Trump administration rolls back Biden-era fuel economy standards

The Trump administration unveiled new fuel economy standards on Monday, rolling back Biden-era rules aimed at cutting down emissions and encouraging more consumers to switch to electric vehicles.

Established by Congress in 1975, the Corporate Average Fuel Economy (CAFE) standards dictate how many miles vehicles must be able to travel per gallon of fuel, with specific standards for light-duty vehicles, as well as medium- and heavy-duty trucks. 

Over time, automakers have gradually improved their vehicles' average fuel efficiency. 

Under the new Trump administration rule, the National Highway Traffic Safety Administration (NHTSA) estimates that the new standards will lead to a fleetwide average of 34.9 miles per gallon by model year 2031 — down from a projected 50.4 miles per gallon in 2031 under rules put in place by the Biden administration.

In a statement on Monday, the Department of Transportation said the new rule will lower the average upfront cost of new vehicles by $1,300 and give automakers more choice regarding the types of cars they manufacture.

"Thanks to President Trump's leadership, we have finally ended the illegal mandate that forced automakers to produce more expensive electric vehicles that American families didn't want," Transportation Secretary Sean P. Duffy said in a statement on Monday.

Savings for drivers?

The Department of Transportation said the rule will help save Americans $138 billion over the next five years. However, it comes at a time when drivers are spending significantly more money at the pump as the war with Iran disrupts the global flow of fuel. 

The national average price for gasoline on Monday was $4.48 per gallon, up from less than $3 earlier this year.

John Bozzella, CEO of the Alliance for Automotive Innovation, a trade association for the car industry, applauded the weaker fuel economy standards.  

"The standards finalized under the previous administration effectively required a switchover to electric vehicles that was out of step with market realities and customer demand," he said in a statement. "Today's final rule is an appropriate course correction."

Yet Sean Tucker, managing editor for Kelley Blue Book, doubts the new rules will have much impact on automobile manufacturing and suggested the weaker fuel economy standards could be reversed down the road.

Carmakers "can't move fast enough to design new cars for a regulation likely to last just two to three years," he said in an email.

Will the new mileage rules lower car prices?

Other auto industry experts are also skeptical that the CAFE rollback will make cars more affordable.

"Automakers are not going to lower prices as long as they sell 15.6 million to 16.2 million new cars annually while their profit margins increase due to relaxed government fuel economy standards," CarEdge co-founder Ray Shefska told CBS News in an email.

Any additional savings will likely be used to offset losses from "poor EV investments," he added.

As of August, the average cost of a new car was $50,089, while the average cost for an EV was $54,813, according to Kelley Blue Book.

Others are more optimistic. Patrick Anderson, CEO of automotive industry consulting firm Anderson Economic Group, said the new rules will help automakers lower costs by aligning production with consumer demand.

For automakers, the new rules will avoid adding "expensive technologies" that failed to deliver the fuel savings promised by the Biden administration, Anderson said. The Trump administration's $1,300 savings estimate is "entirely achievable," he said.

Environmental groups criticized the new rules.

"Less fuel-efficient cars mean more gas burned, spending more at the pump and dirtier air in our communities," Katherine García, director of the Sierra Club's Clean Transportation For All (CTFA) campaign, said in a statement on Saturday before the final rule was released.

The Transportation Department said Monday that the rule would reduce annual U.S. oil consumption in 2050 by about 1.3 billion barrels compared with 2024 levels. 

When the 2024 mileage standards went into effect, NHTSA estimated they would reduce gas consumption by 14 billion gallons by 2050. The agency also said that while new fuel-efficient vehicles cost more up front, their long-term gas savings would more than offset the higher upfront cost.