Money Talks News may earn commission or revenue through links in the content below. Our editorial team independently selects all products. Compensation does not influence our recommendations.
President Donald Trump says his new car rules will put money back in your pocket.
“These new Standards will take the waste out of building cars in America,” he posted on Sept. 26. “That means LOWER PRICES, saving families thousands on a new, beautiful, and safe car.” (1)
Two days later, the Department of Transportation made it official. It finalized a rollback of federal fuel-economy standards that it says will cut the average price of a new vehicle by $1,300 and save Americans $138 billion over five years. (2)
Here’s what the announcement left out: what you’ll spend on gas afterward. If cars don’t have to be as efficient, they may also use more gas.
The new rules aim for a fleet average of 34.9 miles per gallon by model year 2031. (2) The Biden-era rules they replace were aiming for about 50.4. (3)
And gas isn’t cheap. The national average for regular is about $4.46 a gallon, up from roughly $3.14 a year ago. (4)
I’m a CPA, and I’ve spent more than 35 years telling people the sticker price is only the first bill. Here are five numbers to check before you count that $1,300.
1. The $1,300 is real, but it’s not “thousands”
Let’s give the president his due. Fuel-economy rules do push up what it costs to build a car. One University of California economist told TIME it’s “certainly true” that a lower-technology car costs less to make. (5)
But $1,300 is a long way from “thousands.” The average new vehicle sold for $50,089 in August, according to Kelley Blue Book. (6) That makes the promised savings about 2.6% of the price.
And that’s assuming automakers pass the savings along. A University of Michigan engineering professor told TIME she highly doubts they will. (5)
2. The government’s own math says you may pay it back at the pump
This is the number that matters most, and it comes from the administration itself.
When the Transportation Department’s safety agency analyzed the earlier version of this rollback, it estimated about $925 off the sticker price. It also estimated consumers would pay $1,112 to $1,431 more in fuel over the life of the vehicle, according to a summary by Harvard Law School’s environmental program. (7)
In other words, by its own estimate, the savings on day one get eaten up over time. The final rule’s numbers may differ, so watch for them.
Or, as a University of California, Berkeley economist told TIME, fuel standards tend to push prices up, “but a lot of that is offset, if not all of it, by future fuel cost savings.” (5)
3. At today’s gas prices, a few mpg is a lot of money
The EPA’s fuel-cost label assumes you drive 15,000 miles a year. (8) Let’s use that and today’s $4.46 gas to run a simple example.
A car that gets 30 mpg burns 500 gallons a year, or about $2,230. A car that gets 35 mpg burns about 429 gallons, or roughly $1,910. That’s a difference of about $320 a year.
That’s just an illustration. Your car, your commute and future gas prices will differ. But the point stands: A few miles per gallon can easily be worth more than $1,300 if you keep the car long enough.
The good news is you can shave the cost of every tank no matter what Washington does. For example, Upside is a free app that pays you real cash — up to 25¢ a gallon — at stations you already use, including Shell, BP, and Exxon.
It stacks on top of your credit card rewards. Check it out here.
One thing before we keep going — the financial world is louder and dumber than ever. Hot takes everywhere. Almost none of it is worth your time. I’ve spent 35+ years cutting through the noise so you don’t have to. Sign up for the free Money Talks Newsletter — 10 seconds, no spam, just the stuff that matters.
4. You’ll probably keep the car longer than you think
Here’s why this matters so much to retirees. We don’t trade in cars every three years anymore.
The average vehicle on U.S. roads is 12.8 years old, a record, according to S&P Global Mobility. (9) Over that many years, a small fuel penalty adds up, and so do repair bills once the factory warranty is long gone.
If you’re planning to drive your next car into the ground, plan for the repairs, too.
If the thought of unexpected repairs scares you, a plan from Endurance Warranty Services offers several coverage levels for cars up to 20 years old, with no mileage limits, so you can choose only the protection you need.
Every plan includes 24/7 roadside assistance and rental car reimbursement. Get a quote — takes about a minute.
5. Judge any car by what it costs to own, not what it costs to buy
Whether you like this rule or hate it, your job at the dealership is the same: Add up the whole bill.
Start with the fuel. Every new-car window sticker shows an estimated annual fuel cost. Compare that number between the models you’re considering, not just the price.
Next, get insurance quotes before you sign. Premiums can vary widely by model, and it’s a cost you’ll pay every year you own the car.
And while we’re on this subject, are you still paying renewal rates on your car insurance? If so, you are probably throwing away money. Insurify lets you compare real-time quotes side-by-side without the spam. It’s fast, secure, and rated 4.7 stars on Trustpilot. See if you're overpaying — free, 5 minutes.
Finally, look at the loan. If you financed your current car when rates peaked, the interest may be costing you more than any mileage rule ever will.
Find out if you can do better. Gravity Loans, for example, promises no hidden fees or rate markups and reports its customers save over $100 a month on average. Quotes take minutes, and you choose the term. If your loan’s current, comparing costs nothing — check your rate in minutes.
The bottom line
The president is right that regulations aren’t free and that car prices have gotten out of hand. A $1,300 break is nothing to sneeze at.
But a car is a 12-year commitment, not a one-day purchase. The government’s own earlier analysis suggests the sticker savings can drain back out through the gas tank.
So take the discount if it shows up. Then do the math the announcement didn’t: price, plus fuel, plus insurance, plus interest, plus repairs.
The cheapest car to buy isn’t always the cheapest car to own. Your wallet only cares about the second one.
Sources: 1. NPR via MPR News; 2. U.S. Department of Transportation; 3. National Highway Traffic Safety Administration; 4. AAA; 5. TIME; 6. Kelley Blue Book; 7. Harvard Law School Environmental and Energy Law Program; 8. U.S. Environmental Protection Agency; 9. S&P Global Mobility
Add a Comment