Ford CEO Jim Farley celebrates $1 billion 'common sense victory'

Automakers paid a steep price to satisfy the Biden administration's fuel efficiency goals.

While some of that price was used to improve fuel standards, automakers also faced steep penalties for a litany of violations.

Ford’s total U.S. sales by year:

• 2024: 2.08 million vehicles sold, +4.2%
• 2023: 1.99 million vehicles sold, +7.1%
• 2022: 1.77 million vehicles sold, -2.2%
• 2021: 1.9 million vehicles sold, -6.8%
  Source: Best-Selling Cars

Under the Biden administration, General Motors and Stellantis faced fines of hundreds of millions of dollars over emissions rules.

Last July, Reuters reported that General Motors agreed to pay a $145.8 million penalty and forfeit emission credits worth an additional $300 million following a multi-year investigation that found 5.9 million vehicles from the 2012-2018 model years were emitting, on average, more than 10% higher carbon dioxide than GM’s initial compliance reports claimed.

GM also admitted that through 2023, its total costs expensed in connection with emission compliance were about $450 million.

Last year, Stellantis paid $191 million in civil penalties for failing to meet fuel economy requirements for 2019 and 2020, following nearly $400 million in fines paid from 2016 through 2019, according to Reuters.

Ford paid a high price for fuel efficiency under Biden

Under Biden, cars and trucks were required to have an average fuel economy of 49 miles per gallon by model year 2026 as part of the administration's plan to reduce carbon emissions by between 50% and 52% below 2005 levels by 2030.

At the time, Ford said it would face $1 billion in fines from 2027 to 2032 under Biden's rules.

Related: Ford loses $300 million fraud case in California

Earlier this year, the Department of Transportation, under President Doland Trump, declared that the Biden administration had exceeded its authority when calculating emissions standards by inflating the expected adoption of electric vehicles.

As of July, Congress eliminated CAFE penalties, meaning automakers will no longer face government fines for not meeting fuel economy standards.

On Wednesday, Ford CEO Jim Farley was in the Oval Office as Trump unveiled plans to rescind the fuel-economy standards established by Biden.

Ford CEO praises 'common sense' fuel economy rules that will save the company money

The U.S. government’s Corporate Average Fuel Economy (CAFE) rules for automakers codify the average fuel efficiency for their fleets.

On Wednesday, Trump announced the U.S. is returning CAFE standards "to levels that can actually be met with conventional gasoline and diesel vehicles," calling the Biden administration's standards "unrealistic."

Ford Model e losses by year

• 2025: $3.6 billion (year to date)
• 2024: $5.1 billion
• 2023: $4.7 billion
• 2022: $2.2 billion

Ford CEO Jim Farley was in the White House for the announcement.

"Today is a victory for common sense and affordability," Farley said, standing while the president sat next to him.

While Farley reminded the world that 77% of Fords are manufactured in the U.S. and that the company was second in U.S. EV sales and first in internal combustion sales, he also called the new CAFE rules "the right move."

"This allows us to invest in affordable vehicles made in the U.S., which we will take the lead on, and will allow us to make vehicles more affordable," Farley said.

Trump helps Ford with major financial headwind

While the Trump administration's policy on tariffs will cost Ford over $1 billion this year, the company expects to save a bunch of money with the new emissions standards.

Ford already has a strategy in place to shift production capacity from lower-selling, negative-margin EVs to higher-margin and more popular vehicles like pickups and SUVs.

Related: Ford CEO Jim Farley gets real about his retirement

That strategy includes a slower rollout of electric vehicles and a greater focus on hybrids.

Model e lost $1.4 billion in the third quarter alone, due to spending on new products and increased competition, according to Ford.

Farley stated during Ford’s Q3 earnings call that the company now anticipates EV adoption to account for approximately 5% of the U.S. market. However, he anticipates that number to increase in the near future as EVs become more affordable.

Stellantis chairman says 'lower emissions standards' or risk 'irreversible decline'

While automakers are receiving a break on emissions in the U.S., standards in Europe remain stringent.

On Nov. 25, Stellantis Chairman John Elkann advocated for a change to the European Union’s rules on auto emissions, warning that failing to do so could choke the industry.

To help push manufacturers and consumers, European Union officials have targeted climate neutrality (net-zero greenhouse gas emissions) by 2050, with interim targets to reduce net greenhouse gases by 66.2% and 72.5% by 2030, compared to 1990 levels.

According to Reuters, Elkann stated that the auto industry has its own package of proposals, which it claims will provide more flexibility in meeting emissions targets.

“There is another way to cut emissions in Europe in a constructive and agreed way, restoring the growth we have lost and people’s needs,” Elkann said. If it doesn’t, he says, the European auto industry risks an “irreversible decline.”

The European Commission is scheduled to present a package of proposals for a scheduled review of emission standards on December 10.

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