Ford CEO calls for reducing fuel economy targets

Posted on 30 Jan 2017 by Michael Cruickshank

The CEO of Ford Motor Company has called on the US Government to reconsider planned fuel economy targets for future automobile production.

In a meeting with new US President Donald Trump, Ford’s CEO Mark Fields, alongside Mary Barra of GM and Sergio Marchionne of Fiat Chrysler, reportedly voiced his criticism of the current policy direction.

According to reporting by Bloomberg, Fields claimed that “up to a million jobs” were at stake if the fuel efficiency targets did not align with market conditions.

Earlier this month, in the final days of the Obama administration, the US Environmental Protection Agency (EPA) had locked in a mandate for significant fuel economy improvements as part of the country’s efforts to tackle climate change.

Specifically, new cars were expected to have an average fuel efficiency of 51.4 miles per gallon by 2025, a figure which would be close to a doubling of current efficiency levels.

Fields also stated in a conference call this week that there needed to be a balance between environmental protection, consumer affordability, and manufacturing jobs.

Presumably, Ford is concerned that the amount of R&D money it will have to put into increasing fuel economy in its vehicles will increase prices and thus make its vehicles unaffordable.

Such concerns will likely have found a sympathetic ear with President Trump who has voiced skepticism towards the science behind Climate Change and has gone so far as to claim it is a Chinese conspiracy.

Given this, the Trump Administration would likely cave to pressure to abandon (or reduce) these targets in an effort to protect US jobs.

What do consumers want?

While Ford might just get its way on this issue, there is no telling that its underlying calculus is correct with regards to fuel economy.

Current trends within the market show that customers are willing to pay more for cars which are significantly more fuel efficient.

Moreover, sales of electric and hybrid vehicles are seeing significant growth, even during a period of historically low oil prices.

Should this situation change, American car manufacturers could find themselves caught short with only uncompetitive gas-guzzling product lines, much like what happened in 2007-8.