The Environmental Protection Agency’s decision to reverse its findings on the harms caused by greenhouse gases might look like a win for big gas-guzzling vehicles and a disaster for the U.S. electric vehicle market. But critics of the move and some industry analysts argue that the American auto industry can’t afford to back away too much from fuel-efficient cars and EVs.
The EPA is reconsidering a legal framework known as the endangerment finding for several reasons, but chief among them is its conclusion that the Clean Air Act of 1970 gave the agency the authority to regulate airborne toxins that pose a direct threat to human health, not greenhouse gases, which may indirectly cause harm through the effects of climate change.
This finding helped formed the basis of subsequent fuel-efficiency targets, EV incentives and a host of other federal and state policies and programs meant to decarbonize transportation.
The EPA’s reversal is the latest move by the Trump administration and Congress to undo rules and incentives intended to steer automakers and buyers away from fuel-burning vehicles and toward low or zero emission vehicles — most notably EVs.
Last year, Congress removed federal tax credits for EVs of up to $7,500 for a new car, or up to $4,000 for a used vehicle. Sales dropped dramatically in October, the month after the credits went away, according to Cox Automotive.
President Donald Trump last year also signed three resolutions rescinding waivers the EPA had granted decades ago to states such as California, which enabled a host of air quality, climate change mitigation and emissions rules. The Zero Emission Vehicle credits program in California and other states were crucial revenue sources for Tesla as it grew from a tiny startup to one of the largest EV makers in the world.
Some automakers, and the industry groups that represent them, have chafed at emissions regulations they consider too restrictive and too favorable to EVs, arguing that those vehicles aren’t matching consumer demand. U.S. EV sales peaked in September, ahead of the federal incentives ending, at 10.3% of the new vehicle market, according to Cox Automotive.
“We appreciate the work of President Trump and Administrator [Lee] Zeldin to address the imbalance between current emissions standards and customer choice,” Ford Motor said in a statement sent to CNBC. “Ford has consistently advocated for a single, stable national standard that aligns with customer choice, the market, societal benefit, and American job growth.”
CNBC reached out to the two other Detroit-based legacy automakers, Stellantis and General Motors, for comment. Stellantis did not respond in time for publication and GM referred CNBC to the Alliance for Automotive Innovation, the U.S. trade group representing both American and international automakers, which did not respond to two requests for comment.
But the Alliance has in the past year criticized state and federal rules meant to bolster EV adoption.
When the National Highway Traffic Safety Administration proposed lessening Corporate Average Fuel Economy, or CAFE, standards, the Alliance welcomed the change.
“We’re reviewing NHTSA’s announcement, but we’re glad the agency has proposed new fuel economy standards,” Alliance President and CEO John Bozzella said in a December statement. “We’ve been clear and consistent: The current CAFE rules finalized under the previous administration are extremely challenging for automakers to achieve given the current marketplace for EVs.”
Tesla, on the other hand, is one of the automakers opposed to the reconsideration of the endangerment finding.
“The Endangerment Finding — and the vehicle emissions standards which flow from it — have provided a stable regulatory platform for Tesla’s extensive investments in product development and production,” Tesla wrote in a letter to the EPA. “Reversing the Endangerment Finding would also deprive consumers of choice and extensive economic benefits, have negative effects on human health, and further impact the integrated North American automotive sector.”
Clean transportation researchers and analysts have warned that abandoning fuel-efficiency goals and electric vehicles might be short-sighted, given the push for cleaner transportation options around the world.
All three Detroit automakers sell vehicles outside of the United States, and thus still need to reckon with stricter emissions regulations in other markets.
In addition, the consumer case for EVs is growing ever stronger, said Alan Jenn, a professor at the University of California, Davis’s Electric Vehicle Research Center. Battery prices have fallen and there are about 70 models in the U.S. market, compared with just a few about a decade ago, he said.
“Even despite this, almost kind of this war on EVs — getting rid of the subsidies, getting rid of the regulation — I think it’s been pushed to a point where you’re not going to see us turn totally around on EVs,” Jenn said. “A lot of that product is commercially viable, and I think it’s going to continue to grow, albeit maybe a little more slowly now.”
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