The Department of Transportation under President Trump has released its formal plan to reduce Corporate Average Fuel Economy (CAFE) targets for 2031 from the 50.4 MPG proposed by the Biden administration to 34.9 MPG. The Biden figure was unattainable without a large shift towards electric vehicles that the current market does not appear to support without large government incentives. The department estimates that this will save automakers $1,289 per vehicle in technology development costs, which it hopes will be passed on to the consumer. The move comes amid some of the highest real dollar prices for fuel in U.S. history.
The initiative also includes new rules that will reclassify many light trucks as passenger cars. Automakers have intentionally designed many crossover-type vehicles with features that classify them as light trucks, which have lower fuel economy standards. The current mix is around 30% cars to 70% light trucks, which will be flipped the other way when the regulation goes into effect in 2030. The department believes that will also help lower costs, as automakers won’t add as much standard costly equipment in order to reach the light truck classification.
The plan eliminates fines for automakers who fail to meet the CAFE standard, but expects them to abide by corporate policies that require them to follow government regulations. The emissions credit system, which allowed automakers that exceeded the CAFE standards to sell them to other companies that needed to come into compliance, has been eliminated. Tesla was a large beneficiary of the program, as all of its vehicles are zero-emissions electrics.
“We’re still reviewing the final rule, but NHTSA made the right call to better align fuel economy standards with the law and current market conditions. 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. Today’s final rule is an appropriate course correction,” John Bozzella, president and CEO of the Alliance for Automotive Innovation, which represents most of the major automakers, said in a news release.
“What the industry needs is long-term regulatory stability that includes balanced, durable and achievable fuel economy standards that continue to reduce emissions and improve fuel economy. As we’ve said before: This is the formula for preserving consumer vehicle choice and keeping the U.S. auto industry globally competitive.”
States that follow California’s emissions rules will still have higher fuel economy ratings and electric vehicle adoption targets, but the Trump administration is challenging California’s authority in court in an effort to move toward a single national system.
