US lowers fuel economy targets to 34.9 mpg by 2031 and ends trading of EV credits

The US National Highway Traffic Safety Administration published on 28 September 2026 its final rule on Corporate Average Fuel Economy (CAFE) standards. Carmakers will have to improve the average efficiency of their fleets by 1% a year, reaching 34.9 miles per gallon in model year 2031. The rule it replaces required 2% a year and a target of 50.4 mpg for the same year.

The rule also ends the trading of credits between manufacturers. Under the previous framework, companies that sold many electric vehicles could sell surplus credits to rivals whose fleets used more fuel. The change removes a source of revenue for EV makers such as Tesla and a compliance route for groups with large truck and SUV ranges.

The Department of Transportation estimates savings of $138 billion over five years and a reduction of about $1,300 in the average price of a new car. According to Kelley Blue Book data cited by Time, buyers paid an average of $50,089 for a new vehicle in August 2026, 1.9% more than a year earlier. Economists quoted by Time doubt the saving will reach buyers: a University of Michigan professor expects manufacturers to favour larger and more profitable trucks.

The context for fuel costs is unfavourable. Brent crude passed $108 a barrel on the day of the announcement, and US petrol peaked at about $4.56 a gallon in 2026 after the conflict with Iran. NPR reports that critics expect higher spending at the pump to offset lower sticker prices.

Reactions split along industry lines. The Alliance for Automotive Innovation said the rule aligns the standards with the law and with market conditions, and Ford and Stellantis welcomed the focus on consumer demand. The Center for Biological Diversity warned of higher pollution and costs for consumers. The change comes as new EV sales in the US are down 47% on 2025, while sales of used EVs are up 15%.