Trump set to weaken regulations on fuel efficiency for cars

President Donald Trump is set to announce a significant rollback of federal fuel standards put in place by the Biden administration aimed at encouraging the sale of electric vehicles.

The plans, proposed by the National Highway Traffic Safety Administration, will reduce the fuel economy requirements – the standards regulating how far our vehicles must travel on a gallon of fuel – for 2022-2031 model-year vehicles.

Trump is set to announce the plans in the Oval Office at 2.30 p.m. Wednesday and will be joined by the heads of three major U.S. automakers: Ford, Stellantis, and GM, who have hailed the move as “a win for common sense.”

It is the latest step by the administration to make it easier to sell gas-powered vehicles and disincentivize EV production. Earlier this year Trump announced the rescinding of EV tax credits and put a stop to California’s plans to ban the sale of traditional gas-powered vehicles after 2035.

Trump declared at a cabinet meeting Tuesday that he was “bringing back the automobile business,” adding “I think we’ll be bigger than we’ve ever been in the auto business.”

Corporate Average Fuel Economy standards were established by Congress in 1975 to tamp down U.S. reliance on foreign oil, but have since been altered and tightened to encourage manufacturers to make their vehicles more environmentally friendly.

In June 2024, during the Biden administration, NHTSA said it would hike CAFE requirements to around 50 miles per gallon by 2031 (up from 39 mpg) for light-duty vehicles.

Last year the agency said that, for passenger cars and trucks, the rule would reduce gasoline consumption by 64 billion gallons and cut emissions by 659 million metric tons and reduce fuel costs – with net benefits estimated at $35.2 billion for drivers.

Stellantis paid $190.7 million in civil penalties last year for failing to meet U.S. fuel economy requirements for 2019 and 2020 after paying nearly $400 million for penalties from 2016 through 2019, Reuters reported.

GM paid $128.2 million in such penalties for 2016 and 2017.

“Stellantis appreciates the Trump Administration’s actions to re-align the Corporate Average Fuel Economy (CAFE) standards with real world market conditions as part of its wider vision for a growing US automotive industry,” Stellantis CEO, Antonio Filosa, said in a statement Tuesday.

“We look forward to working further with NHTSA on environmentally responsible policies that also allow us to offer our customers the freedom to choose the vehicles they want at prices they can afford.”

A GM spokesperson added: “We have long advocated for one national standard that upholds customer choice and provides the auto industry long-term stability. As we review the proposal, we remain committed to offering the best and broadest portfolio of electric and gas-powered vehicles on the market.”

In a separate statement, Ford CEO Jim Farley said: “As America’s largest auto producer, we appreciate President Trump’s leadership in 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. This is a win for customers and common sense.”