SAN FRANCISCO, USA – Earlier this month, US President Donald Trump announced plans to lower fuel economy standards for cars, saying it would make cars more affordable for Americans and give them more freedom to choose larger vehicles.
But the proposed policy changes would waste years and billions of dollars of investment in cleaner vehicles, including electric vehicles (EVs), experts say, even though the idea of saving American drivers money is “highly speculative.”
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The proposed new standard would allow cars to travel at 34.5 miles per gallon (14.7 kilometers per liter), compared to 50.4 miles per gallon (19 kilometers per liter) set under former President Joe Biden’s administration.
President Trump called the proposal “Freedom is an Affordable Car,” saying lower fuel economy standards would make each new car up to $1,000 cheaper and support American manufacturing.
But Severin Borenstein, dean of the Haas School of Business at the University of California, Berkeley, said U.S. automakers were “already investing in meeting old standards. The idea that this could save consumers a lot of money is highly speculative.”
Driven by these fuel economy measures and U.S. consumers’ continued preference for SUVs and other gas-guzzling vehicles, Ford Motor Co. announced it will cut its EV production plans, taking a $19.5 billion hit. General Motors also announced a $1.6 billion impact related to the exit from EVs in its quarterly results released in October, and warned that further damage was possible. The company also announced that it will lay off 3,400 people across its EV locations.
The federal cuts will slow the transition to EVs in the U.S., where EVs account for less than 10% of the market, far below global EV sales, which account for 25% of all cars sold this year.
“Governments can help markets in this transition,” said Andrew Hoffman, Holcim professor of sustainable enterprise at the University of Michigan’s Ross School of Business.
Hoffman said the U.S. is a “unique market” that favors SUVs and pickup trucks because of the long ranges that can cause range anxiety for electric car drivers. This highlights the need for charging station networks, another area where the Trump administration has made cuts that impact business plans. On Tuesday, 16 states sued the Trump administration for withholding billions of dollars in subsidies for EV charging station infrastructure.
Tesla, the largest U.S. EV maker, is expected to be hit hardest by these changes. U.S. sales in November were down 23% from a year ago as the $7,500 tax credit expired.
Waymo, the electric self-driving car backed by Google’s parent company Alphabet, has expanded to various U.S. cities this year, but the company has only a few thousand vehicles in its fleet, and overall experts expect EVs’ share of the market to decline further.
With the end of the EV tax credit and reduced charging networks, consumers may turn to gas-guzzling cars, but lower fuel efficiency could lead to higher fuel costs and have a negative impact on household budgets.
“Consumers end up paying more when they buy gas-guzzling cars,” said Dan Becker, director of safe transportation campaigns at the Center for Biological Diversity.
The proposed new standards only apply to new cars, so they may not have much impact on fuel economy over the next year or two, but “if they remain in place, they will have a significant impact on fuel economy in the 2030s,” said Matthew Tarduno, an assistant professor of economics at the University of Illinois at Chicago.
pollute the climate and endanger human health
The new standard is the latest in a number of measures announced this year that could reduce the fuel economy of U.S. cars.
When the tax and spending bill was passed in July, fines for cars that don’t meet fuel efficiency standards were reduced to zero. Tailpipe emissions rules have also been relaxed, tax credits for EVs will end in September, and the Environmental Protection Agency (EPA) has announced a proposal to reverse standards that limit greenhouse gas emissions from new cars and trucks, overturning the EPA’s long-standing, science-based finding that greenhouse gases endanger human health and welfare.
Environmental groups say a reversal of the Environmental Protection Agency’s endangerment findings is imminent, adding that they have submitted comments to the EPA on all of these proposals and are preparing for a legal fight to oppose the reversal if it passes.
There is a public hearing period on the fuel standards until the end of next month. “We will share our views with the administration and file a lawsuit with our colleagues (if the proposal passes),” said Becker of the Center for Biological Diversity.
“One potential area of focus in future litigation is how the Department of Transportation treats EVs when it sets new standards,” said Nikki Reisch, director of the Climate and Energy Program at the Center for International Environmental Law (CIEL).
“Gasoline cars cannot match EVs or hybrids in terms of fuel efficiency. These cleaner and more efficient technologies exist and cannot simply be ignored,” she added.
According to the EPA, vehicle exhaust contributes to toxins in the air that are known carcinogens and can also cause respiratory and cardiovascular disease.
In fact, the transportation sector is the leading source of air pollution in the United States, according to the American Lung Association.
William Barrett, vice president for national policy at the American Lung Association, said relaxing fuel standards would “turn back the clock on public health standards.”
The effects of increased air pollution due to increased car exhaust emissions can be particularly severe for children, Barrett said.
“Children are more vulnerable because their lungs are still developing. Increased pollution can have immediate and lasting effects on children, such as being forced to sit on the sidelines of soccer games and increasing emergency room visits.”
The Lung Association also plans to comment on the decision to postpone the application of the new standards during the public hearing process.
freedom of choice
But Karl Brauer, an auto analyst and writer for iSeecars.com, says car emissions have declined since the Clean Air Act was passed in 1970, partly because of regulations put in place since then to reduce emissions.
“The car was cleaned a long time ago,” Brauer says. “If we continue with these regulations, profits will decline.”
Brauer said the proposed new fuel standards would lead to “lower costs and higher margins for car companies and lower prices for consumers,” and the removal of tax credits for EVs would lead to “greater freedom of choice” as gasoline and electric vehicles compete on equal footing for consumer preferences.
In announcing fuel standard relief on Dec. 3, the Trump administration said major automakers would save more than $35 billion in technology costs by 2031.
But at the same time, fuel costs for drivers are expected to rise, with U.S. drivers expected to pay up to $185 billion more by 2050, the National Highway Traffic Safety Administration (NHTSA) reported.
President Trump was flanked by the chief executives of Ford and General Motors during the White House announcement.
GM CEO Mary Barra said the announcement will allow automakers to offer a variety of gasoline and electric vehicles while keeping prices down and meeting consumer preferences. “Regulatory requirements don’t get ahead of the consumer,” she said at the New York Times Dealbook Summit.
With gas prices falling in recent weeks, Brauer says fuel-based cars will become cheaper than EVs. Additionally, a lack of sufficient charging stations can make it less attractive.
But the new standards could move U.S. automakers in a different direction from a global market moving toward higher fuel efficiency and electric vehicles. The proposed standards could help make SUVs and other gasoline consumers more attractive in the U.S., but could make it harder to compete in global markets.
“One of the questions is whether U.S. automakers will be forced to comply with different types of regulations in different places,” said Tarduno, of the University of Illinois at Chicago.
China is currently the world’s largest automobile manufacturer and exporter, and is especially known for its electric vehicles. “GM and Ford will want to be global players, and if they don’t make EVs they will be squeezed out by Chinese automakers,” said Becker of the Center for Biological Diversity.
But Brauer takes a different view.
“Internal combustion engine vehicles” are a competitive advantage for U.S. automakers, he said, given that China has spent years building its lead in electric vehicles. The United States should build on this, he says.
