Under the Trump administration, the Environmental Protection Agency (EPA) has been reconsidering a number of regulations and emissions standards that were set under the Biden administration, moves that have received support from the Ford backed lobby group Alliance for Automotive Innovation (AAI). One of those changes involves eliminating the requirement for automakers to pay fines for not meeting increasingly-stringent Corporate Average Fuel Economy (CAFE) standards. Recently, Ford CEO Jim Farley praised that decision, too.
“Proposed reforms that are on the table now give us greater powertrain optionality and reduce our need to buy CO2 credits,” Farley said during the automaker’s Q2 2025 earnings call with investors. “In fact, our commitments to purchase C02 credits have already been reduced by nearly $1.5 billion. Further changes will balance standards and customer choice and has the potential to unlock a multi-billion dollar opportunity over the next two years, primarily in Ford Blue, which has carried a lot of the compliance burden. EPA’s announcement this week will give us more flexibility with respect to our product mix and volume. Once finalized, this will provide further opportunities to improve profits next year and beyond.”
CAFE standards were signed into law way back in 1975 as a way to reduce the country’s reliance on fossil fuels amid an oil crisis, and have served to entice automakers to make more efficient vehicles as a result. However, many have criticized steeply increasing standards imposed as of late, noting that the resulting fines could be better used to fund the ongoing EV transition. In fact, AAI previously estimated that stricter 2027-2031 CAFE rules could cost automakers a collective $14 billion, after most have already dished out substantial sums. Meanwhile, Tesla has raked in $2.8 billion across the globe for selling credits to other automakers to offset those types of violations.
In addition to this move, the EPA is also aiming to rescind the 2009 Endangerment Finding, which it says has led to $1 trillion in unnecessary regulations. If finalized, the proposal would remove all greenhouse gas standards for light-, medium-, and heavy-duty vehicles and heavy-duty engines, starting with EPA’s first greenhouse gas rule set in 2010 for light-duty vehicles and in 2011 for medium-duty vehicles and heavy-duty vehicles and engines – which includes off-cycle credits like automatic engine start-stop.
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