The United States finalised its weakest fuel-economy standards in a decade this week. The headline is the mileage target. The part that matters to Tesla is four paragraphs further down: from model year 2028, carmakers will no longer be allowed to buy compliance credits from each other.
The mileage numbers
NHTSA Administrator Jonathan Morrison signed the final rule on 25 September 2026, and the Department of Transportation announced it on 28 September under the banner "Freedom Means Affordable Cars". It revises Corporate Average Fuel Economy standards for model years 2022 through 2031.
| Measure | New rule | Previously required |
|---|---|---|
| Fleetwide average, MY2031 | 34.9 mpg | roughly 50 mpg |
| Passenger cars, MY2031 | 40.2 mpg | — |
| Light trucks, MY2031 | 26.4 mpg | — |
The NRDC's characterisation is that 34.9 mpg sits below what manufacturers have on average already achieved — which would make the 2031 target a ceiling the industry has passed rather than a standard it has to meet.
The credit trade is the real change
CAFE has always worked on averages. A manufacturer beating its target banks credits; one missing it either pays a penalty or buys credits from someone with a surplus. A company selling only electric cars posts compliance figures in the hundreds of miles per gallon, generates far more credits than it can use, and sells the rest. That surplus arrives as revenue with almost no cost attached to it.
The final rule ends trading between manufacturers from model year 2028. It is a wind-down rather than a cliff: credits earned through model year 2027 remain tradable and usable for five years, so a MY2027 credit can still be applied as late as model year 2032.
NHTSA names no company in its reasoning, and does not need to. It describes "a manufacturer that produces and sells a large volume of BEVs" which earned approximately 116 million CAFE credits in model year 2021, posted compliance values between 620.4 and 959.5 mpg across model years 2019 to 2021, and sold those credits to offset other manufacturers' low CAFE performance. There is one company that fits.
Tesla's credit income had already collapsed
| Quarter | Automotive regulatory credit revenue |
|---|---|
| Q2 2025 | $439m |
| Q3 2025 | $417m |
| Q4 2025 | $542m |
| Q1 2026 | $380m |
| Q2 2026 | $146m |
The second quarter of 2026 was down 67% on the same quarter a year earlier. Tesla's own filings attribute the decline to government actions restricting credit programmes tied to its products, naming the One Big Beautiful Bill Act.
That matters for reading this week's rule correctly. CAFE credits are one of several programmes Tesla sells into — zero-emission-vehicle and greenhouse-gas credits are administered separately — so the 2028 change closes part of a business that has already lost two-thirds of its value. It is a door being shut on a room that was emptying anyway.
What it means in Europe
Directly, nothing. CAFE is a United States programme, and European CO2 compliance runs on a separate regime with its own pooling rules.
Indirectly, two things follow. Credit sales have historically landed in Tesla's accounts as near-pure margin, so losing them raises how much the cars themselves have to earn — and Tesla's European share was bought in part with price cuts, as Schmidt Automotive Research recorded in the second quarter. Second, removing the compliance incentive weakens the main regulatory reason US manufacturers built electric cars they did not otherwise want to sell — which changes who Tesla competes with at home, and how hard.