The U.S. Department of Transportation (DoT) has announced that the previous administration under President Joe Biden overstepped its authority in setting fuel economy rules based on an expected rise in electric vehicle (EV) sales. This decision opens the door for more relaxed fuel standards and introduces a new rule called “Resetting the Corporate Average Fuel Economy Program” (CAFE).
On Friday, Transportation Secretary Sean Duffy stated that the Biden administration had improperly used CAFE standards as a way to push for more electric vehicles. He emphasized that the goal now is to make vehicles more affordable and easier to manufacture in the U.S.
The National Highway Traffic Safety Administration (NHTSA), while under Biden, had predicted that a significant number of EVs would be produced regardless of the set standards. This assumption led to stricter fuel standards, which the DoT has now decided to revise.
Earlier this year, Duffy ordered the NHTSA to roll back fuel economy standards established for the 2022-2031 model years. These standards were designed to significantly reduce fuel consumption for cars and trucks. The previous rules aimed for a 2% increase in fuel economy for vehicles made between 2027 and 2031, which the Biden administration claimed would save consumers money on gas and help combat climate change.
In June 2024, the NHTSA announced plans to raise CAFE requirements to approximately 50.4 miles per gallon by 2031, up from 39.1 mpg. This move was expected to cut gasoline consumption and reduce emissions significantly.
Recently, Senate Republicans proposed a plan to eliminate penalties for failing to meet CAFE standards. This proposal is part of a broader tax bill aimed at easing regulations for automakers, particularly those producing gas-powered vehicles. Stellantis, the parent company of Chrysler, expressed support for this proposal, arguing that current standards do not reflect market realities and that immediate relief is needed for affordability.
As the DoT works on resetting the CAFE standards, the implications of these changes will likely be felt across the auto industry and by consumers in the coming years.