The U.S. Transportation Department announced a new rule Monday that reduces fuel efficiency requirements for passenger vehicles.
Corporate Average Fuel Economy, or CAFE, standards, which establish how far a new vehicle must travel on a gallon of gasoline, are now 34.9 miles per gallon for passenger cars and light trucks for the 2031 model year — down from a projected 50.4 miles per gallon under rules put in place during the Biden administration.
“We’re keeping car buying affordable, and restoring American manufacturing,” Transportation Secretary Sean Duffy wrote on X on Monday morning in announcing the agency’s Freedom Means Affordable Cars initiative.
Duffy said the rule change will allow automakers to produce cars the public wants to buy and reduce the average cost of a new vehicle by $1,300.
The average manufacturer’s suggested retail price for a new passenger vehicle in the United States in August was $51,852 — 2.2% more than a year ago, according to Kelley Blue Book. The average MSRP has been above $50,000 since April 2025.
Monday’s DOT announcement follows President Donald Trump’s Truth Social post Saturday that said: “BIG DAY FOR AMERICAN AUTO WORKERS AND CAR BUYERS! I have just approved new Fuel Economy Standards that TERMINATE Sleepy Joe Biden and Pete Boot-EDGE-EDGE’s ridiculous EV Mandate. The Dumocrats cost our Great Auto Manufacturers $Billions, forced Americans into cars they never wanted, and wasted Billions on Chargers that were never built.”
The new rule reverses a final rule the Biden administration put in place in 2024 to push carmakers to build more electric vehicles so they could meet increasing fuel-economy standards. The Biden-era rule required cars to be 10% more efficient for the 2026 model year and increase efficiency 2% annually from 2027 to 2031.
The industry trade group representing Ford, General Motors, Hyundai, Toyota and other major carmakers praised the new rule, saying it will preserve consumer vehicle choice and keep the U.S. auto industry globally competitive.
“The standards finalized under the previous administration effectively required a switchover to electric vehicles that was out of step with market realities and customer demand,” Alliance for Automotive Innovation President and CEO John Bozzella said in a statement. “Today’s final rule is an appropriate course correction.”
According to Cox Automotive, electric vehicle sales made up 5.7% of new vehicle sales in August — up 2.5% compared with July but down 46.9% from a year earlier, just before the Trump administration ended the $7,500 federal tax credit for EVs.
The bestselling vehicles in the United States in September are the Toyota Camry, Toyota RAV4, Toyota Tacoma, Honda CR-V and Ford F-150, according to CarEdge.
The fuel economy rule announcement comes as consumers are reeling from higher gas and diesel costs resulting from the 7-month-old Iran war. The national average for a gallon of regular gasoline on Monday is $4.48, according to AAA.
The Union of Concerned Scientists assailed the fuel economy standards rollback, calling it a massive giveaway for automakers.
“CAFE standards have saved consumers over $32 billion since the Iran War began and sent gas prices skyrocketing,” Dave Cooke, clean transportation program senior vehicles analyst at UCS, said in a statement. “Weakening these standards means drivers will spend more on fuel while having fewer options to choose efficient vehicles.”
While the DOT contends the new standards will reduce yearly oil consumption by about 1.3 billion barrels in 2050 compared with 2024, UCS said any reductions in upfront vehicle costs will be outweighed by higher fuel expenses over the vehicle’s lifespan.
“Families already cannot afford the basics, and now Donald Trump wants to make driving more expensive too. Less fuel-efficient cars mean more gas burned, spending more at the pump, and dirtier air in our communities,” Katherine Garcia, director of the Sierra Club’s Clean Transportation for All campaign, said in a statement.
“Americans need relief from high costs, but instead Trump is giving automakers a free pass on pollution and handing families the bill — at the pump and with their health,” she said. “The Sierra Club will fight this senseless rollback every step of the way.”