Lowering the bar
According to new reports published on December 2 by Reuters and Bloomberg, sources close to the Trump White House told the outlets that the administration is prepared to introduce newly adjusted fuel economy standards as soon as Wednesday, December 3, in an effort to lower what it sees as a barrier to new car affordability.
The unnamed sources stated that executives from Detroit’s Big Three manufacturers, including the CEO of Stellantis, Antonio Filosa, as well as senior officials from General Motors and Ford, are expected to attend the announcement at a White House event.
The exact details of the amended fuel economy requirements were not disseminated; however, in light of the administration’s agenda, they are expected to be less restrictive than those finalized under the Biden administration.
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Cutting auto industry red tape has been a day-one agenda item for the Trump administration
The latest move by President Donald Trump is part of a broader effort to streamline auto industry regulations, which he established during his inauguration speech on January 20. Notably, on January 28—the same day he took his oath of office—DOT Secretary Sean Duffy ordered the National Highway Traffic Safety Administration (NHTSA) to reevaluate Biden-era rules designed to make cars more fuel-efficient.
In June 2024, the NHTSA under the Biden Administration set up the Corporate Average Fuel Economy (CAFE) standards, where automakers were tasked with increasing the fleetwide average fuel economy of passenger cars by 2% per year between model years 2027-2031, and light trucks will need to be improved by 2% per year between model years 2029-2031. Under these rules, the agency aimed for the average car to achieve a fuel economy of about 50.4 miles per gallon by the 2031 model year.
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In his letter to the agency, he stated that the restrictive measures in place are not only impossible for automakers to meet, but they would also force drivers out of cars they want to drive and can afford.
“[The CAFE standards] also put coercive pressure on automakers to phase out of production various models of popular ICE vehicles and reengineer their fleets in a way that reduces dramatically the power and durability of the ICE models they are able to offer, thereby fundamentally distorting the market and destroying consumer choice at the dealership,” he said at the time.
Additionally, he argued that such regulations would “also inevitably kill thousands of jobs for America’s autoworkers” and relegate Americans “to driving older and older used vehicles,” which he sees as “an unacceptable outcome that is contrary to [the] NHTSA’s mission of advancing highway traffic safety.”
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Already, steps have been taken to mitigate the effects of government-mandated fuel economy standards, such as the CAFE rules. Back in June, Senate Republicans led by Senate Commerce Committee leader Senator Ted Cruz (R-TX) included language that eliminated fines for car manufacturers who don’t meet the Corporate Average Fuel Economy (CAFE) standards in the tax and spending bill known as the “big, beautiful bill,” which has since been signed into law.
In recent years, Detroit-based automakers like GM and Stellantis have faced the heftiest CAFE-related fines. Reuters reported that in 2024, Stellantis paid $190.7 million in fines for failing to meet fuel-economy targets for 2019 and 2020, and nearly $400 million for 2016 through 2019, while General Motors previously paid $128.2 million for 2016 and 2017.
Final thoughts
It is worth noting that although this development is occurring at a time when manufacturers like GM and Toyota are investing in gas-powered car and truck production in the U.S., new car prices are still at an all-time high. According to the latest data from Kelley Blue Book and Cox Automotive, the average transaction price (ATP) of a new car in the United States was $49,766, a slight dip from the all-time high of $50,080 in September.
However, it should be noted that Erin Keating, an Executive Analyst at Cox Automotive, stated in October that while new complications, such as tariffs, have introduced new cost pressures, sales of more expensive vehicles are dictating the new environment.
“We’ve been expecting to break through the $50,000 barrier,” Keating said. “It was only a matter of time, especially when you consider the best-selling vehicle in America is a pickup truck from Ford that routinely costs north of $65,000. That’s today’s market, and it is ripe for disruption.”
