US rule changes on fuel economy could cut compliance costs and let carmakers focus more on profitable pickups, SUVs and V-8 engines. Analysts say the shift may also reshape EV and hybrid investment.
01Summary
- 01The National Highway Traffic Safety Administration cut light-duty vehicle fuel economy targets to an average of 34.9 miles per gallon by 2031, down from 50.4 miles per gallon under 2024 rules.
- 02Congress also voted last year to eliminate fines for failing to comply with fuel economy regulations, after General Motors and Stellantis had paid hundreds of millions of dollars in penalties.
- 03TD Cowen analyst Itay Michaeli said the changes could deliver a few to several hundred million dollars in incremental earnings tailwinds and remove the need to buy credits.
- 04Automakers including Stellantis, GM and Ford are already bringing back or expanding V-8 availability in pickup trucks such as the Ram full-size line and Ford's F-150.
- 05John Murphy said hybrids could rise from 14% of the US market last year to about 34% by the end of the decade, while EVs remain at around 7.5 million of roughly 300 million vehicles on US roads.
02Why it matters
The rule changes could alter where carmakers spend money, with more room for high-margin trucks and large-engine vehicles. They also affect the pace of EV, hybrid and powertrain investment, which matters for jobs, profits and future vehicle choices.
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