U.S. Cuts 2031 Fuel-Economy Target to 34.9 MPG From 50.4 MPG

• The 2031 fleetwide requirement falls from 50.4 mpg to 34.9 mpg, originally set under President Biden.

• Automakers could save US$1,289 (CDN$1,827) per vehicle while owners face higher lifetime fuel costs.

• Federal fuel-economy credit trading between manufacturers will end in 2028.

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U.S. regulators have finalized substantially weaker fuel-economy requirements for new light-duty vehicles, giving automakers more flexibility to sell gasoline-powered models through the end of the decade. The Transportation Department says the revised rule will lower vehicle production costs and support sales. However, its own analysis projects higher fuel use and costs for owners, as well as greater carbon emissions.

The standard requires a fleetwide average of 34.9 miles per U.S. gallon by the 2031 model year, equivalent to about 6.7 L/100 km. The previous framework adopted under former President Joe Biden targeted 50.4 mpg, or approximately 4.7 L/100 km.

The department estimates the less stringent target will reduce manufacturers’ compliance costs by an average of US$1,289 per vehicle. However, it projects that owners will spend more than US$1,600 (CDN$2,268) extra on fuel over a vehicle’s useful life. Gasoline consumption nationwide is forecast to rise 4.6% through 2050 compared with the now-superseded requirements.

The timing adds another cost consideration for motorists. American fuel prices have climbed since the U.S.-Israeli war with Iran began in late February, making the projected increase in lifetime fuel spending more immediate for prospective buyers.

The Biden-era program called for annual efficiency gains of eight per cent for passenger cars in the 2024 and 2025 model years, followed by 10% for 2026. Required improvements would then have slowed to two per cent annually from 2027 through 2031. Automakers could comply through different powertrain mixes, but the targets encouraged greater EV production.

A separate change will terminate inter-company credit trading in 2028. Manufacturers that exceeded federal requirements had been able to sell credits to companies falling short. That market generated meaningful revenue for EV producers including Tesla and Rivian.

The Alliance for Automotive Innovation, whose members include General Motors, Ford, Toyota, Volkswagen and Hyundai, supported the new direction. It said regulators had “made the right call” by bringing the standards closer to current market conditions and legal requirements. The group argued the earlier rules pushed electrification beyond consumer demand.

Environmental organizations are preparing a challenge. The Sierra Club said the rollback would raise household costs at the fuel pump while allowing more pollution. Critics also point out that the U.S. fleet averaged 35.4 mpg (6.6 L/100km) in 2024, already slightly exceeding the requirement set for 2031.

Source: Reuters