The US National Highway Traffic Safety Administration (NHTSA) has finalized fuel economy standards that require a combined fleet average of 34.9 miles per gallon in model year 2031, against the 49.3 mpg it now estimates its 2024 standards would have required.
NHTSA told the industry that the compliance credits electric vehicle makers sell to rivals will be worth much less as a result.
The final rule, signed on Friday by NHTSA Administrator Jonathan Morrison and posted in pre-publication form ahead of Federal Register publication, rewrites standards for 10 model years at once, from 2022 to 2031.
Three of those years are already over.
The 2024 rule had itself projected a combined requirement of about 50.4 mpg for 2031.
The final rule departs from the December proposal on every headline figure that President Donald Trump and Transportation Secretary Sean Duffy left open at the weekend.
The 2031 target rises to 34.9 mpg from the proposed 34.5 mpg.
Annual stringency increases are 0.9% for passenger cars and 0.51% for light trucks through 2029, not the 0.25% to 0.5% proposed.
The estimated saving per vehicle is roughly $1,290 in model year 2031, up from about $900.
The additional gasoline consumed through 2050 is 122 billion gallons, up from about 100 billion.
NHTSA said it moved to the more stringent option after Honda and the supplier groups MEMA and MECA argued that annual increases of less than half a percent “would fail to encourage the steady, incremental deployment of existing capabilities.”
The numbers are projections.
The actual standards are footprint-based curves, and NHTSA notes that real-world fuel economy is generally 20% to 30% lower than the two-cycle test values used for compliance.
EVs Removed From the Math
The core of the rule is legal rather than technical.
NHTSA says the standards “are based solely on light-duty vehicles powered by gasoline and diesel fuels,” including conventional hybrids.
It says it “has not considered the imputed fuel-economy performance of EVs or the electric operation of plug-in hybrid electric vehicles.”
The agency relies on a provision of the Energy Policy and Conservation Act that bars it from considering alternative-fuel vehicles or the availability of credits when setting standards.
It argues that the 2020, 2022 and 2024 rules broke that rule and were therefore “set higher than maximum feasible levels.”
EVs still count for compliance.
Automakers “are free to produce EVs,” NHTSA writes, and their sales “will earn credit toward compliance with the CAFE standards” under the Department of Energy’s petroleum equivalency factor, which the department lowered in February.
What changed is the standard those EVs are measured against, not the mechanism that scores them.
Credit Trading Ends
The rule eliminates trading between manufacturers for credits earned in model year 2028 and later.
Credits earned through model year 2027 remain tradable and usable for five years, so 2027 credits can be bought and applied through model year 2032.
The December proposal would have made 2027 the last year in which traded credits could be used at all, a change NHTSA describes as “slight.”
NHTSA justifies the change by describing an unnamed manufacturer “that produces and sells a large volume of BEVs.”
That manufacturer earned about 116 million CAFE credits in model year 2021 while averaging compliance values of 620.4 mpg to 959.5 mpg between model years 2019 and 2021, then sold those credits “to offset other manufacturers’ low CAFE performance,” NHTSA said.
The footnote to that passage cites a Reuters report on Tesla‘s regulatory credit revenue.
NHTSA says such transactions “undermine the energy conservation purpose” of the law.
The agency then goes further.
It says it “expects the value of those credits to be significantly diminished” because, with the civil penalty for missing a standard now set at $0.00 by Congress, “there is little to no benefit to manufacturers who may purchase those credits.”
The penalty was zeroed by section 40003 of the One Big Beautiful Bill Act signed on July 4, 2025.
NHTSA is codifying that rate for model year 2022 onward and says it has no discretion to do otherwise.
The practical effect runs through the whole analysis.
“Under current law there are no fines for manufacturer shortfalls, and therefore, only technology costs are incurred,” NHTSA writes.
The Alliance for Automotive Innovation had called ending trading “redundant” once EVs were excluded from standard-setting and asked for a 2030 cutoff.
Honda proposed keeping trading with volume caps.
Porsche and ZETA, the EV industry group, opposed the change.
Shortfall Becomes Surplus
NHTSA’s own tables show what the reset does to the industry’s position.
For model year 2024, US-built passenger cars achieved 41.3 mpg against a 48.9 mpg standard under the 2024 rules.
Under the new rule the standard for that year is 38.0 mpg.
Imported cars achieved 41.2 mpg against 49.6 mpg, now 38.3 mpg. Light trucks achieved 30.5 mpg against 35.4 mpg, now 29.8 mpg.
The gains are uneven.
NHTSA estimates that the rule cuts cumulative industry technology costs for model years 2027 to 2031 by $60.6 billion from $115.8 billion.
General Motors accounts for $20.4 billion of the saving, followed by Stellantis at $6.2 billion, Hyundai at $5.3 billion, Ford at $5.1 billion, Toyota at $4.5 billion and Honda at $4.1 billion.
Per vehicle, GM’s regulatory cost in model year 2031 falls to $1,184 from $3,745 under the 2024 standards.
Honda’s drops to $242 from $1,395.
The industry average falls to $949 from $2,238.
Even on the reset standards, several manufacturers still fall short in at least one fleet on NHTSA’s figures, which exclude EVs and off-cycle adjustments and so differ from official compliance values.
In model year 2024, Ford’s US-built cars achieved 32.8 mpg against a new standard of 37.9 mpg, GM’s 35.3 mpg against 37.7 mpg and Volkswagen Group of America’s 29.7 mpg against 35.1 mpg.
In light trucks, GM achieved 26.5 mpg against 26.8 mpg and Stellantis 27.3 mpg against 29.0 mpg.
Among importers, Jaguar Land Rover achieved 28.4 mpg against 37.1 mpg and Volvo 30.5 mpg against 37.3 mpg.
NHTSA projects strong hybrids will make up 50% of the light-duty fleet in model year 2031 under the final rule, against 81% had the 2024 standards stayed in place.
Plug-in hybrids stay flat at 2.9%, against 7.6% under the old rules.
Crossovers Become Cars in 2030
The rule also redraws the line between passenger cars and light trucks from model year 2030, two years later than proposed, a delay Stellantis had requested.
Vehicles will no longer qualify as light trucks simply by offering three rows of seats that fold flat.
In its place NHTSA is adding a “light-duty work factor” that requires payload plus towing capacity of at least 8,500 pounds.
The off-road pathway is tightened to require all four remaining criteria, including an approach angle of at least 28 degrees.
NHTSA found that 98.9% of vehicles currently qualifying with four of five criteria fail that angle, and that the one exception was the Kia Seltos.
It said manufacturers had cut approach angles “to as low as 14 degrees in pursuit of on-road aerodynamic improvements.”
Reclassification is why light-truck requirements fall from 30.6 mpg in 2029 to 26.2 mpg in 2030 while the combined figure rises from 32.6 mpg to 34.6 mpg.
Lighter crossovers move into the passenger-car fleet, lowering the average of both fleets while raising the weight of the tougher car curve.
NHTSA acknowledges commenters were “correct” that the change brings “no stringency benefit at fleet level.”
The Legal Fight Ahead
NHTSA estimates the rule reduces total technology costs by $15.3 billion in model year 2031 alone.
It projects that the gasoline and diesel fleet will consume an additional 122 billion gallons through 2050, on top of a baseline of 2,639 billion gallons, a 4.6% increase.
Americans used 136.5 billion gallons of gasoline in 2025, so the agency describes the increase as “less than one additional year’s worth” spread over 25 years.
The agency set the social cost of carbon at zero and did not monetize greenhouse gas changes.
Resetting standards for model years already built drew objections.
Honda supported reconsideration but said reaching back to 2022 and 2023 “would unfairly penalize manufacturers who made good-faith investments.”
NHTSA says the change is not retroactive because compliance proceedings for those years never opened.
It says regulatory credits “remain speculative expectations rather than vested rights” until compliance is finalized.
The Natural Resources Defense Council and ZETA argued that if the 2022 to 2026 standards are struck down in court, the tougher standards for later years cannot stand because they are built as percentage increases on the reset 2022 base.
NHTSA states that each set of standards and each compliance change is severable.
The rule takes effect 60 days after Federal Register publication.
NHTSA received 68,294 comments on the proposal, published on December 5, 2025.
The Transportation Department said in a release on Monday that the reset would cut the average price of a new vehicle by $1,300, in line with NHTSA’s $1,290 per-vehicle technology-cost estimate, which assumes manufacturers pass the saving on to buyers.
“Thanks to President Trump’s leadership, we have finally ended the illegal mandate that forced automakers to produce more expensive electric vehicles,” Duffy said in the release.
