In a landmark move, President Donald Trump is set to sign three congressional resolutions on Thursday, June 12, 2025, effectively revoking California’s ambitious electric vehicle (EV) sales mandates and related diesel engine regulations. These resolutions, passed under the Congressional Review Act, will nullify California’s plan to phase out gasoline-only vehicle sales by 2035—a policy adopted by 11 other states, collectively representing roughly 40% of the U.S. auto market. The decision marks a significant shift in U.S. automotive and environmental policy, with far-reaching implications for consumers, car manufacturers, and the trajectory of vehicle electrification. I firmly believe that Tesla is still a great buy on the stock, and this EV mandate won’t hurt Tesla.
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Here’s what you need to know.
Background: California’s EV Mandate
Since the passage of the Clean Air Act in 1970, California has held unique authority to set stricter vehicle emissions standards than the federal government, subject to waivers from the U.S. Environmental Protection Agency (EPA). In 2020, Governor Gavin Newsom signed an executive order mandating that by 2035, 100% of new passenger vehicle sales in California be zero-emission, with interim targets like 35% by 2026. The policy, known as the Advanced Clean Cars II rule, allowed plug-in hybrids but excluded conventional hybrids. California also imposed rules requiring 40-75% of new medium- and heavy-duty vehicles to be zero-emission by 2035 and stricter standards for diesel engines.
This mandate, adopted by states like New York, Maryland, and Vermont, aimed to combat California’s severe air pollution and meet its carbon-neutrality goal by 2045. However, it faced resistance from Republicans, the fossil fuel industry, and some automakers, who argued it was costly, impractical, and effectively set national policy due to California’s massive market share (11% of U.S. new vehicle sales).
Trump’s Policy Reversal
President Trump’s resolutions target three EPA waivers granted under the Biden administration in December 2024, which enabled California’s EV mandate, zero-emission truck requirements, and low-nitrogen oxide rules for heavy-duty vehicles. By signing these resolutions, Trump will revoke California’s ability to enforce these standards, aligning emissions regulations with federal levels. This follows his January 20, 2025, executive order, “Unleashing American Energy,” which aimed to eliminate federal EV incentives, including a $7,500 tax credit for new EVs and a non-binding goal for EVs to comprise 50% of new car sales by 2030.
The move has sparked intense debate. Supporters, including the American Petroleum Institute and automakers like General Motors and Toyota, hail it as a victory for consumer choice and U.S. energy security. Critics, including California officials and environmental groups, argue it undermines climate goals and public health, potentially leading to increased air pollution and greenhouse gas emissions.
Implications for Consumers
For consumers, the end of California’s EV mandate brings both opportunities and uncertainties:
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Greater Vehicle Choice: Consumers in California and the 11 adopting states will no longer face restrictions on purchasing new gasoline-powered vehicles after 2035. This is a relief for those in rural areas, like Wyoming or Virginia, where EV range limitations and sparse charging infrastructure make gas-powered cars more practical. Senator John Barrasso (R-WY) emphasized that EVs are unsuitable for farmers and ranchers who drive long distances daily.
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Potential Cost Savings: Without the mandate, automakers may reduce investments in EVs, potentially lowering production costs for gas-powered and hybrid vehicles. However, the loss of the federal $7,500 EV tax credit (targeted by Trump’s executive order) could make EVs less affordable, especially for middle-income buyers. California’s plan to offer state-level EV rebates, funded by its Greenhouse Gas Reduction Fund, faces hurdles due to a projected $2 billion state budget deficit in 2025.
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Charging Infrastructure Concerns: Trump’s order also freezes funding for EV charging networks, which could exacerbate consumer hesitancy. California leads with over 52,000 public charging ports, but other states lag, with EVs comprising only 10% of new car sales in places like New York. The Alliance for Automotive Innovation noted that inadequate charging infrastructure makes the mandate’s targets unfeasible outside California.
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Market Shifts: While EV sales in California have reached 25% of new vehicles, growth slowed to 1% in 2024 from 46% the previous year. Consumers like Shel Singh, a Los Angeles business owner, worry about the resale value of their EVs amid declining demand and policy uncertainty. Meanwhile, others, like Orange County resident Tina Thurm, support Trump’s stance, valuing the freedom to choose gas-powered vehicles without mandates.
Impact on Car Manufacturers
The auto industry faces a complex landscape following the mandate’s repeal:
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Relief from Compliance Costs: Automakers like General Motors, Toyota, and Ford, which lobbied against the mandate, welcome the change. The 2035 deadline required significant investments in EV production, often at the expense of gas-powered models. Non-compliant manufacturers had to purchase clean air credits, primarily from Tesla, diverting capital from innovation. John Bozzella, CEO of the Alliance for Automotive Innovation, called the mandate “unachievable,” citing market realities.
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Shift to Hybrids and Gas Vehicles: With the mandate gone, manufacturers may prioritize gas-powered and hybrid vehicles, which are more profitable in the short term. Toyota, with 32 hybrid and plug-in hybrid models, is well-positioned to capitalize on this trend. However, this could slow the global EV transition, potentially ceding technological leadership to China, where EV adoption is surging.
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Tariff Challenges: Trump’s proposed 25% tariffs on Mexican and Canadian imports, including EVs and batteries, could disrupt supply chains for companies like General Motors and Ford, which have EV factories in Mexico. This may increase vehicle prices, offsetting cost savings from relaxed emissions standards.
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Long-Term Uncertainty: While some automakers view the repeal as a respite, others warn it could harm U.S. competitiveness. California’s mandate drove innovation, benefiting companies like Tesla, which earned billions selling credits. The Specialty Equipment Market Association (SEMA) also raised concerns about job losses in small businesses tied to EV infrastructure.
The Move to Hybrids and Conventional Cars
The repeal of California’s mandate is likely to accelerate a shift toward hybrids and gas-powered vehicles, at least in the near term:
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Hybrid Surge: Hybrids, particularly plug-in hybrids, remain a viable transitional technology. California’s mandate allowed plug-in hybrids to count toward zero-emission goals, and their popularity is growing due to lower fuel costs and flexibility. Analysts like Jessica Valdez Streaty predict increased sales of gas and plug-in hybrids as consumers seek alternatives to fully electric models.
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Gas-Powered Resilience: Gas-powered vehicles, favored in regions with limited EV infrastructure, will maintain market dominance. States like Wyoming are even pushing to ban EV sales by 2035, reflecting strong consumer and industry support for conventional cars. Trump’s rhetoric, emphasizing “consumer choice,” aligns with this trend.
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Slowed Electrification: The California Air Resources Board estimated the mandate would reduce greenhouse gas emissions by 400 million metric tons and prevent 1,287 air-quality-related deaths. Without it, electrification may stall, especially in states outside California. However, some argue market forces will drive gradual EV adoption, as consumers naturally shift to hybrids and then EVs over time.
Legal and Political Fallout
California is gearing up for a legal battle. Attorney General Rob Bonta plans to sue the Trump administration, arguing the repeal is unlawful. Governor Newsom, displaying a sign reading “Trump’s GOP is Making America Smoggy Again,” vowed to protect California’s climate policies. The state’s challenge hinges on the Clean Air Act’s provisions, though legal experts debate whether the Congressional Review Act applies to EPA waivers. The Senate’s decision to ignore its parliamentarian’s ruling against the repeal adds further complexity.
Politically, the move underscores tensions between Republican-led states and California’s progressive agenda. Republicans like Representative Morgan Griffith (R-VA) argue California’s policies unfairly influence national markets, while Democrats like Senator Alex Padilla (D-CA) warn that blocking the mandate benefits China’s EV industry.
What’s Next?
The end of California’s EV mandate signals a broader rollback of federal and state EV policies under Trump’s administration. For consumers, it means more choices but potentially higher EV costs and slower charging infrastructure growth. For carmakers, it eases regulatory pressures but risks long-term competitiveness. The shift toward hybrids and gas-powered vehicles may dominate the near term, but global trends suggest electrification will persist, albeit at a slower pace in the U.S.
California’s legal challenge could delay or alter the repeal’s impact, and market dynamics—such as consumer demand and automaker strategies—will play a critical role. As the dust settles, one thing is clear: the road to America’s automotive future just took a sharp turn.
Energy News Beat will continue to monitor this story and its implications for the energy and automotive sectors.