President Trump's administration has finalized a sweeping rollback of federal fuel economy standards, cutting the fleet-wide mileage target automakers must hit by 2031 nearly in half from the Biden-era rule and scrapping the credit-trading system that had funneled billions of dollars to electric vehicle makers like Tesla.
Why it matters: The rule reshapes what's profitable to build and sell in the U.S. for years to come, giving automakers far more room to produce trucks and SUVs instead of smaller, more fuel-efficient vehicles — while stripping away a revenue stream that helped bankroll EV production.
Driving the news:
The new fleet-average target is 34.9 mpg by model year 2031, down from 50.4 mpg under the Biden administration's rule, according to Washington Examiner.
The rule eliminates a credit-trading program set to start in 2028 that let EV makers sell surplus efficiency credits to automakers falling short of standards, per Washington Examiner.
Small crossover SUVs will be reclassified as passenger cars rather than light trucks, a change regulators project will flip the industry's on-paper fleet mix from roughly 70% light trucks to 70% passenger cars, Washington Examiner reports.
Trump announced the move over the weekend on Truth Social, saying he'd approved standards that would “TERMINATE” what he called Biden and former Transportation Secretary Pete Buttigieg's “ridiculous EV Mandate,” per Breitbart.
By the numbers:
34.9 mpg — the new fleet-average target automakers must hit by 2031, versus 50.4 mpg under Biden's rule.
$11 billion+ — revenue Tesla has generated over the past decade selling regulatory credits to other automakers under the old system, per Washington Examiner.
1975 — the year Congress first established CAFE standards.
What they’re saying: “I have just approved new Fuel Economy Standards that TERMINATE Sleepy Joe Biden and Pete Boot-EDGE-EDGE's ridiculous EV Mandate,” Trump wrote on Truth Social, promising the change would deliver “LOWER PRICES, saving families thousands on a new car,” per Breitbart.
The other side: Former Transportation Secretary Pete Buttigieg criticized the move, saying “U.S. manufacturing jobs are down under Trump, including in the auto industry. His strategy failed, and so will this,” according to Washington Examiner. Kevin Brown of the Manufacturers of Emission Control Association also told the outlet the new standards fall well short of industry projections and could let automakers “backslide” on efficiency gains.
The bottom line: The rollback caps a year-long fight over how aggressively Washington should push automakers toward electrification, handing manufacturers more flexibility on truck and SUV production while removing one of the financial pillars of the EV credit market — a trade-off the administration is betting shows up in car buyers' wallets.
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