Automakers’ Alliance Backs Trump’s Lowered Standard of 34.9 Miles per Gallon by 2031
Key Facts
The Alliance for Automotive Innovation, which represents General Motors, Toyota, Volkswagen and other major companies, backed President Donald Trump’s administration on November 2 in its legal challenge to reduced U.S. fuel-efficiency standards. The intervention puts automakers on the administration’s side in a lawsuit led by California, New York and other U.S. parties, while the court will decide the dispute. The revised rule targets an average fleet fuel economy of 34.9 miles per gallon by 2031. A standard adopted under President Joe Biden in 2024 targeted 50.4 miles per gallon for the same period. “Automakers need certainty and stability in the standards,” the alliance said in a filing with the U.S. Court of Appeals for the First Circuit.
The alliance includes General Motors, Toyota, Volkswagen, Hyundai, Ford and Stellantis, along with other companies. Its position backed the administration against a lawsuit filed the previous month by California, New York and about 24 other states, cities and counties, after the Transportation Department adopted the weaker standards. The alliance is not seeking to overturn the standards in full; it supports the administration’s challenge to the rule that lowered the targets compared with the 2024 standards. The group filed a brief defending the new rule as the plaintiffs seek to challenge the department’s decision. The breadth of the alliance makes the case relevant to global manufacturers that rely on stable rules when making decisions about vehicle development for the U.S. market.
The alliance said overturning the rule would affect automakers’ business and put at risk capital investment planning, product development and validation for hundreds of new models intended for the U.S. market. The group argues that stable standards are essential for companies to make long-term development decisions under known rules. The states, by contrast, said the administration ignored the existence of millions of electric cars, resulting, in their view, in a distorted analysis of the fuel efficiency that could be achieved. The alliance urged the court to reject the states’ arguments concerning electric cars. Those arguments put before the court a dispute over how to calculate the fleet’s efficiency potential and apply the rule, as well as the effects on companies’ plans.
The Transportation Department says the rule reduces manufacturers’ average compliance costs by $1,289 per vehicle but increases fuel costs by more than $1,600 over its lifetime. The estimates reflect a trade-off between the costs companies bear to meet the standards and the fuel spending drivers incur while using the vehicle. The department also expects the rule to increase U.S. gasoline consumption through 2050 by 4.6%, or about 121 billion gallons, compared with Biden-era rules. The department also expects new-car sales to rise. The figures show how estimates of costs to manufacturers differ from estimates of spending and consumption over vehicles’ lifetimes and across the market.
The Transportation Department announced on June 7, 2024, that the previous fuel-efficiency standards would save Americans more than $23 billion in fuel costs. The department then estimated that those standards would save about 70 billion gallons of gasoline through 2050 and prevent more than 710 million metric tons of carbon dioxide emissions over the same period. The rules called for passenger-car efficiency to increase 2% annually for model years 2027–2031, and light-truck efficiency to increase 2% annually for model years 2029–2031. The National Highway Traffic Safety Administration defines its Corporate Average Fuel Economy program as regulating how far vehicles travel per gallon, covering passenger cars and light trucks. Those previous standards provide a basis for comparison with the rule the administration and alliance are now defending.
Against the backdrop of debate over vehicle costs, the average price of a new car sold in the United States reached $50,089 in August, exceeding the $50,000 threshold for the first time since the previous December, according to the Associated Press. General Motors said in September that it supports the new rule’s goals and better aligning fuel-efficiency standards with market realities. Stellantis also said the standards allow customers to choose from a range of vehicles and powertrains suited to their needs. The agency quoted the president of the Alliance for Automotive Innovation as saying that the National Highway Traffic Safety Administration made the right decision to align the standards with the law and current market conditions. In trading, Volkswagen shares listed under the symbol VWAGY closed at $7.7 on November 2, according to EL7 data.