US regulators have waived fines for automakers failing to meet fuel efficiency standards dating back to the 2022 model year, following a new law signed by President Donald Trump.

This move, part of a tax and budget bill, puts an end to fines under the Corporate Average Fuel Economy (CAFE) rules established by a 1975 energy law.

In a letter obtained by Reuters, the National Highway Traffic Safety Administration (NHTSA) has informed automakers that it is re-evaluating its fuel economy regulations. The move aligns with other measures from Washington aimed at easing the production of gasoline vehicles and increasing the cost of electric vehicle (EV) sales.

In the past, non-compliance with US fuel economy requirements has led to significant penalties for automakers.

Stellantis, the parent company of Chrysler, incurred a $190.7m civil penalty for the 2019 and 2020 model years, adding to around $400m in fines from 2016 to 2019.

Previously, General Motors (GM) paid $128.2m for 2016 and 2017.

President Trump's recent actions also include nullifying California's goal to phase out gasoline-only vehicle sales by 2035.

Meanwhile, Tesla has benefited from the situation, earning $2.8bn globally from regulatory credits through the sale of zero-emission EVs.

The legislation signed this month by Trump states that vehicle fines will be eliminated for any year where NHTSA has not completed its rulemaking process.

Center for Biological Diversity’s Safe Climate Transport Campaign director Dan Becker expressed disapproval of the decision, stating: "The Trump administration is reaching back in time to give an obscene gift to pollution law violators GM and Stellantis at the expense of the American taxpayer.

“The automakers lobbied hard for this ‘get out of jail free’ card. They get hundreds of millions in fines cancelled."

GM and Stellantis have yet to respond to the development. Senate Republicans estimates that the law could “save automakers” around $200m.

The NHTSA under President Joe Biden proposed in 2023 to increase fuel economy standards through 2032, which would have cost the industry an estimated $14bn in fines, including $6.5bn, $3bn, and $1bn for GM, Stellantis, and Ford Motor, respectively. However, the final rule adopted last year significantly reduced these requirements, capping potential industry fines at $1.83bn from 2027 through 2031.