Trump administration to relax US fuel economy standards to 34.5 mpg by 2031

The Trump administration plans to release new automotive fuel economy standards on September 28, further easing energy efficiency requirements for gasoline-powered passenger cars and light trucks. Under the previously announced proposal, the average fuel economy for the U.S. light-duty vehicle fleet is expected to reach approximately 34.5 miles per gallon by the 2031 model year—significantly lower than the 50.4 miles per gallon projected under the Biden administration's rules. The National Highway Traffic Safety Administration (NHTSA) has also published a proposed rule indicating a fleet-wide average of roughly 34.5 miles per gallon for the 2031 model year.

This adjustment is part of the Trump administration's broader effort to reshape the automotive regulatory framework. President Trump has stated that looser standards will lower U.S. vehicle manufacturing costs, thereby reducing expenses for consumers purchasing new cars. At the same time, the new rules will further weaken the policy pressure that previously pushed the auto industry to increase the share of electric vehicles (EVs) through fuel economy and emissions standards.

2031 Fuel Economy Target Significantly Reduced

The Corporate Average Fuel Economy (CAFE) standards set the required average miles per gallon that automakers' new vehicle fleets must achieve. Stricter standards compel manufacturers to improve engine efficiency, reduce vehicle weight, and increase the share of hybrids and EVs to lower overall fleet fuel consumption. NHTSA is responsible for setting CAFE standards for passenger cars and light trucks.

Under the Trump administration's proposed plan, the light-duty vehicle fleet would achieve an average fuel economy of about 34.5 miles per gallon by the 2031 model year, compared to the approximately 50.4 miles per gallon projected under the Biden-era rules for the same period. This means automakers will face significantly less regulatory pressure to improve fuel efficiency in the coming years.

The Trump administration argues that stricter standards force manufacturers to invest in costly fuel-saving technologies and electrification, ultimately driving up new vehicle prices. President Trump has said the new standards will reduce additional costs in U.S. auto production and save families thousands of dollars on vehicle purchases.

Policy Focus Shifts from Promoting EVs to Reducing Compliance Burdens

This adjustment to fuel economy standards continues the Trump administration's automotive policy direction seen earlier this year. The administration has already relaxed vehicle tailpipe emissions requirements, eliminated certain penalties for automakers failing to meet federal fuel economy standards, and ended the consumer EV tax credit of up to $7,500.

The new CAFE rules further reduce the pressure on automakers to increase EV sales in order to meet overall fleet efficiency targets. However, CAFE standards themselves set fleet-wide fuel economy goals and do not directly mandate how many EVs manufacturers must sell.

From the auto industry's perspective, the relaxed standards ease compliance pressure on traditional gasoline vehicles, pickup trucks, and large SUVs, giving automakers greater flexibility in their product mix.

Government Emphasizes Lower Vehicle Prices, but Fuel Costs Remain a Concern

The new rules come at a time when new car prices in the U.S. remain elevated. In August, the average transaction price for a new vehicle reached $50,089, once again surpassing the $50,000 mark.

This is a key backdrop for the Trump administration's focus on reducing regulatory costs. The administration and industry supporters argue that looser fuel economy standards will reduce automakers' need for additional technology investments to meet regulatory requirements, allowing consumers to continue purchasing more affordable gasoline-powered vehicles.

However, fuel costs present another challenge. The average price of regular gasoline in the U.S. was approximately $4.47 per gallon on September 27, up from $4.09 a month earlier. In a high-oil-price environment, lower vehicle fuel efficiency means consumers may face lower upfront costs but will need to purchase more gasoline over the vehicle's lifetime.

Thus, the economic impact of the new standards largely depends on the balance between two cost components: how much vehicle manufacturing and purchase costs decline, and how much additional fuel expenses arise from lower efficiency over the vehicle's lifespan.

Environmental Groups Question Long-Term Costs and Emissions Impact

Environmental organizations oppose relaxing the existing standards, arguing that a wide range of mature fuel-saving technologies are already available and that improving fuel efficiency does not pose insurmountable technical challenges.

Opponents contend that with gasoline prices already rising significantly, reducing vehicle fuel efficiency could lead to higher long-term fuel costs for consumers, while also increasing carbon dioxide and other pollutant emissions.

Previous fuel economy standards were projected to reduce gasoline consumption by approximately 14 billion gallons by 2050. Related estimates also suggest that if the earlier standards were eliminated, annual vehicle CO2 emissions could increase by about 22,100 metric tons by 2035, along with higher emissions of particulate matter, nitrogen oxides, and volatile organic compounds.

This lies at the heart of the policy debate: the Trump administration focuses on reducing automaker compliance costs and new vehicle prices, while opponents emphasize fuel costs and environmental impacts over the entire vehicle lifecycle.

Background: CAFE Standards and Shifting Regulatory Direction

The U.S. CAFE program originated during the energy crisis of the 1970s, and fuel economy requirements have generally increased over time. The Trump administration's significant reduction in requirements for future model years marks another clear shift in U.S. automotive regulatory direction, giving automakers greater autonomy in their product planning for gasoline vehicles, hybrids, and EVs in the years ahead.