LDN Business - Fuel Economy Standards

Transportation chief seeks to weaken fuel economy standards, calls Biden-era rule 'illegal'

[June 07, 2025] By ALEXA ST. JOHN and MATTHEW DALY

DETROIT (AP) — Transportation Secretary Sean Duffy said in a rule Friday that Biden-era fuel economy standards for gas-powered cars and trucks are illegal and moved to reverse them, paving the way for a likely reset of rules.

Combined with Senate language in the pending budget bill to eliminate penalties for exceeding standards regulating how far vehicles must travel on a gallon of fuel, automakers moving forward could come under less pressure from regulators to reduce their pollution. Ultimately, the nation’s use of electric vehicles could be slowed.

The moves align with the Trump administration's ongoing efforts to slash federal support for EVs. President Donald Trump has pledged to end what he has called an EV “mandate,” referring incorrectly to former President Joe Biden's target for half of all new vehicle sales to be electric by 2030. EVs do not use gasoline or emit planet-warming greenhouse gases.

No federal policy has required auto companies to sell — or car buyers to purchase — EVs, although California and other states have imposed rules requiring that all new passenger vehicles sold in the state to be zero-emission by 2035.

When he was in office, Biden imposed increasingly stringent emissions standards for cars and trucks. He included use of EVs in calculating the rules — an inclusion the Trump administration and the auto industry have argued was illegal and raised the bar too high for automakers to meet.

The Transportation Department's memorandum Friday said the previous administration “ignored statutory requirements” that barred consideration of EVs when setting standards.

“We are making vehicles more affordable and easier to manufacture in the United States," Duffy said.

The revised rule does not itself change existing standards, but it empowers the National Highway Traffic Safety Administration to make adjustments in coming months. Duffy put pressure on the federal agency earlier this year to reverse the fuel economy rules as soon as possible.

Under the Biden administration, automakers were required to average about 50 miles (81 kilometers) per gallon of gas by 2031 — up from about 39 miles (63 kilometers) per gallon for light-duty vehicles today — in an effort to save almost 70 billion gallons (265 billion liters) of gasoline through 2050.

The rules, finalized in 2024, increased fuel economy 2% per year for passenger cars in every model year from 2027 to 2031, and 2% each year for SUVs and other light trucks from 2029 to 2031.

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Secretary of Transportation Sean Duffy speaks during a news conference to provide a status update on Newark Liberty International Airport at the Department of Transportation in Washington, Wednesday, May 28, 2025. (AP Photo/Rod Lamkey, Jr.)

Mileage rules — in place since the 1970s energy crisis — work alongside the EPA limits on vehicle greenhouse gas emissions. Transportation accounts for the largest source of the nation’s planet-warming emissions, and cars and trucks make up more than half of those.

In recent years, automakers have been manufacturing gasoline-fueled cars that are more efficient and get higher mileage.

The Alliance for Automotive Innovation, which represents automakers, called Duffy's announcement “a positive development" that adds “important clarity” to federal mileage rules.

The Biden-era standards “were ‘improperly predicated’ on alternative fuel vehicles,” said John Bozzella, the group’s president and CEO.

But Katherine Garcia, director of the Sierra Club's Clean Transportation for All program, said the Transportation Department's action will increase costs for Americans and increase pollution.

“Making our vehicles less fuel-efficient hurts families by forcing them to pay more at the pump,” she said. “It will lead to fewer clean-vehicle options for consumers, squeeze our wallets, endanger our health and increase climate pollution.”

Meanwhile, Republicans on the Senate Commerce Committee added proposed language to the pending budget bill Thursday that would remove fines penalizing automakers that don’t meet fuel economy standards with their gas-powered vehicles.

Automakers can buy regulatory credits under a trading program if they don’t meet the standards. EV makers like Tesla, which don't rely on gasoline, earn credits that they can sell to other carmakers. The arrangement has resulted in billions of dollars in revenue for Tesla and millions for other EV makers like Rivian.

The memo and bill text landed this week as Tesla owner Elon Musk and Trump engage in a public spat online, with Trump suggesting that Musk “only developed a problem” with his budget bill because it rolls back tax credits for EVs. Musk disputes that.

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Daly reported from Washington.

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