Ford Motor Company announced plans to retire up to $5 billion in high-interest debt and tap into the rapidly developing market for "green" bonds to help fund future electric vehicles and provide credit to customers with lower credit scores.

In the end, Ford wants to reclaim an investment-grade rating for itself and Ford Credit, its captive lending arm, which would cut borrowing costs in the future.

Treasurer Dave Webb announced in a press conference that the company is holding a cash tender for "covid bonds" with an interest rate of 8% to 9.5% that it issued in April 2020, at the onset of the global pandemic.Ford Mustang Shelby GT500 2021 - View Specs, Prices, Photos & More | Driving

To replace some of the high-coupon bonds and supplement the zero-interest convertible debt it issued earlier this year, Ford plans to issue a $1 billion green bond with a 3.5% to 4% interest rate.

A portion of the money will go toward the automaker's ambitious aim to switch a large portion of its global production from fossil-fueled combustion engines to battery-powered electric vehicles.

The business has stated that it intends to spend at least $30 billion in North America, China, and Europe by 2025 to design, engineer, and produce a wide range of electric vehicles.

Ford is a top seller of full-size pickup trucks and SUVs, which are still very profitable combustion engine vehicles in the United States.

Ford will have access to new sources of money, including investors who support environmental, social, and governance (ESG) activities, thanks to a "sustainable financing framework" introduced on Thursday.

Ford Credit would be able to give credit to consumers with weaker credit scores if new green bonds were issued, but they would not be required to purchase electric or hybrid vehicles.

Thursday's statement falls on the fifth anniversary of the Paris Climate Agreement and the United Nations Climate Change Conference (COP26) in Glasgow, Scotland.