DETROIT — On Friday, Transportation Secretary Sean Duffy announced that the fuel economy standards established during the Biden administration for gas-powered vehicles are illegal, initiating steps to revoke them. This significant move suggests a probable overhaul of existing regulations.
Simultaneously, a clause in the ongoing budget bill within the Senate aims to abolish penalties faced by automakers for exceeding mandated fuel efficiency levels. As a result, automakers may face less regulatory pressure to minimize their emissions in the future, potentially impacting the country’s transition towards electric vehicles (EVs).
These actions align with the ongoing policies from the Trump administration, which aims to curtail federal endorsement for EVs. President Donald Trump has expressed intentions to eliminate what he inaccurately termed as an EV “mandate” related to former President Joe Biden’s initiative for half of new vehicle sales to be electric by 2030. EVs, which do not utilize gasoline nor emit greenhouse gases contributing to climate change, have not been mandated through federal policy. However, states like California have established their own mandates, expecting all new passenger vehicle sales to be zero-emission by 2035.
During his tenure, Biden set robust emission benchmarks for cars and trucks, factoring in EV usage in the process—a consideration that the Trump administration and some in the automotive sector claim was illegal, imposing overly stringent standards for companies. The Transportation Department memorandum released Friday indicated that the previous administration “ignored statutory requirements” concerning standards setting for EVs.
“We are striving to make vehicles more affordable and simpler to manufacture domestically,” explained Secretary Duffy. While the revised rule itself doesn’t directly change the standing standards, it authorizes the National Highway Traffic Safety Administration to undertake adjustments in the months ahead. Earlier this year, Duffy urged the federal agency to swiftly overturn the fuel economy rules.
Under the Biden administration’s directive, automakers were expected to reach an average of approximately 50 miles per gallon of gas by 2031, up from the current standard of 39 miles per gallon for light-duty vehicles, aiming to conserve nearly 70 billion gallons of gasoline by 2050. The finalized regulations demand a 2% per year increase in fuel economy for passenger vehicles from 2027 to 2031, with a similar increase for SUVs and light trucks from 2029 to 2031.
Mileage guidelines, established since the 1970s energy crisis, complement Environmental Protection Agency limits on vehicle greenhouse gas emissions. Transportation presently constitutes the primary source of the nation’s greenhouse emissions, with cars and trucks contributing significantly. Recent advancements have seen automakers producing more fuel-efficient gasoline vehicles with improved mileage.
The Alliance for Automotive Innovation, representing automotive manufacturers, described Duffy’s declaration as “a positive development” offering “important clarity” to federal mileage regulations. According to John Bozzella, President and CEO of the group, the standards from the Biden era were unjustifiably reliant on alternative-fuel vehicles.
Conversely, Katherine Garcia, director of the Sierra Club’s Clean Transportation for All initiative, criticized the Transportation Department’s decision as cost-intensive for Americans and detrimental to the environment. “Making our vehicles less fuel-efficient places a financial burden on families at the gas stations,” she stated, adding that it would reduce clean-vehicle options for consumers, pressure wallets, jeopardize health, and heighten climate pollution.
Meanwhile, members of the Republican Senate Commerce Committee added a proposal to the budget bill that would abolish fines levied against automakers not aligning with fuel economy standards with their gas-powered vehicles. Automakers have the option to buy regulatory credits through a trading system if they fall short of the standards. EV manufacturers like Tesla, who do not depend on gasoline, earn credits that they can sell to other automakers. This framework has financially benefited Tesla and other EV manufacturers like Rivian significantly.
These developments came as Tesla CEO Elon Musk and President Trump publicly disagreed online, with Trump proposing that Musk opposed his budget bill due to the withdrawal of tax credits for EVs. Musk contested that assertion.