By Joe Stonor
European automotive shares jumped after President Trump committed to reverse Biden-era fuel-efficiency requirements.
Renault, Porsche Holdings and Mercedes led the charge, climbing 5.7%, 5.25% and 4.7% respectively. Suppliers to automakers benefited too, with bearings-maker Schaeffler gaining 4.5%.
On Wednesday Trump said he plans to cut corporate average fuel economy rules, which regulates how many miles vehicles must travel on a gallon of fuel. The government plans to cut the CAFE standard to 34.5 miles a gallon from the current 50.4 miles a gallon.
The proposed change is a "shot in the arm" for European automakers, who had been struggling to compete with Chinese manufactures in the EV space, Scope Markets analyst Joshua Mahoney said.
BMW, Volvo and Aston Martin also gained, climbing 3.8%, 3.1%, and 2.2% respectively.
Congress already nullified the CAFE rules by eliminating fines for companies violating them in the summer. Those fines had been a boon for Tesla, as automakers could buy credits from manufacturers overperforming on efficiency, like Tesla, instead of paying fines.
Automakers said the lower standards proposed by Trump are more in line with consumer demand, arguing that CAFE standards forced them to invest in EVs and other environmental technologies that consumers didn't want to pay for.
Environmental groups, on the other hand, argue that stricter fuel-economy rules save consumers money in fuel costs.
Regulatory easing, particularly on carbon-dioxide emissions, will benefit all automakers, analysts at Bank of America said. "The discounted cash flow outlook for all automakers--from Renault to Ferrari--will improve," they added.
Write to Joe Stonor at josephmichael.stonor@wsj.com
Corrections & Amplifications
This headline was corrected at 8:20 a.m. ET because it incorrectly said Trump is lowering fuel-economy rules. U.S. President Trump plans to reverse Biden-era fuel-efficiency requirements.
(END) Dow Jones Newswires
12-04-25 0751ET
