Speaking from the Oval Office, President Donald Trump has introduced a new proposal to change fuel efficiency regulations in the United States; claiming that the previous regulations “put tremendous upward pressure on car prices.” He also announced that his administration would “reset” fuel standards for passenger cars.
The announcement comes at a time when many Americans are already feeling worried about the cost of everything. October saw a record high for new car prices, with the average price surpassing $50,000. “The $20,000-vehicle is now mostly extinct, and many price-conscious buyers are sidelined or cruising in the used-vehicle market.” according to Cox Automotive analyst Erin Keating.
What exactly is changing?
The administration’s proposed rollback of fuel efficiency regulations was intended to reduce carbon emissions by compelling automakers to produce cleaner, more efficient vehicles. According to Trump, many families can no longer afford cars because of those regulations.
According to the Department of Transportation, the new plan will “save the American people $109 billion” overall, or about $1,000 for each new car on average. Additionally, it states that the modification “will also revive the beating heart of American manufacturing and unshackle the nation’s automotive industry.”
The new standards are not yet final, though. Officials anticipate that they will complete the formal rulemaking process in 2026. The targets that Trump’s team wishes to alter are applicable to cars manufactured in 2031. “The announcement today is a shift in long-term fuel economy targets for model year 2031 vehicles,” said Mark Schirmer, director of industry insights communications at Cox Automotive. “Those targets are being lowered, which may change automaker long-term strategy and product development plans and pricing, but will have little impact on prices near term.”
A change in the classification of certain vehicles is one notable aspect of the proposal. According to the administration, small SUVs and crossovers will no longer be classified as light trucks but rather as passenger cars. According to officials, this eliminates a “market distortion that existed for decades” and more closely aligns the categories with the real-world uses of those vehicles.
How the auto industry is reacting
Alongside executives from Detroit’s “Big Three”—Ford Motor Company CEO Jim Farley, Stellantis CEO Antonio Filosa, and John Urbanic, an executive from a General Motors facility in Michigan—Trump made the announcement. All three businesses publicly applauded the action.
The proposal would “re-align … standards with real world market conditions,” according to Stellantis, the European parent company of Chrysler, Dodge, Jeep, and Ram.
Ford adopted a slightly different approach, emphasizing balance. “we can make real progress on carbon emissions and energy efficiency while still giving customers choice and affordability.” Farley went so far as to describe the change in policy as “a win for customers and common sense.”
General Motors emphasized that the company has “long advocated for one national standard that upholds customer choice and provides the auto industry long-term stability,” according to the statement. GM stated that it is “committed to offering the best and broadest portfolio of electric and gas-powered vehicles on the market.”
Investors appeared to be pleased with the news on Wall Street, as shares of Stellantis increased 4.7% and those of Ford and GM closed about 1% higher.
What this could mean for drivers and the environment
Experts do not currently expect an enormous, rapid decline in auto prices. Many of the cars that automakers will sell in the coming years have already been planned and designed, so their strategies won’t change overnight.
Even though they will have more creative and financial freedom, automakers could put off developing cleaner, more efficient vehicles if fuel regulations are loosened. The administration claims that easing these regulations could result in lower costs and allow more people to buy new cars.