Welcome to the Dec. 18 edition of the Daily 5.
The Federal Reserve cut its benchmark rate target 0.25 points and adjusted the number of expected rate cuts in 2025 from to two from four. The Fed now projects two cuts of 0.25 percent each next year, taking a wait-and-see approach to the incoming Trump administration. The federal funds rate target now sits at 4.25 to 4.5 percent, and its short-term borrowing benchmark by the end of 2025 is now projected to be in the 3.75 to 4 percent range. The Fed's adjustments to the benchmark rate can have a ripple effect on the interest rates auto lenders charge consumers. In 2024, "new-vehicle interest rates declined after peaking in May," Jessica Caldwell, Edmunds' head of insights, said in a Dec. 17 statement ahead of the Fed's decision. "Consumers are still feeling the pinch, but the market has become a slightly friendlier place for car shoppers than it was at the start of the year."
In other "fed" news, the EPA granted a waiver to the state of California on Dec. 18, a formality allowing the state to implement its ambitious Advanced Clean Cars II regulations phasing out internal combustion engine vehicles by 2035. However, President-elect Donald Trump will likely try to revoke the waiver when he takes office in January, and there remain legal challenges to California's authority to write its own emissions regulations. The EPA's action eliminates a breezy path to Trump's administration simply not approving the waiver but leaves open several other avenues to an attempted pullback. "This was an expected development," said John Bozzella, CEO of the Alliance for Automotive Innovation, in an email. "And we expect President Trump will revoke the waiver in 2025."
Meanwhile, slow electric vehicle adoption in Europe and the U.S. as well as plummeting sales in China are forcing many automakers to reassess their EV plans. Porsche is the latest: It looks like its plan to get 80 percent of its sales from EVs by 2030 likely won't happen, according to a report by Automotive News affiliate Automobilwoche. For example, Porsche is struggling to electrify the 718 Boxster and 718 Cayman. The project is behind schedule because of issues with the battery, according to the report, and Porsche is struggling to match the driving characteristics in the sport cars with the move to a battery powertrain from a midengine combustion one. Porsche is seeking frequent changes from battery supplier Valmet Automotive, which built a factory in the German state of Baden-Württemberg specifically for the order. Valmet is seeking compensation for the extra work that Porsche does not want to pay or wants to pay only partially, according to the report. The 718 family's combustion-driven models were scheduled to be phased out next summer and replaced by the electric versions of the sports cars, but that target is in doubt, according to Automobilwoche.
And finally, you won't want to miss our video about Project 2025, plus our roundup of new cars and light trucks coming next year.
That's it for today. Enjoy the rest of your day!
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Wes Raynal, assistant web editor
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