In May, Stellantis informed its nationwide dealer body that it would need to adjust its vehicle allotment formula based on whether a state followed California Air Resources Board (CARB) emissions rules. At the moment, 14 states and the nation’s capital adhere to CARB rules. They are: Colorado, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and Washington, D.C. The backstory’s a bit involved with this one, the result is Stellantis has greatly reduced or cut off shipments of gas-only vehicles to CARB states, and shipping its PHEVs to CARB states. Conversely, non-CARB states are getting the gas-only models and few if any PHEVs.
To put it plainly, that means a lot of Jeep 4xe trims going to Pennsylvania, for example, while gas-only Jeep trims and few if any PHEVs go to neighboring Ohio and West Virginia. If a Pennsylvania buyer wants a non-hybrid Jeep, the buyer needs to place an order and wait for it to be shipped to PA, or cross the state line.
The Delaware Business Times first reported on the issue after finding out a dealer in Delaware “said he received notification last week from the brand’s parent company, Stellantis, that he could not receive regular shipments of two popular Jeep gasoline-powered models to stock on his lot ‘because we are considered a ‘California state.'” The models cited were the two-door Wrangler Sport and Wrangler Rubicon, and the four-door Wrangler Sport, Sahara, and Rubicon. Instead, he’d be getting plenty of the Wrangler 4xe and Grand Cherokee 4xe. The Dodge Durang R/T and SRT trims also joined the dealer’s forbidden list. As the story suggests, Delaware hasn’t adopted CARB standards yet. State governor John Carney has said he plans on doing so.
Of note, this isn’t about the new zero-emissions-vehicle standards coming into force in 2026. The roots of this go back to 2019, when California was duking it out with the Trump administration over the ability to set its own emissions standards. The short story is that the Trump administration rolled back the ramp-up of fuel economy standards set by the previous Obama administration, and had revoked California’s EPA waiver allowing the state to set its chosen levels. California went back to the Obama administration standards, then signed agreements with five automakers — Ford, Honda, BMW, and Volkswagen Group of America initially, then adding Volvo — that agreed to abide by a slightly relaxed set of those Obama-era standards for the years 2021 through 2026. The deal was called the California Framework.
Stellantis wouldn’t be an official entity until a year later. The automaker asked California in 2021 if it could join the agreement, California turned down the request, saying it wasn’t accepting more parties.
That’s the history, which brings us to the allocation matter today. The agreement between CARB and the five automakers contained a clause that allowed the automakers to calculate their CARB-state emissions levels using their nationwide sales, not just their sales in CARB states. In the contract’s section on Ford, a paragraph 29 states, “Ford agrees to maintain an average yearly reduction in GHG emissions from its fleet sold nationwide (light-duty passenger cars, light-duty trucks, and medium-duty passenger vehicles) for model years 2021 through 2026.” That is, Ford’s sales of the F-150 Lightning and Mustang Mach-E nationwide help offset the emissions of the standard F-150s and Expeditions Ford sells in CARB states. The other four California Framework automakers can do the equivalent with their model lines. Carmakers not a party to the framework have to do the emissions math based only on sales in California and the other 14 states. GM and Toyota aren’t parties to the 2019 framework and at first challenged California’s rulemaking ability. Both have since agreed to support California’s efforts.
Stellantis, as has been discussed often before, has perhaps the least fuel-efficient range of any full-line automaker selling in the the U.S. This is even more trying for the automaker since Stellantis’ best sellers are its least fuel efficient vehicles. Seeking to avoid fines or other punitive measures, the company’s reworking allotments so that the most fuel efficient vehicles it has are sold in CARB states. The carmaker also told dealers it “may choose not to advertise some trimlines in certain states at certain times, which may impact your ability to order or receive shipments of those trimlines.”
The automaker in its memo to storefronts “told dealers in April that the CARB states are enforcing tougher greenhouse gas standards retroactively to 2021 model year.” Dealers weren’t expecting this, and don’t like the idea of watching some customers leave their states to buy chosen models. One dealer told Automotive News, “I think many of us expected when the CARB rules actually kick in in 2026 in a meaningful way that we’d have some allocation challenges, [but the] fact that it’s happening in the middle of 2023 is a bit of a surprise.” That dealer went from an allocation of gas-only Wranglers and about 15 Wrangler 4xe units each month to getting no gas-only Jeeps and 80 Wranger 4xe units one month.
This seems like a misunderstanding on the dealer’s part. Automakers signed the framework in 2019, it has always applied to the span from 2021 to 2026. Stellantis knew enough about the framework in 2021 to ask about joining. So why is Stellantis saying it’s retroactive, why are dealers surprised now, and why did Stellantis wait until April 2023 to enforce a new CARB-state model mix?
Another company statement explained, “The communication to our dealers simply acknowledges the reality that we may need to adjust vehicle allocations among the California and Federal states to ensure that Stellantis complies with different standards in the California states,” and, “We will continue to support our dealer network as they work to meet the needs of our consumers during this time, and we will continue to seek a level playing field for our company and our dealers. The ultimate solution rests with a program that allows compliance based on sales in all 50 states.”