Rollback
The Trump administration announced this week its plans to reset Biden-era Corporate Average Fuel Economy (CAFE) standards that it called “costly and unlawful,” dropping a requirement that automaker fleets average 50.4 mpg by 2031 down to 34.5 mpg.
CAFE standards require that a given automaker’s entire fleet become more efficient over time, with underperforming automakers either having to pay fines or buy credits from overachieving EV makers — a feature that has netted Tesla and others significant income over the years.
The long-expected move is seen as part of the current administration’s agenda of reversing fuel-economy standards and EV-friendly initiatives that had been set into motion in prior administrations. It is preceded by the demise of the $7500 EV tax credit this year, which has already slowed EV sales.
“President Trump is returning CAFE standards to levels that can actually be met with conventional gasoline and diesel vehicles. The Biden Administration standards imposed unrealistic fuel economy targets that effectively resulted in an electric vehicle (EV) mandate,” the White House claimed in a statement.
Flanked by executives from the three largest automakers with a US manufacturing presence, including General Motors, Ford, and Stellantis, the President criticized the Biden administration for enacting the existing CAFE rules.
“We’re officially terminating Joe Biden’s ridiculously burdensome, horrible, actually, CAFE standards that impose expensive restrictions,” Trump said.
In an accompanying statement, the Trump administration further claimed that the Biden-era rules “broke the law” by exceeding the standards mandated by Congress in enacting the CAFE standards.
Portions of the One Big Beautiful Bill Act have already gotten rid of fines for underperforming automakers — perhaps a far greater change than the newly proposed repeal.
And the Trump administration’s proposed changes aren’t automatic: The rule will still have to go through the usual administrative rulemaking procedures and public comment period. The rule could then potentially be finalized in 2026.
“The Biden Administration created extraordinarily stringent fuel economy standards for passenger cars and trucks, set at such aggressive levels that they were impossible to meet with available technologies for gas cars,” the White House claimed in a statement.
The announcement has been painted by the White House as lowering the costs for consumers, particularly at a time of continuing inflation. But one of the more curious claims made by administration was that the Biden-era rules would have raised the average cost of a new vehicle “by nearly $1,000” — a strangely specific number — while also saving Americans a total of $109 billion over a period of five years.
The White house did not detail coherently just how or when the reset of Biden-era CAFE standards would affect wider cost-of-living issues or car prices for Americans, given the typical length of automaker product cycles and other longer-term trends that have their own inertia in the marketplace. (Also, one would expect that less fuel-efficient cars and trucks would require more annual expenditures on fuel by Americans, not less, absent a return of gas prices not seen for years).
Automaker CEOs on hand for the Oval Office announcement released statements praising the administration’s move.
“As America’s largest auto producer, we appreciate President Trump’s leadership in aligning fuel economy standards with market realities,” Ford CEO Jim Farley said in a statement provided to the media. “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.”
The proposed rule is generally seen as a boon for domestic automakers with a heavier mix of trucks and SUVs in their lineups. However, quite a few had already taken steps away from heavier EV mixes in their lineups in recent years, and have also given EREV powertrains a fresh look, with several such models now in the pipelines.
In effect, some of the upcoming deregulation had already been priced in or otherwise set into motion by market factors.
The administration’s proposed rule rollback drew predictably sharp reactions from climate and consumer advocacy groups.
“Gutting the CAFE program will make cars burn more gas and American families burn more cash. The current standards save drivers thousands of dollars each year by requiring manufacturers to produce more fuel-efficient cars,” said Katherine García, Sierra Club Clean Transportation for All Director.
“Drivers will be paying hundreds of dollars more at the pump every year if these rules are put in place,” said Kathy Harris, director for clean vehicles at NRDC (Natural Resources Defense Council). “That’s only good news for Big Oil, which has been given handouts time and time again by this administration.”
From a wider perspective, the proposed changes represent yet another cycle of a seesaw effect of alternating Republican and Democratic administrations that either strengthen or weaken CAFE standards and climate-related legislative initiatives, as if turning a large regulation/deregulation dial every four to eight years.
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December 5, 2025
Peter Hughes
December 5, 2025
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