The Trump administration has started the process of dramatically easing fuel economy requirements for new vehicles, part of the administration's broader pivot away from cleaner cars.
At the White House on Wednesday, surrounded by the executives from several major car companies, President Trump said the move would save consumers money by making cars cheaper.
"We're officially terminating Joe Biden's ridiculously burdensome, horrible, actually, CAFE standards that impose expensive restrictions," Trump said, referring to the federal Corporate Average Fuel Economy rules, often called CAFE standards. "And all sorts of problems, all sorts of problems for automakers."
Previous research from Consumer Reports has challenged the argument that regulations make cars more expensive. Stringent fuel economy standards also carry an economic benefit in the form of lower fuel costs over time.
CAFE standards require that the entire fleet of vehicles sold by a given automaker, on average, get more fuel-efficient over time. Automakers who fall short have previously needed to either pay hefty fines, or buy credits from a company that over-performs on efficiency, like Tesla and other all-electric automakers.
The Trump administration has already defanged the existing CAFE standards by eliminating the fines associated with them, as part of the One Big Beautiful Bill Act. Under Former President Joe Biden, the rules called for vehicles to get 2% more efficient every year; the Trump administration is now proposing to revert to the 2022 baseline and increase by .5% annually.
The proposed change now enters a period of public comment; the Department of Transportation will collect input from companies and citizens before finalizing the rule.
The administration has already been working to roll back tailpipe standards set by the Environmental Protection Agency, which are designed to cut pollution from vehicles. The two sets of rules have overlapping effects, with both of them pushing automakers toward cleaner vehicles.
Meanwhile, during the second Trump presidency Congress has also eliminated the consumer tax credit for purchasing electric vehicles, decided to end a tax credit for installing an EV charger in June 2026, earlier than planned, and voted to strike down federal waivers that let California require automakers to build zero-emission vehicles. The Trump administration also temporarily delayed a program to use federal money to build a high-speed EV charger network.
The policy shift was no surprise. Trump campaigned against what he called the "electric vehicle mandate," and promised to rescind policies — including fuel economy standards — that encouraged or incentivized EVs.
Trump has framed the policy rollback as a gift to the auto industry. And that's partially true: Large trucks and SUVs may be inefficient, but they're popular and profitable, and selling more of them without any penalty is a financial boon to automakers. In earnings calls this fall, multiple executives noted that the regulatory rollback will boost earnings and help offset the cost of tariffs.
Electric vehicle adoption in the U.S. has moved slower than automakers had expected. Some automakers have said made some of the Biden-era policies not just challenging but unworkable.
In a statement provided by the White House, Ford CEO Jim Farley praised "President Trump's leadership in aligning fuel economy standards with market realities."
But automakers are also navigating a changing global market, with many countries continuing to prioritize climate action. The popularity of high-quality, affordable Chinese EVs has raised questions about whether legacy automakers can compete. So Farley's statement also promised that "We can make real progress on carbon emissions and energy efficiency while still giving customers choice and affordability."
For companies, which need to plan their future vehicle line-ups years in advance, it's challenging when rules whipsaw back and forth with each change in administration. That's been the reality for years now: The Obama administration set ambitious fuel economy rules, which Trump 1.0 reversed, Biden reinstated, and now Trump 2.0 is seeking to "reset."
Farley obliquely noted that risk in a conversation with investors in October. He explained why Ford was continuing to move ahead with plans for an affordable electric pickup, despite regulations shifting to no longer support EVs. "We expect adoption will increase over time and the market continue to evolve," Farley said. "And maybe the regulations evolve."
Copyright 2025 NPR
