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US Senate Republicans propose eliminating fines on automakers for fuel efficiency

The U.S. Senate Republicans proposed Thursday eliminating fines for failing to meet Corporate average fuel economy rules as part a tax bill that would affect a broad range of industries. This is the latest step to make it easier for automakers build gas-powered cars.

In 2018, Chrysler's parent company Stellantis, which is owned by Chrysler, paid nearly $400 million in penalties between 2016 and 2019. GM paid $128.2 millions in penalties between 2016 and 2017.

The proposal makes the emission credits Tesla sells less valuable, as competitors won't be required to pay Tesla for meeting requirements. According to the lawmakers, automakers would save $200 million. GM and Chrysler didn't immediately respond.

The U.S. House Republicans pursue similar goals, but in a different way. Last month, they proposed to repeal planned increases in fuel economy standards as well as vehicle emission rules adopted by the Biden administration.

The House bill also eliminates a $7500 tax credit on new electric vehicles. It imposes a $250 annual fee for EVs to cover road repair costs. And it phases out the EV battery production credits by 2028.

Both chambers voted against California's historic plan to stop selling gasoline-only cars by 2035, which was adopted by 11 states that represent a third in the U.S. automobile market. This bill is currently waiting for the signature of U.S. president Donald Trump.

Transportation Department will declare that the fuel economy regulations issued by Biden went beyond government legal authority in including EVs.

The National Highway Traffic Safety Administration announced last year that it would increase fuel economy standards to an average of 50,4 miles per gallon (4.67 litris per 100km) by 2031. This is up from 39.1mpg for light duty vehicles. The warning warned that the auto industry would face fines totaling $1.83 billion by 2031.

(source: Reuters)