Trump's plan to drastically relax car fuel consumption standards could completely change the direction of the U.S. auto market.

Recently, Trump announced at the White House that he would overturn the "ridiculous, onerous and terrible" automobile fuel efficiency regulations set by the Biden administration. These regulations originally required car companies to significantly improve the fuel efficiency of vehicles to promote the popularization of electric vehicles.

According to the new proposal, by 2031, the average new car in the United States will need to travel about 34 miles per gallon (about 8.6 liters/100 kilometers). The Biden administration previously set a target of 50 mpg (about 4.7 liters/100 km), which is significantly stricter and aims to accelerate the transition to electric vehicles.

The announcement was made by the CEOs of Ford and Stellantis (Chrysler's parent company). Traditional car companies and the oil industry generally welcome this adjustment, believing that the cost of the old standard is too high and unrealistic, and the new solution is closer to the actual needs of current consumers for price and model.

Trump's relaxation of fuel consumption standards has relieved traditional car companies, but the pace of the transition to electric vehicles in the United States may slow down.

Fuel efficiency targets have been significantly lowered

The core of this policy adjustment is to significantly relax the requirements for automobile fuel consumption.

The United States has implemented the "Average Corporate Fuel Economy" (CAFE) standard since 1975, and it has become stricter over the years, with the aim of forcing car companies to build more fuel-efficient and environmentally friendly cars.

The Biden administration previously stipulated that by 2031, new cars (including cars and light trucks) would run an average of 50 miles per gallon of gasoline (about 4.7 liters/100 kilometers) to promote the popularization of electric vehicles.

But the new plan proposed by the Trump administration directly cuts the target to 34 miles per gallon (about 8.6 liters/100 kilometers) - a reduction of more than 30%. This is another key move by Trump to abolish environmental regulations and relax regulations after taking office.

The Automotive Innovation Alliance, an industry organization representing most American car companies, welcomed this. Its CEO John Bozzella said: "We have always emphasized that given the current reality of the electric vehicle market, the standards set by Biden are too aggressive, and it is difficult for car companies to meet the standards."

In addition, the oil industry has long opposed strict fuel consumption standards. The American Petroleum Institute (API) has publicly lobbied the Trump administration to overturn the old rules, arguing that those policies are "actually aimed at eliminating fuel vehicles."

The new standard allows car companies to continue to sell more traditional fuel vehicles instead of desperately building electric vehicles or ultra-fuel-efficient vehicles - good for car companies and oil companies, but a clear step back for climate and energy transition.

The relaxation of standards is to make cars cheaper and better to sell

Supporters of this policy believe that relaxing fuel consumption standards is a closer approach to market reality and can alleviate the old problem of "buying a car is too expensive".

At present, the average price of new cars in the United States is as high as 50,000 US dollars (about 360,000 yuan), which discourages many ordinary families. After the relaxation of standards, car companies do not have to forcibly install expensive technology or only push up the cost of electric vehicles in order to meet strict fuel-saving requirements.

According to media reports, a number of participants, including car dealers, said that the new standard is more in line with the models that consumers really want to buy - such as pickup trucks, SUVs and other large cars, rather than high-priced energy-saving cars "forced" by regulations.

Trump and other officials also emphasized that the new rules will reduce the cost of building cars, thereby making cars more affordable.

It is worth noting that traditional car companies have welcomed this change, but Tesla - the leader in electric vehicles in the United States - has not responded to this.

The analysis pointed out that although this policy is good for fuel vehicles and traditional manufacturers, it may bring new challenges to companies such as Tesla that focus on electric vehicles: in a more relaxed regulatory environment, consumers may be more inclined to choose cheap and familiar fuel vehicles, and the pace of promotion of electric vehicles may slow down.

The policy shift is to make cars cheaper and more free, but the price may be that the pace of electric vehicle development has been slowed down.

Don't bet on policies, it depends on the resilience of enterprises

Trump wants Americans to continue to drive big pickups, and Biden wants them to change to Model Y. But the market finally has the final say - not what car the policy pushes, but what kind of car the people are willing to pay for. The current penetration rate of electric vehicles in the United States is only about 8%, which is much lower than that of China (40%+) and Europe (25%+). Explanation: Electrification is not something that can be achieved quickly by a paper standard.

For investors, instead of betting on who will be in charge of the White House, it is better to keep an eye on which car companies can meet today's needs without giving up tomorrow's technology.

Short-term (within 1 year):

Traditional American car companies (F, GM, STLA) may have an emotional rebound, but need to be vigilant: the global electrification trend has not changed, and Europe/China is still pushing new energy; If the Democratic Party returns to power in 2028, the policy may reverse again. Avoid chasing pure American electric vehicle concept stocks unless there is a clear overseas order support.

Medium to long term (3–5 years):

Real winners = global car companies that can "double repair oil and electricity": such as Toyota (hybrid + hydrogen energy + pure electric), BYD (multi-technology route + going overseas); If Ford can use the policy window to stabilize cash flow and accelerate the implementation of North American electric production capacity, there is still a turning point.

Focus on alternative opportunities in the United States: If electric vehicle subsidies remain (such as the IRA Act), the construction of battery materials and charging piles is still certain.