Corporate Average Fuel Economy (CAFE) Standards

Automobile manufacturers must achieve a minimum fleet-wide average fuel economy for passenger cars and light trucks. CAFE standards are set by NHTSA and increase over time to reduce fuel consumption and greenhouse gas emissions. Manufacturers that fail to meet the standards are subject to civil penalties.

Manufacturers may earn credits for exceeding the standards, which can be banked for up to five years or traded with other manufacturers. Alternative fuel vehicles and advanced technology vehicles may receive special treatment in CAFE calculations.