DOT Regulatory Outlook: 2025 Recap and Key Trends for 2026

In 2025, the U.S. Department of Transportation (DOT) and the National Highway Traffic Safety Administration (NHTSA), advanced several key regulatory initiatives affecting the automotive industry.  Looking ahead to 2026, manufacturers and technology developers should anticipate continued focus on automated driving systems (ADS), significant revisions to Corporate Average Fuel Economy (CAFE) standards, and robust enforcement activity.  This alert summarizes these developments and identifies key trends for manufacturers and other stakeholders to monitor in the year ahead.

NHTSA and the Federal Motor Carrier Safety Administration (FMCSA) Focus on Automated Driving Systems

In 2025, NHTSA took several significant actions related to ADS.  First, to expand developers’ ability to test, the agency enlarged an existing exemption program for testing and demonstration-previously available only for imported vehicles-to include domestically manufactured vehicles that do not meet Federal Motor Vehicle Safety Standards (FMVSS).  This exemption program has been instrumental in ADS development, with 347 ADS vehicles imported under the program between 2016 and 2024.  Expanding it to domestic manufacturers opens an important pathway for testing and evaluation to U.S.-based ADS developers.

Second, NHTSA announced an overhaul of its process for petitioning for an exemption from the FMVSS under 49 C.F.R. Part 555, which has been seen by many as unavailable to ADS developers, because NHTSA has not granted a petition for exemption involving an ADS vehicle since February of 2020.  As part of this overhaul, the agency stated it would shorten review times and provide guidance to applicants.  Part 555 exemptions are critical to the development of ADS as they provide the only current path to commercialization for ADS vehicles that do not comply with all FMVSS.  The speed with which NHTSA issues decisions on pending petitions will demonstrate the effectiveness of these process changes.

In January 2025, NHTSA issued its Automated Vehicle Safety, Transparency, and Evaluation Program (AV STEP) proposed rule which would create a voluntary framework for agency oversight of ADS implementation.  The program would establish data reporting requirements to inform future ADS rules and include an FMVSS exemption process tailored  to ADS vehicles.  It is not yet clear whether the current administration will finalize the rule, propose revisions, or withdraw it.  NHTSA is expected to provide more clarity on its plans for AV STEP in 2026.

NHTSA has also announced plans to issue four proposed rulemakings in 2026 aimed at reducing design barriers for ADS vehicles lacking manual controls.  These proposals would:

• Address the appropriateness of indicator, telltales, and warning lights in ADS vehicles without manual controls;
• Amend the FMVSS on lighting to remove requirements for manual controls;
• Amend the FMVSS on windshield wipers and defrosters to account for vehicles that lack manual controls and do not have cameras or other sensors behind the windshield; and
• Amend the FMVSS on transmission shift interlock to enable the applicability of the standard to novel-design ADS vehicles lacking manual controls.

While NHTSA will not finalize all of these rules in 2026, these proposals will provide a crucial roadmap for the agency's long-term regulatory approach to ADS vehicles.

FMCSA, which regulates commercial trucks and buses, also plans to issue a proposed rule for ADS vehicles in 2026.  In 2025, FMCSA granted a waiver allowing disabled ADS-equipped commercial trucks to use a cab-mounted beacon instead of manually placed warning devices around the vehicle, removing a significant barrier to driverless operations.  With an increasing number of companies testing ADS on commercial trucks, FMCSA is expected to play a greater role in ADS implementation in 2026.

Proposed Revisions to CAFE Standards

NHTSA issued its proposed revisions to the agency’s CAFE standards on December 5, 2025.  The proposal would reduce the estimated light-duty fleet-wide fuel economy requirement from 50.4 miles per gallon (mpg) in 2031 under current rules to 34.5 mpg.  This reduction is based in part on the fact that NHTSA is no longer considering the contribution of electric vehicles to fleet fuel economy in setting the standards.  The proposed rule would also make other significant changes to the CAFE program, including abolishing the credit trading system and reclassifying certain crossovers and smaller SUVs from light trucks to passenger vehicles.  The proposed rules would revise NHTSA’s current fuel economy standards applicable to model years 2022 through 2031.

While the proposal could negatively affect electric vehicle manufacturers, which rely on revenue from selling credits obtained from over complying with the standard, the proposal’s short-term impacts could be minimal.  This is both because Congress removed fines for failing to comply with fleet fuel economy requirements going back to 2022 and because manufacturers have largely already made production plans for the short term.  The proposal’s impact also depends heavily on the outcome of litigation challenging the revocation of California’s Clean Air Act waiver.  Should California retain its authority to set its own emissions standards, manufacturers would be forced to contend with both federal and state standards.  However, if the waiver revocation is upheld, the rule could have wide ranging impacts because it would significantly lower the baseline for future fuel economy standards.  The rule includes a 45-day comment period, suggesting that NHTSA intends to move quickly to issue a final rule.

Investigations and Enforcement Trends

While NHTSA announced no new civil penalty settlements in 2025, it continued robust oversight by opening 35 new Engineering Analysis, Preliminary Evaluation, and Recall and Audit Query investigations into safety and compliance issues.  Although this was fewer than in the prior year, the 20 investigations opened in the last six months of 2025 matched the number opened during the same period in 2024.

Investigations involving new and emerging technologies remain an agency priority.  NHTSA opened six investigations involving ADS and advanced driver assistance systems in 2025.  Defect investigations into rearview camera failures also continue to be an area of emphasis.  In the past two years, NHTSA has opened six investigations into rear view camera failures.  These trends are expected to continue in 2026, along with a potential return of civil penalty enforcement.  The absence of penalties in 2025 is likely attributable to the resolution of several major cases at the end of the prior administration rather than a shift in agency policy.

A key issue to watch is whether NHTSA issues guidance to ADS developers on how it will analyze potential defects in ADS vehicles.  Many of the agency’s ADS investigations to date have focused on driving behaviors rather than component failures, creating ambiguity for developers regarding how NHTSA will assess safety risks.  It remains to be seen whether NHTSA will provide additional clarity on this issue in 2026 as part of its broader focus on ADS.

For questions about the impact of any of these initiatives on your business, please contact Tom Healy or your Honigman attorney.