Trump cuts fuel economy standards back to 2014 levels

Fuel economy standards are reduced, meaning automakers can sell less efficient vehicles.

The U.S. Department of Transportation has finalized new Corporate Average Fuel Economy (CAFE) standards, rolling them back to 34.9 miles per gallon (mpg) by model year 2031. This represents a significant reduction from previous targets, effectively reverting to levels seen around 2014. The new rule eliminates emissions credits for automakers starting in model year 2028 and will no longer count plug-in vehicles towards fleet averages, which previously had very high mpg ratings. Previously, under the Biden administration, standards were on a path to increase, encouraging more electric and plug-in hybrid vehicle sales. The Department of Transportation has also indicated a shift in how light trucks and passenger vehicles are classified, aiming to increase the proportion of passenger cars in the fleet mix starting in model year 2030. Enforcement of existing rules has also been relaxed, with no fines issued for exceeding CAFE limits since 2022.

This rollback signals a potential shift away from aggressive electrification mandates by the government, potentially impacting the trajectory of EV and plug-in hybrid adoption in the U.S. Automakers that were investing heavily in these technologies may need to re-evaluate their strategies. The elimination of emissions credits and the exclusion of EVs from fleet averages also remove key incentives for manufacturers to produce zero-emission vehicles.

The revised classification criteria for light trucks and passenger vehicles could lead to a significant change in vehicle design and sales mix, potentially resulting in more smaller cars and fewer SUVs or larger trucks on the road. This could affect consumer choice and the overall size and weight of vehicles manufactured for the U.S. market.