Ford Exec Says Regulations Could Make Future Cars Too Expensive

Jim Farley, who is the head of European operations at Ford, says that the regulations imposed by the European Union on vehicle emissions will make future cars so expensive that ordinary people will no longer be able to afford them. The car business will become an “elitist industry,” Farley tells theFinancial Times (subscription required).

Much of what Farley has to say is connected to the fact that many Europeans love diesel-powered cars. Their governments have been telling them for the past 40 years that diesels are the answer to affordable transportation. You can’t walk down any street in Europe without hearing the clatter of a diesel engine. Even luxury carmakers like Jaguar, BMW, and Mercedes-Benz offer diesel engines in their top models to satisfy the demands of European drivers.

But Houston, we have a problem. Thanks to Volkswagen and its massive diesel-emissions-cheating scandal, people now realize that those lovable diesels are slowly poisoning the atmosphere with particulate and nitrous oxide emissions, and then humans. Who knew? Following in the wake of VW’s cheating, European Union officials were shocked — SHOCKED! — to learn that virtually every manufacturer has equipped their diesel-powered cars with software to shut off pollution controls in most real-world driving situations.

These electronic defeat devices are perfectly legal in Europe, as it turns out. The regulations allow carmakers to disable the pollution controls if they are a risk to engine longevity. Since they are a risk most of time, carmakers are free to turn them off most of the time. Go figure.

New rules from regulators will require real-world testing. Previously, all tests were done under laboratory conditions. Fiat took the easiest and most obvious way out. Since the lab test is precisely 20 minutes long, it simply programmed all its diesel engines to shut off their pollution controls after 22 minutes. That sort of chicanery won’t be acceptable any more.

Making diesel pollution controls that meet the letter and the spirit of the regulations in the real world will be expensive and that is what Jim Farley is worried about. He says consumers “often have budgets” that have to be adhered to. More expensive vehicles simply won’t be affordable to them, he reasons.

His comments come at an odd time. Ford has just reported it made a pre-tax profit of $434 million in the first quarter of 2016. That’s more than it earned in all of last year. Those profits have been bulked up because Ford is selling more large cars loaded with options. The Ford Kuga — known as the Escape in the US — is enjoying strong sales. Considered a compact crossover in the States, it is relatively large by European standards.

Ford is also enjoying strong sales of its Mustang, which is now sold in Europe for the first time. It outsold the Porsche 911 and Audi TT in the German market in March, reports the Financial Times. The demand for the Mustang has surprised Ford management.

Jim Farley is correct. New pollution control hardware and software probably will add a few Euros to the bottom line of most diesel-powered cars. But perhaps Farley and his peers are looking through the wrong end of the telescope. The reason for the emissions regulations is not to give government minions something to do or to bedevil car company executives.

The reason they exist is to try to change the course of the automotive industry from one that spews out millions of tons of carbon and other emissions in its wake to one that builds cars with no tailpipes at all. That will be a Herculean task, akin to steering a supertanker with a canoe paddle. It will take many years and much effort from lots of people working toward a common goal to make that happen.

But the alternative is that a select few human beings with large enough bank accounts will pay Elon Musk to ferry them to his colony on Mars, where they can watch from afar as the world slowly strangles in its waste products. Wake up and smell the coffee, Mr. Farley. Yours and other car companies are dinosaurs that need to adapt or die. Your plaint is noted, but in the final analysis, it is irrelevant.

Source: Green Car Reports | Photo credit: Ford Motor Company