Ford Scrutinizes Own Emissions, Fuel Economy Testing

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In an announcement Thursday, Ford Motor Co. (NYSE: F) said it is investigating its fuel economy and emissions testing methods following complaints raised by employees last September. The company has also notified the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) of the investigation.

Company group vice president Kim Pittel said that neither the employees’ complaints nor the investigation involves the use of a defeat device such as the one that Volkswagen used in some of its diesel-powered vehicles to yield lower emissions readings during testing than in actual driving conditions. While that probably means that Ford won’t be on the hook for billions in fines and restitution to buyers (VW’s bill runs to more than $20 billion so far), if the company is found to have reported incorrect results to the EPA it could be fined.

In a statement cited by The Wall Street Journal, the EPA said that the information it received from Ford is “too incomplete for EPA to reach any conclusions” but that the agency will work alongside Ford as the investigation continues.

This is not the first time Ford has run afoul of testing errors. The company paid owners of some models more than $1,000 when it underestimated the cost of fuel for the vehicles. Hyundai-Kia paid nearly $700 million in federal fines and to settle lawsuits for overstating fuel-economy ratings on most of its model years 2012 and 2013 vehicles. The Kia Soul’s fuel-economy rating was reduced by six miles per gallon. That was just the second time in the 21st century that the agency had found incorrect label values out of some 150 to 200 vehicles it tests every year.

What may be of most concern to Ford is the impact of flawed fuel-economy data on its new 2019 Ranger midsize pickup. The company said that the Ranger is the first vehicle it is evaluating. The new pickup’s 2.3-liter turbocharged EcoBoost four-cylinder engine gets an EPA fuel-economy rating of 21 miles per gallon in the city, 26 mpg on the highway and 23 mpg combined. That’s at the top of the class for gasoline-powered, rear-wheel drive midsize pickups, a class that includes the Chevy Colorado, GMC Sierra and Toyota Tacoma. The Ranger’s four-wheel drive fuel-economy rating is 20 mpg in the city, 24 mpg on the highway and 22 mpg combined, also the best in its class.

Ford does not want to lose bragging rights for its new Ranger, especially given the fact that it just returned to the market after a seven-year absence that Toyota and GM have filled quite handsomely.

In Thursday’s announcement, Ford admitted that it has identified “potential concerns with how we calculate road load” specifications. Road load is specified using engineering models that are validated through vehicle testing, including physical track tests referred to as coastdown testing. Ford has hired outside experts to investigate its testing models and an independent laboratory to perform coastdown testing as part of the company’s overall inquiry.

Ford stock traded down about 0.8% in the noon hour Friday, at $8.64 in a 52-week range of $7.41 to $12.15. The 12-month consensus price target on the stock is $9.33.

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