Ford Motor Co. is cutting its spending on emissions compliance credits and forecasting a "multi-billion dollar opportunity" over the next two years under President Donald Trump's pullback of greenhouse gas emissions and fuel economy regulations.

With federal fuel economy standard penalties set to zero, a proposal by the U.S. Environmental Protection Agency to eliminate its ability to regulate greenhouse gas emissions and the revocation of California's waiver to set its own emissions standards, Detroit automakers have increasing flexibility to produce and sell their cash-cow, but also gas-guzzling trucks and large SUVs. That means less need to pay competitors like Tesla Inc. for compliance credits to comply and potentially more time to invest in the development of electrified vehicles consumers want to buy and the expansion of their infrastructure.

"Hybrids and full electric vehicles are all on tap at Ford," CEO Jim Farley said this week during an earnings call. "The most material for Ford, in the end, is going to be changing our mix. We have high demand for our Pro and larger SUVs right now. We have high demand for some of our non-electrified powertrains, and changing that mix is a multi-billion dollar opportunity over the next couple of years."

He said Ford does support one national emissions standard for common industry planning. But the Dearborn, Michigan, automaker already has cut by $1.5 billion its purchasing of credits, an allowance of which automakers receive when they surpass government standards. Historically, companies like Ford, General Motors Co. and Ram parent Stellantis NV have fallen short of standards and needed to purchase credits from rivals to remain in compliance.

The regulatory pullback, however, means there is less need for those transactions. Farley emphasized the greater flexibility Ford will have in product offerings of various powertrains. Meanwhile, Stellantis is bringing back its V-8 Hemi engine later this year and reintroducing the gas-powered Dodge Charger, after delaying electrified versions of Ram pickups. GM also is investing in traditional engine-powered production as part of its $4 billion in investments to move production to the United States from Mexico.

Ford isn't stepping away completely from credits. It expensed $200 million for compliance credits so far in 2025 and expects that to be a rough quarterly rate moving forward, Chief Financial Officer Sherry House said.

The relaxation of government requirements also comes as Ford is set to reveal more details on Aug. 11 in Kentucky on the development and building of its next generation of electric vehicles from its California-based "skunkworks" team. Farley called the event a "Model T moment" for the company.

"We believe the only way to really compete effectively with the Chinese over the globe on EVs is to go and really push ourselves to radically re-engineer and transform our engineering, supply chain and manufacturing process, and that will come to life soon," the CEO said. "We really see, not the global OEMs as the competitive set for our next generation of EVs, we see the Chinese companies like Geely and BYD."

He underscored the battery plant Ford is building in south-central Michigan's Marshall as a key part of that, because it will build lower-cost lithium-iron-phosphate batteries under a licensing agreement with China's CATL.

Investors await with eager anticipation the details of the EV platform that Farley says will have a few different "top hats" of vehicle bodies to support multiple segments from pickups to crossovers. Ford has said it will launch a new electric commercial van next year, but the next launch of a retail EV isn't slated until 2027, when it has said a midsize and full-size truck are coming.

"It’s still going to be a couple more years, so that they do not have to plug some of that compliance gap with as much credit spending is good news," said David Whiston, analyst at financial services firm Morningstar Inc. "I think that's the plan at both GM and Ford, to use the profits to fund the transition."

The EPA's proposal this week to repeal an Obama-era finding, widely known as the Endangerment Finding, could precede the removal of all EPA greenhouse gas standards for new motor vehicles dating back to 2010. That includes the latest standards, finalized last year under former President Joe Biden, that Trump and other Republicans have called an "electric vehicle mandate."

Farley expects the proposal could be finalized come December: " The EPA 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."

The EPA's proposal comes after Trump already has disarmed federal fuel economy standards and canceled California's ability to set zero-emission vehicle sales requirements that states could opt into. It's adding up to a dismantling of the regulatory structure that has shaped the automotive industry for 16 years, and raising concerns among climate activists.

"It’s ironic that Jim Farley out of one side of his his mouth is cheering on the Trump administration deregulating emissions standards and out of the other is expressing existential concern for Ford," said Dan Becker, director of the Center for Biological Diversity's Safe Climate Transport Campaign. "Chinese clean-car companies like BYD are going to eat their lunch."

Whiston expects Ford is aware that a new administration could seek to put emissions regulations back in place. But that could take time, giving these companies years of regulatory leeway, but still facing global competitive pressure.

Regardless of policy, he added, EV advancements will happen, and once there is battery technology to make an EV cheaper than a gas-powered vehicle with sufficient range, automakers need to be ready for that.

But Becker said the industry has been here before. Trade restrictions on more fuel-efficient vehicles from Japan didn't stop companies like Toyota Motor Corp. and Honda Motor Co. from gobbling up substantial pieces of market share.

"The reason those rules exist is because the auto companies didn't make clean vehicles that protect people’s lungs without the rules," Becker said. "Is Bill Ford, a self-professed conservationist, going to step up and say the law doesn’t require us to make vehicles, but we are going to anyway, because it’s the right thing do?"

Wall Street, Whiston said, will be looking on Aug. 11 for details on when it can expect the loss of Ford's Model e EV division to turn profitable. Model e has lost $2.178 billion this year. The guidance Ford suspended for it in May estimated a $5 billion to $5.5 billion loss for the full year.

"Jim’s talk has been very favorable and almost described as revolutionary in how good these next-gen EVs are going to be," Whiston said. "That’s great. But until we see the product and hear what consumers think about it, it's all talk."

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