Elon Musk Pushes For Harsher Fuel Economy Penalties

Elon Musk is a controversial figure. He will say and do just about anything on his mind no matter what it does to Tesla stock prices. Love him or hate him, no one can deny that Musk is more than willing to do what he can to give his electric vehicle company a competitive advantage.

According to a report from Reuters, Musk is putting pressure on the Biden administration and a U.S. appeals court to increase penalties for automakers not meeting fuel economy requirements set by the government.

Why are Elon Musk and Tesla pushing the government to push harsher financial penalties for fuel economy standards? The answer comes down to money, as usual.

Tesla sells “credits” to other automakers to help them reach fuel economy requirements set by the U.S. government. Elon Musk says those credits are now less valuable because of the Trump administration easing penalties. In essence, because the U.S. government is not imparting harsh penalties for manufacturers falling behind vehicle emissions standards, those automakers feel less compelled to buy credits from Tesla.

Tesla had a meeting with the National Highway Traffic Safety Administration (NHTSA) on August 30th, 2021. That meeting may have been when Musk pushed for the agency to bring back steeper fines for automakers lagging behind the regulations.

On August 18th, the NHTSA suggested that they may increase penalties for “prior model years” for automakers who are failing to meet the requirements, but they would wait to hear from the public on the matter first.

Automakers have pushed back, suggesting that increasing fines could cost them as much as 1 billion dollars annually when combining the penalties and increased prices for credits to bring themselves back to compliance.

Elon Musk has a love-hate relationship with the government

Elon Musk at SpaceX
Elon Musk at SpaceX | Yichuan Cao/NurPhoto/Getty Images

In this instance, Elon Musk and Telsa are reaching out to the government to get aid from them essentially. Should the NHTSA cave to Tesla’s requests, the EV company is bound to increase the company’s profits and raise their stock price once the market knows that competitors will come to them to buy credits at a higher rate.

However, things between Elon Musk and the U.S. government have not always been so symbiotic.

While the NHTSA might be considering Tesla’s suggestion about these penalties, the government agency is also investigating the company due to growing safety concerns.

The NHTSA is worried about Telsa’s “Autopilot” autonomous driving technology and its impact on vehicle safety. There have been several crashes involving Tesla vehicles in which Autopilot has been a suspected cause.

Elon Musk has defended Autopilot against criticism of its safety, but that is not stopping the NHTSA from looking into the matter further.

The National Transportation Safety Board (NTSB) is also looking into the possibility of Tesla batteries leading to fires after a crash. There are three NTSB agents currently in Flordia investigating a Tesla Model 3 crash that claimed two lives after the EV hit a tree and burst into flames.

Tesla, Elon Musk, and the U.S. government seem to have a very complicated relationship.

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