Major automakers are urging the Trump administration to roll back the Biden-era tailpipe emissions and fuel efficiency standards, which they argue require unrealistically high miles-per-gallon targets. Automakers say these standards can only be met by selling large numbers of electric vehicles (EVs). They contend that the rules for model years 2027 through 2032 are unworkable due to weak consumer demand for EVs, limited charging infrastructure, the expiration of federal EV incentives, ongoing supply chain issues, and affordability concerns. The standards set by the Biden administration were based on projections of relatively fast EV adoption that were and are overly optimistic. Growth in consumer demand for EVs has stalled, and government policy under the Trump administration is expected to further depress EV market potential.
Trump’s Environmental Protection Agency (EPA) is working on rescinding the Endangerment Finding, which is the legal basis for promoting these regulations and standards. The finding, which indicates that greenhouse gas emissions from cars and other sources pose a threat to public health, was used to promote regulations encouraging EVs and renewable energy, particularly wind and solar power.
President Trump’s One Big Beautiful Bill Act ends a $7,500 federal tax credit for new EV purchases that had been available in varying forms since 2008. IER’s analysis indicates that repealing the EV tax credits and returning to the pre-Inflation Reduction Act policy framework would generate approximately $300 billion in additional federal revenue between 2026 and 2035. Congress also enacted legislation earlier this year that removed the EPA’s waivers, allowing California to mandate EVs by banning the sale of gasoline vehicles by 2035. EPA waivers formerly allowed California to set more stringent vehicle emissions standards and allowed other states to opt in.
According to Advanced Clean Tech News, EV adoption has stalled at under 10% of new U.S. vehicle sales through the first half of 2025, well below projections used by the Biden administration to set current standards, and far below the Biden administration’s projected path toward 50% market share by 2030. Biden’s EPA forecast between 35% and 56% of new vehicles sold between 2030 and 2032 would need to be electric. The tailpipe rule, if implemented, was supposed to cut passenger vehicle fleetwide tailpipe emissions by nearly 50% by 2032, compared with 2027 projected levels.
The Alliance for Automotive Innovation, representing most major automakers and suppliers in the United States, submitted formal comments to the EPA on its proposed reconsideration of the 2009 Endangerment Finding and federal greenhouse gas vehicle standards. The Alliance’s letter urges EPA to:
- Document why current standards are no longer appropriate.
- Issue revised, achievable standards as a “backstop” if the 2009 Endangerment Finding is rescinded.
- Consider interim rules based on recent model years to provide regulatory stability.
- Maintain programs that offer compliance flexibility, such as credit trading and off-cycle credits.
Third Quarter EV Sales Up
After the One Big Beautiful Bill was passed, EV sales grew quickly to capture the tax incentive, and because some automakers added even more discounts to move out older models. According to CNBC, Cox Automotive forecasts that 410,000 EVs were sold during the third quarter, up 21% from a year earlier, which is likely the highest number of electric vehicles sold in a quarter in the United States and a record 10% market share. The robust sales, as well as regulatory changes eliminating fuel efficiency fines and corporate tax change benefits, have helped some automakers offset part of the higher tariff costs that President Trump has implemented.
The expiration of the tax credit will test whether the electric vehicle market is mature enough to thrive on its own. Automakers, however, are expecting a downturn in EV sales. Via CNBC, they are making changes to EV production plans, including implementing downtime at plants, cutting upcoming production shifts, and slowing the rollout of models.
Expectations for Future EV Sales
According to Automotive Dive, factors such as tariffs and rare earth shortages are expected to further slow EV adoption in the United States to a more moderate pace year over year, from 7.3% in 2024, to under 2% annually each year through 2030. EVs are projected to account for only 11% of all U.S. light vehicle sales by 2029.
Analysis
Because automakers have suffered under costly regulations aimed at lowering greenhouse gas emissions from the transportation sector through de facto bans of gas-powered vehicles, it makes sense that they want to see these restrictions repealed. In contrast to the Biden administration, the Trump administration has made it a priority to repeal restrictions raising energy costs for consumers and society, including the Endangerment Finding and California waivers.
As we’ve explained previously, “EVs continue to be considerably more expensive than gasoline-powered vehicles, not only in terms of upfront cost but also insurance, maintenance, and the infrastructure required to support them. Meanwhile, consumer demand remains well below government adoption targets, as practical limitations like reduced range in cold weather and slow charging persist. With the pace and direction of technological innovation still uncertain, public policy should instead prioritize consumer sovereignty as the guiding principle in shaping the automobile market.”
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