The White House is expected to roll back the Biden administration’s more stringent fuel economy standards in an announcement Wednesday afternoon.
Car buyers are feeling the pinch right now, as average new vehicle prices round the $50,000 market and just keep going. As an effort to lower vehicle development costs and address those ballooning costs, the Trump administration is announcing a plan to roll back Biden-era fuel economy standards, after the former administration set stricter rules in mid-2024. This information comes via Bloomberg, which reported that executives from each of the Big Three automakers (Ford, GM and Stellantis) would join President Trump to reveal the plan Wednesday afternoon.
For reference, the standards this proposal aims to unwind would compel automakers to bring their Corporate Average Fuel Economy (CAFE) up to 50 mpg by model year 2031. Those standards imposed an 8% increase for 2024-2025 models and a 10% increase for 2026, as an effort to curtail greenhouse gas emissions and save consumers money on fuel over the long-term. In last year’s update to fuel economy standards, the Biden administration claimed the move would cut fuel consumption by 70 billion gallons over 25 years, and save consumers $23 billion in fuel costs as a consequence of running more efficient vehicles.
The current administration, however, contends these policies have directly lead to rising new car prices, as did the now-defunct federal EV tax credit. As the current administration came into power, President Trump and other government officials vowed to put a stop to the “EV mandate” through eliminating the tax credit, which ended September 30.
As it stands now, the Department of Transportation must still go through a formal rulemaking process before new standards take effect, which would likely happen next year. This year’s “One Big Beautiful Bill Act”, which Trump signed into law on July 4, has already eliminated fines for manufacturers who don’t meet the current CAFE standards. Leading up to that policy change, Stellantis paid nearly $600 million in civil penalties for failing to meet the standards between 2016 and 2020, while GM paid more than $128 million for missing CAFE requirements in 2016 and 2017.
The White House is pushing affordability as a key point in relaxing fuel economy standards, arguing this decision will ultimately drop prices by $900, at a time when consumers are taking on more pressure by way of tariff-related price hikes, supply chain disruptions and a rising inflation rate, all of which continue to make new vehicles and other goods more expensive to purchase.
The National Highway Traffic Safety Administration (NHTSA) proposed lowering the 2022-2031 fuel economy standards from the Biden administration’s 50.4 mpg target to 34.5 mpg, resulting in a 0.25-0.5% increase annually instead of 8-10%. Ford CEO Jim Farley praised the decision ahead of Wednesday’s announcement, saying the less restrictive policy is “aligning fuel economy standards with market realities.”
“We can make real progress on carbon emissions and energy efficiency while still giving customers choice and affordability,” Farley continued. On Tuesday, GM CEO Mary Barra noted that the company was going to “have to start shutting down plants” because it wouldn’t be able to effectively build and sell EVs in an amount that would comply with California’s zero-emissions rules requiring 35% of new vehicle sales in the state be electric in 2026. The federal government enacted legislation to block California’s vehicle rules in June.
While the Trump administration and American automakers are touting the CAFE rollback as a net positive for drivers, environmental groups such as the Natural Resources Defense Council contend this decision will result in increased fuel consumption and higher per capita costs over time. “Drivers will be paying hundreds of dollars more at the pump every year if these rules are put in place, said director of clean vehicles at the NRDC nonprofit, Kathy Harris (per Reuters).
