The Trump administration has announced changes to fuel efficiency requirements on a wide range of new vehicles, which is expected to hit the electric vehicle (EV) industry hard. With less strict regulations on internal combustion engine (ICE) vehicles, many consumers will likely continue to use gas-guzzling models for longer rather than shift to EV alternatives, as had previously been expected.
Government Rolls Back Fuel Economy Rules Set Under Biden
President Trump announced that the U.S. Department of Transportation would be weakening fuel efficiency requirements for tens of millions of new cars and light trucks. According to Trump, the move will save U.S. consumers $109 billion over five years and reduce the cost of the average new car by $1,000.
“We’re officially terminating Joe Biden’s ridiculously burdensome, horrible, actually, CAFE (Corporate Average Fuel Economy) standards that impose expensive restrictions and all sorts of problems — gave all sorts of problems to automakers,” said Trump.
The stricter efficiency standards had been adopted under the Biden administration as part of the former president’s aim to encourage consumers to switch to EVs to help decarbonize the economy. Transportation continues to be one of the country’s biggest emitters of greenhouse gases (GHG), contributing between 28% and 30% of total U.S. GHG emissions.
However, President Trump said that the restrictions “forced automakers to build cars using expensive technologies that drove up costs, drove up prices, and made the car much worse. This is a green new scam, and people were paying too much for a car that didn’t work as well.”
The watered-down standards, which are still subject to a formal rule-making process, would require automakers to achieve an average of 34.5 miles a gallon for cars and light trucks by 2031, a significant reduction from the previous standard aim of 50.4 miles a gallon that was established by the Biden administration in 2024. Biden’s rule was expected to decrease fuel costs by $23 billion as well as prevent over 710 million metric tons of carbon dioxide from being released into the atmosphere by 2050.
High Vehicle Costs Due to Tariffs
In recent months, President Trump has introduced multiple tariffs on imports from several countries around the world. His high tariffs on steel and imported car parts have already disrupted supply chains and have made it more expensive for U.S. automakers to produce vehicles. Inflation has further exacerbated the situation.
The average price of a new car in the United States has now exceeded $50,000 for the first time, owing largely to the increased tariffs, according to the automotive research company Kelley Blue Book.
Industry Response
While several automakers publicly applauded the move by Trump to weaken efficiency requirements, some have shown concern in recent months due to the uncertainty the sector is facing in the face of conflicting federal policies.
The CEO of Ford, Jim Farley, said the new rules were “aligned with customer demand” and called the change “the right move for a lot of reasons.”
Farley added, “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.”
Meanwhile, Sierra Club Clean Transportation for All director Katherine Garcia said the move would drive up GHG emissions and increase fuel costs. “This rollback would move the auto industry backwards, keeping polluting cars on our roads for years to come and threatening the health of millions of Americans, particularly children and the elderly,” Garcia said in a statement.
The recent move is expected to make it more difficult for the U.S. to achieve its climate pledges. In addition, critics suggest that lowering efficiency standards could drive up consumer costs, as automakers were previously encouraged to produce vehicles that used less gas, which reduced consumer spending on gasoline.
Electric Vehicles are on the Chopping Block
President Trump already scrapped tax credits for EVs earlier this year, driving several automakers to reduce their investments in EV production, and the recent move is expected to slow EV uptake even further.
In January, Trump revoked the Biden administration’s mandate for EVs to contribute at least 50% all new vehicle sales by 2030. The government also announced the halt of charging infrastructure expenditure via the $5 billion National Electric Vehicle Infrastructure (NEVI) program.
On June 12, Trump also blocked California’s EV sales mandates, which banned the sale of new ICE-only vehicles from 2035 and required that at least 80% of all new vehicle sales be battery electric by that date.
The weakening of the fuel efficiency requirements could slow the pace of EV uptake, which could force automakers to change their production strategies to focus on ICE vehicles for longer.
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