The EPA Is Threatening California's Federal Funding Now

What California traffic looked like in 1967, when the California Air Resources Board was signed into existence by none other than Ronald Reagan.
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The United Auto Wokers’ strike continues today, but there’s a lot of car news around the rest of the world as well. All that and more in The Morning Shift for Wednesday, Sept. 25, 2019.

1st Gear: EPA Is Leaning On California’s Highway Funding In Fuel Economy Battle

The fight over fuel economy between the Trump Administration’s EPA and California’s Air Resources Board is getting good, y’all, moving on from posturing to threatening actual money. The EPA is going after California’s highway funds, which is how the Feds can really lean on you if you’re a state.

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The Detroit News has the details:

“California has the worst air quality in the United States, with ... 34 million people living in areas that do not meet National Ambient Air Quality Standards — more than twice as many people as any other state in the country,” EPA Administrator Andrew Wheeler wrote in a letter to CARB Chairwoman Mary Nichols.

“As evidenced by the EPA’s recent work on interstate air pollution issues ..., California’s chronic air quality problems are not the result of cross-state air pollution or this administration’s regulatory reform efforts,” Wheeler continued.

CARB Executive Officer Richard Corey said the EPA’s letter threatening his state’s highway funding “contains multiple inaccuracies, omissions and misstatements. EPA has The agency cited a backlog in California’s State Implementation Plans, which states are required to provide to the EPA to demonstrate plans for complying with the federal Clean Air Act. Disapproval of a state implementation plan would allow the EPA to block California from receiving federal money and grants for transportation projects.

This is not unlike the anti-trust case going on at the same time against manufacturers trying to stick it out with consistency in California. The Feds will do anything they can to win here.

2nd Gear: Ford Is Giving Up On Taking India On Its Own, Partners With Mahindra

The Indian car market is no joke. It burned Volkswagen back when it tried to move in with Suzuki, and now it has burned Ford, as Bloomberg reports:

Ford Motor Co. is set to transfer most of its assets in India to a joint venture with Mahindra & Mahindra Ltd. after failing to make meaningful inroads for more than two decades in the world’s fourth-largest automobile market, people with knowledge of the matter said.

Mahindra, one of India’s largest automakers, will own 51 percent of the new entity, said the people, who asked not to be identified discussing the confidential plan. Ford will get equal voting rights and board representation, one of the people said. The venture, to be announced as soon as next week, doesn’t include Ford’s global business services division or an export-focused engine plant in Sanand.

Ford’s compensation is likely to be far below the $2 billion it’s poured into India, only to achieve market share of less than 3 percent. The deal keeps Ford in the heavily populated market while letting it share the financial burden with Mahindra. Ford CEO Jim Hackett is leading an $11 billion restructuring and paring money-losing overseas operations.

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Ford and Mahindra had previously tied up, but going to a joint-venture is a big change of attitude.

Wow, Ford is really killing it right now!

3rd Gear: Aston Is Going High-Risk To Get Its SUV Online As Brexit Looms

Aston Martin is in an awkward situation. It still hasn’t put its DBX SUV into production, which it hopes will save the company’s bottom line, roughly one thousand years after Porsche did the deed with the Cayenne.

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But Brexit—and a hard one— is looming, too. So Aston has to hold on for the DBX, but it can’t wait for anything to happen as Brexit could screw everything up. What’s that leave it to do? Drum up as much money as it can now, while the going is, uh, not great but maybe not awful.

And indeed, it just went into some high-risk bonds to the tune of $150 million, as Bloomberg notes in a wire report:

Aston Martin Lagonda Global Holdings Plc raised $150 million in a steeply priced bond sale, responding to liquidity concerns as the luxury carmaker bets that a future SUV model will boost cash flow.

The debt issue comes with a 12% coupon, double the cost of Aston Martin’s existing bonds. A further $100 million of notes could be available next year, according to a statement Wednesday, though only if the Gaydon, England-based company achieves specific sales targets for the new DBX.

[...]

Standard & Poor’s cut its long-term rating on Aston Martin debt, already at junk level, one notch to CCC+, saying the group has “reached the ceiling in terms of the amount of term debt and cash interest burden it can sustainably service.” S&P ascribed the debt a negative outlook, which it said reflects pressure on margins, high cash burn, and a leverage of 30 times 2019 earnings it described as very high given risks from Brexit, possible U.S. tariffs and the DBX launch.

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This is not a position I would want to be in, but that’s what Aston has to deal with. I hope it was having a good time back when all Aston was up to was stretching and tweaking the DB9 platform in various forms.

4th Gear: Renault: Oh Yeah, Fiat? Sure

It seems like a million years ago that Fiat Chrysler was talking up some mega-merger with Renault, but it wasn’t even a year ago. We’ve just been busy with, well, there’s a lot of news these days.

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Anyway, the boss at Renault woke up this morning and it must have come back to him in a flash, too, as Bloomberg notes in a wire report headlined, “Renault Chairman Would Be ‘Delighted’ to Rekindle Fiat Deal:”

Renault SA Chairman Jean-Dominique Senard said he would back a tie up with Fiat Chrysler Automobiles NV should another opportunity arise to get a deal.

If the project with Fiat “were to come back under conditions that are acceptable for all, I would be delighted,” Senard told French senators late Tuesday at a hearing in Paris, adding that there’s nothing currently “on the table.”

For the moment, any deal is “behind us,” he said. Renault shares fell as much as 1.2% in early trading Wednesday while Fiat dropped as much as 1.9%.

The Fiat merger proposal was called off in June after French government representatives on Renault’s board refused to sign off on the plan because the carmaker had failed to win the backing of its Japanese partners.

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Honestly I can’t keep track of anything Renault-related anymore. I’d prefer if it could un-merge with Nissan and go back to making incredibly boring midsize sedans on its own just so I don’t have to think about it ever again.

5th Gear: Japan Is Hosting A New Global Pledge: 10 Million Hydrogen Vehicles Over Next 10 Years

I have been told that hydrogen vehicles and infrastructure is all in the works for, oh, about 15 or 20 years now, but I won’t stop being obsessed with the news at every turn. The most recent development is a new international pledge coming out of Japan, promising new infrastructure and a ton of new vehicles. They’re not all cars, though, as the Japan Times clarifies:

Ministers and delegates from more than 30 nations, regions and organizations pledged Wednesday in Tokyo to introduce 10 million fuel cell vehicles, trucks, buses and other hydrogen-powered systems, as well as 10,000 hydrogen refueling stations, globally over the next 10 years.

That means around a 250-fold increase over the next decade, as the current number of fuel cell vehicles, forklifts, trains and ships is estimated to be around 40,000 globally, said Yoshinori Furukawa, director general of New Energy and Industrial Technology Development Organization’s advanced battery and hydrogen technology department.

That comprises about 10,800 FCVs across Japan, the United States and Germany, 3,000 fuel cell buses and trucks in China, and about 25,100 forklifts in Japan and the U.S., he added.

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I’ll take anything at this point. The planet is cooking.

Reverse: Onboard Warning Systems Were Ignored. Who Has Heard Of That Before?

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Neutral: What’s California’s Next Move?

If you’re running CARB, what is your next play at the EPA? How petty can you even be when Trump is on the other side?

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About the author

Raphael Orlove

Raphael Orlove is features editor for Jalopnik.