What are the CAFE standards, the fuel efficiency regulations Trump may target?
What are the CAFE standards, the fuel efficiency regulations Trump may target?
A week from today, President-elect Donald Trump takes office again. One set of federal regulations he may attempt to weaken are fuel efficiency requirements for cars and trucks. These are known as the Corporate Average Fuel Economy standards, or CAFE standards, and they regulate the amount of fuel used by cars and trucks on American roads.
Over several decades, the CAFE standards have changed the kinds of vehicles we drive, and for years, presidential administrations of different parties have brought them up and down — a trend that could continue under the next Trump administration.
Their story starts in the early 1970s, with the first oil crisis.
In 1973, OPEC countries cut off oil exports to the United States, which caused huge lines at gas stations and a spike in oil prices.
“And so the idea was to improve the fuel economy of our cars so that we’d be less susceptible to availability shocks from these markets,” said Rebecca Ciez, an assistant professor of mechanical engineering at Purdue University.
Back then, vehicles, on average, only got about 13 miles to the gallon. So Congress passed what became the CAFE standards to require car companies to improve that metric. They took effect in 1978 and quickly became a political football — and stayed that way.
Case in point: More than a decade later, CAFE standards came up in one of the 1992 presidential debates. Then-President George H.W. Bush, a Republican, took aim at Democratic candidate Bill Clinton for floating the idea of raising the standard to 40 miles per gallon. (It was 27.5 miles per gallon for passenger cars at the time).
“That would break the auto industry and throw a lot of people out of work,” Bush claimed. (The standards ultimately didn’t change for years.)
But beyond their role as a political talking point, the standards have had an effect. According to the Environmental Protection Agency, in 2023, average fuel economy across all vehicles was 27 miles per gallon — more than double what it was in 1975.
“We’ve seen this incredible improvement in the fuel economy of our vehicles,” Ciez said. “They’ve gotten safer over time. We’ve saved a lot of energy and greenhouse gas emissions over the course of that period.”
But the standards have also had some unintended consequences. That’s in part because of the A for “average” in the CAFE acronym. The standards regulate the average fuel efficiency of all new vehicles each auto company sells.
“Some of them might be above the standard, some of them might be below the standard,” said Kenneth Gillingham, a professor of environmental and energy economics at the Yale School of the Environment.
But on the whole, a company’s vehicle fleet is supposed to meet the standard. A somewhat recent example, Gillingham said, is the plug-in hybrid Chevrolet Volt from GM.
“Each Chevy Volt that was sold permitted them to sell some number of other gas-guzzling larger vehicles,” he said.
And carmakers have been able to sell even more gas guzzlers due to a change to the standards made in the early ’80s, according to David Zipper, a senior fellow at the MIT mobility initiative.
“There was an element of skewed incentives because of what I would call the ‘light truck loophole,’” he said.
That loophole, as he calls it, created one standard for passenger cars — think sedans — and another, less strict standard for light trucks — which includes SUVs. With those two separate standards, car companies started making and selling more SUVs and trucks. So, Zipper argues those changes helped push drivers into bigger and bigger vehicles over time.
“Now we have larger vehicles on American roads than we otherwise would have, and that creates some serious problems around safety and around infrastructure,” he said.
In more recent years, the standards have shifted under different presidents.
First, car companies saw them rise under President Barack Obama, who pledged alongside automakers in 2011 that “by 2025, the average fuel economy of their vehicles will nearly double, to almost 55 miles per gallon.”
Then in 2017, former and future President Donald Trump said he’d roll them back, “so you can make cars in America again,” he told an audience in Detroit at the time.
And campaigning in 2019, future President Joe Biden vowed to bring them back up, telling a CNN town hall that “I think we should raise the CAFE Standards, bring them back to where they were, which would have saved 12 billion gallons of oil to begin with, and move beyond.”
In 2024, his administration finalized rules that aim to bring average fuel economy to 50.4 miles per gallon in model year 2031, a goal Trump may now look to lower.
All of those moves amount to a lot of back-and-forth for carmakers.
“And that makes it difficult for automakers to plan for the long term,” said Chris Douglas, a professor of economics at the University of Michigan, Flint. “Because every four years, the administration changes, and that changes the mileage standards.”
Douglas thinks that uncertainty is likely to continue for years to come, since Trump is coming back to office, but is term-limited. So, he said, if Trump lowers the CAFE standards in his next term, they could change yet again four years from now.
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