On Monday, Secretary of Transportation Sean Duffy announced a rollback of corporate average fuel economy standards.
In a move hailed as a watershed moment for deregulation under the second Trump administration, the Department of Transportation announced a move to reset corporate average fuel economy (CAFE) standards to previous levels, change vehicle classification rules and eliminate a credit trading program automakers used to meet the more stringent regulations.
The new rule slashes the fuel economy target automakers were formerly required to hit by 2031. Under the old rule formalized by the Biden administration under previous Secretary of Transportation Pete Buttigieg, manufacturers were required to attain a fleet-wide fuel economy average of 50.4 MPG by model year 2031. Now, the standard is a fleet-average fuel mileage rating of 34.9 MPG within the same time frame.
Keep in mind fleet-wide is still a key word in either equation, as that amounts to the average fuel economy for all of a manufacturer’s vehicles, so trucks do not necessarily need to manage 35 MPG or even 50 MPG within the next five years. Automakers that produce smaller and/or more efficient vehicles like hybrids or EVs could then use the breathing room under this rule so trucks would not have to hit substantially higher targets — that hurdle was just significantly lowered from what they would have to achieve under the older target.
The latest CAFE standard is still a step forward, according to the DOT’s official statement, as the CAFE rating for model year 2024 was 30.1 miles per gallon. There will still be some improvement, but automakers are no longer required under this final rule to hit the aggressive targets set by the previous administration.
Under the new and finalized rule, the DOT contends the average cost of a new vehicle will decrease by $1,300 for American households, and the resulting cost savings will compel people to buy newer, safer cars and trucks that should reduce serious injuries or fatalities on U.S. roads.
Another crucial component of the updated CAFE rule reclassifying criteria for “light trucks”. By doing so, manufacturers will face different qualifications by model year 2030 on the design and equipment that pushed certain SUVs into the light truck category. Those vehicles did not have to meet the same fuel efficiency requirements as passenger cars, therefore making them cheaper for OEMs to build and more profitable to sell. The changing criteria under the “Freedom Means Affordable Cars” initiative, the DOT says, would flip the current status quo from 70% light trucks and 30% passenger cars, to 70% passenger cars and 30% light trucks.
Beginning in model year 2028, the rule will also compel the National Highway Traffic Safety Administration (NHTSA) to eliminate CAFE credit trading. Effectively, this will discontinue the practice of manufacturers selling or trading credits from less efficient fleets to those well above the fuel efficiency targets. The agency said this practice “artificially propped up the EV industry”, as companies like Tesla and Rivian — who don’t have gas-burning vehicles to worry about at all — make the most benefit of generating revenue through those credits. “Eliminating the credit trading program restores fairness, puts all automakers on an even playing field, and ensures that manufacturers are spreading fuel-saving technologies throughout their fleets.”
The overall rulemaking, and the notion toward saving money for consumers, comes at a time when gas prices currently sit at around $4.48 per gallon, according to AAA. Diesel prices are even higher, at $6.45 per gallon. While the decision does, in theory, lower the overall buying costs, it is unclear whether automakers will actually lower vehicle costs by anywhere near the quoted $1,300 figure (suggesting companies would pass cheaper manufacturing costs from not having to implement more aggressive fuel-efficiency measures to the consumer). With fuel prices currently far higher than in previous years, the consumer may wind up spending what money they save on fuel or on other higher-priced goods instead.
