Analysis: Fuel Economy Rollback May Make Cars Cheaper, But Higher Gas Bills Will Absorb Savings

The Trump administration’s proposal to roll back Biden-era vehicle fuel efficiency standards may save automakers in the U.S. tens of billions of dollars and potentially lower upfront purchase costs for American car buyers.

But any savings at the dealership will vanish quickly as drivers are forced to shell out more cash at the nation’s fuel pumps, according to industry experts who analyzed the administration’s proposal as well as the administration’s own projections.

The National Highway Traffic Safety Administration and Environmental Protection Agency last Wednesday proposed cutting the fuel economy requirements for cars to 34.5 miles per gallon on average by 2031, down from the 50.4 miles per gallon (21.4 km per liter) set by former President Joe Biden.

Automakers Save Billions

As a result, automakers would save $35 billion through 2031 and average upfront vehicle costs would decline by about $930, assuming the automakers pass along the savings, according to NHTSA’s economic analysis in support of the proposal.

But NHTSA’s same economic analysis also said the proposal would raise fuel consumption by around 100 billion gallons through 2050 relative to the Biden standard, costing Americans up to $185 billion.

“The Department of Transportation is now estimating larger upfront savings on technology costs, but they are also estimating even larger losses in fuel savings,” said Jason Schwartz, legal director at New York University’s Institute for Policy Integrity.

“As for just how quickly any upfront savings will evaporate in the face of more money spent at the gas pump, very quickly indeed,” he said.

Car buyers with long-term financing may not feel even the short-term benefits, as purchase savings would be spread out over time alongside the higher fuel bills.

“From the very first day of driving, it will cost consumers more to operate their less-efficient cars: more for gas, more for repairs, more time wasted pumping gas,” he said.

White House Defends Rollbacks

The Trump administration touted the fuel economy rollback proposal as a boost to the auto industry and a benefit for consumers by potentially allowing for the comeback of less-efficient vehicles such as station wagons, a staple of 1970s and 1980s family travel.

It criticized Biden’s standards as a mandate for more electric vehicles that are more expensive, and which American automakers have struggled to produce profitably at scale.

Some of the biggest beneficiaries of the proposal include U.S. automakers Ford and GM, along with Europe-based Stellantis, which produces vehicles under the Chrysler, Dodge and Ram brands in the United States, according to the NHTSA’s analysis.

Scientists Challenge Analysis

Dave Cooke, a senior scientist for the clean transportation program at Union of Concerned Scientists, said he believed the proposal amounted to a financial hit to consumers.

“It shows that consumers will be paying more in lifetime fuel costs than saved in technology costs beginning in model year 2027 in every single one of their three alternative (scenarios) compared to the original standards under Biden,” he said of the NHTSA analysis.

He also criticized the administration’s analysis for omitting the foregone financial benefits associated with increased tailpipe pollution and greenhouse gas emissions.

NHTSA’s analysis showed the proposal would raise vehicle carbon dioxide emissions by around 5% relative to the Biden standards. Transport is the top source of U.S. carbon dioxide output, according to the EPA.

Trump has called global warming a “con job” and pulled the United States out of international efforts to combat it.

The NHTSA did not immediately respond to a request for comment.

The EPA said its administrator, Lee Zeldin, had made revitalizing the American auto industry one of his priorities.

“EPA is committed to delivering on this promise and giving consumers choice through rulemaking within EPA’s jurisdiction,” the agency said in a statement.

Analysts for Edmunds, a consumer research guide for car buyers, said it may be too early to forecast how quickly the projected upfront savings on vehicles might be offset by higher fuel costs. Edmunds told Reuters that product development cycles are typically planned years in advance, so any meaningful impact would take quite a while to materialize.

(Reporting by Volcovic; iEditing by Rod Nickel)