The federal government is changing course again on how quickly new cars and trucks must become more fuel efficient. The Trump administration has finalized substantially lower Corporate Average Fuel Economy requirements through the 2031 model year, reversing the direction established under the Biden administration. The new rules call for an industry fleetwide average of roughly 35 mpg by 2031, compared with the approximately 50.4 mpg projected under the previous standards. For automakers, the change means considerably more flexibility when determining how many gasoline, hybrid, plug-in hybrid and fully electric vehicles make up their future lineups.

The argument behind the rollback centers heavily on vehicle affordability and consumer choice. The administration maintains that less stringent requirements will reduce the regulatory costs associated with developing and selling new vehicles, particularly gasoline-powered cars, SUVs and trucks. That could allow manufacturers to continue investing in internal-combustion models without relying as heavily on electrification to satisfy increasingly demanding fleetwide targets. The previous rules called for passenger-car fuel economy requirements to increase significantly during the middle of the decade before settling into smaller annual increases through 2031. While those regulations did not directly require consumers to purchase an EV, they created stronger incentives for manufacturers to add highly efficient and electric models to their fleets.

There is, however, another side to the equation. Lower fuel economy requirements can reduce some vehicle manufacturing and compliance costs, but vehicles that burn more gasoline can leave owners purchasing more fuel throughout their years of ownership. Government analysis of the regulatory changes also projects higher overall fuel consumption and carbon dioxide emissions compared with the previous standards. That tradeoff takes on additional importance whenever gasoline prices climb. In other words, a vehicle that potentially costs less to build or purchase up front does not automatically translate into lower operating costs over the long haul.

Automakers have generally pushed for regulations that give them greater flexibility to respond to what customers are actually buying. The Alliance for Automotive Innovation, which represents major manufacturers including General Motors, Ford, Toyota, Volkswagen and Hyundai, welcomed the revised approach and argued that the previous trajectory did not sufficiently reflect market conditions and consumer demand. The industry’s challenge has become increasingly complicated as manufacturers balance billions in EV investments with continued strong demand for gasoline-powered SUVs and pickup trucks. Hybrids have also become an increasingly important middle ground, allowing companies to improve fuel economy without asking every customer to make the jump to a fully electric vehicle.

Environmental organizations see the rollback much differently and are expected to continue challenging the changes, arguing that weaker standards will increase petroleum consumption, emissions and motorists’ long-term fuel expenses. What is certain is that the new rules represent another major change in direction for the American auto industry. Product development cycles stretch across many years, so dramatically changing federal targets from one administration to another can complicate long-term planning for automakers. For car shoppers, the most noticeable effect may ultimately be greater availability of gasoline-powered and hybrid vehicles deeper into the decade, even as manufacturers continue developing EVs for buyers who want them. The next several years could therefore produce a U.S. new-car market with a broader mix of powertrains rather than one moving toward electrification at the pace envisioned under the previous standards.