Few topics clear a room faster than fuel economy standards, and on Tuesday's show, the hosts admitted as much before diving in anyway. Stick with it, though, because this one touches every vehicle on your lot.
The Transportation Department finalized lower fuel economy standards Monday, dropping the 2031 fleetwide target from 50.4 mpg under the Biden-era rules to 34.9 mpg. The rule also ends credit trading among automakers in 2028.
Who comes out ahead, and who pays?
Here's how the department's own estimates break down:
Who | What changes |
|---|---|
Automakers | Average compliance costs drop $1,289 per vehicle |
Drivers | Fuel costs rise more than $1,600 over a vehicle's life |
The market | New-vehicle sales get a boost, while gasoline use climbs 4.6% through 2050 |
EV makers | Credit trading, a major income source for Tesla and Rivian, ends in 2028 |
The Alliance for Automotive Innovation said the government "made the right call to better align fuel economy standards with the law and current market conditions." The Sierra Club said it will fight the rollback.
Is the new target even a stretch?
Environmental groups noted that the fleetwide average already hit 35.4 mpg in 2024. As Paul put it, the new rule sets the bar just under what the industry can already jump.
Kyle added an important nuance: that target is averaged across every manufacturer combined, so individual automakers still land on both sides of it. And 50.4 mpg by 2031 sat well outside what current technology and customer demand could deliver.
For Paul, the old target effectively tried to mandate a hockey-stick EV adoption curve. EV sales are still climbing, just along a much gentler slope.
What's the part most people are missing?
Kyle's pick for the real story is the credit trading. Tesla and Rivian have long sold credits to automakers that needed help meeting fleet targets, and that money went more or less straight to the bottom line. Starting in 2028, it's gone.
Paul had a different number in mind: imagine putting that $1,289 on the hood of every vehicle right now. Whether those savings ever reach customers is the question dealers should watch.
Both hosts agreed that fuel economy rules tend to swing with each administration. Plan around what your customers are asking for, since the rules around them will keep moving.
