Ford, GM, and FCA put their faith in Trump and now they are trapped in a political fight they can't win (F, GM, FCAU)

  • Detroit automakers thought they had crafted a sweet deal with Donald Trump.
  • But GM, Ford, and FCA didn't count on Trump making fuel-economy regulations into a battle against California.
  • California is the biggest car market in the country, with $2 million in annual sales.

Shortly after Donald Trump was elected President, the Detroit big three automakers — General Motors, Ford, and Fiat Chrysler Automobiles — saw an opportunity.

Under the Obama administration, fuel economy standards for automakers' fleets were set to rise to 50 mpg, which would have crimped Detroit's desire to sell highly profitable pickup trucks and SUVs, compelling them to invest instead in slow-selling hybrids and electric vehicles. 

Trump wanted headlines about his reversals of what his supporters considered anti-business Obama policies, as well as hiring in the Midwestern states that he unexpectedly won in the general election. The automaker could do that. Presto! A Trump deal was quickly sealed, with the automakers getting exactly what they wanted.

RELATED: Consumer Reports' Top Picks for 2018: Best cars, trucks, and SUVs to buy

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Consumer Reports' Top Picks for 2018: Best cars, trucks, and SUVs to buy
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Consumer Reports' Top Picks for 2018: Best cars, trucks, and SUVs to buy

1. Compact car: Toyota Corolla

Price as tested: $20,650

Why it's here: "This practical, fuel-efficient sedan has all the virtues that small-car shoppers seek, backed by its strong reliability track record," the publication said in a statement. Consumer Reports praised the Corolla for its roomy interior, secure handling, superior ride, and solid 32 mpg fuel economy.

2. Compact green car: Chevrolet Bolt

Price as tested: $38,424

Why it's here: "We put the Bolt through our battery of rigorous tests and drove it thousands of miles, both at our test track and on public roads," Consumer Reports' director of automotive testing, Jake Fisher said in a statement. "With the ability to go up to 250 miles on a charge, the Bolt is a good option for someone who might never have considered an EV before."

3. Luxury compact car: Audi A4

Price as tested: $48,890

Why it's here: "The A4 shines by being sporty, luxurious, and polished in a competitive category," Consumer Reports wrote. "It's very satisfying to drive, with nimble, secure handling helped by its minimal body roll and responsive steering."

4. Midsize car: Toyota Camry

Price as tested: $26,364 — $28,949

Why it's here: Consumer Reports praised the Camry for its overall competence, new styling, and improved handling. The publication was also particularly impressed by the four-cylinder Camry's 32 mpg fuel economy as well as the Camry Hybrid's 47 mpg.

5. Large car: Chevrolet Impala

Price as tested: $39,110

Why it's here: "The Impala continues to be a gem among large cars, providing a driving experience that's akin to a luxury car," Consumer Reports gushed. Its staff was also impressed by the Impala's spacious, quiet, and well-appointed cabin.

6. Compact SUV: Subaru Forester

Price as tested: $27,145

Why it's here: "This is a practical, smartly packaged small SUV that emphasizes fuel economy, room, visibility, and reliability over trendiness or flash," Consumer Reports wrote.

7. Luxury Compact SUV: BMW X3

Price as tested: $53,745

Why it's here: "This luxury compact SUV combines driving enjoyment, comfort, slick technology, and utility in an appealing package," the publication wrote. "It's sharp, sporty handling encourages drivers to seek curvy roads."

8. Midsize SUV: Toyota Highlander

Price as tested: $41,169 — $50,875

Why it's here: The Highlander garnered praise for its good performance, fuel economy, and reliability. In addition, the three-row SUV's ability to handle eight occupants while remaining small enough to be easy to park also won the Highlander plaudits.

9. Minivan: Toyota Sienna

Price as tested: $38,424

Why it's here: "In this segment, the Sienna offers the best all-around package with a comfortable ride, an energetic powertrain, and respectable fuel economy," Consumer Reports wrote. "The spacious cabin features convenient folding seats and available seating for eight."

10. Full-sized pickup truck: Ford F-150

Price as tested: $52,535

Why it's here: "The F-150 tops the full-sized pickup truck category," the publication wrote. "The best-selling vehicle in America is an impressive workhorse that pulls ahead of the pack thanks to its weight-reduced design and fuel-efficient turbocharged six-cylinder engine."

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They forgot about one important wildcard, however: California.

Since the election, the Golden State and final-term Governor Jerry Brown have established themselves as a mega-resister to all things Trump. It's often noted that if California were a country, it would have the world's fifth largest economy. As it happens, that economy is supportive of immigration, has been a hotbed of innovation, and for decades has led both the nation and the globe in environmental regulations. 

The bottom line is that although California is far from environmentally pristine, citizens of the state love their much cleaner air and aren't in any mood to have Washington mess with it. 

The automakers are trapped in a political confrontation

The automakers, having sold many millions of vehicles in the country's biggest car market, are abundantly aware of this and assumed that their deal with Trump would not have led to a war with California. But they underestimated the President's enthusiasm for confronting his political enemies, a large number of whom have a view of the Pacific Ocean.

EPA head Scott Pruitt, no fan of California's tougher fuel-economy and emissions rules, is bristling for the fight. He argues that California should set the tone for the nation. But California disagrees, and it has the historic firepower to be confident in a battle: 12 additional states follow California's lead.

According to Bloomberg, California Air Resources Board chief Mary Nichols' aim "is to continue to link California’s clean-air rules with Washington’s, as the state has done since 2009."

But the publication quotes Nichols insisting that if Washington pushes for a change that deviates from what California wants, the state won't go along with it.

For the automakers, this is a nightmare: a $17-million annual sales market with two fuel-economy standards. GM, Ford, and FCA would have to build California versions of popular vehicles — and possibly versions for any state that adopts California's standards. 

Now they want a compromise that eases the implicit California requirements without pitting the state and its followers against the rest of the country. 

Trump and Pruitt don't have any chance of winning this war. The big three can exert considerable influence over the economies of Michigan and Ohio, and Californians will punish Detroit if the carmakers overplay their hand. The state's residents buy two million vehicles a year — and Detroit has for decades been forced to fight hard for its share against Japanese, German, and South Korean competitors.

The freak-out in Motown is getting palpable. The automakers were initially gleeful about Trump, but they neglected to inform the administration that California has been calling its own shots for years. Executives perhaps assumed Trump knew this. They were wrong, and now they're having to broker a new deal from a position of considerable weakness.

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