The U.S. is preparing for another major change in automotive policy that could reshape what automakers build and what consumers pay at the dealership and gas pump.
The Transportation Department is set to finalize sharply lower fuel-economy requirements for new passenger cars and light trucks through 2031, reversing much of the efficiency push established under the previous administration.
The change matters because fuel-economy rules influence far more than the number shown on a vehicle’s window sticker. They affect the engines automakers develop, the mix of gasoline, hybrid, and electric vehicles they sell, the technology added to new vehicles, and the amount of fuel Americans ultimately consume.
According to Reuters, President Donald Trump said on September 26 that he had approved the new fuel-economy standards, with Transportation Secretary Sean Duffy saying the department would finalize the rule on September 28.
The administration argues that the revised standards will reduce vehicle costs and give consumers more freedom to choose larger gasoline-powered vehicles.
Under rules finalized by the Biden administration, NHTSA projected that the industry-wide average fuel-economy requirement for light-duty vehicles would reach approximately 50.4 mpg by the 2031 model year. The new approach is expected to bring that figure down to roughly 34.5 mpg.
That does not mean every new car will have to achieve 34.5 mpg. CAFE standards apply to manufacturers’ fleets rather than requiring every individual vehicle to achieve the same figure. Still, the difference illustrates how substantial the policy reversal could be.
Why Washington Wants to Lower the Standards
The administration’s argument centers on vehicle affordability and consumer choice. NHTSA’s December 2025 proposal, known as the SAFE Vehicles Rule III, sought to substantially recalibrate Corporate Average Fuel Economy standards for model years through 2031.
The agency proposed much slower annual increases in fuel-economy requirements and projected an industry-wide average of about 34.5 mpg for 2031.
The administration says existing rules place too much pressure on automakers to add expensive fuel-saving technology and move toward electrified vehicles that some American consumers may not want.
Trump described the forthcoming standards as a way to remove unnecessary costs from vehicle manufacturing. Reuters reported that he said the changes would produce lower vehicle prices and give American buyers more choice.
Transportation Secretary Sean Duffy has similarly argued that automakers should build vehicles consumers actually want rather than vehicles designed primarily to satisfy increasingly stringent federal requirements.
There is an important technical distinction, however. CAFE standards are not an EV mandate. NHTSA regulates fuel economy under the Department of Transportation, while the Environmental Protection Agency separately regulates greenhouse-gas emissions from vehicles.
The two systems have often pushed manufacturers in similar directions, but they are legally distinct. Lowering CAFE requirements therefore does not automatically mean electric vehicles will disappear from automakers’ plans. Instead, it changes the economic and regulatory pressure surrounding those plans.
What the Change Could Mean for Automakers and Buyers
For automakers, lower fuel-economy requirements could provide more flexibility in deciding which powertrains deserve investment.
A manufacturer that previously needed to improve fleet fuel economy aggressively might have more room to sell large pickups, SUVs, and gasoline-powered vehicles without making equivalent investments in expensive efficiency technology.
The effect on hybrids could be more complicated. Hybrids provide manufacturers with a relatively straightforward way to improve fleet fuel economy without requiring consumers to make the full transition to battery-electric vehicles. Automakers could therefore continue offering hybrids even if federal requirements become less demanding.
The proposed rollback is more likely to change the balance between technologies than simply return the market to gasoline-only vehicles.
NHTSA’s analysis also identifies a consumer trade-off. Estimates cited by the Eno Transportation Foundation put the average reduction in vehicle retail costs at roughly $840 to $910 by the 2031 model year compared with maintaining the previous standards. However, average lifetime fuel costs could increase by approximately $1,256 to $1,431.
This raises an important consideration for buyers. A vehicle with a lower purchase price may not necessarily cost less to own over time.
The answer depends heavily on how much someone drives, the vehicle purchased, and future gasoline prices. A driver who keeps a vehicle for many years and travels long distances could spend substantially more on fuel, while someone who drives relatively little may place greater value on a lower purchase price.
The policy could also affect automakers’ EV strategies. Companies have already invested billions of dollars in battery factories, electric platforms, software, and EV production facilities. Those investments cannot simply be abandoned because federal fuel-economy rules change.
Market demand will remain equally important. EV sales have not developed at exactly the pace many manufacturers originally expected, while hybrid demand has strengthened in several parts of the market.
Automakers are consequently trying to maintain gasoline products, expand hybrids, and continue developing EVs at the same time.
Lower CAFE requirements could give them greater freedom to decide where electrification makes financial sense rather than pushing every manufacturer toward the same technological path.
For consumers, the effects will emerge gradually. The rules concern future model years, so they will influence vehicle development and product planning before buyers see all of the changes on dealer lots.
The policy also does not guarantee that gasoline vehicles will become dramatically cheaper or that EV prices will rise. Automakers will still set prices according to production costs, demand, competition, incentives, and profitability. The biggest change is therefore the direction of federal policy.
The previous approach relied on increasingly stringent fuel-economy requirements to push the industry toward more efficient vehicles. The new approach places greater emphasis on consumer choice, manufacturing costs, and automakers’ ability to respond to market demand.
If the Transportation Department completes the expected final rule, manufacturers will have a substantially different target to plan around through 2031.
That could mean more large gasoline-powered vehicles, continued growth in hybrids where customers demand them, and a less direct regulatory push toward electrification.
For American drivers, the trade-off may become clear over time. A lower purchase price could make a vehicle more affordable upfront, while higher fuel costs could increase the total expense throughout the years of ownership.
The coming years will show which side of that equation matters more to consumers. For automakers, meanwhile, the new standards could become one of the most consequential changes to U.S. vehicle strategy in years, giving them considerably more freedom to decide how quickly their fleets move from traditional gasoline engines toward hybrids and fully electric vehicles.
The U.S. Department of Transportation is preparing to finalize significantly lower fuel-economy requirements for new passenger cars and light trucks through 2031, marking a major reversal from the previous administration’s efficiency policies.
According to Reuters, President Donald Trump said on September 26 that he had approved the new standards, while Transportation Secretary Sean Duffy said the department expected to finalize them on September 28.
The administration argues that lower requirements will reduce vehicle costs and give consumers greater freedom to choose larger gasoline-powered cars, trucks, and SUVs.
The difference between the two approaches is substantial. Under standards finalized during the Biden administration, NHTSA projected an industry-wide average fuel-economy requirement of about 50.4 mpg for 2031. The new approach is expected to reduce that figure to approximately 34.5 mpg.
The change could influence automakers’ decisions about gasoline engines, hybrids, and EVs. Lower requirements may reduce the regulatory pressure to invest heavily in fuel-saving technology, while hybrids could remain attractive because they improve efficiency without requiring drivers to switch completely to electric vehicles.
For consumers, the trade-off could be lower upfront vehicle costs but higher fuel expenses over time. NHTSA estimates cited by the Eno Transportation Foundation suggest vehicle prices could fall by roughly $840 to $910, while lifetime fuel costs could increase by about $1,256 to $1,431 for 2031 vehicles. The final rule could therefore reshape America’s vehicle market for years to come.
