EPA backs up on pollution
Here's what reversal under Trump means for US automakers
Vehicles drive along a highway July 30 in Cincinnati. Transportation — which also includes ships, trains and planes — is the sector that contributes the most to planet-warming emissions in the U.S.
ENVIRONMENT
The Environmental Protection Agency's plan to relax rules aimed at cleaning up auto tailpipe emissions is the latest Trump administration move to undo incentives for automakers to go electric.
Part of a larger effort to undo climate-based governmental regulations, the EPA said last month it plans to revoke the 2009 finding that carbon dioxide and other greenhouse gases endanger public health and welfare. That would cripple the legal basis for limiting emissions from things like power plants and motor vehicles.
President Donald Trump's massive tax and spending law already targets EV incentives, including the imminent removal of a credit that saves buyers up to $7,500 on a new electric car.
The tax law approved in early July also includes another provision that will hit Tesla and other EV makers in the pocketbook: repealing fines for automakers that don't meet federal fuel economy standards.
Automakers can buy credits under a trading program if they don't meet the mileage standards. EV makers like Tesla, which don't rely on gasoline, earn credits they can sell to other carmakers. The arrangement resulted in billions of dollars in revenue for Tesla and millions for other EV makers like Rivian.
That all will go away under the new law.
Trump also challenged federal EV charging infrastructure money and blocked California's ban of new gas-powered vehicle sales.
It adds up to less pressure on automakers to continue evolving their production away from gas-burning vehicles. That's significant because transportation — which also includes ships, trains and planes — is the sector that contributes the most to planet-warming emissions in the U.S.
Tailpipe, mileage rules
Stringent tailpipe emissions and mileage rules were part of the Biden administration's pledge to clean up the nation's vehicles and reduce the use of fossil fuels by incentivizing growth in EVs, which do not use gasoline or emit greenhouse gases.
The Trump administration and the auto industry said both rules were unreasonable for manufacturers.
Automakers could meet EPA tailpipe limits with about 56% of new vehicle sales being electric by 2032 — they're at about 8% now — along with at least 13% plug-in hybrids or other partially electric cars, and more efficient gasoline-powered cars that get more miles to the gallon.
The latest mileage targets set under the Biden administration required automakers to get to an average of about 50 mpg for light-duty vehicles by model year 2031, and about 35 mpg for pickups and vans by model year 2035.
Department of Transportation Secretary Sean Duffy pressured the National Highway Traffic Safety Administration this year to reverse the rules, and recently said Biden's inclusion of EVs in calculating them was illegal. NHTSA likely will reset or significantly weaken them.
Fines going away
Then there are the fines automakers will no longer face for falling short on the fuel economy rules.
Some legacy automakers paid hundreds of millions of dollars in penalties for not meeting the rules. Just last year, Jeep maker Stellantis paid $190.7 million for model years 2019 and 2020, and General Motors paid $128.2 million for the 2016 and 2017 models.
Automakers that didn't meet the standards also could instead buy credits from carmakers that did — or even surpassed them — such as Tesla. That provision earned Tesla $2.8 billion in 2024 — revenue it will no longer see.
The agency wrote to carmakers earlier this month informing them the penalties wouldn't be issued from the model year 2022 onward. Some automakers confirmed receiving the letter but declined to comment further.
Experts say without them, the law "invites automakers to cheat on government fuel economy rules by setting fines to $0, ensuring consumers will buy more gas guzzlers, pay more at the pump and enrich Big Oil," said Dan Becker, director of the Center for Biological Diversity's Safe Climate Transport Campaign.
Ann Carlson, an environmental law professor at the University of California, Los Angeles, and a former acting NHTSA administrator under Biden, called it a "stunning decision" for NHTSA to essentially forgive the fines from 2022 onward. She said it amounted to a windfall for companies that chose to pay penalties rather than produce more efficient cars.
Shift from EVs
It takes a while for carmakers to shift their product lines, and experts say automakers might be locked into their technology and manufacturing decisions for the next few model years. Still, changes could come for model year 2027 and beyond, they said.
EVs aren't as profitable as gas-engine cars, so automakers may make fewer of them if they no longer have to offset emissions from their gasoline models. Already, some automakers pulled back on their ambitions to go all-electric with a slower pace of EV sales growth.
Automakers could meet EPA tailpipe limits with about 56% of new vehicle sales being electric by 2032 — they're at about 8% now .
