An EPA proposal could lead U.S. auto makers to shift their strategy on EVs

A new Environmental Protection Agency (EPA) proposal to revoke a landmark greenhouse gas finding could alter the direction of the auto industry, which until now has had to abide by strict emissions guidelines.

The EPA on July 29 announced it is planning to revoke an "endangerment finding" from 2009 that has served as the legal and scientific basis for the agency's regulation of greenhouse gas emissions across multiple industries, including motor vehicles, power plants, oil and gas producers and aircraft. The proposal, which still needs to go through a public comment period, focuses on regulations affecting the auto industry. If passed, it would repeal all greenhouse gas standards for light-, medium- and heavy-duty vehicles and heavy-duty engines.

"With this proposal, the Trump EPA is proposing to end 16 years of uncertainty for auto makers and American consumers," Lee Zeldin, the administrator of EPA, stated in the announcement.

Strict standards for emissions and fuel efficiency introduced during the Obama administration and expanded during the Biden administration, which also provided generous EV funding, has led many auto makers to add electric vehicles to their fleets in recent years. Others, like Volvo, have taken things a step further and committed to a fully electric future. But the landscape is shifting under President Trump, who has pushed forward a deregulatory agenda.

Experts say that if this proposal passes, it will ease pressure on auto makers to produce electric cars, enabling them to adapt their mix of EV and gas-powered vehicle offerings to meet consumer demand.

"It gives auto makers a little bit better ability to build, to produce and put vehicles on market that are more closely aligned with the pace of electric adoption right now," said Stephanie Brinley, a principal automotive analyst at S&P Global.

John Bozzella, president and CEO Alliance for Automotive Innovation, which represents most of the major car manufacturers in the U.S., said in an email to CBS MoneyWatch that the trade association is reviewing the announcement.

"At the same time," he added, "there's no question the vehicle emissions regulations finalized under the previous administration aren't achievable and should be revised to reflect current market conditions, to keep the auto industry in America competitive, and to keep the industry on a path of vehicle choice and lower emissions."

A spokesperson from the EPA said Congress never explicitly gave EPA authority to impose greenhouse gas regulations for cars and trucks and that the agency's proposal to revoke the endangerment finding "does not prohibit vehicle manufacturers from developing EVs or different vehicles."

Experts say that even amid a shifting regulatory landscape, consumer preference will continue to drive auto makers' decisions.

"Their focus is going to be on making vehicles more affordable and dealing with the fact that consumers, not the government, are standing in the way of the mass adoption for EVs," Patrick Anderson, founder of Michigan-based consulting firm Anderson Economic Group.

The rate of electric vehicle adoption has been steady over the last several years, although the majority of Americans still fuel their cars at the pump. Demand for the vehicles has waned over the last year, according to data on light vehicle registration from S&P Global Mobility. From January to May, the electric vehicle market share was 7.3%, compared with 8% for the entire year of 2024, data from the auto intelligence provider shows.

But while consumer demand may have stalled slightly over the past year, auto makers will still want to offer low-emissions products in order to stay competitive both at home and abroad, Ivan Drury, director of insights at online car marketplace Edmunds, told CBS MoneyWatch.

"Every auto maker is a global competitor, and even though they might not be selling as well here, they could sell elsewhere better," he said.

Experts say the proposal, if passed, wouldn't drastically change any near-term plans of auto makers, given the time and money they have already invested in their product lines.

"If had already planned to build X number of this kind of vehicle, you can change that, but not necessarily tomorrow," said Brinley. "So that's gonna have to be planned out."

Product development cycles at car manufacturers span five to 10 years, according to a report from Eurasia Group, a global research firm.

The exact strategy and speed with which companies make changes would vary from auto maker to auto maker, according to experts. "For now, auto makers would enjoy the flexibility and lower costs from less stringent emissions limits, particularly in their nonelectric fleet planning," the report from Eurasia says.

There are concerns among some companies that the EPA's proposal, if passed, would inject a degree of chaos into industry, David Victor, a professor at University of California San Diego, told CBS MoneyWatch. Also, the rule-making process will likely be challenged in the courts, he said.

"[Auto makers] will not get a reliable new set of rules anytime soon," said Victor.

The EPA is holding a virtual public hearing on the proposed rule on Aug. 19-20, with a public comment period open through Sept. 15.