The nation’s fuel economy landscape may shift dramatically as President Donald Trump’s administration unveiled a proposal to substantially loosen federal Corporate Average Fuel Economy requirements, marking one of the most significant regulatory reversals since his return to office.
Under the proposal, automakers would need to meet an average of 34.5 mpg across their 2031 model-year fleets, a major reduction from the Biden-era requirement of 50.4 mpg for that same model year. The administration also plans to reclassify crossovers and small SUVs as passenger cars instead of light trucks, a move that lowers the compliance threshold for many of the industry’s fastest-selling models. The announcement was made during a White House press conference with Transportation Department officials.
“People were brainwashed. This is a green new scam, and people were paying too much for a car that didn’t work as well,” Trump said at the event. “All of the nonsense is being taken out of the cars.”
The National Highway Traffic Safety Administration said the proposal will be published in the Federal Register, opening a 45-day comment period. The agency will also hold a public hearing at an undetermined date.
The change continues an aggressive rollback of federal environmental and efficiency policies. Earlier this year, Trump and the Republican-led Congress eliminated federal tax credits for new and used electric vehicles and revoked California’s authority to set tougher emissions standards adopted by many other states. Congress also ended financial penalties for automakers that fail to meet CAFE standards in a sweeping tax and spending bill passed this year. Without those fines, the government lacks the primary enforcement mechanism historically used to compel compliance.
The end of penalties also collapsed a once-lucrative market for compliance credits. EV manufacturers commonly exceeded federal fuel economy requirements, allowing them to sell credits to companies that fell short. That system helped fund early electric vehicle programs at several automakers.
Industry reaction to the new proposal was broadly supportive. Representatives from Ford, Stellantis and General Motors attended the announcement, joined by National Automobile Dealers Association Chairman Tom Castriota.
“Today is a victory for common sense and affordability,” Ford CEO Jim Farley said at the White House. “We believe that people should be able to make a choice, as you said, Mr. President, and we will invest more in affordable vehicles.”
The most recent CAFE standards—finalized in 2024 during the Biden administration—covered passenger cars and light trucks from the 2027 model year forward, and heavy-duty pickups and vans beginning in 2030. When those rules were released, Alliance for Automotive Innovation CEO John Bozzella said the administration “appears to have landed on a CAFE rule that works with the other recent federal tailpipe rules,” though he questioned whether CAFE remained relevant in a market moving toward electrification.
But as electric vehicle demand softened and manufacturers confronted layered regulations from the EPA, California-aligned states and federal fuel economy rules, support for tougher standards waned.
“We’re reviewing NHTSA’s announcement, but we’re glad the agency has proposed new fuel economy standards,” Bozzella said in a Dec. 3 statement. “The current CAFE rules finalized under the previous administration are extremely challenging for automakers to achieve given the current marketplace for EVs.”
NADA President Mike Stanton also endorsed the proposal, calling it a “milestone” and saying it would create standards that can be met “with a range of technologies.”
Congress created the CAFE program in 1975, tasking the Transportation Department with setting average fuel economy requirements for each manufacturer’s fleet. Transportation Secretary Sean Duffy ordered the agency to revisit the standards in January.
It remains unclear how much input the industry had in the drafting of the revised proposal. A GM spokesperson said the company remains committed to both EVs and internal combustion vehicles “as we review the proposal.”
Still, several companies joined the president to celebrate the move. Stellantis CEO Antonio Filosa praised the administration for aligning policy with “real world market conditions” and said the company wants to offer “vehicles they want at prices they can afford.” GM sent John Urbanic, executive plant director at Orion Assembly in Michigan, one of five GM plants scheduled to shift from EV production to gasoline-powered SUVs and trucks in early 2027.
The industry’s visible support marked a contrast from the first Trump administration, when six automakers entered voluntary agreements with California to oppose federal rollbacks of emissions rules. Now, some of those same companies have embraced the administration’s shift away from electric vehicle mandates and toward expanded production of profitable gasoline models.
More changes could follow. The Environmental Protection Agency said earlier this year it intends to rescind the 2009 “endangerment finding,” the scientific and legal basis for federal climate policy. The agency indicated in a July court filing that a final rule could be issued this month, though analysts at TD Cowen said they do not expect that timeline to be met.
Environmental groups condemned the proposal. Will Anderson, zero-emissions policy advocate for Public Citizen’s Climate Program, said Americans consistently cite fuel economy as a priority when shopping for vehicles. “This is another Trump shell game that shuffles money to Trump’s oil and gas cronies at the expense of Americans’ wallets, health and air quality,” Anderson said.