The White House announced today that the administration will “reset” the federal Corporate Average Fuel Economy (CAFE) standards, shifting the regulatory framework for fuel efficiency requirements across the nation’s light-duty vehicle fleet. According to the announcement, the reset is intended to align fuel economy targets with what the administration describes as “realistic, congressionally-mandated” levels based primarily on gasoline and diesel vehicle performance, rather than the more aggressive targets previously planned through the early 2030s.
The President’s announcement states that earlier standards set under the prior administration would have required fuel-economy levels that significantly exceeded statutory limits, in part by incorporating electric-vehicle compliance mechanisms and over-compliance credit trading. The new direction follows a June 2025 interpretive rule issued by the National Highway Traffic Safety Administration clarifying that CAFE targets must be based on internal-combustion vehicle capability and excluding EVs from the calculation of average fleet efficiency. The White House said this change is intended to keep the program within the legal framework outlined by Congress when the CAFE program was originally established.
According to the White House fact sheet, the administration estimates that resetting the standards will prevent cost increases associated with meeting the previous fuel-economy requirements. It projects consumer savings of approximately $109 billion over a five-year period, citing avoided manufacturing costs that the administration says would have raised new-vehicle prices by roughly $1,000. The announcement also links the reset to projected safety gains, stating that the adjusted standards could prevent serious injuries and reduce roadway fatalities through 2050 by encouraging broader turnover into newer vehicles.
The CAFE reset comes after several legislative and regulatory steps taken earlier in the year. In July, Congress passed legislation that eliminated civil penalties for noncompliance with CAFE requirements for passenger cars and light trucks, removing one of the core enforcement mechanisms for the program. The administration’s new approach also represents a significant shift from fuel-economy targets previously set through model year 2031, which had aimed for an average of approximately 50 miles per gallon across new light-duty vehicles.
Automakers have been watching the process closely, as CAFE rules shape long-term product planning and investment decisions. The new standard-setting approach is expected to provide manufacturers with additional flexibility in balancing gasoline, diesel, and hybrid vehicle production in the coming model years. Industry groups have previously raised concerns about compliance costs associated with the earlier targets, while environmental and public-health organizations have warned that changes to the program could result in higher long-term fuel consumption and associated emissions.
The administration will begin a formal rulemaking process based on the reset framework, including publication of a proposed rule and a public comment period. Final standards for future model years will be determined following review of comments and regulatory analysis, with agencies expected to outline updated fuel-economy requirements sometime in 2026. Until then, federal officials have indicated that they will continue implementing the CAFE program under the June 2025 interpretive guidance.
