New EPA Regs Announced, Cap 1 Drops Floorplans, Electric Burritos

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Welcome to Wednesday as we cover the newly announced EPA regulations. We also talk about Capital One’s decision to dropping floor plan financing, as well as Chipotle going all electric.

• The Biden Administration has officially released the strictest tailpipe emissions regulations in history. The EPA’s new standards for light-duty vehicles cover the 2027-2032 model years 

  • The EPA states a taxpayer savings of over one trillion
  • The regulations focus on grams of carbon dioxided per mile
  • In a Wednesday blog post, Alliance for Automotive Innovation CEO John Bozzella called the EPA's proposal "aggressive by any measure."
    • "By that I mean it sets automotive electrification goals in the next few years that are … very high," he wrote, citing that the proposal exceeds both Biden's 50 percent ZEV sales target and another goal outlined in a governmentwide transportation decarbonization plan.
    • "How will EPA justify exceeding the carefully considered and data-driven goal announced by the administration in the executive order and the more recent national blueprint?" Bozzella asked. 
• After over 25 years, Capital One is winding down floorplan lending but will continue its auto finance operations citing a renewed focus on their core business.. Floorplan lending comprised about 1% of the bank's commercial business and was not considered core to its long-term priorities.
  • Low interest rates in the 2010s and early pandemic period allowed dealers to profit from floorplan lending as automakers subsidized loans for new vehicle purchases.
  • In 2015, the average dealership made $109,497 in floorplanning due to favorable borrowing costs.
  • As interest rates rose in 2018, floorplanning became a cost, with the average dealership expense reaching $82,979 in 2019.
  • With rising interest rates and higher car prices expected, dealerships may see floorplanning revenue dip and the practice potentially becoming a cost again.
• The auto industry isn’t the only one focusing on a move to electric. Chipotle is taking significant steps towards sustainability by piloting three all-electric restaurants powered by renewable energy and include the elimination of gas usage. The changes include
  • Electric grills: Chipotle is replacing gas-fired grills with electric ones to reduce energy consumption and carbon emissions.
  • Solar panels: The new restaurant design includes solar panels to generate clean energy.
  • Heat pump water heaters: These energy-efficient heaters will replace traditional gas water heaters.
  • Shading built into the facade: The design incorporates shading elements to reduce the need for air conditioning, lowering energy consumption.

Join Paul J Daly and Kyle Mountsier every morning for the Automotive State of the Union podcast as they connect the dots across car dealerships, retail trends, emerging tech like AI, and cultural shifts—bringing clarity, speed, and people-first insight to automotive leaders navigating a rapidly changing industry.

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