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Published May 7, 2026
The Trump administration has officially loosened the federal fuel-economy requirements that govern nearly every new car and truck sold in the United States. The National Highway Traffic Safety Administration finalized new Corporate Average Fuel Economy (CAFE) standards that ask automakers to improve fleet efficiency by just 1% a year, targeting an average of 34.9 miles per gallon by model year 2031.
That is a sharp retreat from the rules put in place under the Biden administration, which required annual efficiency gains of 2% and pushed most vehicles to reach a fleet-wide average of 50.4 mpg over the same period. The new rule is expected to preserve more room for bigger, less efficient vehicles while easing the pressure on automakers to build large numbers of electric models.
Administration officials say the shift is about affordability. Their argument is simple: fuel-saving technology is expensive, and forcing carmakers to install it has raised the price of new vehicles. NHTSA estimates the relaxed standards will trim roughly $1,300 from the average sticker price.
Transportation Secretary Sean Duffy described the move as both economic relief and an industrial revival. In a statement, he said the administration is “delivering relief to families and reviving the beating heart of American manufacturing.”
President Trump also weighed in, writing on Truth Social that the new standards would remove waste from car production and lead to “LOWER PRICES, saving families thousands on a new, beautiful, and safe car.”
Climate and consumer advocates see the rule differently. They argue that weaker standards will boost gasoline consumption and pollution, and they avoid the real-world costs of driving a less efficient vehicle.
Dan Becker, director of the Safe Climate Transport Campaign at the Center for Biological Diversity, called the rollback a blow to consumers. He said drivers would pay more at the pump and in health care costs linked to poor air quality, “at the worst possible time” given today’s high fuel prices.
That price pressure is already visible nationally. According to AAA, the average cost of a gallon of regular gasoline sits near $4.50, while diesel is hovering around $6.50—close to a record high.
The auto industry’s main trade group, the Alliance for Automotive Innovation, applauded the government’s decision. The group represents brands including Ford, General Motors and Stellantis.
John Bozzella, the alliance’s president and CEO, said the previous standards effectively forced a rapid switch to electric vehicles that did not match consumer demand or market realities. He called the new rule “an appropriate course correction.”
For many U.S. automakers, the change offers short-term relief. Trucks and SUVs still generate the bulk of their profits, and the looser standards give them more flexibility to keep selling those models without relying on EV credits to balance out their fleet averages.
The affordability argument is central to the administration’s rollout—but not everyone believes the cost savings will reach consumers.
Economist Sue Helper, who studies the auto industry at Case Western Reserve University, says the rising price of new cars has less to do with fuel-efficiency rules than with other factors. Vehicles have grown larger, supply chain problems have pushed up costs, tariffs have added friction, and many buyers are paying for infotainment systems and other features that were once optional.
A Consumer Reports analysis from 2023 supported that view. It found that fuel economy improved by about 30% between model years 2003 and 2021, but the bigger price jumps tracked an industrywide shift toward expensive SUVs—not the cost of making engines cleaner.
Even financing costs can outweigh a $1,300 discount. Ellen Hughes-Cromwick, a former chief global economist at Ford who now studies clean energy at the Third Way think tank, points out that sky-high interest rates have made monthly payments a bigger barrier to ownership than the upfront sticker price.
CAFE standards date back to the oil shocks of the 1970s. Congress created them in 1975 to reduce the country’s dependence on Middle East oil by forcing automakers to make more efficient vehicles.
Since then, the rationale has shifted. The U.S. is now the world’s largest oil producer, and climate change has become the main argument for tightening fuel-economy requirements. Under the Biden administration, automakers were expected to sell enough electric vehicles to offset their gas-heavy models, or pay penalties.
The Trump administration changed that equation even before this week’s final rule. As part of last year’s One Big Beautiful Bill Act, it stripped away the federal penalty that made EV credits valuable. The White House then proposed a broader CAFE rollback, and NHTSA opened the issue for public comment. Alongside the new standards, the agency also eliminated the trading system that let automakers buy credits from EV makers to meet their obligations.
Longtime auto industry observers are worried the rollback could hurt American manufacturers in the broader global market.
“The future of the industry is all about the transition to electric vehicles,” Hughes-Cromwick said. “The rest of the world is marching on in this transition. We have a very powerful competitor in terms of the Chinese electric vehicle industry.”
Helper echoes that concern, arguing that weaker domestic standards give U.S. companies less practice building the products international buyers will demand. “It’s very bad in the long term, because it slows progress,” she said. “Then we make our auto companies less competitive.”
She also notes that foreign markets, especially Europe and China, are adopting stricter emissions rules of their own. American carmakers hoping to sell overseas will eventually need those green technologies anyway.
For now, automakers are caught in regulatory limbo. Environmental groups are expected to challenge the NHTSA rule in court, which could take months or years to resolve. And because fuel-economy policy has shifted with each administration, carmakers may hesitate to redesign vehicles around standards that could easily change again.
That uncertainty matters. Decisions about engines, platforms and factories are made years in advance. As one trade official put it privately, the safest strategy may be to keep the current vehicle lineup stable and wait to see which way the political winds blow.
One thing is clear: America’s fuel-economy trajectory under the new rule is far less aggressive than it was just two years ago. Whether that leads to cheaper cars, more pollution, or simply a longer and bumpier road for EVs remains an open question—and likely the next battleground.
