The U.S. Department of Transportation finalized Corporate Average Fuel Economy (CAFE) standards requiring an industry-wide average of approximately 34.9 miles per gallon through the 2031 model year, more than 30% below the previous Biden administration target of 50.4 mpg. The change, approved by President Donald Trump on Sept. 26 and announced Sept. 28 local time, is estimated to reduce industry technology costs by $60.6 billion, including roughly $7.4 billion for Hyundai Motor and Kia. The automakers’ flexible production systems could help them preserve profitability by selling more hybrids and large SUVs without rapidly increasing electric-vehicle volumes, which carry high battery costs. Hyundai Motor and Kia sold a record 50,057 hybrid vehicles in the U.S. in August, up 47.7% from a year earlier. Nomura Securities said U.S. hybrid penetration rose from 3% in 2020 to 16% cumulatively through August this year. Hyundai Motor Group Metaplant America in Georgia can build electric vehicles and hybrids on the same line, including the IONIQ 5, IONIQ 9 and Sportage Hybrid. Hyundai Motor plans 10 new North American hybrid models by 2030 and aims to raise hybrids’ sales share from 25% to 50%. Hyundai plans to launch the Santa Fe Extended-Range Electric Vehicle (EREV) in the first half of next year, while Kia plans the Telluride EREV for 2029. A rule moving small crossover utility vehicles such as the Tucson and Sportage from the light-truck category to the stricter passenger-car category beginning with the 2030 model year could increase compliance pressure. Industry experts say the timing of electrification and the allocation of production investment across markets will remain critical as Europe tightens environmental rules while the U.S. relaxes them.