The Environmental Protection Agency (EPA) has released a report highlighting a significant decline in emissions from new cars in the US, with real-world fuel economy improving by 1.1 miles per gallon to a record high of 27.1 mpg for model year 2023 vehicles. This marks a 13.1 mpg improvement since 1975, when the EPA first began gathering fuel economy data. The report also reveals that new electric vehicles and plug-in hybrids have contributed to an 11% reduction in CO2 emissions for model year 2023.

However, the progress made in reducing emissions may be short-lived, as President-elect Donald Trump's administration has signaled a shift away from prioritizing climate change and air pollution. Trump has promised to roll back President Joe Biden's climate legacy, which could include relaxing tailpipe emission standards. This would be a significant setback, as the current standards aim to reduce greenhouse gas emissions per mile to 85 grams by 2032, down from 170 grams per mile in 2027.

The EPA report shows that automakers are on track to meet these stricter standards, with Tesla, Kia, and Hyundai leading the way in reducing tailpipe emissions. Tesla, which only produces fully electric vehicles, had the lowest emissions, followed by Kia and Hyundai. Stellantis, General Motors, and Ford had the worst fuel economy, with average emissions ranging from 374 to 402 grams per mile.

The three German automakers, Mercedes, Volkswagen, and BMW, showed the most significant improvement in pollution reduction between 2018 and 2023. Mercedes eliminated the most pollution, reducing its emissions by 73 grams per mile, followed by VW and BMW.

Tesla also dominated the regulatory credit market, generating nearly 34 million metric tons of greenhouse gas credits for model year 2023. The company has long relied on the sale of these credits to other automakers as a significant revenue stream. In the first three quarters of 2024, Tesla earned $2.1 billion from selling regulatory credits, accounting for over 40% of its profit for the year.

However, Trump's threat to roll back climate regulations could jeopardize Tesla's revenue stream and undermine the progress made in reducing emissions. The company's CEO, Elon Musk, has expressed mixed views on Trump's stance, suggesting that Tesla could benefit from the elimination of the $7,500 EV tax credit, but it remains unclear how he would respond to the relaxation of tailpipe emission rules.

The implications of Trump's presidency on the automotive industry's progress towards reducing emissions are significant. If the administration relaxes emission standards, it could lead to a surge in pollution and undermine the health benefits of cleaner air. As the industry continues to innovate and bring new technologies to market, it remains to be seen how Trump's climate stance will impact the trajectory of emissions reduction in the US.