Trump Administration Finalizes Rollback of Federal Fuel Economy Standards
The Trump administration finalized a comprehensive rollback of federal fuel economy standards on Monday, projecting roughly $1,300 in savings on the average new vehicle under its "Freedom Means Affordable Cars" initiative. The changes reset corporate average fuel economy standards for passenger cars and light trucks from model years 2022 through 2031.
U.S. Transportation Secretary Sean Duffy announced the changes, which the National Highway Traffic Safety Administration estimates will reduce average new-vehicle costs by $1,289 for model year 2031 compared with retaining the previous standards, assuming manufacturers pass the savings to buyers. With new vehicles currently averaging around $49,000 to $50,000 in transaction price, the projected savings would represent approximately 2.5% of vehicle costs.
"Thanks to President Trump's leadership, we have finally ended the illegal mandate that forced automakers to produce more expensive electric vehicles that American families didn't want," Duffy said in a statement.
The CAFE program, originally enacted by Congress in 1975 through the Energy Policy and Conservation Act in response to the 1973 Arab oil embargo, sets fuel economy requirements for automakers' vehicle fleets. The initial goal was to roughly double average fuel economy of new cars to 27.5 mpg by 1985.
Under the Biden administration's standards finalized in 2022 and 2024, fuel efficiency was required to increase by 8% annually for model years 2024-2025, 10% for 2026, and 2% annually from 2027-2031, targeting a fleetwide average of 50.4 mpg by 2031. The new standards project a fleetwide average requirement of 34.9 miles per gallon in model year 2031 instead.
This marks the second time Trump has rolled back CAFE standards. During his first term in 2020, the administration reduced required annual efficiency improvements from 5% to 1.5% for model years 2021-2026.
Industry and Environmental Response
The Alliance for Automotive Innovation, a trade group representing major automakers including Ford, General Motors and Stellantis, praised the rollback. CEO John Bozzella stated that Biden-era standards "effectively required a switchover to electric vehicles that was out of step with market realities and customer demand."
Electric vehicle market share has declined from approximately 7.4% of new vehicle sales in 2025 to around 6.5% in early 2026, following the expiration of federal EV tax credits at the end of September 2025.
Environmental groups criticized the changes. The Natural Resources Defense Council stated that NHTSA's own estimates predict the average driver will pay $1,400 more in fuel costs over their vehicle's lifetime under the new standards. The organization also noted that the new 34.9 mpg target for 2031 falls below what automakers on average have already achieved.
Regulatory Changes and Safety Projections
The rule ends credit trading between manufacturers starting in model year 2028 and changes vehicle classifications beginning in model year 2030. Those classification changes will move more crossovers into the passenger-car category, with the regulatory fleet mix expected to shift from roughly 70% light trucks to about 70% passenger cars. This aims to reduce incentives to modify vehicles to qualify for less stringent truck standards.
NHTSA projects about 1,900 fewer traffic deaths and more than 300,000 fewer nonfatal injuries through 2050 compared with retaining the previous standards. The agency's model attributes most of that reduction to people driving less as per-mile fuel costs rise, with replacing older vehicles with newer ones contributing a smaller share of the projected safety gains.
"This rule restores integrity to the national fuel economy program, balancing vehicle affordability and energy conservation goals while improving safety on our roadways," NHTSA Administrator Jonathan Morrison said.
The agency also projects 4.6% higher gasoline consumption through 2050 than under the previous standards, although total fuel use would decline over time under either approach. The timing comes as Americans face gasoline prices above $4 per gallon amid broader geopolitical tensions.
In a related action, NHTSA announced in August 2026 that it is reversing Obama-era rules regulating standalone medium- and heavy-duty truck engines, concluding it lacks statutory authority to establish fuel economy standards for engines separate from complete vehicles.
The rule takes effect 60 days after publication in the Federal Register.
