Although I love hiking and the outdoors and fondly remember the Algonquin Provincial Park of my youth, when campers didn’t pack water for a canoe trip because you could drink straight from the lake, I’m hardly what you would call a radical environmentalist. I’m doubtful I will ever own an electric vehicle, and I wouldn’t drive one even if Elon Musk comped me a Tesla, which I perceive as being far and away ahead of rival EVs available in the U.S.
Yet even I concede that EVs are the global powertrain of the future.
Trump has a disdain for EVs, or at least for those who champion them. In a nod to his MAGA agenda, Trump’s U.S. Transportation Department on Monday will finalize sharply lower vehicle fuel economy standards through 2031, reversing a push by Joe Biden’s administration to force automakers to build more electric vehicles. The new standards would cut the cost of new vehicles but increase fuel consumption and carbon dioxide emissions for decades, according to the department’s own estimates.
The DOT’s revised mandate will require that automakers achieve a fleetwide average of 34.5 miles per gallon by 2031, down from the 50.4 miles per gallon mandated under Biden. DOT estimates its proposal would save $930 on the cost of a new vehicle but also result in about 100 billion additional gallons of fuel consumption and $185 billion in additional fuel spending through 2050, as well as roughly 5% higher CO₂ emissions.
Trump believes the rollback will be a boon to GM and Ford. More likely, it will further shield them from the global competitive pressures forcing automakers to build more fuel-efficient vehicles.
Trump isn’t the first president who believed Washington should help GM and Ford become more competitive. The Biden administration showered the domestic EV industry with federal incentives while its Energy Department provided billions in government-backed financing to battery ventures serving GM and Ford. Biden believed taxpayer support and tougher fuel economy requirements would prod Detroit into becoming more competitive in the global transition to electric vehicles.
I questioned that approach as well. GM and Ford are multibillion-dollar corporations whose managements are handsomely compensated to anticipate where the auto industry is heading and invest accordingly. They shouldn’t need Washington to finance or mandate their transformation.
Trump is now offering Detroit a different form of government assistance: protection from competition and relief from the regulatory pressure to improve fuel economy.
For now, GM and Ford are protected from Chinese EV competition in the U.S. by prohibitive tariffs imposed under both the Biden and Trump administrations. GM and Ford remain heavily dependent on pricey pickups and SUVs that are also shielded from foreign competition by prohibitive tariffs.
Trump’s rollback likely won’t have nearly the same impact on the long-term strategies of Toyota and Hyundai, which are global companies and must manage their businesses accordingly. While Barra talked a good game about electric vehicles and achieving zero emissions, the most recent EPA findings tell a very different story about what she’s been up to.
GM’s fleet averaged just 22.9 miles per gallon in the 2024 model year, placing the company near the bottom of the industry. Stellantis performed a tad worse, at 22.8 mpg. The industry average was 27.2 mpg; GM trails the broader market by more than four miles per gallon.
Among traditional automakers, Honda averaged 31.0 mpg, Hyundai posted 29.8 mpg, Kia reached 29.2 mpg, and Toyota delivered 29.0 mpg. Even Ford, another Detroit truck-heavy manufacturer, managed 23.4 mpg.
The five-year trend is even more telling. Toyota improved its fleet fuel economy by 3.3 mpg, the biggest improvement among the 14 major manufacturers tracked by the EPA. GM still badly trails Toyota, Hyundai, Kia, and Honda.
In his book, Car Guys vs. Bean Counters, legendary automotive executive Bob Lutz acknowledged that Toyota became a leader in fuel efficiency because it competed in overseas markets where concerns about the environment and climate change were major concerns long before they were in the U.S. While Lutz was a big champion of GM’s trucks and SUVs, he still appreciated where the world was heading and spearheaded the pioneering Chevy Volt, a plug-in hybrid that could function as a pure electric vehicle for about 40 miles on a single charge before reverting to a gas engine.
Although the Volt achieved a cult-like following, particularly in California, Barra killed the vehicle in 2019. That same year, she called hybrids an “interim solution” and told a Barclays conference that “customers generally aren’t interested in hybrids.”
They are now.
Hybrids accounted for 19% of total U.S. retail vehicle sales in August and reached 20% in May, according to Reuters. GM is sitting out the hybrid boom. Supplier sources and forecasting firms told Reuters they don’t expect GM to have a hybrid on sale in the U.S. until near the end of the decade. GM’s U.S. market share fell to 16.8% in the first half of this year from 17.6% a year earlier.
Toyota took a beating on Wall Street and in the financial press for prioritizing hybrids over an aggressive pure-electric pivot, a strategy that has since delivered record hybrid sales. While looser federal fuel economy rules may reduce the pressure for mass EV adoption in the U.S., Toyota is continuing to invest heavily in both hybrids and EVs.
In the U.S., Toyota is expanding its electric lineup with the updated bZ crossover and bZ Woodland while preparing to manufacture its first American-assembled three-row electric SUV at its Georgetown, Kentucky, plant. Toyota is also investing heavily in U.S. hybrid production.
Hyundai Motor Group also continues investing heavily in electrification. The South Korean automaker, which with Kia and Genesis is a major EV seller in the United States, has committed $7.6 billion to its Metaplant America complex in Georgia, where it manufactures the electric Ioniq 5 and Ioniq 9. The plant was designed with the flexibility to produce hybrids as well as EVs.
Hyundai, like Toyota, must also compete outside the United States. Tightening emissions requirements and fierce competition from Chinese automakers in Europe and Asia won’t disappear because Trump has relaxed U.S. fuel economy standards.
GM, by contrast, is investing $888 million in its Tonawanda, N.Y., propulsion plant to manufacture a new generation of V8 engines for full-size pickups and SUVs. The investment, GM’s largest ever in an engine manufacturing plant, will begin producing the new V8s in 2027. GM says the engines will improve fuel economy and reduce emissions, but the investment underscores where the company sees considerable money to be made.
Ford faces much the same temptation: retreat further into high-margin, gas-powered pickups and SUVs rather than confront global competitors whose businesses require them to master multiple powertrains and markets.
Trump is mistaken if he believes relaxed fuel-efficiency mandates will make GM and Ford great again. The rollback gives Detroit more breathing room to continue doing what has made it so profitable in recent years: selling Americans expensive pickups and SUVs while delaying the reckoning with increasingly formidable global competitors.
Trump can relax America’s fuel economy standards. He can’t relax the global competition GM and Ford ultimately must confront.