Gas-Guzzler Revival Risks Dead-End Future for US Automakers

Ford's BlueOval SK electric vehicle battery manufacturing facility in Stanton, Tennessee, in 2023. Photographer: Houston Cofield/Bloomberg Photo by Houston Cofield /Photographer: Houston Cofield/Bl

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(Bloomberg) — Detroit under Donald Trump has rediscovered its love of the big, roaring engine.

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By gutting climate regulations, the president has freed US automakers to sell as many gas-burning trucks and SUVs as they can. Muscle cars powered by rumbling V-8s and Hemi engines are back, with beasts like the Dodge Charger and Ford’s Mustang Dark Horse laying down rubber at this year’s Detroit Auto Show. Electric vehicles, pushed by years of federal policy, are now purely optional.

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The sudden switch promises a new era of fat profits for the companies. They’ve always made their best margins on large vehicles with monster engines. Ford Motor Co.’s top executive even hailed the change as a “multibillion-dollar opportunity.”

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Long-term, it risks sending American automakers off a cliff. EVs are still backed by government regulations and incentives across much of the world. And they’re finding buyers, particularly the high-tech, low-cost cars now pouring out of China. If US automakers turn their backs on electrics, their sales outside the US will shrivel. They’re already falling behind on the technology, relying on a 100% US tariff on Chinese EVs to keep surging rivals like BYD Co. at bay.

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“If they just go back to Hemi Land and not do anything, it would be disastrous in a few years — a horrific disaster,” said Mark Wakefield, head of the global automotive practice at consultant AlixPartners. While the American automakers “mostly understand the challenge in front of them, they don’t have full plans” to confront it, he said. 

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Auto executives pledge they’ll use the windfall from Trump’s regulatory reprieve to invest in an electrified future. Ford Executive Chair Bill Ford, great-grandson of the company’s founder, pointed to a line of affordable electric vehicles the automaker plans for 2027, including a $30,000 pickup. The company also is expanding its offerings of gas-electric hybrid models.

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“We certainly are not turning our back on the rest of the world,” Ford said in an interview at the Detroit Auto Show. “We are investing.”

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But the company used the same show to highlight its new take on the Mustang muscle car — a version called the Dark Horse SC with horsepower exceeding 500 and a price expected to top $90,000. “Now is a great time for the V-8 engine,” said Ryan Shaughnessy, the Mustang’s brand manager. “We’ve done extensive customer research in multiple cities, looking at a variety of powertrains, and the V-8 is always the number-one choice.”

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It isn’t just customers. US automakers have long been run by “car guys:” enthusiasts who live for the bone-shaking rumble of a big engine. For them, quiet and smooth EVs — even the absurdly fast ones — can’t satisfy that craving. They’re convinced many American car buyers share the same enthusiasm for what Shaughnessy described as “the sound and roar of the V-8.”

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Wall Street couldn’t be happier with the new direction. After General Motors Co.’s earnings blew away expectations in January, more than a dozen analysts boosted their price targets, with Piper Sandler’s Alexander Potter writing that GM “has too much earnings power to ignore.” Ford’s fortunes are also on the rise, as it’s predicting operating profits could grow by as much as 47% this year to $10 billion. Ford’s stock has risen nearly 50% over the last 12 months.