Trump Administration Seeks to Nearly Halve Vehicle Mileage Efficiency Standards

Written by John Egan for Industrial Info Resources (Sugar Land Texas)

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Summary

In a Wednesday Oval Office event, President Donald Trump unveiled a proposal to significantly reduce federal vehicle fuel-economy standards to make new cars and light-duty trucks more affordable and give consumers additional choices when purchasing a new vehicle.

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White House Oval Office Event

Flanked by about 18 lawmakers, automobile representatives and members of his administration, President Donald Trump on December 3 said his administration was reducing vehicle efficiency standards "to lower costs for American consumers, protect American auto jobs and make buying a car more affordable for countless American families." He said the proposed "reset" also would make cars safer in the future while also providing consumers with greater choice in their selection of vehicles.

The 575-page proposed rule will be published in the Federal Register in the coming days. Public comment will be taken for 45 days after that, with finalization of the rule expected next year. The oil and auto industries praised the proposal, but environmental and public health advocates blasted it, virtually guaranteeing litigation when the proposed rule is finalized.

In his Oval Office remarks, Trump blasted his predecessor's "ridiculous and horrible and unattainable" corporate average fuel economy (CAFE) standards, which were finalized last year: "Nobody could (meet those standards) and no one wanted to." He also claimed that the Biden-era CAFE standards imposed "very expensive restrictions" that drove vehicle costs up by 25%.

"People were brainwashed by the New Green Scam--people were paying too much for a car that didn't work as well," Trump continued. "Now, we're going to have great cars that will be environmentally friendly but will cost a lot less and will work great. All of the nonsense is being taken out of the car-making process."

The Biden-era rule did not set separate standards, electric and other types of vehicles, nor did it require carmakers to manufacture a specific number or percentage of electric vehicles (EVs) or vehicles powered by internal combustion engines that burned gasoline or diesel fuel. Rather, it blended all of the miles per gallon (MPG) performance for all vehicles across an automaker's fleet, with some assumptions about EV mileage equivalent efficiencies. For more on the Biden administration's final 2024 rule on CAFE, see June 17, 2024, article - Republicans Slam Final Rule Setting Higher Vehicle Fuel Efficiency Standards.

In addition to disparaging the fuel economy standards enacted last year by his predecessor, Trump's wide-ranging remarks on December 3 also touched on his tariffs, China, the wars he supposedly ended, artificial intelligence, domestic computer chip-making capacity, the strength of the U.S. economy and his tax-and-spend bill, enacted over the summer.

DOT Proposal

The Trump administrations proposed CAFE rule, called the "Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule III for Model Years 2022 to 2031," is detailed in a lengthy document from the Department of Transportation (DOT). It proposes to cut efficiency standards by about 47%, from the current level of about 50 MPG in vehicle year 2031 to about 34 MPG in that vehicle year.

Trump's proposed rule seeks annual efficiency gains of between 0.25% and 0.5% through model year 2031 vehicles. The Biden administration, by contrast, increased fuel efficiency by 8% annually for model years 2024-2025 and 10% for model year 2026 vehicles.

A DOT statement estimated that the new standard would save American consumers about $109 billion over the next five years and save families $1,000 on the average cost of a new vehicle. The new standards also would save over 1,500 lives and prevent almost 250,000 serious injuries through 2050, DOT projected.

The Biden-era CAFE rule estimated that more fuel-efficient vehicles, including an increase in non-internal combustion engine vehicles, would save U.S. consumers more than $23 billion in fuel costs, about $600 in savings over an individual vehicle's lifetime. Those tougher standards would also reduce vehicle emissions of carbon dioxide (CO2), which contribute to global warming. The U.S. transportation sector is the nation's largest emitter of CO2, surpassing the energy industry, according to data from the EPA.

Click on the image at right to see an EPA estimate of what percentage of U.S. greenhouse gas emissions came from which sectors in 2022.

CAFE Standards: Out with the Old, In with the New--Again

For half a century, the federal government has required automakers to attain a blended average MPG performance across its fleet.

The December 3 draft rule continues more than a decade of back-and-forth on federal vehicle MPG standards. Those standards were raised in 2012, during the Obama administration, then lowered in 2016 during the first Trump administration, then raised again by the Biden administration in 2024. Now Trump seeks to sharply lower them.

Although Trump has repeatedly criticized his predecessor's "EV mandate," no such mandate ever existed. The final Biden-era rule gave vehicle makers the option of meeting the new mileage efficiency requirements by improving the fuel efficiency of vehicles powered with internal combustion engines, by boosting the number of models they produce that run on electricity, or a mix of both.

Automakers have been put in a bind by frequent federal shifts in MPG standards: Though most companies were not happy to see the Biden administration's 50 MPG standard enacted last year, they accepted it, however reluctantly, because it provided certainty that there would be a single average MPG standard across the U.S. market. That made it easier for them to plan and produce vehicles with specific efficiency ratings. What they didn't want was an absence of federal regulation, which could lead to a patchwork of state regulations where they would have to make one set of vehicles for California and another for Kentucky.

New Proposal Aligns with Other Trump Energy Efforts

The December 3 proposal continued and extended the Trump administration's efforts to support automakers and the oil industry. As one of his first acts as president, Trump signed an executive order ending federal tax credits for EVs. Also in January, Secretary of Transportation Sean Duffy began a process to re-evaluate the feasibility of Biden-era vehicle mileage standards, claiming they underestimated both the threats to the electric grid and U.S. reserves of oil and gas. The administration also rolled back Biden-era tightening of vehicle tailpipe emissions standards.

On the oil front, this measure, if finalized and surviving any legal challenges, would preserve a large and important refined product market for U.S. oil companies. This administration has taken several other steps to make it easier for oil and gas companies to drill for hydrocarbons.

In his December 3 Oval Office remarks, Trump said the new CAFE standards were being proposed "so that California communists can't regulate the auto industry and ruin the entire" car-making and car-buying process. He was referring to a measure he signed earlier this year revoking California's longstanding waiver from federal CAFE standards that allowed the Golden State to set MPG standards that were higher than the federal government. That matter currently is being litigated.

Key Takeaways

• The Trump administration is seeking to slash vehicle mileage efficiency standards by 47% for model-2031 vehicles.
• The administration said its proposed rule would make new cars and trucks more affordable and safer while also creating domestic automaking jobs.
• The transportation sector is the largest single emitter of greenhouse gases.
• The oil and auto industries supported the proposal, but environmental and public health groups criticized it. Litigation is virtually certain.
• The December 3 draft proposal continued and extended the Trump administration's support for the oil and automaking industries.

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