U.S. Lowers Fuel Economy Standards; GM's Technology Costs Expected to Drop by $20.4 Billion by 2031

en.Wedoany.com Reported - On September 28, the National Highway Traffic Safety Administration under the U.S. Department of Transportation completed a new round of rulemaking for automotive fuel economy standards. According to the Department of Transportation's estimates, under the new corporate average fuel economy requirements, GM's compliance technology costs through 2031 are expected to be $20.4 billion lower than under the previous rules; industry-wide related technology costs are expected to decrease by $60.6 billion, or about $1,289 per vehicle. Under the previous 2024 rules, GM's related technology costs through 2031 were estimated at approximately $31.7 billion.

The new rules are scheduled to take effect around December 2026. By 2031, the average fuel economy requirement for the U.S. light-duty vehicle fleet is approximately 34.9 miles per gallon, lower than the approximately 50.4 miles per gallon set under the 2024 rules. According to the Department of Transportation's estimates, after lowering the standards, the pressure on automakers to equip additional fuel-saving technologies or increase electric vehicle production to meet regulatory requirements will decrease. GM said it supports the goals proposed in the new rules and stated that they help align fuel economy requirements with current market conditions.

In addition to GM, the National Highway Traffic Safety Administration estimates that Stellantis's technology costs through 2031 will decrease by $6.6 billion, Ford's by $5.8 billion, Toyota's by $4.5 billion, and Honda's by $4.1 billion. The new rules also plan to end fuel economy credit trading among automakers in 2028.

The Department of Transportation also estimates that the new standards will increase average fuel expenditures over the vehicle lifecycle by more than $1,600 and will increase U.S. gasoline consumption through 2050 by approximately 4.6% compared with the 2024 rules scenario. Automotive industry organizations support reducing compliance costs; environmental groups, including the Sierra Club, oppose relaxing the standards, arguing that it will increase fuel consumption and vehicle emissions.

The previous version of the rules issued by the National Highway Traffic Safety Administration in 2024 required that fuel economy standards for light-duty passenger vehicles for model years 2027–2031 increase by an average of 2% per year, and projected that by model year 2031, the average fuel economy of light-duty vehicles would rise to approximately 50.4 miles per gallon. The new rules announced on September 28 adjust this standards trajectory.