US finalizes relaxed fuel economy standards through 2031

The U.S. Department of Transportation, through the National Highway Traffic Safety Administration (NHTSA), has finalized new Corporate Average Fuel Economy (CAFE) standards through the 2031 model year. These new regulations represent a significant loosening of the stricter standards previously established by the Biden administration.

The new rules set a theoretical average fuel consumption target of 34.9 miles per gallon (mpg) for cars and light trucks by 2031, up from 30.1 mpg in 2024. This is notably lower than the approximately 50.4 mpg target envisioned under previous regulations. Annual increases will be set at 0.9% for passenger cars and 0.51% for light trucks through 2029, rising to 1% for both categories by 2031.

The decision is expected to benefit manufacturers heavily invested in gasoline-powered pickups and SUVs, such as General Motors, Ford, and Stellantis. Additionally, the NHTSA confirmed that efficiency attributed to electric vehicles and the electric components of plug-in hybrids will be excluded from the standard determinations, though non-rechargeable hybrids remain included. The rules also mandate an end to the exchange of CAFE credits between manufacturers for credits generated from the 2028 model year onward.