Today, President Trump, Transportation Secretary Sean Duffy, automotive executives, and others addressed the public from the White House to reveal plans for undoing the near-future automaker fuel economy standards established by the Biden Administration. The American automotive sector, along with the vehicles you can purchase in the coming years, will experience significant impacts. Following Wednesday’s announcement, average fleet fuel efficiency for automakers is required to reach just 34.5 mpg by 2031, as opposed to the earlier mandate of 50.4 mpg.
Corporate Average Fuel Economy (CAFE) standards represent an “average” mpg rating that a car manufacturer earns across its entire lineup. Essentially, if a manufacturer produces fuel-intensive vehicles, they are also expected to create more efficient cars. These standards have been in place since the 1970s, underwent major updates during the Obama presidency, were revised backward during Trump’s first term, became more ambitious during Biden’s administration, and are now set to be significantly reduced.
Under Trump’s guidance, the National Highway Traffic Safety Administration (NHTSA) is now recommending a decrease in fuel economy requirements for vehicle models from 2022 to 2031, adjusting the CAFE requirement to 34.5 miles per gallon on average by 2031, instead of the previously targeted 50.4 miles per gallon.
As concerning as these figures sound, any alteration to CAFE regulations at this stage is nearly irrelevant, since part of the One Big Beautiful Bill Act passed this summer removed penalties for automakers that fail to meet targets. However, changes to CAFE will complicate improvements in our national fuel economy averages moving forward.
The government is also aiming to abolish certain automaker credits for fuel-saving technologies, and to eliminate credit trading among car manufacturers (the system where low- or zero-emission brands, like EV manufacturers, could essentially sell carbon credits to other automakers) by 2028.
Trump’s communication focuses on this policy shift leading to lower vehicle prices for consumers. The rationale appears to be that manufacturers can price cars lower since they will not need to invest in pollution reduction R&D. My assumption is that they’ll happily retain that development budget and not necessarily lower prices, but the White House’s official assertions are as follows:
- “Had President Trump chosen not to act, the Biden standards would have increased the average price of a new vehicle by nearly $1,000, compared to the costs under the standards declared today.”
- “President Trump’s measures will save American households $109 billion in total over the next five years.”
- “By enabling more Americans to purchase newer, safer vehicles, this recalibration is expected to save over 1,500 lives and avert nearly a quarter-million serious injuries by 2050.”
Exact methods of how those figures were determined or how they will be accomplished were not detailed in the president’s video address or the press release.
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**Trump Administration Lowers Fuel Economy Standards for New Vehicles in Major CAFE Rollback**
In August 2018, the Trump administration revealed a notable reduction of fuel economy standards set during the Obama administration. This decision, part of a larger initiative to lessen regulatory pressures on the automotive sector, aimed to maintain the Corporate Average Fuel Economy (CAFE) standards at 2020 levels until 2026, instead of allowing them to increase gradually as previously ordered.
**Overview of CAFE Standards**
Corporate Average Fuel Economy standards were established in the 1970s in reaction to the oil crisis, aiming to enhance the average fuel economy of cars and light trucks sold in the United States. The Obama administration established ambitious goals requiring automakers to reach an average fuel economy of about 54.5 miles per gallon by 2025. These standards aimed to curtail greenhouse gas emissions, reduce reliance on fossil fuels, and promote the creation of more fuel-efficient vehicles.
**Main Changes Under the Trump Administration**
The rollback initiated by the Trump administration comprised several significant changes:
1. **Freezing Standards**: The administration aimed to freeze fuel economy standards at 2020 levels, which were around 37 miles per gallon for cars and light trucks. This marked a considerable shift from the previously intended trajectory that sought greater efficiency.
2. **Effects on Emissions**: The rollback was anticipated to result in an increase in greenhouse gas emissions, reversing the advances made in lowering pollution from the automotive industry. The Environmental Protection Agency (EPA) projected that the rollback could result in an added 1.2 billion tons of carbon dioxide emissions throughout the lifespan of vehicles sold during the impacted years.
3. **Economic Justifications**: Supporters of the rollback argued that it would decrease vehicle prices, expand consumer choices, and stimulate the economy by allowing manufacturers to focus on producing larger, more profitable vehicles. They maintained that the earlier standards were excessively rigorous and economically burdensome.
4. **Legal and Environmental Opposition**: The rollback encountered considerable resistance from environmental organizations, numerous states, and even some manufacturers who had heavily invested in fuel-efficient technologies. Detractors contended that the rollback would undermine attempts to address climate change and could result in higher fuel expenses for consumers over time.
**Responses and Ramifications**
The choice to reverse CAFE standards ignited extensive discussions. Environmental advocates and numerous state governments, particularly those in California, pledged to legally contest the rollback. California, which possesses its own vehicle emissions standards, spearheaded a coalition of states aiming to uphold stricter regulations.
Automakers were split on the matter. Some backed the rollback, citing the need for regulatory relief, while others raised concerns about the potential for an inconsistent regulatory framework if states advanced their own standards.
**Conclusion**
The Trump administration’s reduction of fuel economy standards signified a substantial shift in U.S. automotive policy, emphasizing economic growth and consumer options over rigorous environmental regulations. As the dialogue around fuel economy and emission standards progresses, the long-term consequences of this policy shift remain uncertain, especially regarding global initiatives to confront climate change and transition to more sustainable transportation methods.