The U.S. automotive industry is facing a major shift in fuel-economy policy after President Donald Trump approved new standards that will replace rules established during the Biden administration.
The complete details of the replacement standards have not yet been disclosed, but the change is expected to give automakers more room to continue offering gasoline-powered vehicles rather than relying as heavily on hybrids and electric vehicles, Autoblog reported.
Under the previous Corporate Average Fuel Economy (CAFE) rules, automakers were projected to reach a fleetwide average of about 50.4 mpg for cars and light trucks by the 2031 model year.
Trump has argued that the earlier approach pushed consumers toward electric vehicles, describing it as a “ridiculous EV mandate.” He said the replacement standards would help reduce vehicle prices, support U.S. manufacturing, encourage plants to reopen, and create additional jobs.
Trump also criticized EV adoption, claiming it had “forced Americans into cars they never wanted” while wasting “billions on chargers that were never built.”
For automakers, looser fuel-economy requirements could make it easier to maintain combustion-powered models in their lineups. Gasoline vehicles can also be less expensive to manufacture than comparable hybrids because hybrid powertrains require additional components, including an electric motor and a high-voltage battery.
However, the policy shift may not make gasoline vehicles more attractive in every situation. Higher fuel prices could increase consumer interest in electrified models because of their potential fuel-cost advantages.
Meanwhile, EV-focused manufacturers such as Tesla, Rivian, and Lucid could face additional pressure as the regulatory environment becomes less focused on encouraging electrification.
Some traditional automakers have already adjusted their strategies. Volkswagen has stopped producing the ID.4 at its Chattanooga, Tennessee, facility, while Ram has canceled the all-electric 1500 REV and shifted attention toward performance-oriented models.
Trump also claimed that more than $100 billion is being invested in the American automotive industry under his administration, adding that “that’s just the beginning.” The new fuel-economy standards are expected to be finalized on Monday.
Despite the rollback of the fuel-economy requirements, EV incentives remain available in some states. California, for example, continues to offer rebates of up to $3,500 for qualifying first-time buyers of new zero-emission vehicles, with incentives of up to $1,750 for qualifying used models.
For consumers, the policy change could ultimately mean there is less regulatory pressure pushing them toward a particular type of powertrain. Instead of being increasingly steered toward EVs, buyers may have more room to choose between gasoline vehicles, hybrids and EVs based on their preferences, needs and budget. In that sense, the rollback could give consumers greater flexibility over how they want their next vehicle to be powered.