Trump Just Gave Automakers a Major Fuel-Economy Break — GM, Toyota and Volkswagen Are Siding With Him, But California Is Fighting Back in Court

Major automakers, including General Motors (NYSE:GM), Toyota Motor Corp. (NYSE:TM) and Volkswagen AG (OTC:VWAGY), backed President Donald Trump’s rollback of Biden-era fuel efficiency standards on Monday, opposing a legal challenge from California and other states seeking stricter regulations.

Automakers Warn Legal Challenge Threatens Investments

The Alliance for Automotive Innovation, representing Ford Motor Co. (NYSE:F), Hyundai Motor Company (OTC:HYMTF), Stellantis N.V. (NYSE:STLA) and other manufacturers, supported the administration in a filing with the First U.S. Circuit Court of Appeals. California, New York and roughly two dozen other jurisdictions sued after the Transportation Department finalized substantially weaker fuel economy requirements in September.

"Automakers require certainty and stability in the standards," the alliance argued, warning that overturning the rules could jeopardize investments and development plans covering hundreds of upcoming vehicle models.

The administration lowered its projected fleetwide fuel economy requirement for 2031 to 34.9 miles per gallon, compared with 50.4 mpg under regulations finalized by former President Joe Biden in 2024. The rollback follows Trump’s broader efforts to reverse policies encouraging electric vehicle adoption.

California Challenges Trump’s Electric Vehicle Calculations

The states accused federal regulators of disregarding millions of electric vehicles when calculating achievable efficiency levels, producing what they described as a "flawed, dramatically distorted analysis." Environmental and consumer organizations also filed a separate lawsuit challenging the revised standards.

California Governor Gavin Newsom previously condemned the rollback, arguing that weaker requirements would increase pollution and gasoline expenses. The alliance rejected the states’ arguments, maintaining that manufacturers need predictable regulations to plan investments.

Cheaper Vehicles Could Mean Higher Fuel Bills

The Transportation Department estimates the revised standards will save manufacturers $1,289 per vehicle in compliance costs while increasing drivers’ lifetime fuel expenses by more than $1,600.

Officials also project gasoline consumption will rise 4.6%, or approximately 121 billion gallons, through 2050 compared with Biden’s regulations, although they expect higher new-vehicle sales.

Transportation Secretary Sean Duffy previously defended the changes, citing affordability and consumer choice. Meanwhile, Newsom accused Trump of shifting costs toward consumers.

The American Petroleum Institute also backed the administration, arguing that federal standards should not force consumers toward more fuel-efficient vehicles than they would otherwise choose.

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