Illustration: Sarah Grillo/Axios

As the debate over fuel-economy standards escalates, automakers are desperately trying to forge a compromise between the goals of the Trump administration, which wants to weaken current rules, and California, which favors growing stringency.

The big picture: It's rare for companies to beg for regulation, but nothing could be worse for the auto industry than a split market, where some states have stricter rules than others. A drawn-out court battle would be just as bad, creating regulatory uncertainty.

  • A predictable 50-state solution would let them focus on other concerns, like a slowing global economy, trade disputes, U.S. labor negotiations and new mobility initiatives.
  • On Thursday, the U.S. Chamber of Commerce's Global Energy Institute called for a nationwide compromise.

The intrigue: While pushing for a solution, carmakers are tiptoeing around political land mines, fearful of angering President Trump, who has already lashed out on Twitter.

  • Some automakers would rather watch from the sidelines, especially because Trump is still weighing big tariffs on auto imports that could wreak havoc on their business, according to multiple industry sources.

Yes, but: Consumers are the wild card. They have shown little interest in hybrids or electric vehicles to date. Tougher fuel economy standards won't reduce greenhouse gas emissions unless people choose to buy cleaner vehicles.

  • "Regulation forces everyone to jump into the pool," says IHS Markit analyst Devin Lindsay. "Right now, if you commit to a certain amount of electrification and your competitor does not, and consumers are still choosing internal combustion engines, you will lose business."

Where it stands: The Trump administration is planning to freeze annual emissions standards starting in 2020, rather than letting them grow stricter as envisioned under Obama-era rules that almost everyone — even California — now agrees are not achievable.

  • The EPA, as part of that plan, would seek to strip California's special permission under the Clean Air Act to set its own emissions standards, which 13 states and the District of Columbia follow.
  • Sensing a showdown, 4 automakers — Ford, Volkswagen, Honda and BMW —last month signed a voluntary agreement with California that set standards in between Obama's lofty targets and Trump's 2020-level freeze.
  • The California deal would increase greenhouse gas standards 3.7% a year (compared to Obama's 5% targets) for 2022-2026, with as much as 1% of that coming from credit allowances for plug-in hybrids, EVs and other advanced technologies. Trump's plan would eliminate the use of credits — a sore point for automakers.

The context: With smaller, turbocharged engines, lighter body materials and other fuel-efficient technologies, automakers have been improving fuel economy and reducing CO2 tailpipe emissions by about 2% per year, according to the EPA.

  • Adding more hybrids and electric vehicles to the mix should increase the rate of improvement.

But, but, but: Trump argues that if fuel efficient technologies are too expensive, consumers won't trade in their older cars and will miss out on the life-saving benefits of new safety features like automatic emergency braking.

  • In fact, safety ranks much higher than fuel economy on shoppers' lists of considerations, according to virtually every consumer survey.

What to watch: Although industry forces are lining up against the president's policy proposal, Trump's ire against California could be stronger. If so, the fight will no doubt wind up in court — exactly what automakers fear.

Go deeper: Emissions credits are like gold for automakers

Go deeper

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Annelise Capossela/Axios

  1. Politics: Trump calls Fauci a "disaster" on campaign call.
  2. Health: Coronavirus hospitalizations are on the rise — 8 states set single-day coronavirus case records last week.
  3. States: California to independently review FDA-approved coronavirus vaccines
  4. Wisconsin judge reimposes capacity limit on indoor venues.
  5. Media: Trump attacks CNN as "dumb b*stards" for continuing to cover pandemic.
  6. Business: Consumer confidence surveys show Americans are getting nervousHow China's economy bounced back from coronavirus.
  7. Sports: We've entered the era of limited fan attendance.
  8. Education: Why education technology can’t save remote learning.
Dion Rabouin, author of Markets
2 hours ago - Economy & Business

The 2020 holiday season may just kill Main Street

Illustration: Eniola Odetunde/Axios

Online retail and e-commerce have been chipping away at brick-and-mortar businesses over the years but the combination of the coronavirus pandemic and the 2020 holiday season may prove to be a knockout blow.

State of play: Anxious consumers say financial concerns and health worries will push them to spend less money this year and to do more of their limited spending online.

California to independently review FDA-approved coronavirus vaccines

California Gov. Gavin Newsom. Photo: Justin Sullivan/Getty Images

California will "independently review" all coronavirus vaccines approved by the Food and Drug Administration before allowing their distribution, Gov. Gavin Newsom (D) announced at a news conference Monday.

Why it matters: The move that comes days after NAID director Anthony Fauci said he had "strong confidence" in FDA-approved vaccines could cast further public doubt that the federal government could release a vaccine based on political motives, rather than safety and efficacy.