned, to address climate change by drastically reducing automobile emissions," Barra wrote in a statement.

In 2019, General Motors and a few other carmakers, including Fiat Chrysler and Toyota, decided to support President Trump in the legal battle against the state of California to prevent it from setting its own fuel economy and gas emissions standards.

The group of the automakers were known as the "Coalition or Sustainable Automotive Regulation" and consisted of big names such as Nissan, Hyundai, Kia, Subaru, Isuzu, Suzuki, Maserati, McLaren, Aston-Martin, and Ferrari.

"With our industry facing the possibility of multiple, overlapping and inconsistent standards that drive up costs and penalize consumers, we had an obligation to intervene," John Bozzella, Chief Executive of the group and the coalition’s spokesperson, stated at the time.

Toyota said last year it backed annualized increases in fuel economy standards and that it decided to join the coalition because the majority of other car manufacturers agreed that there should be a single American standard.

"Given the changing circumstances, we are assessing the situation, but remain committed to our goal of a consistent, unitary set of fuel economy standards applicable in all 50 states," Toyota wrote in a statement.

Wendy Wendlandt, acting chairman of Environment America, who also received GM’s letter, asked other automakers to follow suit.

"We cannot address climate change without phasing out gas-powered cars, and GM embracing the promise of electric cars goes in the right direction," Wendlandt said.

Several months ago, California announced its new objectives when Governor Gavin Newsom promised to ban sales of gas-powered vehicles in the state by 2035. If this happens, California’s greenhouse gas emissions would be cut by one third.

General Motors said last week it was developing new battery chemistry that will reduce EV costs compared to gas-powered cars over the next five years. Moreover, it increased its financial commitment to electric vehicles to $27 billion through 2025 – up from the $20 billion announced earlier.

GM hopes to further improve its second-generation Ultium chemistry to deliver twice the energy density at much lower costs compared to today’s standards.

“GM’s EV development times are speeding up and costs are going down rapidly, so we expect our Ultium EV programs to be profitable from the first generation on,” said Doug Parks, GM executive vice president of Global Product Development, Purchasing and Supply Chain.

“It’s not just the cost and performance of our innovative EV components that will give us a competitive advantage in a fast-changing industry, but how we integrate them with other advanced systems like Super Cruise, our Vehicle Intelligence Platform electrical architecture and other technologies pioneered in our traditional portfolio.”

GM to Recall 7 Million Cars

The US government ordered General Motors to recall around 7 million of its SUVs and large pickup trucks around the world to replace its potentially unsafe Takata airbag inflators.

GM said it believes the vehicles are not dangerous but added it would not oppose the government’s decision. The recalls will cost GM around $1.2 billion, which is around 30% of its net income in 2020.

The company had filed petitions to the agency four times in the last four years to avoid recalls and claimed its airbag inflators have proved to be safe both on the road and during the tests; however, the National Highway Traffic Safety Administration denied its petitions.

Furthermore, owners filed complaints to the NHTSA and said that General Motors was favoring profits over safety. Potentially dangerous airbag inflators have been part of the biggest series of vehicle recalls in the history of the US, with at least 63 million Takata inflators recalled.

The government said that as of September, over 11.1 million inflators haven’t been replaced, while around 100 million have been recalled.

Summary

General Motors said it will pull out of the lawsuit that aims to prevent California from setting its own fuel economy and gas emissions standard and will further increase its investment in electric vehicles. On the other hand, the automaker is forced to recall 7 million vehicles because of its potentially harmful Takata airbag inflators.

About the Author


Headshot for author Mariliana Fotopoulou

Mariliana has an MSC in consumer analytics and business strategy. She has a special interest in fast-moving industries and big data.

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