The announcement, which came from Transportation Secretary Sean Duffy, said that the previous regulations had been costly for automakers. The changes are meant to reduce their costs and encourage manufacturers to expand production in the U.S. Duffy claimed that, by extension, the rollbacks would make new cars more affordable for Americans.
When it was first proposed in December 2025, the rule was divisive, drawing ire from environmental advocates while garnering praise from auto-industry trade groups. The Administration finalized it last week with a signoff from President Donald Trump.
“That means LOWER PRICES, saving families thousands on a new, beautiful, and safe car,” he wrote on Truth Social.
Former President Joe Biden’s regulations were put in place in 2024 to reduce car-based greenhouse gas emissions, decrease dependence on fossil fuels, and spur a transition to electric and hybrid vehicles. The Trump Administration has claimed that its revisions are more focused on bolstering the auto industry and making safer, newer cars more accessible.
Two federal agencies have traditionally set rules that shape how much fuel vehicles use and how much pollution they produce. The Environmental Protection Agency (EPA) regulates vehicle pollution and, until this year’s rollback, also limited vehicle greenhouse gas emissions. The Department of Transportation (DOT) sets fuel economy standards—how far vehicles must travel on a gallon of fuel.
It is these standards that sit at the center of the latest rollbacks: The Biden Administration projected its standards would bring average fleet fuel economy to approximately 50.4 mpg by model year 2031. The Trump Administration projects 34.9 mpg under its revised standards.
Trump’s “One Big Beautiful Bill” in July 2025 axed the $7,500 electric vehicle tax credit. That same month, the Administration eliminated fines for automakers that failed to meet federal fuel-efficiency requirements. And the EPA in February 2026 repealed vehicle greenhouse gas emissions standards.
What does the rule mean for EV demand?
The Trump Administration believes that Biden-era CAFE standards overestimated consumer demand for electric vehicles. Sam Fiorani, the Vice President of Global Vehicle Forecasting at AutoForecast Solutions, says the story is more complicated.
An August report from Kelley Blue Book (KBB) showed that new EV sales in the U.S. were down some 47% from 2025; however, the sales of used EVs were on the rise, with a nearly 15% increase.
“Removing the federal incentives did not remove the demand, but it made the transition for the supply of EVs less profitable,” Fiorani says. “Demand for EVs will continue to grow, and manufacturers investing in the technology will ultimately take advantage of it.”
Will it be more affordable to buy new cars with this rule in effect?
According to the DOT’s announcement, the Trump Administration’s reduced fuel economy standards will save Americans $138 billion over the next five years and reduce the average cost of a new car by $1,300.
That is a key reason that trade groups representing automobile manufacturers support the change.
Read More: Trump Says Tariffs Saved the U.S. Auto Industry. The Data Tells a Different Story
One is the cost of gasoline. James Michael Sallee, an economist and professor at University of California, Berkeley, explains that customers may wind up paying less for a vehicle that is less fuel efficient—but ultimately spend more over the car’s lifetime.
This question is especially pertinent as the world deals with a global oil shortage, with a barrel of Brent crude oil surpassing $108 on Monday. The U.S. has experienced a surge in gas prices in 2026, peaking around $4.56 per gallon after the start of the U.S.-Iran conflict in February. Even if negotiations proceeded and a deal to reopen the Strait of Hormuz were reached, economists predict that it would take months for gas prices to drop back to prewar baselines.
New-car prices are also higher in 2026: Buyers paid an average of $50,089 in August, up 1.9% from a year earlier, according to KBB. Sallee says it is reasonable for the Trump Administration to try to address affordability. “The price of new vehicles is a real issue,” he says.
Many manufacturers will just be selling more “larger and more profitable trucks,” she says, once they no longer have to contend with “stringent” CAFE standards of average fuel economy.
The new rule will take effect 60 days after its publication in the Federal Register. Whether drivers ultimately save money will depend on how much automakers lower prices—and how much buyers spend on fuel. With standards extending through model year 2031, and the conflict in the Middle East adding uncertainty to future pump prices, the full impact on consumers’ wallets may take years to become clear.
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