Here's Why NHTSA's Latest Move Is a Massive Victory For Tesla

The U.S. National Highway Traffic Safety Administration reinstated a sharp increase in penalties for automakers not fulfilling fuel efficiency norms for model years 2019 and beyond, Reuters reports.

NHTSA hiked the penalty to $14, up from $5.50, for every 0.1 miles per gallon new vehicles fall short of required fuel-economy standards, multiplied by the number of noncomplying cars sold for the 2019 to 2021 model years. NHTSA has raised the penalty to $15 for the 2022 model year.

NHTSA's move was a big win for Tesla Inc TSLA as it could cost other automakers hundreds of millions of dollars or more in penalties, Reuters notes.

NHTSA saw the 2019 model year owe $294 million at the new rate, up from $115.4 million under the prior rate.

NHTSA looked to raise the accountability of manufacturers for violating the nation's fuel economy standards and incentivize manufacturers to make fuel economy improvements.

Automakers whose vehicles accomplished higher fuel economy beyond the threshold could sell credits to automakers that did not meet Corporate Average Fuel Economy rules, as per Reuters.

Price Action: TSLA shares traded higher by 6.07% at $1,072.42 in the premarket on the last check Friday.

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