U.S. President Joe Biden’s tailpipe emissions rules are a focus of tension between president-elect Donald Trump, who has promised to axe them, and auto companies that would like political stability.
“The regulations determine that all automakers have to follow the same rules,” Stephanie Brinley, an analyst for the auto intelligence service at S&P Global Mobility, told The New York Times.
“You don’t want one automaker sticking to making the cheapest fossil fuel cars to sell domestically, while the other automakers are trying to make these investments to compete globally. If you have a regulation on the books, then everybody has to play by the same rules.”
U.S. federal regulations on vehicle emissions have swung back and forth with each new presidency over the past couple decades. Former president George W. Bush had sided with auto companies to resist aligning federal fuel efficiency policies with tougher standards set by the state of California. But early in his first term as president, Barack Obama turned course and set efficiency standards to regulate emissions from internal combustion vehicles and set incentives for electric vehicle production. Donald Trump, in his first term in office, then aggressively rolled back the Obama-era regulations, even over calls from automakers to only slightly loosen the rules.
“The auto industry has consistently called for year-over-year increases in fuel efficiency,” John Bozzella, president of the Alliance for Automotive Innovation, said at the time.
“We need a policy environment that drives improvements in fuel economy and the infrastructure that supports a transformation to net-zero emissions.”
Biden then revamped the tailpipe emissions rules with an eye toward pushing the auto industry to produce more electric vehicles. Car companies have called for relaxing the rules—by extending the timeline or lowering penalties for non-compliance, for instance—but have otherwise made investments and steered business goals to align with greater EV production. According to the Environmental Protection Agency, the new rule could result in EVs accounting for 67% of new U.S. light-duty vehicle sales and 46% of new medium-duty vehicle sales by model year 2032.
S&P Global reported when the final regulations were released in March that “the final ruling has, in general, been well-received by the industry.”
But now, Trump is vowing to again roll back regulations. Automakers like Ford, GM, and Stellantis have indicated they would welcome some leniency, but are concerned about what a rollback would mean for the investments they’ve already made in low- and zero-emission vehicles. Bozzella has written to Trump that keeping the auto industry “successful and competitive” requires “stability and predictability in auto-related emissions standards,” The Times says.
Trump’s plan includes ending a $7,500 tax credit for EV purchasers through Biden’s Inflation Reduction Act. Republican lawmakers are expected to use reconciliation—the same tactic that Biden used to push his major climate legislation through with a simple majority—to remove the tax credit quickly, The New York Times says. California Governor Gavin Newsom is already vowing to replace the federal subsidy with a state tax credit.
While Trump moves to undo support for EVs, he is also closely aligned with Tesla CEO Elon Musk. But Musk has said he will not try to protect the tax credit and has even indicated that its removal could give him a competitive edge over other automakers.
“I think it would be devastating for our competitors and for Tesla, slightly,” said Musk in a July earnings call. He is advocating to end all government subsidies, including those for oil and gas.
