US finalizes new lower fuel economy standards in boost for gas-powered vehicles

The U.S. Transportation Department on Monday finalized sharply lower vehicle fuel economy standards, President Donald Trump's latest effort to encourage sales of gasoline-powered vehicles and reverseformer President Joe Biden's ‌push toward greater fuel efficiency and EVs. The new standards will cut the cost of new vehicles but increase fuel consumption and carbon dioxide emissions for decades, according to the department's estimates.

US drivers have been grappling with sharply higher fuel prices since the start of the US-Israeli war with Iran at the end ‌of February. Trump's Transportation Department said it was finalizing a fleetwide average of 34.9 miles per gallon (14.7 km per liter) by 2031, down from ‌50.4 miles per gallon (21.4 km per liter) under Biden.

USDOT said the regulation will reduce manufacturers' average cost per vehicle to comply by $1,289 but increase fuel costs by more than $1,600 over the life of the vehicles. USDOT said the rule would increase US gasoline consumption by 4.6% through 2050 compared to the Biden rules but also boost new car sales. In 2024, ⁠the Biden ​administration finalized rules to push automakers to ⁠build more electric vehicles to meet rising fuel-efficiency standards. Biden increased required fuel efficiency for cars by 8% annually for model years 2024 and 2025, 10% for 2026 and 2% ⁠annually from 2027 to 2031.

The rules will also end credit trading among automakers in 2028, which previously was a significant source of income for EV manufacturers like ​Tesla and Rivian. The Alliance for Automotive Innovation, the trade group representing General Motors, Toyota, Volkswagen, Hyundai, Ford and other major automakers, said ⁠the government "made the right call to better align fuel economy standards with the law and current market conditions."

The group added that the Biden rules "effectively required a switchover to electric vehicles that ⁠was ​out of step with market realities and customer demand." The Sierra Club, an environmental group, said it will fight Trump's rollback of fuel economy standards. "Americans need relief from high costs, but instead Trump is giving automakers a free pass on pollution and handing families the bill — at the pump and ⁠with their health," it said.

Trump has mounted a multi-pronged effort to make it easier to sell gasoline-powered vehicles and last year scrapped a $7,500 ⁠new EV tax credit. The Environmental ⁠Protection Agency in February repealed a scientific finding that greenhouse gas emissions endanger human health, and eliminated federal tailpipe emissions standards for cars and trucks. Environmental groups noted that fleet-wide fuel economy averaged 35.4 mpg in 2024 -- which ‌is lower than what ‌the government wants to require in 2031.