Car manufacturers across the United States are caught in a growing legal clash between the Trump administration and the state of California over electric vehicle standards, a dispute that could reshape the country’s auto market, Fine Day Radio reported.
At the centre of the conflict is California’s long-standing authority to set its own vehicle emissions rules. The state is challenging a Republican-led effort in Congress to revoke that authority, arguing the move was unlawful. If California prevails in court, automakers could be forced to comply with two separate regulatory systems: federal rules under President Donald Trump that scale back support for electric vehicles, and California’s stricter zero-emission requirements, which have been adopted by a dozen other states.
California has mandated that all new vehicles sold in the state must be electric or zero-emission models by 2035, with interim targets that began this year. Meanwhile, the Trump administration has rolled back federal electric vehicle incentives and removed penalties tied to fuel efficiency standards, steps that have coincided with a slowdown in electric vehicle sales nationwide.
Last year, Republican lawmakers eliminated a $7,500 federal tax credit for electric vehicles and lifted penalties for automakers that failed to meet fuel economy targets. The Environmental Protection Agency also reversed a 2010 scientific finding, first issued during the Obama administration, that classified greenhouse gas emissions as a threat to public health — a key legal basis for federal vehicle emissions regulations.
The administration has also moved to revoke California’s special waiver, which allows the state to enforce stricter standards than the federal government. California argues that Congress improperly treated these waivers as administrative “rules” that can be overturned under the Congressional Review Act. For decades, the EPA has stated that such waivers are not rules and are therefore not subject to that law.
A federal court hearing is scheduled in Oakland, California. The administration has asked the court to dismiss the case.
If the federal government succeeds, traditional automakers would face less pressure to sell electric vehicles in California and 11 other states that follow its standards. Together, those states account for roughly 29% of US new vehicle sales, according to S&P Global Mobility. Electric vehicle manufacturers such as Tesla could lose revenue from selling regulatory credits to other automakers.
If California wins, automakers may need to design separate vehicle strategies to meet conflicting federal and state requirements. The Alliance for Automotive Innovation has warned that such a split would limit consumer choice and complicate manufacturing plans.
Industry analysts say the shifting policy landscape has already had financial consequences. Automakers have recorded an estimated $55 billion in electric vehicle investment writedowns since Trump’s election. Mike Murphy, a former Republican strategist who helped found the advocacy group EVs for All America, said companies are struggling to plan amid rapid regulatory changes.
California’s authority to set its own vehicle emissions standards dates back to the 1950s, when the state sought to combat severe air pollution, including heavy smog in Los Angeles. The Air Quality Act of 1967 granted the EPA power to approve California’s requests for waivers, and more than 100 have been approved by administrations of both parties.
During Trump’s first term, the EPA revoked part of California’s waiver through formal rulemaking, a decision later reversed by President Joe Biden in 2022. In Trump’s second term, Republicans used the Congressional Review Act in an effort to eliminate the waiver more quickly.
The Government Accountability Office concluded last year that California waivers are not rules because they apply to specific cases rather than broad policy changes. Congressional Republicans disagreed, maintaining that Congress has the authority to determine what qualifies as a rule. California filed suit shortly after Trump signed the legislation in June.
California Attorney General Rob Bonta has accused the administration of overstepping its legal authority. The EPA, in response, said Congress writes the laws and argued that California’s regulations would harm industry and raise costs for consumers.
Legal experts note that the case raises questions that have rarely been tested in court, making the outcome difficult to predict.
In the meantime, the California Air Resources Board has told automakers they may choose whether to comply with the state’s new standards for now but warned that penalties could apply later if California prevails. Many manufacturers are reportedly opting to comply.
California first adopted the current rules in 2022, when electric vehicle sales were expected to accelerate. Last year, electric vehicles accounted for 21% of new car sales in the state, slightly down from the previous year. State regulators have said they will not enforce this year’s sales target due to the legal uncertainty.
Industry observers say automakers are likely to continue engaging with California regulators, wary that federal rollbacks may not endure beyond the current administration. At the same time, global markets such as China and Europe are tightening emissions standards, reinforcing the importance of electric vehicles in long-term business strategies.
