Trump Administration Finalizes Fuel Economy Standards

The Trump administration has finalized a rule rolling back federal fuel efficiency standards for new cars. The U.S. Department of Transportation announced the change on Monday, scaling back Corporate Average Fuel Economy (CAFE) requirements.

President Donald Trump posted on Truth Social over the weekend that the administration finalized the rule, stating it would 'take the waste out of building cars in America' and mean 'LOWER PRICES, saving families thousands on a new, beautiful, and safe car'. U.S. Transportation Secretary Sean Duffy announced the change in an online statement. The administration described the action as among its largest deregulatory moves.

Standards compared

The revised rule sets a 2031 fuel economy target of 34.9 miles per gallon, a significant reduction from the Biden-era goal of 50.4 mpg. The previous target for model year 2024 was 30.1 mpg.

The Biden-era rules had required an annual 2% increase in fuel efficiency. The new rule requires carmakers to make new passenger car and truck fleets up to 1% more fuel efficient each year.

Administration claims

Officials argue that fuel efficiency technology is expensive and has driven up vehicle costs. They estimate that scaling back the standards will reduce the average sticker price of a new vehicle by about $1,300. The administration claims the plan would save $138 billion over the next five years.

Critics respond

Environmental, health, and consumer groups warn the change will increase fuel costs, pollution, and health risks. Dan Becker, director of the Safe Climate Transport Campaign at the Center for Biological Diversity, stated that rolling back the standards would increase gasoline usage and pollution, 'costing consumers at the pump and at the doctor's office'.

Katherine García, Sierra Club Clean Transportation for All director, criticized the rollback. 'Families already cannot afford the basics, and now Donald Trump wants to make driving more expensive too,' she said. The rollback is expected to increase gasoline consumption and pump prices for families. The Biden administration’s standards were expected to save $23 billion in fuel costs and more than $600 in gasoline over the lifetime of a vehicle for a car owner.

Harold Wimmer, president and CEO of the American Lung Association, stated that for decades, fuel economy standards have ensured new vehicles are more efficient, saving lives and money. He argued there is no reason to weaken standards that are technologically feasible and benefit air quality. Critics also argue weaker standards will increase healthcare costs and climate change damages from air pollution.

Industry and broader context

Automakers are reportedly happy with the new rules. The revised rules require a 1% annual increase in fuel efficiency. Economist Sue Helper from Case Western Reserve University said easing CAFE standards will hinder the industry's shift toward fuel-efficient and electric vehicles. She stated it is 'very bad in the long term, because it slows progress' and makes auto companies less competitive, especially as they hope to sell in foreign markets with stricter standards.

Helper noted the rule change is good in the short-term for automakers because it allows them to profit more from selling trucks and SUVs. She argued that rising new car prices are due to vehicles getting larger, tariffs, supply chain issues, and added features-not primarily fuel economy standards. A 2023 analysis found vehicles became about 30% more fuel efficient between 2003 and 2021 but attributed price increases to an industry shift toward expensive SUVs.

In its final rule, the National Highway Traffic Safety Administration eliminated the ability of carmakers to trade credits for making electric vehicles. This system had allowed automakers to buy credits from EV manufacturers to offset producing less fuel-efficient vehicles. The agency stated the current system leads manufacturers to force adoption of technologies that do not meet family demands, adding inefficiency and cost.

Ellen Hughes-Cromwick, former Ford chief global economist, warned that lower sticker prices could be offset by higher fuel costs if vehicles are less efficient. This is especially pertinent with high gas prices; according to AAA, the national average price for gasoline is close to $4.50 per gallon, with diesel near $6.50. Climate advocates say the rollback is part of broader efforts to reverse Biden-era climate policies, including cutting the federal EV tax credit and delaying funding for a nationwide EV charging program.

The rule sets a 1% annual increase in fuel efficiency under the revised CAFE standards, requiring fleets to reach 34.9 mpg by 2031.