The Trump administration has made a big decision for car buyers in America. The Transportation Department announced on September 28 that it is changing fuel economy or mileage rules for vehicles. The administration claims that this will make new cars cheaper and save an average of about $1,300, or about Rs 1.25 lakh. The Trump administration has dubbed the move ‘Freedom Means Affordable Cars’. What is special is that this decision has come at a time when the average price of petrol in America has reached $4.47 per gallon.
What is policy?
Mileage pressure on car companies will reduce under the new proposal. According to the US Department of Transportation, the fleetwide average fuel economy requirement for cars is being reduced.
Under the Biden administration’s rules, this average was to be above 50 miles per gallon by 2031, which will now drop to just under 35 miles per gallon. Earlier mileage above 21 km per liter was standard if we understand Indian standard, now it will be around 15 km per litre.
Earlier there was pressure to make expensive vehicles
The Trump administration has argued that previous regulations were putting increasing pressure on companies to make expensive electric vehicles, when American families had a different choice. Transport Secretary Sean Duffy said an ‘unnecessary requirement’ had been removed. According to him, these standards changes will make cars more affordable, bring safer cars to the roads and increase investment in American auto workers.
According to NHTSA Administrator Jonathan Morrison, the change ‘restores the credibility’ of the National Fuel Economy Program. He says that if cars become cheaper, more families will be able to buy new and safer vehicles. Auto industry lobby ‘Alliance for Automotive Innovation’ has also termed it as ‘right reform’ as per market reality.
How much can the rate be reduced?
Administration officials say relaxing the rules could make cars cost an average of $1,300 over the long term. The Transportation Department also claims that the plan will save the American people $138 billion over the next five years.
The relief is significant because the average price of a new car in the US hit a record high of nearly $50,000 last month. The department says that as vehicles become cheaper, people will buy newer models with more safety features. This can reduce accidents and deaths.
Overall, this decision is between two different arguments. The government and car companies are hailing this as a move to reduce the cost of cars and give consumers the freedom to choose the car of their choice.
At the same time, environmental groups say that the benefit of saving a few hundred dollars in the price of a car can be offset by the additional cost of gasoline, especially when the fuel is already expensive. Besides, low mileage vehicles are likely to increase pollution. Whether the average savings of $1,300 will actually trickle down to buyers will depend on the companies’ prices and fuel prices in the future.
