The White House Officially Proposes Fuel Economy Standards Roll Back

The United States is preparing a sweeping shift in fuel-economy policy, proposing a rollback of standards that had been finalized during the Biden administration.

The draft rule, released Wednesday, would lower federal efficiency targets for vehicles built between 2022 and 2031, sharply reducing the compliance pressure automakers had been bracing for.

The proposal calls for an industry fleet average of 34.5 mpg by 2031—well below the 50.4-mpg figure set under the previous administration. The National Highway Traffic Safety Association also wants to dial back standards retroactively for model-year 2022 and then apply only minimal annual increases of 0.25% to 0.5% through the end of the decade. By comparison, the Biden standards called for 8% annual gains through 2025 and a 10% jump in 2026.

According to the NHTSA, easing the rule would shave roughly $900 off the average upfront price of a new vehicle. The tradeoff, however, is higher national fuel consumption, with NHTSA acknowledging that relaxed requirements will increase gasoline demand significantly over time. A portion of the proposal remains under review, including how far back the retroactive reductions would apply—an unusual step that effectively gives automakers a wider path to compliance.

One of the most consequential elements of the plan is a proposal to end credit trading among automakers beginning in 2028. Under the current system, companies with more efficient lineups—most notably EV-only manufacturers—can sell excess credits to companies that fall short of their targets. NHTSA says the shift would prevent what it views as a “windfall” for brands without internal-combustion portfolios. Ending the market would directly affect companies like Tesla and Rivian, which have long relied on credit sales as a significant revenue stream.

Earlier this year, President Donald Trump signed legislation eliminating fuel-economy penalties for automakers dating back to the 2022 model year, effectively eliminating billions in potential fines.

Ford CEO Jim Farley voiced support for the new direction, saying the revised standards “align with market realities” and still allow meaningful progress on carbon emissions without pricing buyers out of the market. GM CEO Mary Barra also pointed to the strain the industry faced under California’s previously planned zero-emission mandates, noting that manufacturers risked plant shutdowns if they were unable to sell enough EVs to meet those state-level requirements.

The administration has already scrapped federal EV tax credits and blocked California from enforcing its plan to end sales of new gasoline-powered vehicles after 2035. Whether the revised fuel-economy rule moves forward as written will depend on a public-comment process and the possibility of legal challenges that are virtually certain to follow.

This article was co-written using AI and was then heavily edited and optimized by our editorial team.

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