Alexa st. John, Associated Press
DETROIT (AP) – This week’s Environmental Protection Agency’s plan to ease rules aimed at cleaning motor vehicle pipe emissions is the latest Trump administration move to undo incentives for automakers to take electricity.
As part of a larger effort to revoke climate-based government regulations, the EPA said Tuesday that it would like to cancel a 2009 finding that carbon dioxide and other greenhouse gases put public health and welfare at risk. It would undermine the legal basis for limiting emissions from power plants and cars.
President Donald Trump’s massive tax and spending laws have already targeted EV incentives, including the removal of impending credits for credit savings up to $7,500 on new electric vehicles.
The tax law, which was approved in early July, also includes other provisions in the pocketbook that will hit Tesla and other EV manufacturers. We will abolish fines for automobile manufacturers that do not meet federal fuel economy standards.
Automakers can purchase credits under the trading program if they do not meet mileage standards. EV manufacturers like Tesla, which do not rely on gasoline, have earned credits that can be sold to other automakers. The arrangement has brought millions of dollars in revenue from other EV manufacturers like Tesla and Libian to billions of dollars.
It’s all set to disappear under new laws.
Trump also challenged the federal government’s EV charging infrastructure money and blocked the ban on the sale of new gas-powered vehicles in California.
The pressure on automakers is reduced and production continues to evolve from gas-burning vehicles. And that’s important – as transportation, including ships, trains and planes, is the sector that contributes most to the emissions that warm the planets in the United States.
Push and pull on the tailpipe and mileage rules
The strict tailpipe emissions and mileage regulations were part of the Biden administration’s pledge to clean the country’s vehicles and reduce the use of fossil fuels by encouraging EV growth. EVs do not use gasoline or emit greenhouse gases.
The Trump administration and the automotive industry have said both rules are unreasonable for manufacturers.
By 2032, automakers are able to meet EPA tailpipe restrictions, which is currently around 8%, with approximately 56% of new vehicle sales being electricity.
The latest mileage target set under the Biden administration required light vehicles to reach around 50 miles per gallon (81 kilometres) by Model 2031, and around 35 miles per gallon with pickups and vans by the 2035 model year.
But Transport Secretary Sean Duffy put pressure on the National Highway Traffic Safety Administration to reverse the rules earlier this year, and recently said it was illegal for Biden to include EVs in those calculations. NHTSA can reset or significantly weaken them.
The fines that have disappeared
Then there are fines that automakers no longer face because of lack of fuel economy rules.
“By signing one big beautiful invoice, there will be zero new penalties for automakers who are not complying with illegal fuel economy standards designed to push EVs,” NHTSA spokesman Sean Rushton said in a statement.
Some legacy automakers have paid hundreds of millions of dollars fines for not meeting them. Last year, Jeep maker Stellantis paid $109.7 million for the 2019 and 2020 model years, while General Motors paid $128.2 million for the 2016 and 2017 model years.
Automakers that do not meet the criteria can also purchase credits from automakers such as Tesla or from automakers that exceed them. That provision won $2.8 billion in 2024.
Elon Musk sharply criticised the large tax and spending bill in June, saying it was “severely damaging future industries while giving handouts to past industries.” Tesla did not immediately respond to requests for comment regarding the effectiveness of the law on these credits.
The agency wrote a letter to the car manufacturer earlier this month. It was reported that penalties will not be issued from the 2022 model. Some automakers confirmed they would receive the letter, but declined to comment further.
Experts say without them, the law “deceives automakers of the government’s fuel economy rules by setting fines at $0, consumers buying more gasslers, paying more with pumps, enriching big oil.”
Anne Carlson, an environmental law professor at the University of California, Los Angeles and a former acting NHTSA administrator under Biden, called the NHTSA “a surprising decision” essentially to allow fines from 2022 onwards. She said it was blown away for businesses that chose to pay penalties rather than producing more efficient cars.
Carlson said leaving future fines “poses a dilemma for automakers who may feel they will comply with the law, even if there is no financial consequence of not doing so.”
Where the car manufacturers go from here
It takes some time for automakers to shift their product lines, and experts say automakers may be trapped in technology and manufacturing decisions for the next few years. However, changes could occur after Model 2027, they said.
EVs are as profitable as gas engine vehicles, so car manufacturers can have fewer cars if they no longer have to offset emissions from their gasoline models. Already, some automakers are pulling back their ambitions to put all their electricity out of energy, as EV sales grows slowly.
“The automakers will not abandon their efforts to develop EVs as they know that all presidential administrations will eventually end,” said Carl Blauer, executive analyst at ISEeCars.com. “But they will reduce short-term efforts in this area.”
Alexa St. John is a climate reporter for the Associated Press. X: Follow her at @Alexa_stjohn. Contact her at ast.john@ap.org.
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Original issue: July 31, 2025, 1:34pm EDT
