DETROIT: President Donald Trump’s push to cut federal sales incentives and roll back emissions standards is shaping up to be a multibillion-dollar gift to Detroit’s automakers as they shift investments into petrol-fuelled cars.
General Motors Co (GM) last week said it would cut electric-vehicle (EV) production plans at two factories as it overhauls a third plant to make petrol-fuelled pickups, instead of battery-powered trucks.
Ford Motor Co is moving funds from a cancelled three-row electric sports utility vehicle to future internal combustion engine vehicles and hybrids, while Jeep-owner Stellantis NV is resurrecting the thirsty Hemi V-8 engine.
Although not yet finalised, the deregulatory push is clearing the way for Detroit’s legacy automakers and their traditional rivals to reallocate billions of dollars earmarked for EVs and other costs linked to pollution rules.
GM has spent US$3.5bil since 2022 purchasing so-called regulatory credits to help the company meet fuel economy and tailpipe emissions requirements – a less-needed currency if Trump’s policies stick.
Ford has similarly cut its own credit-purchase commitments by nearly US$1.5bil this year alone, money it now plans to reallocate to petrol-powered models and hybrids.
The shift in policy “has the potential to unlock a multibillion-dollar opportunity over the next two years,” Ford chief executive officer Jim Farley recently told analysts.
Trump’s US$3.4 trillion fiscal package sunsets the US$7,500 tax credit for EV buyers on Sept 30. It also zeroed out fines faced by automakers that fell short of fuel-economy mandates, negating the need to buy credits under those rules.
Stellantis paid US$190mil in penalties in each of the last two years.
Eliminating the fines “will save us money in 2026 and beyond for sure,” GM chief financial officer Paul Jacobson told investors last month.
Separately, the US Environmental Protection Agency (EPA) has proposed rescinding stringent rules limiting tailpipe greenhouse gas emissions from cars and the president signed legislation effectively terminating similar regulations set by California.
“The EPA’s decision and their posture has really changed a lot in the United States,” Farley said on the company’s second-quarter earnings call.
Farley said he expects the biggest beneficiary will be the company’s Ford Blue division that builds internal combustion engine vehicles and hybrids.
The unit “has carried a lot of the compliance burden” under the previous emissions regulations.
The carmaker is in the process of retooling its plant in Oakville, Ontario, to make Super Duty F-Series pickups starting next year. The factory had been in line to produce EVs until Ford scrapped that plan last year in response to sluggish demand for battery-powered models.
Critics have assailed Trump for attacking policies to curb pollution from automobiles, one of the largest contributors of planet-warming emissions.
“The EPA is revoking the biggest single step any nation has taken to save oil, save consumers money at the pump and combat global warming,” Dan Becker, director of the Centre for Biological Diversity’s Safe Climate Transport Campaign, said in a July statement.
But automakers blasted the standards, arguing they were so stringent that companies were being pushed to sell more plug-in models than the market would bear.
“I would be surprised if there aren’t fewer EV retailers or EV sellers in the next four to five years,” Jacobson said at a JPMorgan conference.
GM believes it can capture a bigger slice of the EV market as rivals pull out, but the automaker is happy to do so at a slower rate. — Bloomberg
