The fleet community is following potential amendments to or elimination of the numerous state and federal emissions regulations and funding for zero emissions vehicles.
When political parties change after any presidential election, numerous constituencies — from business and trade groups to consumer, labor, environmental, and public policy organizations — closely monitor potential regulatory shifts to assess how new policies will affect their interests.
The 2024 presidential election was no different, but it was different.
Before the election, many anticipated that a Trump victory would bring significant political and regulatory disruption, particularly regarding environmental policies, EV incentives, and emissions regulations.
This anticipation has not been quelled after the first few weeks of the new administration, as President Trump has taken a “shock and repeal” approach to rolling back regulations.
The fleet community is following potential amendments to or elimination of state and federal emissions regulations and funding for zero emissions vehicles (ZEVs) and charging infrastructure.
Rather than taking a stance on regulatory policy, this article analyzes the restraining and driving forces behind those policies and outlines how they could be repealed, revised, or reinforced.
However, this is still early innings. The article will be updated as news arrives.
Emissions Regulations & ZEV Funding by Type
The developments fall into four major buckets. Be ready for “acronym overload:”
- Federal incentives in the Inflation Reduction Act (IRA): the $7,500 Clean Vehicle Credit under Section 30D, the $4,000 used credit under 25E, and the up-to $40,000 credit for commercial vehicles under 45W.
- Funding from the 2021 Bipartisan Infrastructure Law (IIJA) for the buildout of charging infrastructure in the National Electric Vehicle Infrastructure (NEVI) Formula Program.
- Regulations and authority of the California Air Resources Board (CARB):
- Advanced Clean Fleets (ACF): Requiring fleets operating in California to purchase ZEVs.
- Advanced Clean Trucks (ACT) and Advanced Clean Cars (ACC II): Requiring manufacturers to sell zero-emission trucks and cars.
- CARB’s and the CARB-following (Section 177) states’ authority to set its own emissions standards that supersede federal rules.
- CARB’s Low NOx Omnibus regulations for Class 4-8 trucks.
- Federal regulations:
New Administration’s Actions & Intentions
To date, the Trump administration has taken these actions and signaled these intentions:
- Revoked a 2021 non-enforceable executive order that aimed for half of all new vehicles sold in the U.S. to be electric by 2030.
- Signed an executive order to halt the distribution of unspent government funds for vehicle charging stations as part of the $5 billion fund established under the 2021 Bipartisan Infrastructure Law. The Federal Highway Administration (FHWA) halted funding on February 6.
- Issued an executive order aiming to revoke California’s waivers under the Clean Air Act that allows stricter pollution standards than federal rules.
- On Feb. 14, new EPA Administrator Lee Zeldin ordered Congress to use the Congressional Review Act to kill the waivers given to CARB by Biden’s EPA.
- Proposes eliminating the 30D federal tax credit of $7,500 for electric vehicle purchases. While specific actions regarding the up to $40,000 credit under 45W for commercial vehicles have not been detailed, the administration’s intent to dismantle the IRA entirely would likely affect this incentive as well.
- On January 29, Transportation Secretary Sean Duffy signed an order directing NHTSA to rescind the fuel economy standards established during President Joe Biden’s administration.
CARB Rescinds ACF Waiver Request
One action was not generated by the Trump administration but was taken in anticipation of a losing legal battle.
On January 15, CARB rescinded its waiver request from the incoming EPA regarding enforcing ACF for private (“high-priority”) fleets. Therefore, private companies with fleet vehicles in California will not have to acquire ZEVs. The rule continues to be in effect for state and municipal fleets.
Revoking the rule also prevents the 14 to 17 “Section 177” states that follow CARB from enacting ACF.
However, the withdrawal of the waiver request does not affect the implementation of the ACF for state and local government fleets, which still must purchase an increasing percentage of zero-emission vehicles over time.
Multiple Stakeholders in 30D and 45W Credits
While the 30D tax credit is often seen as a consumer incentive, it is fundamentally a supply chain and domestic manufacturing policy, said Ben Prochazka, executive director of the Electrification Coalition.
The provision’s final assembly and sourcing requirements for battery minerals and components are designed to encourage the onshoring of battery production and sourcing of critical materials from U.S.-friendly nations rather than China.
Prochazka said repealing the credits would be politically challenging, especially given the growth of EV and battery production plants in the U.S., which has promoted job growth.
A letter sent to the new administration from 18 Republican lawmakers said that “energy tax credits have spurred innovation, incentivized investment, and created good jobs in many parts of the country — including many districts represented by members of our conference.”
Potentially complicating the repeal effort are other groups benefitting from the incentives directly or indirectly.
Scott Case, co-founder & CEO of Recurrent, noted that $3 billion in direct payments and rebates to auto dealers under 30D and 25E had fostered dealership sales and profits.
Trisha Dello Iacono, head of policy at Calstart, mentioned that private money has made up about 85% of the $184 billion invested in domestic manufacturing of ZEVs and batteries since 2020.
A Compromise on 30D and 45W Credits?
Prochazka, Case, and Dello Iacono envision potential modifications to the credits, rather than elimination. “We’ve seen signs that Congress may opt for a scalpel rather than a sledgehammer, adjusting eligibility criteria rather than outright eliminating the credits,” Prochazka said.
Case believes 30D has a better chance of remaining but could be rewritten to become even more restrictive by focusing exclusively on domestic production.
For corporate fleets, 30D allows for leasing arrangements that bypass sourcing restrictions, making certain vehicles eligible for incentives that wouldn’t qualify under direct consumer purchases. This “loophole” could be tightened.
Meanwhile, 45W has no sourcing requirements. “The 45W credit is a prime target for repeal because it lacks domestic sourcing requirements and has been used extensively for non-U.S. vehicles,” Case said.
However, Calstart believes 45W being entirely eliminated is unlikely. “Tax credits can be modified somewhat through executive action but not eliminated entirely,” Dello Iacono said.
Ruben Aronin, principal at A Better World Group, surmises that 45W could survive because eliminating it would remove support for many independent electric truck chassis makers that have production plants in the U.S.
Aronin said that if federal incentives disappear, some CARB states are prepared to invigorate their rebate programs or create new ones.
To further spur change those states could also enact procurement mandates for state-owned vehicles, set up zero-emission delivery zones, and enable access to carpool lanes or priority lanes for ZEV trucks in drayage operations.
ACT, ACC II Still in Place
With the ACF waiver rescinded, private fleets in California and Section 177 states no longer have an obligation to acquire ZEVs. Yet the manufacturer-driven ACT and ACC II rules are still in place, with litigation pending. In California, ACT requires that 7% of OEMs’ new truck sales be ZEV as of Jan 1.
With ACC II’s long-term order that 35% of new car sales be ZEVs by 2036, “This is the only true EV mandate,” Case said. “Everything else is incentives or gradual emissions tightening. If Trump targets an ‘EV mandate,’ this is what he’ll go after.”
Case and others emphasize that attempts to revoke California’s waiver would likely result in prolonged legal battles, just as they did during Trump’s first term. “Last time, California tied up the case in court for four years. If challenged again, expect the same strategy,” Case said.
According to Kyle J. Spencer, a principal at Bracewell LLP, Trump’s executive order to rescind California’s emissions waivers diverges from past presidential approaches in that it actively seeks to revoke already-issued waivers.
Indeed, the EPA’s Zeldin has initiated steps to involve Congress through the Congressional Review Act (CRA), which would subject the California waivers to congressional oversight. “By submitting the waiver as a rule under CRA, Congress could overturn it with a simple majority,” Spencer said.
Additionally, the Government Accountability Office (GAO) may play a key role in determining whether the waiver qualifies as a “rule” under CRA. This remains uncertain, Spencer said.
“If the GAO rules in favor, it would open the door for Congress to intervene and potentially block the waiver, further complicating California’s ability to implement stricter vehicle emissions standards,” Spencer said.
“This dual-track approach leverages legislative and administrative tools to forestall or eliminate California’s emissions policies, though it is expected to face significant legal and political hurdles.”
Voluntary OEM Agreements
Automakers have agreed to meet California’s stringent emissions targets regardless of the status of the CAA waiver as part of the voluntary Framework Agreements on Clean Cars and the Clean Truck Partnership.
Will automakers back out of these signed commitments? The agreements attempt to address policy instability. But market realities will weigh on how automakers move forward.
Ford and General Motors have scaled back EV production targets, while Ford Pro reported a $5 billion EV loss in 2024 and has projected greater losses in 2025. Meanwhile, automakers like Ford, Toyota, and Volkswagen have delayed new electric model rollouts.
Supreme Court Ruling Inevitable?
Will the challenges to California’s authority under the Clean Air Act likely end up in the Supreme Court?
Dello Iacono points out that the U.S. Supreme Court has declined to review a case challenging the EPA’s waiver granting California the right to set its own emissions standards.
However, Dello Iacono said the Court has agreed to hear cases concerning the appropriate venue for legal challenges under the Clean Air Act, which Calstart believes has much less potential impact.
Aronin thinks it’s inevitable that the Supreme Court will hear the case, with a question mark on the outcome. “Historically, this authority has been upheld, but the current court composition adds a layer of uncertainty,” he said.
With many parts of California in severe or extreme nonattainment status for ozone and particulate pollution, Aronin noted that CARB may try to legally justify its stricter emissions regulations by linking them to National Ambient Air Quality Standards (NAAQS) under the Clean Air Act.
“California has long framed emissions regulations around air quality and health, which could make it harder for a federal rollback to gain traction,” he said.
The other question is if CARB can draw out a legal battle into a new administration in 2028, can it regain its authority and retroactively reintroduce and enforce its stricter emissions standards?
Dello Iacono sees this as a possibility, though she noted retroactive enforcement authority has not been tested historically.
EPA Standards: What’s Next?
On the federal level, the EPA’s multi-pollutant emissions standards for MY-2027 loom. In a traditional rulemaking environment, overturning them would require a lengthy regulatory process rather than an immediate repeal.
How will this non-traditional administration circumvent that process? Another legal fight is likely to follow. However, this one doesn’t challenge the legal authority of an entity like CARB, which may facilitate a quicker resolution.
These standards may have an advocate within the administration: Tesla benefits from existing EPA emissions rules that require automakers to meet CAFÉ and greenhouse gas (GHG) emissions standards. As an electric-only automaker, Tesla has benefitted from billions of dollars annually from regulatory carbon credit sales.
Case speculated that rather than attempting to overturn 2027–2032 regulations, the Trump administration may focus on blocking future emissions regulations beyond 2032.
The Need for Policy Stability & Consistency
When the federal government, states, and agencies set overlapping and often contradictory rules, automakers and fleets must make investment decisions without clarity on long-term compliance requirements.
Prochazka, Aronin, and Dello Iacono each stressed the importance of policy consistency for automakers, fleets, and investors. A chaotic regulatory environment not only slows carbon reductions but also undermines the climate goals these policies aim to achieve.
“The lack of market certainty creates whiplash for companies,” Dello Iacono said. “Regulations level the playing field and are crucial for long-term planning and investments.”
