International Political Strategy and the Climate Crisis: The CAFE Clash

This case presents the challenges facing BMW and Toyota in choosing how to address the divergence between the Trump administration and the State of California’s standards over U.S. Corporate Average Fuel Economy (CAFE) standards. The case provides relevant information about the two firms and recent developments in the auto industry. The case leads the students to consider the political causes for the higher international pressure on automakers to reduce carbon dioxide emissions relative to the stance of the U.S. government; and the domestic legislative showdown between the state of California and the federal government on vehicular emissions. Students are asked to develop a detailed integrated market and lobbying strategy for BMW and Toyota based on a range of concepts, data, and frameworks germane to courses in business, policy, and society.

At the heart of the case study are the constantly evolving challenges facing two global automakers and their operations in the United States. The case begins by presenting the international landscape, particularly in Europe, with respect to climate change. It then provides relevant information about the two firms and recent developments in the auto industry. It also presents the broader political and economic landscape surrounding the auto industry, particularly with the advent of electric vehicles and changing consumer preferences. To do so, the case lays down the current political climate in the United States; the threat of climate change and mounting international pressure on automakers to reduce carbon dioxide emissions; and the domestic legislative showdown between the state of California and the federal government on vehicular emissions.