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WASHINGTON — The Trump administration has formally finalized a sweeping rollback of federal fuel-economy rules for new cars and light trucks, a move designed to lower vehicle prices, ease pressure on automakers and unwind what President Donald Trump has repeatedly called the Biden administration’s “EV mandate.”
The new rule, announced by Trump on social media over the weekend and finalized by regulators this week, resets the fleet-wide mileage target to an average of 34.9 miles per gallon. That is a sharp drop from the 50.4 mpg figure that the previous administration had projected for automakers’ combined car and truck fleets.
The change, published by the National Highway Traffic Safety Administration, marks one of the most significant regulatory reversals of Trump’s second term. It also aligns with earlier moves by Congress and the Environmental Protection Agency to strip away penalties for automakers that miss federal mileage goals and eliminate the previous administration’s vehicle pollution limits.
Trump argued that the lower standards will make new vehicles more affordable and encourage more domestic production. The average price of a new car in the U.S. topped $50,000 as of last summer, according to industry data, and many households are still wrestling with higher borrowing costs and slower wage growth.
“This rule restores integrity to the national fuel economy program, balancing vehicle affordability and energy conservation goals while improving safety on our roadways,” said Jonathan Morrison, the NHTSA administrator. “Newer cars are safer cars. By reducing vehicle prices, more American families will be able to afford newer vehicles, and sensible standards allow automakers more freedom to design and produce vehicles consumers actually want.”
Trump framed the rollback as a direct rebuke of his predecessor’s climate policy. In a post on Truth Social, he accused Democratic officials of forcing automakers to spend billions on electric vehicles that Americans did not want and of wasting money on charging infrastructure that was never built.
The finalized standards arrive at a politically and economically delicate moment. Fuel prices have climbed since the outbreak of the Iran conflict in February, with the national average for a gallon of gasoline at $4.47 this week and diesel at $6.45, according to price tracking data. Supporters of stricter mileage requirements argue that higher efficiency ultimately saves drivers money by reducing trips to the pump, but the White House has prioritized upfront affordability in this round of rulemaking.
A major theme of the shift is the uneven pace of America’s transition to electric vehicles. While EV adoption has accelerated in parts of the world, especially in China and Europe, U.S. consumers have been slower to trade gasoline-powered vehicles for electric ones. EVs accounted for only 5.8 percent of new-car sales in the most recent quarter, and just 7.4 percent of sales last year, as generous federal tax credits that once lowered their price were eliminated by the current administration.
That reality has forced the industry to reassess its ambitions. Several automakers have scaled back or delayed EV production plans after losing billions of dollars in the domestic market. Industry groups welcomed the regulatory relief, saying the previous mileage targets were out of step with customer demand.
“The standards finalized under the previous administration effectively required a switchover to electric vehicles that was out of step with market realities and customer demand. Today’s final rule is an appropriate course correction,” said John Bozzella, president and CEO of the Alliance for Automotive Innovation.
Still, the decision carries long-term risks for American competitiveness. China’s automotive industry has built a commanding lead in the global EV market, offering smaller and more affordable models than their U.S. and European counterparts. China also dominates the supply chain for EV batteries and the critical materials used to produce them.
According to the International Energy Agency, China accounted for more than 80 percent of global battery cell production in 2025 and an even larger share of the production of active materials used in EV batteries. Although lithium-ion battery manufacturing is expanding in the U.S. and Europe, China is widely expected to remain the largest producer of batteries and related materials until at least 2035.
During the Biden administration, Washington treated breaking China’s grip on the EV supply chain as a national priority, funneling billions of dollars into domestic manufacturing through subsidies, tax incentives and federal electrification programs. The removal of EV tax credits has made that competition harder, leaving U.S. automakers with fewer tools to encourage consumers to make the leap.
Tim Johnson, a professor of energy and the environment at Duke University, said the rollback includes a dose of realism but also carries a warning. He noted that the earlier standards would have forced a major transformation in both car production and consumer buying habits, as well as a massive rollout of charging infrastructure. Yet he cautioned that easing the rules could push companies toward short-term profit rather than long-term innovation.
“It depends on how short- versus long-term the U.S. auto industry is,” Johnson said. “They make a lot of money on SUVs and big vehicles, and if they can plow some of that into R&D for electric vehicles and at least keep that simmering on the back burner for a while, then fine. But if not, they're going to be hurt in the long run.”
The lower mileage standards could give automakers greater freedom to produce larger, higher-margin vehicles like pickup trucks and sport utility vehicles. On paper, that is good news for quarterly earnings. But analysts note that it may also deepen the industry’s dependence on gasoline-powered models at a time when global markets are moving in the opposite direction.
The regulatory reset is likely to face legal challenges. Environmental groups and several states, particularly California, have signaled they will defend stricter standards and may file suit to block the rule. Similar litigation followed the first Trump administration’s rollback of Obama-era fuel economy targets, and the courts ultimately struck down parts of that plan.
For consumers, the immediate impact may be felt in dealerships. Lower compliance costs are expected to allow automakers to hold the line on prices for gas-powered models, but the long-term trajectory of the market remains uncertain. With global competition intensifying and battery technology advancing quickly, the U.S. auto industry must weigh near-term affordability against its ability to remain relevant in the electric age.
The new rule also raises questions about federal energy policy. If U.S. consumers continue to buy fuel-hungry vehicles and domestic EV production remains limited, the country may find itself more dependent on imported oil and more exposed to volatile gasoline prices. At the same time, the Trump administration is betting that a lighter regulatory touch will keep manufacturing jobs in America and make new vehicles attainable for more families.
As the policy takes effect, automakers will face a choice. They can use this period of relief to invest quietly in next-generation electric vehicles and battery research, positioning themselves for the inevitable global transition. Or they can focus on protecting profits from trucks and SUVs, leaving the U.S. even further behind in a market China is already reshaping.
For now, the administration is presenting the rule as a victory for common sense and consumer choice. But the long-term consequences, both for the domestic industry and for America’s standing in the global auto market, may take years to fully measure.
