NHTSA Finalizes Less Stringent Fuel Economy Standards for 2031, Impacting U.S. Auto Market
The National Highway Traffic Safety Administration (NHTSA) has finalized a new Corporate Average Fuel Economy (CAFE) framework, setting a fleetwide average fuel economy target of approximately 34.5 miles per gallon (mpg) for model year 2031. This new rule replaces a more stringent trajectory set in 2024, which projected a fleetwide average of about 50.4 mpg by 2031. The previous rule mandated a 2 percent annual increase in passenger car standards through 2031 and a 2 percent annual increase for light-truck standards from 2029 to 2031. The current administration has argued that less stringent standards could reduce vehicle production costs. Notably, these new standards are based solely on gasoline and diesel vehicles, excluding electric vehicles (EVs) in their calculation, consistent with an interpretive rule from June 2025.
