Key facts
- The US government finalized new vehicle fuel economy standards on Monday, lowering targets from previous Biden administration rules.
- The new standards set a fleetwide average of 34.9 miles per gallon by 2031, down from 50.4 mpg previously planned.
- The Alliance for Automotive Innovation called the rollback an "appropriate course correction."
- Environmental groups criticized the rollback, stating it would increase US drivers' fuel costs and global carbon emissions.
- The policy encourages the production of larger, less efficient gas-powered trucks and SUVs.
- The US is moving in the opposite direction of the EU and China, which are implementing stricter emissions regulations and EV mandates.
The US government on Monday finalized new vehicle fuel economy standards that significantly lower the targets set by the Biden administration, a move that is expected to favor gasoline-powered vehicles over electric ones. The Transportation Department announced a fleetwide average of 34.9 miles per gallon by 2031, a reduction from the previous goal of 50.4 mpg.
The Alliance for Automotive Innovation described the rollback as an "appropriate course correction" that aligns standards with market realities. However, environmental groups criticized the decision, arguing it benefits automakers while US drivers face high fuel prices and contributes to increased global carbon emissions. The policy is seen as encouraging the production of less efficient gas trucks and SUVs, potentially keeping oil demand high for decades.
Furthermore, the new regulations will end a credit-trading system used by automakers to comply with requirements, starting with model year 2028. This change removes a financial cushion for electric vehicle manufacturers like Tesla and Rivian. International automakers such as Toyota, Volkswagen, and Hyundai may now focus on selling more profitable gasoline vehicles in the US while concentrating EV development elsewhere. The Trump administration estimates these changes will save automakers billions of dollars in technology costs through 2031.
In contrast to the US, the European Union and China are implementing stricter regulations. Europe aims for a 100% reduction in tailpipe emissions for new cars by 2035, effectively phasing out internal combustion engines. China employs a "dual-credit" system that mandates a high percentage of EV and plug-in hybrid manufacturing, a strategy that has helped Chinese automakers secure about 60% of global EV sales. China also regulates electric car battery efficiency, pushing for lighter, longer-range EVs.
Globally, fuel economy or greenhouse gas emission standards exist in over 40 countries, covering more than 80% of new passenger vehicle sales. These policies often rely on corporate-average fuel economy (CAFE) or fleet-average tailpipe limits, with targets scaled based on vehicle attributes rather than a flat standard.