Critics warn of pump costs, lost EV edge as industry backs rule
The National Highway Traffic Safety Administration’s revised Corporate Average Fuel Economy rule, finalized Monday, requires automakers to improve passenger-car and light-truck fleet efficiency by no more than 1% per year, targeting an average of 34.9 miles per gallon by model year 2031. That replaces a Biden-era standard requiring a 2% annual increase aimed at 50.4 mpg by 2031. The new rule also ends the EV-credit-trading arrangement that had let manufacturers buy credits from electric-vehicle makers to offset producing less fuel-efficient vehicles, a feature Republicans had long criticized.
Administration officials framed the change as an affordability measure, estimating the rollback would shave about $1,300 off new-car sticker prices. “This administration is delivering relief to families and reviving the beating heart of American manufacturing,” Transportation Secretary Sean Duffy said in an online statement announcing the change. President Trump wrote on Truth Social that the standards would “take the waste out of building cars in America” and produce “LOWER PRICES, saving families thousands on a new, beautiful, and safe car.”
Critics disputed both the rationale and the longer-term consequences. Dan Becker, director of the Safe Climate Transport Campaign at the Center for Biological Diversity, said rolling back the standards would increase gasoline use and pollution, “costing consumers at the pump and at the doctor’s office.” Becker added that the move comes “at the worst possible time for consumers, who’re getting hit with sky-high prices at the pump.” According to AAA, the national average gasoline price is close to $4.50 a gallon, and diesel is hovering near $6.50 a gallon, just short of last week’s record.
The Trump administration had already dropped the EV-related civil penalty last July through the One Big Beautiful Bill Act, effectively defanging the Biden-era CAFE standards. The White House proposed scaling back CAFE altogether in December, and NHTSA subsequently opened a public-comment period before issuing the final rule. The rule fits into a broader pattern of Trump administration actions rolling back Biden-era climate and electric-vehicle policies, including cutting the federal EV tax credit, delaying federal funding for a nationwide EV-charging program, and striking federal waivers that had allowed California to set its own stricter pollution regulations.
Economists pushed back on the administration’s central claim. Sue Helper, who studies the auto industry at Case Western Reserve University, said the price of new cars has risen largely because vehicles have gotten larger and have absorbed tariffs, supply-chain costs, and added features like infotainment systems, rather than because of fuel-economy technology. A 2023 Consumer Reports analysis found that between model years 2003 and 2021, vehicles became about 30% more fuel-efficient, but attributed rising prices to the industrywide shift toward expensive SUVs. Ellen Hughes-Cromwick, a former Ford chief global economist now at the center-left Third Way think tank, said: “One of the cruxes of vehicle affordability right now is the average monthly payment getting jacked up, because interest rates are so high.” She noted that any cut in sticker prices could be offset over time by higher fuel spending, particularly given elevated pump prices tied to the war in Iran.
Helper and Hughes-Cromwick argued the rollback also weakens U.S. automakers in a global market. “It’s very bad in the long term, because it slows progress,” Helper said. “Then we make our auto companies less competitive. We give them less practice in making the cars that both Americans will want in the future and that the rest of the world will want.”
On the one hand, Helper said, a rules change that makes it easier for automakers to sell trucks and SUVs is “good in the short-term, because they make a lot of profits making these giant vehicles,” though they are not as popular outside of the U.S. Helper called the new U.S. environment “a playground in this protected little Galapagos of an ecosystem where no one else is wanting to compete.” Hughes-Cromwick added: “The future of the industry is all about the transition to electric vehicles. The rest of the world is marching on in this transition to EVs. We have a very powerful competitor in terms of the Chinese electric vehicle industry.”
The Alliance for Automotive Innovation, a trade group whose members include Ford, General Motors, and Stellantis, praised the move. “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,” said John Bozzella, the group’s president and CEO, in an emailed statement to NPR. He added that the Biden-era standards “effectively required a switchover to electric vehicles that was out of step with market realities and customer demand” and called the final rule “an appropriate course correction.”
NHTSA, in its final rule, said the prior system “increasingly led manufacturers to try to fit square vehicle pegs in round classification holes to force the adoption of technologies that do not meet the demands of American families,” adding that the change would let manufacturers “design and produce vehicles they believe their customers will want and need.”
CAFE standards date to 1975, when Congress enacted fuel-efficiency rules during that decade’s oil supply shock to reduce American dependence on Middle Eastern oil. Since then, the United States has become the world’s largest oil producer, and successive administrations have tied fuel-economy increases to climate concerns.
The revised rule could face legal challenges, and a future administration could restore stricter standards, factors that may discourage automakers from overhauling their vehicle lineups in response to Monday’s change.