Geoff Bennett:
The Trump administration is rolling back tougher federal fuel economy standards for new vehicles, giving automakers more flexibility over how fuel-efficient their cars and trucks must be.
Amna Nawaz:
The move reverses policies meant to increase fuel efficiency to encourage greater use of electric vehicles. According to the administration, the fleet-wide average will be 34.9 miles per gallon in 2031. Under the Biden era rules, the average would have been over 50 miles per gallon.
And this new standard relaxes requirements for automakers to control pollution. The boost for gas-powered vehicles comes as the war in Iran continues to drive up oil prices.
For more on what these changes mean, I’m joined by David Shepardson, who covers transportation for Reuters.
Good to see you again.
David Shepardson, Reuters:
Thanks.
Amna Nawaz:
So let’s just start with the basics here. What exactly did the Trump administration change today?
David Shepardson:
So, as you said, it took the Biden rules, which would have increased efficiency quite dramatically in some years by 10 percent from 50 miles per gallon average to 35 miles per gallon. And it did it back to 2022.
That’s a big benefit to auto companies that in the past would have had to use credits or buy credits from a Tesla or Rivian to meet those requirements. And it’s really part of the administration’s multipronged strategy to make it easier to buy gas-powered vehicles and de-emphasize and in some cases make it more expensive to buy E.V.s.
Amna Nawaz:
We heard from the transportation secretary, Duffy, today. He said this will allow automakers to make vehicles American people want to buy, not what Washington is forcing them to build, in his words.
And the Trump administration says this move was going to reduce the cost of a new vehicle by $1,300. Is there evidence to back up that claim?
David Shepardson:
So, it’s true that, by their estimate, about $1,289 per vehicle in technology costs are going to be reduced on the auto companies’ part. Companies like GM are going to see a $20 billion reduction in their estimated costs between now and 2031.
However, there’s no guarantee or requirement that the auto companies pass that savings onto the consumer in forms of a lower price. It’s also worth noting that, by their estimate, the fuel costs through the life of the vehicles would increase by about $1,600 on average. So it would actually cost more over the life of the vehicles than the upfront savings.
But it’s certainly true. Vehicles are over $50,000 on average. There’s a lot of inflationary pressures on cars. The administration is looking at ways to try to reduce that cost, upfront cost.
Amna Nawaz:
You mentioned what this could mean for automakers. In your conversations, how are they reacting to today’s rules?
David Shepardson:
Well, look, they didn’t like the Biden rules. And now it wasn’t an E.V. mandate, as the Trump administration calls. However, it was part of a multipronged strategy to force auto companies to build more E.V.s and ultimately likely get to an all-E.V. world.
By having high standards, the easiest way to comply would have been through building E.V.s. Now, in this new world, you don’t have to build E.V.s. Why? Because there’s no regulatory benefits. There’s no credits. There’s no $7,500 E.V. tax credit, and so it is much more of a market-based strategy, and the government’s not requiring these efficiency improvements that would give people benefits, even if they’re not necessarily willing to pay for it.
Amna Nawaz:
So do we yet know what this means for the E.V. market and for future production ahead?
David Shepardson:
Well, I think the jury is still out. A lot depends on 2028 and then the next rounds of elections. Certainly, between now and then, the — all the regulatory triggers to force auto companies to build more E.V.s, more efficient vehicles are gone, with one exception, California.
Congress is still trying to revoke — Republicans in Congress, rather, California’s right to also regulate vehicles, require electric vehicles. So that’s sort of the last — really last actor standing here.
But, without that, I do think it’s going to be, with the all the regulatory rules pushed aside, a lot easier to build less efficient vehicles that might have a cheaper upfront price at the dealership.
Amna Nawaz:
And we have seen some pushback from environmental groups already, of course. They’re arguing less fuel-efficient cars mean more gas will be burned, which leads to dirtier air.
Simply speaking here, what do we know? Has anyone looked at what these new rules would mean for emissions and moving forward?
David Shepardson:
So, by the Trump administration’s own admission, this would increase gasoline use through 2050 by close to 5 percent, or, by one estimate in all the thousands of documents, about 120 billion gallons of fuel between now and 2050 in addition. So that’s roughly $300 billion, $400 billion in costs that the drivers are going to have to pay.
On the other hand it is going to be cheaper to buy vehicles. There are some — they say it’ll be — that means cheaper vehicles. It means people buy vehicles faster. It means safer vehicles. It means a benefit for road safety.
When you’re talking about 15 million vehicles a year and Americans spending $300 billion, $400 billion, we’re talking massive numbers. It’s hard to quantify all the pluses and minuses as you add them up, but certainly the upside is cheaper vehicles potentially, depending on how much of the savings. The downside is more emissions, as you pointed out, more gasoline burned, and a push away from E.V.s.
Amna Nawaz:
So, on that balance, if you’re a consumer out there thinking about buying a new car or a new truck, what should you take away from today’s announcement? And when will consumers see the impacts of these rule changes?
David Shepardson:
It takes auto companies a long time to change vehicles. Product cycles are three, four, five years. So in terms of things like the credits companies get, this is air conditioning credits, other off — they’re called off-cycle credits for meeting these standards, they no longer count.
So you can expect auto companies are going to probably pull some of that auto vehicles. And I do think you will either see some reduction in price or some perhaps lower price options for consumers. But the reality is without the tax credits, without sort of the government put — deciding or trying to encourage the companies or to build more fuel-efficient vehicles, it’s really up to them.
You got to buy what you want. You have to value fuel efficiency and try to take the long run. Is it worth it to pay more men up front to get the hybrid or plug-in hybrid to get more efficient driving, or do I rather have a cheaper vehicle up front and maybe not have to spend as much to buy the vehicle at the showroom?
Amna Nawaz:
David Shepardson covers transportation for Reuters. Always great to have you here. Thank you so much.
David Shepardson:
Thank you.