The fuel economy standards finalized by former President Joe Biden last year are facing potential cuts as U.S. President Donald Trump proposes revisions to facilitate the sale of gasoline-powered vehicles. Trump’s move aims to reverse one of Biden’s key climate initiatives, which encouraged the adoption of electric vehicles. According to Trump, there is a strong demand for gasoline-powered cars among consumers.
The National Highway Traffic Safety Administration (NHTSA) is suggesting a significant reduction in fuel economy requirements for vehicles from 2022 to 2031, aiming for an average of 34.5 miles per gallon by 2031, down from the previous target of 50.4 miles per gallon. The proposal includes revising down the 2022 fuel economy standards and gradually increasing them by 0.25% to 0.5% annually until 2031.
Biden’s rules aimed to push automakers to produce more electric vehicles without an immediate ban on gasoline-powered vehicles. The proposed changes by NHTSA are estimated to lower upfront vehicle costs by $930 US but could lead to an increase in fuel consumption by around 100 billion gallons by 2050, costing Americans up to an additional $185 billion US on fuel and raising carbon dioxide emissions by approximately 5%.
The proposed rule could result in substantial savings for automakers, with estimates suggesting savings of $35 billion through 2031, including significant amounts for companies like GM, Ford, and Stellantis. The proposal also aims to eliminate credit trading among automakers by 2028 and phase out certain credits for fuel-saving features.
California Governor Gavin Newsom criticized Trump’s proposal, stating that it would force Americans to spend more on fuel while increasing air pollution. Transportation accounts for a significant portion of U.S. greenhouse gas emissions. The suggested increase in vehicle emissions under the new proposal by 2035 would be equivalent to the annual emissions from 7.7 million vehicles under the previous Biden administration proposal.
Earlier this year, Trump signed legislation eliminating fuel economy penalties for automakers, and NHTSA reported no fines for automakers dating back to the 2022 model year. The proposal to end credit trading could impact companies like Tesla and Rivian, which have sold credits to manufacturers producing gas-powered vehicles. Ford CEO Jim Farley expressed support for the proposal, emphasizing affordability and consumer choice.
Despite Trump’s claims of decreasing vehicle prices, recent data shows a year-over-year increase in new vehicle prices. The proposed changes could have implications for the auto industry, as General Motors CEO Mary Barra highlighted challenges faced due to state requirements for a high percentage of EV sales. The agency projects that the new rule could cut gasoline consumption and emissions significantly, benefiting drivers financially.
Critics, including environmental organizations, argue that the proposed changes will burden consumers with higher fuel costs to benefit the oil industry. Trump’s administration has taken several measures to promote gas-powered vehicles over EVs, including revoking EV tax credits and preventing California from prohibiting the sale of traditional gas-powered vehicles beyond 2035.