New Secretary of Transportation Sean Duffy has ordered that the existing Corporate Average Fuel Economy standards be rescinded or revoked, in an order issued January 29th, 2025.
Previously, in July 2024, the National Highway Traffic and Safety Administration (NHTSA) finalized Corporate Average Fuel Economy (CAFE) Standards for new vehicles MY 2027-2031. The rules were ultimately published with a significant reduction in stringency for light trucks, the vehicle class with the greatest emissions. NHTSA’s final rule only requires a 2% increase for light-trucks each year, while the preferred proposal required the fuel economy of new light trucks to improve by 4% each year through model years 2027-2031. Light duty trucks are the largest source of emissions in the road transport sector in the United States, and were responsible for almost 80% more CO2 emissions than passenger cars in 2022.
Many major auto manufacturers endorsed the position of the Alliance for Automotive Innovation (AAI), which argued the targets for light-duty trucks were overly ambitious. In the AAI’s October 2023 regulatory comments to the EPA, the association specifically cited projections in which one in two (50%) light trucks would not comply with the regulation in 2027-2032. After the release of the weakened rule, AAI CEO John Bozzella stated support for the final outcome of the rule.
CAFE standards regulate how far new vehicles must be able to travel on a gallon of fuel. While other similar standards were created to reduce pollutants from motor vehicles, CAFE standards were originally created with the primary goal of reducing US oil consumption in the US.
NHTSA issued final Corporate Average Fuel Economy Standards for MY 2027-2031 in June 2024, with significant reductions in ambition. On January 29th, the Secretary of the Department of Transportation ordered that the rules be rescinded or replaced, and penalties for noncompliance were waived by the One Big Beautiful Bill Act, passed in July 2025.
The One Big Beautiful Bill Act, passed July 2025, eliminated compliance penalties and fines for CAFE standards. Although the rule is still in place, there are no consequences for failure to comply.
The One Big Beautiful Bill Act, passed July 2025, eliminated compliance penalties and fines for CAFE standards. Although the rule is still in place, there are no consequences for failure to comply.
General Motors, Stellantis, Toyota, and the CEO of Alliance for Automotive Innovation issued statements on 1 March supporting the Transportation Freedom Act. The bill would repeal existing emissions standards for light-, medium-, and heavy-duty transport in the US, and also remove California and other states' authority to enforce zero-emission vehicle sales targets.
Specifically, Title II of the Transportation Freedom Act would repeal existing light- and medium duty GHG emissions standards for passenger cars and trucks MY2027+, phase 3 GHG emissions standards for heavy-duty motor vehicles MY2030+, and corporate average fuel economy standards for passenger cars and light trucks MY2027+ and heavy duty trucks MY2030-2035. New, less stringent GHG emissions standards would be drafted by the current EPA. Title III would remove the waivers granted to California to enforce its own emissions standards and zero-emission vehicle sales targets, and also repeal Section 177 of the Clean Air Act, which enables other US states to follow California's emissions standards. These actions would prevent California and all other participating US states from enforcing the Advanced Clean Trucks rule, Advanced Clean Cars II rule, Advanced Clean Fleet rule, and other California-led policies.
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