- Auto execs see an opportunity to roll back state EV mandates under President-elect Donald Trump.
- Nissan and Toyota say state rules requiring a rapid uptick in EV sales are unrealistic.
- Automakers are facing slowing EV demand, job cuts, and competition from China.
Some auto executives see an opportunity with the incoming Trump administration to roll back state rules requiring a rapid uptick in electric vehicle sales.
Executives at Nissan, Toyota, and the auto industry's largest US lobbying group say it will be impossible for the industry to meet aggressive timelines to phase out gas-powered cars and trucks by 2035 in a dozen states including California and New York, as well as Washington, DC. In six states, a target kicks in in 2026, when at least 35% of new car sales must be EVs.
"It will take a miracle to be achieved," Jérémie Papin, senior vice president of Nissan, said this week during an event in Washington, DC. "That's where others need to do a reality check on what's possible."
He noted that EVs accounted for about 9% of new car sales nationwide in the third quarter — a record, but still far short of what regulators are requiring by 2026.
Automakers, facing lower-than-expected demand for EVs this year, are pulling back on production, and some companies are cutting jobs to save costs. At the same time, they have poured billions of dollars into EVs and executives say they are committed to the transition, especially to stay competitive with China as it churns out more affordable EVs. That balancing act has put the industry in a delicate position with Trump who railed against EVs on the campaign trail, vowing to kill tax credits and other incentives encouraging Americans to buy them.
Now the industry is strategizing how to influence Trump, including on EV sales requirements they view as too ambitious. Trump will likely take their side.
At a campaign event in Michigan in October, he said no state would be allowed to ban gas-powered cars. Trump during his first term tried to revoke California's authority to set stricter limits on tailpipe pollution than the federal government. California is granted that authority under the Clean Air Act but must get waivers from the Environmental Protection Agency. Biden restored the states' authority — a move currently being litigated and could reach the Supreme Court.
To avoid uncertainty, a group of automakers, including BMW, Ford, Honda, and Volkswagen, struck an agreement with California in 2020 to follow the state's rules through 2026.
The rules are stricter than federal regulations issued earlier this year by the Biden administration's EPA. Those federal rules aren't an "EV mandate," as Trump falsely said on the campaign trail. Rather, automakers can choose how to curb greenhouse gas emissions from cars, trucks, SUVs, and vans sold between 2027 and 2032. The agency estimated the rules could boost EVs to up to 56% of new car sales, with the rest from a mix of hybrids and gas vehicles.
'Not ready to go electric'
Dealers, which were the first to sound the alarm on changes in the EV market last year, have argued that state and federal emissions requirements are out of step with demand. As companies push to meet these requirements, dealers complain they are stuck with unpopular EVs on their lots.
"A majority of customers are simply not ready to go electric right now," Dave Kelleher, a Chrysler-Dodge-Jeep-Ram dealer in Pennsylvania, told BI. "Maybe with a new administration, some of those fines will become a thing of the past, or even mitigated."
Karoline Leavitt, spokeswoman for Trump's transition effort, said Trump will stop attacks on gas-powered cars.
"When he takes office, President Trump will support the auto industry, allowing space for both gas-powered cars AND electric vehicles," she said in an email.
John Bozella, president of the Alliance for Automotive Innovation, which represents companies producing nearly all the new vehicles sold in the US, sent a letter to Trump in November asking that he ease emissions regulations but keep EV tax incentives fueling domestic investment in the supply chain.
An analysis commissioned by the Natural Resources Defense Council found that companies have announced $312 billion in planned investments in EVs and battery production since Biden took office in 2021, fueled partly by tax incentives in the Inflation Reduction Act.
One automaker, Toyota, supports doing away with EV mandates and subsidies altogether. In a recent op-ed in the Wall Street Journal, Toyota Chief Operating Officer Jack Hollins wrote that state mandates distort the market because companies funnel zero-emissions vehicles to those locations and ultimately limit choices for customers.
General Motors initially sided with Trump in his crusade against California's EV rules, but dropped its support of the legal battle after Biden won the 2020 election. It's unclear whether the automaker would once again side with Trump if he tries to roll back emissions requirements. Paul Jacobson, General Motors' executive vice president and chief financial officer, told reporters that ideally there'd be more consistency between federal and state rules. But the automaker will respect regulators' authority, he said.
"There's a lot at stake here," Jacobson said during the event in Washington. "That's why we talk about being nimble across the board, because sometimes it's the marketplace and sometimes it might be the regulatory environment. But we can't make excuses for poor performance. It's not just Washington. It's China, it's Europe. There's a lot of things going on all over the world and we have to be able to respond to that."