Ford Gets Multibillion Gift

Apparently, new cutbacks in emissions regulations will add billions of dollars to the bottom lines of Ford Motor Co. (NYSE: F | F Price Prediction) and its rivals. This could help offset the billions of dollars they have invested in electric vehicles (EVs). And it may reduce those investments in the future.

Bloomberg reports that the Trump administration will relax rules on vehicle emissions. The move takes away many of the pollution targets that have been in place for years. It also means that EV production can drop because those gasoline-powered car emissions rules will sunset.

The Biden administration set strict rules last year to lower emissions by billions of tons, which it said cut healthcare costs by $13 billion and would trigger “$62 billion in reduced annual fuel costs, and maintenance and repair costs for drivers.”

The Gift

Ford CEO Jim Farley summed up the effect of the new regulations when he commented that the change “has the potential to unlock a multibillion-dollar opportunity over the next two years.” Detroit has recently backed away from EV manufacturing, which had made automakers retool much of their companies to, among other things, compete with Tesla. That goal will become much less important.

The change comes at about the same time that the Trump administration cut the $7,500 tax credit that came from EV purchases. There has been anxiety that, after this expired on September 30, EV sales would crater. There had already been doubt that Americans were buying EVs in rising numbers. Ford’s overall U.S. EV sales have been about 4% of all unit sales through the first eight months of the year.

The change also comes at a point when gasoline prices have fallen sharply over the past five years. This gives drivers another reason to stay away from EVs. Tight refinery production and Russia’s invasion of Ukraine pushed the average price of a gallon of regular nationwide to $5.10 in July 2022. The AAA Fuel Price tracker put that number at $3.20 yesterday. As crude prices continue to fall, that number could go lower.

Ford said it would lose $5 billion this year in its EV unit. It has already invested billions in its quest to be a major EV force in America. The need to race toward that target has become much less important.

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