GM drops out of air pollution lawsuit against California

General Motors says it will no longer support the Trump administration in legal efforts to end California's right to set its own clean-air standards.

In a letter Monday to environmental groups, GM CEO Mary Barra said the company will pull out of the lawsuit, and urged other automakers to do so. She said the company agrees with President-elect Joe Biden's plan to expand electric vehicle use.

"We believe the ambitious electrification goals of the President-elect, California, and General Motors are aligned, to address climate change by drastically reducing automobile emissions," Barra said in the letter.

Last week, GM said it is testing a new battery chemistry that will bring electric-vehicle costs down to those of gas-powered vehicles within five years.

Barra sent the letter after a Monday morning conversation with Mary Nichols, head of California's Air Resources Board, the company said. The board is the state's air pollution regulator.

Nichols called GM's announcement good news. "I was pleased to be in communication with Mary Barra again," she said. "It's been a while since we had talked."

The news helped to push GM's shares up 4% Monday to close at $44.77. Earlier in the day, the stock hit $45.16, its highest level in more than two years. GM's stock has more than doubled in value since April.

Wendy Wendlandt, acting president of Environment America, one of the recipients of the letter, urged other carmakers to follow GM.

"We cannot address climate change without phasing out gas-powered cars, and GM embracing the promise of electric cars goes in the right direction," she said in a statement.

The White House had no immediate comment Monday.

Ron Klain, Biden's incoming chief of staff, wrote on Twitter that he is glad to see the president-elect's leadership "is already encouraging progress."

Last year General Motors, Fiat Chrysler, Toyota and 10 smaller automakers sided with the Trump administration in a lawsuit over whether California has the right to set its own standards for greenhouse gas emissions and fuel economy. The companies said they would intervene in a lawsuit filed by the Environmental Defense Fund against the Trump administration, which has rolled back national pollution and gas mileage standards enacted while Barack Obama was president.

The group called itself the "Coalition or Sustainable Automotive Regulation" and also included Nissan, Hyundai, Kia, Subaru, Isuzu, Suzuki, Maserati, McLaren, Aston-Martin and Ferrari.

"With our industry facing the possibility of multiple, overlapping and inconsistent standards that drive up costs and penalize consumers, we had an obligation to intervene," John Bozzella, CEO of Global Automakers and spokesman for the coalition, said at the time.

Toyota, one of the big automakers in the coalition favoring the Trump standards, said Monday it is reconsidering its position. In a statement, the company said it has supported year-over-year increases in fuel economy standards, and that it joined the coalition because most other automakers agreed there should be a single U.S. standard.

"Given the changing circumstances, we are assessing the situation, but remain committed to our goal of a consistent, unitary set of fuel economy standards applicable in all 50 states," Toyota said.

The initial move put the coalition automakers at odds with five other companies — BMW, Ford, Volkswagen, Volvo and Honda — that backed California and endorsed stricter emissions and fuel economy standards than proposed by the Trump administration.

But the coalition's stance was not so straightforward. For instance, although it opposed California, it still wanted Trump and the state to compromise on one national regulation.

In September of 2019, Trump announced his administration would seek to revoke California's congressionally granted authority to set standards that are stricter than those issued by federal regulators.

The move came after Ford, BMW, Honda and Volkswagen signed a deal with the California Air Resources Board, which had been at odds with the Trump administration for months.

Many automakers have said in the past that they support increasing the standards, but not as much as those affirmed in the waning days of the Obama administration in 2016. Under those requirements, the fleet of new vehicles would have to average 30 miles per gallon in real-world driving by 2021, rising to 36 by 2025. Those increases would be about 5% per year. The Trump administration's plan increased fuel economy by 1.5% per year.

Automakers say that because buyers are switching to larger trucks and SUVs, many companies would not be able to meet the stricter standards.

Earlier this year, California set an even more ambitious goal, with Governor Gavin Newsom pledging to end sales of gas-powered vehicles in the state by 2035. The move would reduce the state's greenhouse gas emissions by one third.