Trump to Roll Back EV Credit Rule Tied to Fuel Economy Targets

The Trump administration on Wednesday rescinded a rule that allowed automakers to boost fuel economy compliance by assigning higher energy savings to electric vehicles. The Energy Department said it will remove the “fuel content factor” from its calculations following an appeals court ruling in September, calling the provision unlawful. The department added that further revisions are planned.

The fuel content factor had been used to determine fleetwide averages under Corporate Average Fuel Economy standards. Environmental groups have argued that the rule assigned unrealistically high mileage values to EVs, enabling compliance without significant gains in real-world fleet efficiency.

The Biden administration had proposed eliminating the provision from 2027, a move that would have reduced the compliance value of EVs by about 70 per cent. In 2024, however, the department opted to phase it out by 2030 after automakers raised concerns. Industry groups said the factor produced fuel economy figures roughly seven times higher than calculations based solely on the gasoline-equivalent energy content of electricity.

In December, the Trump administration also proposed lowering fuel economy standards finalised in 2024. The National Highway Traffic Safety Administration suggested reducing requirements for model years 2022 through 2031 to an average of 34.5 miles per gallon by 2031, compared with 50.4 mpg under the earlier rule.

Last year, Trump signed legislation ending fuel economy penalties for automakers. NHTSA said no fines would apply from the 2022 model year onward, though companies have expressed concern that penalties could return under a future administration. The administration has taken additional steps aimed at easing production of gasoline-powered vehicles and reducing incentives for EV manufacturing and purchases.