That's not a very exciting headline, perhaps. But the Trump administration's proposed changes to the so-called Corporate Average Fuel Economy (CAFE) rules have already drawn criticism from many quarters. The Environmental Defense Fund, for example, claims in a headline that the changes will "cost Americans more for gas, weaken national security, and increase pollution." If it's so bad, why is the administration doing it?
At the news conference announcing the proposal, Trump was surrounded by representatives of several domestic automakers, who favor the move. It is actually a further step in a series of actions that Trump has taken to step back from the Biden administration's CAFE standards.
Under the previous administration, each automaker had to ensure that the average "fleet" economy (all their current model-year production, basically) measured in miles per gallon, had to increase by 2% per year. (Electric vehicles are assigned an equivalent value of fuel economy on the order of 140 MPG.) Companies not meeting the standards pay fines or purchase credits from firms who exceed them.
Already, the Trump administration has ceased levying the associated fines under the spending bill recently passed by Congress. They are now proposing to lower the 2% figure to 0.5%, and roll back the "baseline" from which the percentages are calculated to 2022.
Let's compare two cases: the former policy with fines and the 2% rate versus the proposed policy. And let's see how various constituencies are affected by the two cases.
In the former Biden-administration case, automakers faced the fact that in less than 10 years, the CAFE standards would require raising their average fuel economy by 20%. Any time an engineering system has some of its performance mandated by law, engineers eventually run up against another law: physical law. While modern automobiles differ in thousands of ways from the typical 1955 car—computer-controlled engines, greater use of plastic for reduced weight, etc.—there is still only so much energy in a gallon of gasoline. And beyond a certain point, the accessible design space shrinks as the required fuel economy rises. What the old CAFE standards were doing in practice was to compel the auto industry to move toward smaller, lighter cars and more electric vehicles.
Yes, that would save people money in fuel costs, and make the U. S. more energy-independent, and reduce our carbon footprint. But it also makes cars somewhat more expensive, at least at first, and gradually would eliminate certain larger sizes that consumers might want to buy. So for automakers, the old rules meant compulsory redesigns against fundamental constraints that might eventually eliminate whole classes of vehicles. For consumers, they meant more limited choices of somewhat more expensive cars, although ones that would be slightly cheaper to run. And for the environment, it meant slower increases in carbon and other emissions, which are good things.
The proposed reduction in CAFE increases to 0.5% means that the time to get to 20% higher than at present goes from 10 years to 36 years. And in any case, there are no longer fines for violating the standards, so they are essentially an aspirational goal with no teeth in them. Under the proposed rules, automakers will no longer be obliged to make cars steadily more fuel-efficient unless consumers ask for that. Consumers will have a wider choice of cars that won't be more expensive simply because of the CAFE standards. And while presumably we will have more carbon emissions than if the old standards were retained, unexpected advances in electric-vehicle technology may change this picture.
For example, in the December issue of Physics Today, the umbrella publication of the American Institute of Physics, researchers describe their work on solid-state lithium batteries that could vastly out-perform current lithium-ion batteries. One radical improvement they hope to make is to replace the current graphite anodes, which can absorb only one lithium ion for every six carbon atoms, with solid-lithium ones, which raises the charge capacity of the anode by a factor of ten. There are problems with solid-state battery technology, but if they are overcome, it might be possible to manufacture electric vehicles that are both cheaper to buy than gasoline-powered ones and travel farther on a charge.
And if consumers are presented with such a choice, it's quite likely that the internal-combustion-engine-powered vehicles would be relegated to specialist uses in construction, etc., leaving most of the field to electric vehicles. That would come about not because of any government mandate, but because competitive forces in the marketplace produced innovations that consumers genuinely want, and have the byproduct of increasing CAFE mileage and reducing pollution.
Obviously, there's no guarantee that solid-state batteries or any other innovation will ever make all-electric vehicles outperform gas-guzzlers in all significant ways: first cost, performance (including range), and per-mile costs, including power and maintenance. But it could happen, just as we saw a huge reduction in carbon emissions from power plants when coal was replaced by cheaper abundant natural gas, due not mainly to government mandates but to the privately-funded development of fracking technology.
You can't count on these serendipitous things happening. But it's equally short-sighted to think that the only good things that go on in a market are government-mandated changes.
The CAFE changes proposed by the Trump administration are still open to comments before they are implemented. I'm not holding my breath that the current regime will take negative comments into consideration, but it might happen. Perhaps what is most harmful in this whole situation is the every-four-year policy shifts that manufacturers have been trying to deal with, as Obama was replaced by Trump, who was replaced by Biden, who was replaced by Trump again. But a small-r republican form of government, as messy as it is, is better than being dictated to by a small group of powerful individuals with no term limits, which is how China is governed. And for now, it looks like we may be reverting to more of a free-market model in the auto industry. Consumers and manufacturers should enjoy it while they can, because it may not last.
Sources: I referred to an NPR report on the Trump administration proposed CAFE-standard changes at https://www.npr.org/2025/12/03/nx-s1-5630389/trump-administration-rolls-back-fuel-economy-standards. I also referred to a webpage of the Environmental Defense Fund at https://www.edf.org/media/trump-administration-announces-plan-weaken-fuel-economy-standards-cars-and-trucks. The Physics Today article "Solid-State Batteries: Hype, Hope, and Hurdles" by S. Muy, K. Hatzell, S. Meng, and Y. Shao-Horn appeared on pp. 40-46 of the December 2025 issue.
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