Trump Weakens Fuel Economy Regulations

This move isn't just about undoing what Biden did, or attempted to do. The federal government has, for fifty years and across Republican and Democratic administrations, worked to encourage reduced fuel consumption by tightening standards -- the idea being that tighter standards would lead to higher miles per gallon, and thus slower fuel consumption.

Tighter fuel-economy standards have lead automakers to find ways to build internal-combustion engines that maximize fuel economy, and have also helped drive automakers to build hybrids and electric vehicles.

From the New York Times:

The plan announced on Wednesday would require automakers to achieve an average of 34.5 miles per gallon for cars and light trucks in model year 2031, down from the standard of 50.4 miles per gallon set by the Biden administration.

The Times reports that automakers are publicly praising the move but privately are upset that Trump is making these changes after they invested years and billions of dollars in EVs and EV batteries. Not only that, but Trump's tariffs on steel and imported auto parts are raising their costs and negatively affecting their supply chains -- and inflation is making it harder for the average consumer to even buy a new car.

The Biden admin rules, which were finalized in June 2024, were based on the assumption that automakers would sell more EVs, since EVs don't burn gas at all. That would obviously boost fuel-economy averages across a brand, even factoring in the continued sale of ICE and hybrid vehicles.

From the Times:

Biden administration officials estimated that the rule would lower fuel costs by $23 billion while preventing more than 710 million metric tons of carbon dioxide from entering the atmosphere by 2050, the equivalent of taking 165 million cars off the roads for one year.

It's likely that these changes will lead to increased sales of trucks and SUVs, which tend to be more profitable to automakers -- and also tend to have fewer MPGs. Many automakers have already moved away from cars and towards SUVs -- more than a few product portfolios lack any inexpensive and fuel-saving compact-car offerings.

That could cause automakers a problem should the price of oil jump unexpectedly. Indeed, that was an issue for certain automakers during The Great Recession in 2007 and 2008.

These changes put the U.S. on a different path from the rest of the world. Other parts of the globe are seeing increased sales of electric vehicles, and if the EV market is growing in other parts of the globe but shrinking or stagnating here, that could make it a bit harder to design cars for global markets. Not impossible, of course, and consumer behavior will play as much a part as regulations, but it will be tougher.

Corporate Average Fuel Economy standards, or CAFE, have been around since 1975. They came into being as a result of the oil shortages of the 1970s and remained relatively stagnant until the Obama administration, in which Biden served as vice president, sought to tighten them.

The Times says that most economists it polled suggest that Trump's proposed changes will reduce production costs, but only marginally, and there will be costs to public health and the environment. Those economists also say that over time, Americans will pay more in gas prices.

There is now a 45-day public comment period on the proposed changes -- with finalization happening some time in 2026.

[Image: K-FK/Shutterstock.com]

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