Dateline: LONDON, December 4, 2025 – European automaker shares jumped up to 6.1% Thursday after President Trump proposed cutting US fuel economy standards to 34.5 mpg from 50.4 mpg1. The regulatory rollback could reduce compliance costs for automakers selling vehicles in the US market, potentially boosting profitability across their American operations.
Key Takeaways
- Trump cuts fuel standards from 50.4 to 34.5 mpg
- Renault leads gains at 6.1%, Porsche up 5.7%
- Move reverses Biden-era efficiency requirements
Market Reaction & Context
Renault led the gains with a 6.1% increase, while Porsche Holdings rose 5.7% and Mercedes-Benz climbed 4.7%2. The broader European automotive sector outperformed regional indices, with most major carmakers posting gains between 2.5% and 6%6.
The rally reflects investor optimism about reduced regulatory burden on automakers operating in the US market. Trump’s Corporate Average Fuel Economy (CAFE) proposal represents a dramatic reversal from Biden-era environmental policies1.
Regulatory Impact
The new standards would require automakers to achieve an average of 34.5 miles per gallon across their vehicle fleets by 2031, down from the current requirement of 50.4 mpg8. The Trump administration personally unveiled the Department of Transportation proposal on Wednesday9.
This rollback eliminates pressure on manufacturers to rapidly transition to electric vehicles or invest heavily in fuel-efficient technology. European automakers with significant US operations stand to benefit from lower compliance costs and reduced penalties for missing efficiency targets.
Industry Response
Stellantis, the parent company of brands including Chrysler, Jeep, and Peugeot, welcomed the development. The company said it looks forward to collaboration on “balanced regulations” that support both innovation and consumer choice6.
Bank of America analysts expressed optimism about the automotive sector following Trump’s regulatory announcements, citing reduced compliance costs and operational flexibility for manufacturers4.
Market Outlook
The fuel economy rollback forms part of Trump’s broader assault on electric vehicle mandates and environmental regulations affecting the automotive sector9. Investors are betting that relaxed standards will improve margins for traditional internal combustion engine vehicles while reducing pressure for costly EV transitions.
European automakers with substantial US market exposure, including Volkswagen, BMW, and Mercedes-Benz, could see the most significant benefit from the regulatory changes. The policy shift may also influence their long-term electrification strategies and capital allocation decisions.
Not investment advice. For informational purposes only.
References
1WSJ Business (December 4, 2025). “European Automakers Shares Climb after Trump Commits to Relax Fuel-Economy Rules”. Wall Street Journal. Retrieved December 4, 2025.
2“European automakers surge as Trump pledges to roll back fuel rules” (December 4, 2025). Investing.com. Retrieved December 4, 2025.
3WSJ Business (@WSJbusiness) (December 4, 2025). “European Automakers Shares Climb After Trump Commits to Relax Fuel-Economy Rules”. X/Twitter. Retrieved December 4, 2025.
4“Auto Stocks Surge as Trump Plans to Ease Regulations” (December 4, 2025). MarketScreener. Retrieved December 4, 2025.
5“Trump proposes a sharp rollback of US vehicle fuel efficiency rules” (December 3, 2025). Energy News. Retrieved December 4, 2025.
6“Trump’s U-turn on fuel economy rules lifts European carmakers’ shares” (December 3, 2025). Business Times. Retrieved December 4, 2025.
7“Trump Administration Lowers Fuel-Economy Rules for Carmakers” (December 3, 2025). Wall Street Journal. Retrieved December 4, 2025.
8“Trump rolls back Biden-era fuel economy standards, paving way for automakers” (December 3, 2025). AOL Finance. Retrieved December 4, 2025.
9“Trump caps EV assault with fuel economy repeal” (December 4, 2025). POLITICO Pro. Retrieved December 4, 2025.