U.S. Fuel Economy Standards Set for Lower Requirements

U.S. Fuel Economy Standards Could Be Lowered

On August 31, U.S. Transportation Secretary Sean Duffy said the administration is preparing to finalize lower federal fuel economy requirements for automakers and will announce the new standards soon. The expected changes would reverse regulatory tightening adopted under President Joe Biden and could give OEMs greater flexibility in developing and selling vehicles in the United States. Although the final requirements have not yet been released, the administration is expected to closely follow a proposal issued by the National Highway Traffic Safety Administration in December 2025. The proposal called for a fleetwide average of 34.5 miles per gallon by 2031, compared with 50.4 mpg under Biden.

Lower Requirements Could Expand OEM Product Flexibility

The proposed change would give automakers more flexibility in deciding which vehicles to develop and sell in the United States. OEMs can use compliance credits earned by exceeding federal requirements in previous model years, providing another mechanism for meeting future obligations. The administration has also proposed a retroactive adjustment to the 2022 standard, which would make those credits more valuable for future compliance. The precise requirements will be important because they will determine how significantly OEMs can shift their product mix toward internal-combustion-engine vehicles without creating additional compliance costs under the revised federal framework.

Proposed 2031 Target Marks Major Regulatory Shift

The December 2025 proposal from the National Highway Traffic Safety Administration would reduce the fleetwide average requirement to 34.5 mpg by 2031 from the 50.4 mpg level established under the Biden administration. That difference represents a substantial reduction in the required fuel-economy performance of new vehicles sold in the United States. For automakers, a less stringent target could affect product planning, powertrain strategies, vehicle pricing, and the balance between internal-combustion and other technologies. However, the final regulatory requirements remain pending, meaning the ultimate effect on OEM compliance obligations and product mix will depend on the standards ultimately announced by the administration.

Lower Standards Could Increase Fuel Consumption and Emissions

The National Highway Traffic Safety Administration estimated that lowering the standards would reduce the average cost of a new vehicle by about USD 930. At the same time, the agency projected that the change would increase fuel consumption by roughly 100 billion gallons through 2050, add approximately USD 185 billion in fuel spending, and raise carbon dioxide emissions by 5%. These projections highlight the tradeoff associated with the proposed approach: automakers could receive greater flexibility and consumers could face lower upfront vehicle costs, while the broader effect across the United States could include higher long-term fuel consumption, increased fuel expenditures, and additional carbon dioxide emissions.

Frequently Asked Questions

What are the proposed U.S. fuel economy changes?
The proposed changes would lower federal fuel economy requirements for automakers, potentially reducing the fleetwide average target from 50.4 mpg under Biden to 34.5 mpg by 2031. The National Highway Traffic Safety Administration estimated that the change could reduce the average cost of a new vehicle by about USD 930 while increasing fuel consumption by roughly 100 billion gallons through 2050. The proposal also projects USD 185 billion in additional fuel spending and a 5% increase in carbon dioxide emissions if the lower standards are implemented.