Trump Administration to Finalize Relaxed Vehicle Fuel Economy Rules by Monday
The proposed rollback of Biden-era CAFE standards signals a shift in federal auto policy that could affect vehicle prices, automaker compliance costs, and the pace of US electric vehicle adoption.
The US Department of Transportation is set to finalize revised fuel economy standards for cars and trucks on Monday, September 28, 2026, according to Folha de S.Paulo, citing the proposed rules as substantially less stringent than those set under President Joe Biden. The new standards would apply through 2031.
President Donald Trump stated publicly that he approved the new fuel economy rules for cars and trucks and said the changes would reduce the price of new vehicles, according to the same Folha de S.Paulo report. The White House has not released a detailed cost-benefit analysis as of the publication date of this article.
The Biden administration had used Corporate Average Fuel Economy (CAFE) standards as a mechanism to push automakers toward higher production volumes of electric vehicles. Under federal law, the National Highway Traffic Safety Administration (NHTSA), a division of the Department of Transportation, sets CAFE standards. Automakers that fall short of the standards must pay civil penalties or purchase credits from manufacturers that exceed them.
Relaxing these targets reduces the per-vehicle compliance cost for manufacturers that sell large volumes of gasoline-powered trucks and SUVs, which carry lower fuel efficiency ratings than battery electric or hybrid vehicles. Ford Motor Company, General Motors, and Stellantis each disclosed in their most recent annual filings with the Securities and Exchange Commission that CAFE compliance costs represent a material line item in their regulatory expense projections.
The Biden-era standards, finalized in 2024, required the industry fleet average to reach approximately 50.4 miles per gallon by model year 2031, per NHTSA regulatory filings. The Trump administration has not yet published the specific numeric targets for the revised standards. The final rule text will be available in the Federal Register upon publication.
The timing of the rule has direct consequences for automakers currently investing in EV production capacity. General Motors disclosed capital expenditure commitments for EV and battery manufacturing exceeding $35 billion through 2025 in its 2023 annual report filed with the SEC. A relaxation of federal EV-linked fuel economy targets could alter the return-on-investment calculus for those commitments, though the companies have not yet issued updated guidance in response to this specific rule change.
Consumer vehicle prices are the administration's stated rationale for the policy change. The relationship between CAFE standards and sticker prices is documented in NHTSA regulatory impact analyses, which estimate the technology cost required to meet each incremental improvement in fleet fuel economy. Whether the savings to manufacturers translate to lower retail prices depends on market competition and manufacturer pricing decisions, neither of which is determined by federal regulation.
Environmental and energy policy groups have argued that weaker fuel economy standards increase long-run fuel expenditures for consumers and reduce US energy security by maintaining higher gasoline demand. Industry groups, including the Alliance for Automotive Innovation, have argued that aggressive standards outpace consumer demand for EVs and create financial strain for domestic manufacturers. Both positions are based on separate modeling assumptions; the specific projections for this rule are not yet publicly available pending Federal Register publication.
The auto sector has been subject to significant federal policy activity in 2026. The Trump administration has separately imposed tariffs on imported vehicles and auto parts, which the major US automakers have said increase their own input costs for vehicles assembled from globally sourced components, per earnings call transcripts from Ford and GM in the first half of 2026.
The finalized rule text, including the specific CAFE targets by model year and the accompanying regulatory impact analysis, will be the primary source for quantifying the net effect on automakers, consumers, and federal fuel economy enforcement. Those documents will be accessible through the Federal Register and the NHTSA rulemaking docket once published on or after September 28, 2026.