Ford CEO turns to Trump to help blunt EPA’s regulatory surge

Ford Motor company CEO, Mark Fields, a staunch Trump opponent during the presidential campaign, now wants the President Elect to help with EPA’s surprise decision to keep long term fuel economy targets in place.

A mid-term review of corporate average fuel economy (CAFE) targets set in 2012 kicked off earlier this year, but the timing of the agency’s recent decision to maintain the 54.5 mile-per-gallon goal reeks of politics, Fields claims.

For automakers, reaching 54.5 mpg means extra costs. To avoid this, Ford is prepared to turn to its election campaign sparring partner — President-elect Donald Trump — for help.

Meeting federally mandated CAFE (Corporate Annual Fuel Economy)  standards has become one of the huge cost factors to automakers not only in R&D costs and technology improvements, but in managing the fleet average.  If the new line high performance muscle cars are huge sellers, then this must be balanced with production of smaller, higher efficiency cars which may not be attractive to buyers in certain markets.  For example, the manufacture and sale of electric vehicles may allow an automaker to achieve the fleet standard, but will also likely result in a financial loss for the manufacturer.

The extra mileage mandated by the EPA means automakers will likely fill the gap with money-losing electric cars and pricey hybrids.  General Motors expects to lose $9,000 on every Chevrolet Bolt, so it’s not a recipe for profit.  While Ford has plans to expand its EV offerings, it does so tentatively.

To return auto worker jobs to the US, Trump and the automakers must take a combined approach to mitigate the higher costs associated with American labor.  Repealing Obamacare, dealing with union demands, corporate tax breaks and finally reeling in the EPA’s CAFE standards would be among the keys to returning manufacturing to the US.

Trump has already selected Myron Ebell of the Competitive Enterprise Institute as his EPA transition chief.  Ebell, referred to as a “climate skeptic” in the MSM, is no doubt on board with Trump’s longstanding charge that the EPA does more harm to business and American interests than can possibly be gained by arbitrary environmental regulations.  For the auto industry, I think that we have long since reached the point of diminishing returns on cost vs. benefit on fuel efficiency and emissions.  Ebell, and the appointment of Elaine Chao as Transportation Secretary with the obvious link to the legislative branch through her husband Mitch McConnell, gives Trump a one-two punch to boost US auto manufacturing.

John Smith is the pen name of a retired US intelligence officer

Thomas Lifson adds:

The CAFE standards have driven small car manufacturing investments into Mexico. I know for a fact from my consulting work that it is virtually impossible to make money manufacturing small cars in the United States. Ford invested in a massive factory in Hermosillo, Mexico to manufacture Ford Escorts.  This model is essential to Ford’s ability to sell much more profitable large cars and SUVs.