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May 9, 2026 — The U.S. Department of Transportation has finalized a new fuel economy rule that resets the Corporate Average Fuel Economy (CAFE) requirements for model years 2022 through 2031, sharply easing the federal government’s push for electric vehicles while promising lower prices at dealerships.
Transportation Secretary Sean P. Duffy called the move “commonsense standards” and said the previous course had effectively forced EVs on consumers who weren’t asking for them. The rule, issued by the National Highway Traffic Safety Administration (NHTSA), reverses the Biden-Buttigieg-era policy that USDOT claims exceeded statutory authority and operated as “a backdoor electric vehicle mandate.”
Under the new regulation, NHTSA projects the average fuel economy for the nation’s new light-duty fleet will reach 34.9 mpg by model year 2031, up from 30.1 mpg in model year 2024. The agency also estimates the standards will cut annual oil consumption by about 1.3 billion barrels in 2050 compared with 2024.
“With our commonsense standards in place, we are making the American dream affordable again, putting safer cars on the road, and investing in the American autoworker,” Duffy said in a statement.
USDOT says the final rule, titled “Freedom Means Affordable Cars,” is designed to:
The theory is straightforward: if new vehicles cost less, more people will replace older, less-safe cars with newer ones that come equipped with modern crash-avoidance technology. NHTSA Administrator Jonathan Morrison echoed that point, saying “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,” Morrison said.
Automakers have largely welcomed the reset. The Alliance for Automotive Innovation, a major industry trade group, released a statement endorsing the rule while noting it was still reviewing the full text.
“NHTSA made the right call to better align fuel economy standards with the law and current market conditions,” said John Bozzella, the group’s president and CEO. “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.”
Bozzella argued that automakers need “long-term regulatory stability” with balanced and achievable targets, adding that today’s final rule is “an appropriate course correction” that helps preserve consumer choice and keeps the U.S. industry globally competitive.
The final rule makes two structural moves that go beyond simple mpg targets.
First, starting with model year 2030, NHTSA will classify vehicles based on each model’s actual intended use rather than the current footprint-and-equipment tests. The agency says this will flip the fleet mix from roughly 70% light trucks and 30% passenger cars to about 70% passenger cars and 30% light trucks. By changing the classification criteria, officials say automakers will no longer have an incentive to add weight, tires, or other equipment just to qualify for less-stringent light-truck standards.
That should make hatchbacks, wagons, and other smaller vehicles more available in the U.S. market, which could also help American auto exports match the preferences of foreign buyers.
Second, the CAFE credit trading program will end in model year 2028. Until now, automakers that exceeded fuel economy targets could sell credits to others that fell short. Eliminating that program, according to USDOT, “restores fairness” and ensures every manufacturer is actually spreading fuel-saving technology throughout its fleet.
For shoppers, the practical impact may be visible in showroom inventory within a few years. With less regulatory pressure to force EV adoption, dealerships are expected to stock more conventional gasoline-powered models — compacts, crossovers, pickups — alongside hybrids and EVs.
Lower compliance costs could help keep transaction prices down, though broader economic factors like interest rates and inflation will still play a larger role in affordability. The rule does not eliminate fuel economy standards altogether; it simply aligns the trajectory with what automakers can achieve using existing engine, transmission, and hybrid technology.
Industry observers view the final rule as a deliberate move to cool down the EV transition timeline. Unlike the previous administration’s approach, there is no explicit requirement for a certain percentage of EV sales. Instead, the mpg targets are set at a level that allows manufacturers to comply while continuing to sell a wide range of gasoline-powered vehicles.
The new rule follows years of litigation and regulatory whiplash. The Biden administration had raised CAFE stringency sharply, arguing that Congress required the maximum feasible fuel economy. The Trump administration and Republican lawmakers countered that those standards were effectively an EV mandate written without clear congressional approval.
This final rule is being published just as the federal regulatory calendar enters a quieter period, but challenges are likely. Environmental groups have already criticized the reset as a retreat from climate goals and have signaled they may sue to block it.
For now, the automotive industry is getting the regulatory clarity it says it needs. The next step is publication in the Federal Register, after which the standards formally apply to the 2022–2031 model years being reviewed in this rulemaking cycle.
