The Trump administration on Wednesday announced plans to lower fuel efficiency standards for passenger cars and light trucks sold in the United States.
With the CEOs of Ford and Stellantis in attendance, President Donald Trump proposed lowering fuel efficiency for all 2031 model year vehicles to 34.5 miles per gallon. Previous fuel efficiency standards set under the Biden administration called for 50.4 mpg by 2031. The regulatory changes would also reclassify crossovers as cars rather than light trucks and prevent automakers from trading credits for electric vehicles.
The National Highway Traffic Safety Administration regulates fuel economy rules based on Corporate Average Fuel Economy (CAFE) standards. These regulations were first enacted by Congress in 1975 and dictate how far a vehicle must travel on one gallon of fuel. According to CAFE calculations, automakers needed to achieve an average of 30.1mpg across their fleet in 2024, exceeding that by achieving 35.4mpg.
President Trump also said he would give the Department of Transportation the authority to allow automakers to build “really small cars” like those seen in Japan and South Korea.
The White House claims existing regulations would increase car prices by $1,000 per vehicle. The previous Trump administration made the same argument in 2020 when it last lowered fuel efficiency standards.
But since that rollback, new car prices have risen to new heights, averaging more than $50,000, as automakers took advantage of consumers’ desire for SUVs and discontinued lower-priced models. Larger vehicles use more materials and are therefore more expensive to manufacture, but they also have lower fuel efficiency.
Consumer choice appears to contradict the government’s argument that lower fuel economy benefits the car-buying public. For example, hybrid sales are up significantly this year compared to last year, and the momentum continues. Hybrid sales in October increased 6% from the previous month.
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Experts doubt that lower fuel efficiency standards will change the trajectory of new car prices. Many vehicles are developed with the global market in mind, and most are still focused on efficiency.
“While other countries will continue to innovate and develop cleaner cars that people want to buy and drive, we are forced to sit in clunky cars, pay more for gas, and emit more emissions,” former EPA Administrator Gina McCarthy said in a statement. “With their backward thinking and endless efforts to create more pollution in this country, we are ceding the global auto market and innovation to China.”
Fuel economy standards have become essentially ineffective since the passage of the One Big Beautiful Bill Act this summer, eliminating penalties for automakers that don’t meet targets. Rather, this regulatory move is likely intended to serve as a hurdle for future administrations to roll back regulations.
Automakers are already making moves to sell vehicles that consume more gas.
Ford has indefinitely halted production of its F-150 Lightning electric pickup truck and shifted production capacity to internal combustion models. Stellantis reintroduced the Hemi V-8 engine, but a review of the Ram 1500’s powertrain revealed that it performed worse in almost every way than the more efficient inline-six engine.
However, not all automakers have decided to withdraw. While Hyundai remains focused on EVs, its sister company Kia is offering a flat $10,000 discount on its EVs.
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