President Trump put the affordability crisis squarely in his sights this week when he announced a major regulatory reform that will save American families billions of dollars on vehicles in the coming years. By rolling back onerous overreach from the Biden administration, Mr. Trump is ensuring consumers will be able to buy the cars and trucks they want, and at lower prices.
The regulation concerned here is the Corporate Average Fuel Economy (CAFE) standards, which are promulgated by the National Highway Traffic Safety Administration. CAFE standards regulate fuel economy for cars, SUVs, and pickup trucks. Under Biden, these standards were raised to completely unreasonable levels, forcing costly changes for consumers and automakers alike.
The Biden-era regulation would’ve required automakers to meet a fleet average of more than 50 miles per gallon for cars, SUVs, and pickup trucks in model year 2031, which is just a few years away. This would’ve compelled consumers to mostly buy electric vehicles (EVs) with relatively short ranges, low power, and steep price tags—all things consumers don’t want.
Among other severely deleterious effects, the Biden-era regulation would’ve forced automakers to continue selling EVs at a loss—even with tens of thousands of dollars in subsidies per vehicle. To stay profitable, those automakers would’ve had to hike the price of their internal combustion engine cars and trucks to compensate.
In brief, all vehicles, regardless of their powertrain, would’ve become more expensive.
Unlike the completely unrealistic Biden-era CAFE standard, Trump’s regulatory reform sets a much more reasonable average of almost 35 miles per gallon and reclassifies some vehicles to give automakers more flexibility, allowing them to produce different sizes of vehicles with the powertrains that consumers actually want.
This regulatory reform will also make many vehicles available to American consumers that are already sold overseas but not in the US market because of burdensome regulation and government overreach. These include very affordable, popular cars and small trucks like the Toyota Hilux.
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While the Biden-era rule shackled automakers with completely unreasonable requirements for fuel economy, Mr. Trump’s reform undoes the damage. Instead of making vehicles much more expensive, this will provide consumers with significant relief, amounting to $109 billion over next five years and averaging about $1,000 for each new vehicle.
But the regulatory reform will also save lives in addition to money. By making it more affordable for families to get into newer, safer vehicles sooner, there will be about 1,500 fewer deaths on the road and almost a quarter million fewer serious injuries over the next several years.
Additionally, automakers will no longer need to sacrifice the strength of a vehicle’s frame to save on weight and fuel consumption. Car manufacturers can return to prioritizing safety and reliability when designing new vehicles, instead of forfeiting both before the altar of the radical left’s “green” agenda.
Mr. Trump’s amended CAFE standards also increase consumers’ freedom of choice. Instead of being forced into EVs that they don’t want to drive, Americans will continue to have access to reliable, affordable internal combustion cars, SUVs, and pickup trucks, along with new vehicles that were previously only available overseas.
To underscore how unpopular EVs are with American consumers, consider that they already receive tens of thousands of dollars in subsidies for the manufacturer and consumers receive thousands of dollars more in incentives (like tax credits) and people still don’t want to buy them. That’s why the Biden administration used these burdensome regulations to effective force consumers into EVs.
But Mr. Trump’s regulatory reform flips the script. This change will greatly reduce costs for automakers which in turn will result in higher returns for shareholders, lower prices for consumers, and faster wage growth for autoworkers—it’s a win for everyone involved.
American families have been in an affordability crisis for years because of the failed policies of the Biden administration. Reversing those failures is an essential step to getting out of this cost-of-living nightmare and alleviating burdens on the auto industry.
Giving consumers the choice to buy less expensive, more reliable vehicles made in America—and now being able to deduct the interest on their car loan—is meaningful progress toward the restoration of the American dream.
E.J. Antoni, Ph.D., is the chief economist and Richard Aster fellow at the Heritage Foundation and a senior fellow at Unleash Prosperity.
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