A Strange Year for Automakers and Unexpected Changes
This year has turned out to be strange for automakers, but many of them just received an unexpected break. The U.S. Environmental Protection Agency (EPA) has effectively canceled fines for non-compliance with fuel economy targets. This move could easily trigger a new surge in production of high-margin full-size pickups and SUVs.
Less regulatory pressure means engines don’t have to become cleaner or more efficient. However, General Motors CEO Mary Barra insists that the company will continue to move in this direction anyway.
She claims that GM will improve every internal combustion engine it invests in, regardless of what the rules say. The question is whether this commitment will hold when the market leans even more heavily in favor of large, profitable “gas guzzlers.”
How Long Will Progress Last?
Innovation is undoubtedly key for all automakers, so the promise of continued development looks attractive on paper. This is exactly what Barra stated at the New York Times DealBook Summit on Wednesday:
Every engine we invest in, we work to achieve significant improvement.
It is obvious that stricter fuel economy standards have led to enormous costs for automakers. A recent report indicates that many of the major recalls over the past two years may be linked precisely to these standards. The question of whether GM and other automakers will continue to insist on fuel savings as decisively remains open.
What’s the Incentive Now?
For decades, automakers have deliberately steered consumers towards larger SUVs and trucks because they bring the highest profit and have the least stringent fuel economy standards.
It is unclear why this strategy should change now, when the fines have disappeared altogether. Nevertheless, in Barra’s opinion, something positive may come from the new rules.
Barra also supported Trump’s move to strip California of its authority to set stricter air purity standards, calling instead for a single national standard that does not “get ahead of the consumer.” However, automakers themselves helped create today’s SUV-oriented demand, so this argument has limited force.
Softer rules also relieve pressure on electric vehicles, which is a convenient change for GM, as sales fell after tax credits expired and its electric lineup remains unprofitable. Barra insists that the company is still committed to this direction.
She was more positive about tariffs, calling the recent policy “more of a level playing field” after years of unequal barriers. GM may continue to improve engines, but with loosened rules and a market built around giant SUVs, it’s hard to imagine Detroit giving up its biggest profit margins.
Mary Barra’s statement about improving internal combustion engines against the backdrop of relaxed federal standards looks like an attempt to balance public sustainability commitments with harsh business reality. Historically, the auto industry has shown that without external regulatory pressure, short-term profitability becomes the priority, not long-term investment in clean technologies. Market dynamics, where large SUVs and pickups provide the bulk of revenue, create a powerful incentive to focus on them, especially when penalties for non-compliance with environmental standards disappear. Therefore, real progress in engine efficiency in the coming years is likely to be determined not by the public promises of management, but by whether competitors such as Tesla or European brands actively developing electric vehicles can create sufficient pressure through demand.