U.S. automakers for years have sought to weaken EPA limits on climate-warming pollution from cars and trucks. But the Trump administration’s decision last week to zap EPA tailpipe regulations and eliminate the endangerment finding — a cornerstone of federal climate policy — might have gone too far, even for them.
Carmakers now have leeway to build vehicles for U.S. drivers that spew more greenhouse gases. Yet the global shift toward electric cars and trucks means that approach carries more risk than it would have even a few years ago — as any U.S. automaker who sticks with gasoline-powered cars could find itself increasingly isolated on the world market.
“They got more than what they asked for,” said Stephanie Valdez Streaty, director of industry insights for Cox Automotive.
Thursday’s rollback was the final move in the Trump administration’s pivot away from former President Joe Biden’s emphasis on electric cars and cleaner transportation. The Department of Transportation announced a plan in December to cut fuel-economy standards to their lowest level in years. That came after Congress systematically dismantled the price incentives and tax breaks for electric vehicles.
President Donald Trump and EPA Administrator Lee Zeldin pitched the rollback as a boon for car buyers. Getting rid of regulations on tailpipe emissions would send vehicle prices “tumbling down dramatically,” Trump said.
“Perhaps no industry has benefited more from our historic deregulation campaign than the U.S. auto industry,” he said.
But it’s no slam dunk — and the first layer of uncertainty for automakers will be the inevitable legal challenges to the rollback of the endangerment finding, analysts said.
The Alliance for Automotive Innovation, which represents the major carmakers, urged EPA last year to issue an interim final rule on greenhouse gas emissions while lawsuits over the broader rollback make their way through the courts. But the trade group didn’t explicitly argue against the endangerment finding last year and didn’t explicitly praise the rollback last week.
“The auto industry in America remains focused on preserving vehicle choice for consumers, keeping the industry competitive, and staying on a long-term path of emissions reductions and cleaner vehicles,” AAI Chief Executive Officer John Bozzella said in a statement last week.
The Zero Emission Transportation Association, which represents EV makers and their suppliers, warned that getting rid of federal regulations could leave carmakers with a patchwork of state regulations and nuisance lawsuits.
“This will place added costs and legal burden onto private industry, and eventually onto consumers,” ZETA Executive Director Albert Gore said in a statement.
A third trade group, the Manufacturers of Emission Controls Association, argued last year for keeping a standard on greenhouse gas emissions, with modifications.
“EPA should revise the GHG standards to a level that continues to incentivize technology innovation and U.S. auto industry competitiveness in the global market,” the group wrote.
Environmentalists — as well California Gov. Gavin Newsom (D) — argued that state and federal regulations helped create a domestic EV industry, which is now serving as a bulwark against the growth of Chinese EV-makers.
Newsom, speaking at the Munich Security Conference, called Trump’s decision to roll back the endangerment finding, “a death sentence to legacy American automobile manufacturers.”
“You talk about innovation, it’s been California’s regulation in this space that’s driven manufacturing innovation that allows American automobile manufacturers to be competitive globally,” he said.
Some analysts argue the government pullback could set a trap for U.S. carmakers — as they would be tempted to build expensive gas-powered vehicles while the rest of the world market shifts to electric.
Getting rid of the regulations will incentivize the car industry to build more SUVs and pickup trucks, which are its most profitable vehicles, according to Sam Abuelsamid, an analyst at the Detroit-based consulting firm Telemetry.
But those trucks and SUVs have less appeal outside North America — and the Trump administration has alienated many buyers in Mexico and Canada. Meanwhile, Chinese carmakers have 20 percent of the market in Mexico, and they recently established a toehold in Canada, when Prime Minister Mark Carney announced he’ll cut the country’s tariffs on a limited number of Chinese-made EVs.
Carmakers need to start building affordable EVs, hybrids and other alternatives, Abuelsamid said in a January research note.
“The industry must chart its own path forward by creating globally competitive products that compete on features, performance, and most importantly, price,” he wrote. “Without them, their market will steadily shrink. Sooner or later, the competition will find a way into the U.S. market, and an outdated product strategy won’t slow them down.”
Automakers have shown some flexibility, as they’ve been forced to navigate increased competition and shifting mandates from the government, Stephanie Brinley, an auto analyst at S&P Global, said in an interview. But the quick changes also have been a strain for an industry that has to plan years in advance.
“Understanding what the rules are that you have to play by is the most important thing,” she said.
Ford reported an $11.1 billion loss for the fourth quarter of 2025, after writing off $14 billion it had invested in new EV factories and battery plants. General Motors and Stellantis announced similar write-downs.
Yet the companies are continuing to invest in EVs — in part because of the shifting market and also because the regulations could change again.
Ford’s “universal” EV platform, expected to debut in 2027, will provide “a scalable hedge against a potential regulation step back in the future,” Ford CEO Jim Farley said on the company’s analyst call.
At General Motors, Chief Executive Officer Mary Barra told analysts late January it’s unclear what’ll happen over the next few months, but the long-term trend is clear.
“We know once somebody drives an EV, they rarely go back to an internal combustion engine,” she said.
Reporter Sara Schonhardt contributed.
