In a sweeping policy reversal, President Donald Trump has set in motion a rollback of the stringent fuel efficiency standards for new cars and light trucks, upending the regulatory framework established under the Biden administration. The move, announced on December 3, 2025, and followed by a formal proposal from the National Highway Traffic Safety Administration (NHTSA) and Environmental Protection Agency (EPA) just days later, has sent shockwaves through the auto industry, environmental circles, and political ranks alike.
At the heart of the debate are the Corporate Average Fuel Economy (CAFE) standards, which dictate the average fuel efficiency that automakers must achieve across their fleets. As explained by Stephanie Valdez Streaty, director of industry insights at Cox Automotive, to Straight Arrow News, "It’s the CAFE standards, which is corporate average fuel economy. So basically, it kind of dictates how manufacturers build their portfolio. So, if they have more big truck SUVs, they need to balance that out with pure batteries that have better efficiencies. It’s getting that average of fuel efficiency to meet those guidelines set by the government."
The Trump administration's new proposal slashes the 2031 fuel economy target from 50.4 miles per gallon, set by Biden, to 34.5 miles per gallon. The change is touted by Trump as a boon for both consumers and automakers. Surrounded by executives from Ford, General Motors, and Stellantis during his announcement, Trump declared, "Today my administration is taking historic action to lower costs for American consumers, protect American auto jobs, and make buying a car much more affordable for countless American families and also safer. We’re officially terminating Joe Biden’s ridiculously burdensome, horrible actually, CAFE standards that imposed expensive restrictions and all sorts of problems, gave all sorts of problems to automakers."
Transportation Secretary Sean Duffy echoed these sentiments in an opinion piece for the Detroit Free Press, sharply criticizing his predecessor Pete Buttigieg and the Biden administration for allowing vehicle prices to "run wild," with prices up 20% over four years. Duffy accused Biden's policies of forcing a "backdoor EV mandate" that cost the industry billions and led Americans to keep their cars longer—"The average age of a car on American roads is 13 years old," Duffy noted.
The rollback, according to NHTSA’s economic analysis, could save automakers $35 billion through 2031 and reduce the average upfront cost of a new vehicle by about $930, assuming those savings are passed on to buyers. Trump himself claimed the typical consumer would see $1,000 shaved off the sticker price. Duffy went further, promising the change would "enhance customer choice and vehicle options" and create more jobs and investment in the American auto industry. Ford CEO Jim Farley publicly supported the move, reaffirming Ford's commitment to investing in American-made vehicles.
But beneath the headline savings lies a far more complicated reality. Experts warn that any short-term savings for consumers could be quickly erased by higher fuel and maintenance costs. As Dan Sperling, director emeritus of the Institute of Transportation Studies at the University of California, Davis, told Straight Arrow News, "The sticker price of a car could go down, but when they’re putting more gas cars on the market, the price of gas is going to go up. Maintenance costs are going to go up. So, is this really helping affordability?" Yale’s Kenneth Gillingham added, "It’s pretty uncontroversial that standards will likely raise the price of new cars by some amount. Now, of course, that increase in price also comes along with improved efficiency. So, you save money on gasoline if you have a gasoline car, or you save money by getting an electric car, and you pay a lot less. So, on net, you’re paying less. The total cost of ownership is lower in most cases, but you’re going to be paying a little bit more upfront."
Analysis from NHTSA and industry experts supports this caution. The agency projects that the proposal would increase U.S. fuel consumption by 100 billion gallons through 2050, costing Americans up to $185 billion extra at the pump. Jason Schwartz, legal director at New York University’s Institute for Policy Integrity, told Reuters, "From the very first day of driving, it will cost consumers more to operate their less-efficient cars: more for gas, more for repairs, more time wasted pumping gas." Dave Cooke, a senior scientist at the Union of Concerned Scientists, was blunt: "It shows that consumers will be paying more in lifetime fuel costs than saved in technology costs beginning in model year 2027 in every single one of their three alternative (scenarios) compared to the original standards under Biden."
On the industry side, the rollback is widely seen as a lifeline to automakers, who have struggled to profitably scale electric vehicle (EV) production—except for Tesla, which was notably absent from the White House announcement. "The automakers, basically, are concerned that they can’t meet these standards under the Biden administration in a cost-effective way because their cost structure is such for electric vehicles that they don’t make money on electric vehicles," Gillingham said. "But that’s because of innovation and the time that they’ve been building electric vehicles. And the big three and other American automakers and many others just haven’t scaled up in the same way."
Yet, this policy flip-flop is not without risks for the industry. As Sperling noted, "If the U.S. industry continues to make very large vehicles that run on gasoline, then they’re going to continue losing their international markets." Valdez Streaty pointed out that while automakers are supporting the rollback, "they’re still moving towards electrification, and they have a lot of investment. It’s just shifting the timeline. So, I think they’re going to still invest and try to compete globally as well, but I think it just gives them the opportunity to sell more big SUVs and trucks, right? They’re more profitable."
Meanwhile, the environmental implications are stark. Biden’s original CAFE standards were designed to curb greenhouse gas emissions and accelerate the shift to cleaner vehicles. According to the EPA, transport is the largest source of U.S. carbon dioxide emissions. Sperling was unequivocal: "Unequivocally, it increases greenhouse gas emissions and increases local air pollution by definition." Gillingham added, "Regardless of what you think about climate change, it’s very, very clear that you’re going to have more greenhouse gasses in the atmosphere because of this rollback."
California Governor Gavin Newsom has emerged as a leading critic, warning that the rollback will allow China to outpace the U.S. in EVs and saddle Americans with higher fuel costs. Newsom’s concerns are echoed by climate advocates, who point to increased risks of respiratory and circulation health issues—and higher hospital admissions—as more polluting vehicles hit the roads.
For American consumers, the road ahead is anything but straightforward. As Valdez Streaty advised, "Just do your research. I think that’s a key message for consumers, and know what options are available to you." With automakers caught between shifting regulations and global competition, and consumers left to weigh upfront savings against long-term costs, the nation’s automotive future hangs in the balance—one policy swing at a time.
