The Environmental Protection Agency has issued a waiver to allow California and the twelve other states that have adopted its emissions standards to ban gas-powered cars in 2035.
Starting in model year 2026, which for most car manufacturers begins halfway through 2025, 35% of passenger vehicles sold in California and the states that have adopted California air regulation standards for passenger vehicles. These twelve states, including Washington, D.C., cover nearly half of America’s new light-duty vehicle and over a quarter of its heavy-duty vehicle market.
The average financing cost for a new electric vehicle is over $700 per month, a sum that is unaffordable to most Americans. EV sales recently declined stabilizing in California, suggesting even the Golden State may struggle to meet the new mandate.
The United States Clean Air Act authorizes California to set and enforce emissions standards more strict than the federal standard, but only if the Environmental Protection Agency grants the state a waiver for each new standard. California was grandfathered in with self-regulatory powers due to its regulation of air pollution before the EPA’s existence to combat Los Angeles’ infamous smog.
While other states do not have the power to set their own air regulations, they do have the ability to choose to follow California’s more stringent regulations — which include carbon dioxide, a non-toxic greenhouse gas, as pollution.
The first Trump administration attempted to revoke some of California’s EPA waivers, a move that was held up in court and never definitively ruled on. Last week, the Supreme Court only partially punted a ruling on California’s emissions regulations waiver, deciding to only rule on the narrow question of whether or not fossil fuel makers and other groups have standing to challenge the EPA waiver — leading to speculation that it could soon fully take on the main question.
After president-elect Donald Trump’s electoral victory last month, California Gov. Gavin Newsom flew to the nation’s capital, seeking immediate approval for federal waivers for eight of California’s emissions policies.
“Clean cars are here to stay,” said Newsom’s office in a statement on receiving approval for its Advanced Clean Cars II standard governing light-duty vehicles, which includes most cars and trucks regular consumers buy. “Naysayers like President-elect Trump would prefer to side with the oil industry over consumers and American automakers, but California will continue fostering new innovations in the market.”
Notably, the EPA granted a waiver for the tighter nitrogen emissions regulations for diesel, but did not grant a waiver for the Advanced Clean Fleets standard that regulates truck transportation and could have severely disrupted national supply chains if approved.
States that adopt California air regulations can only begin implementing those regulations after the EPA has granted a waiver for the specific regulation in question, meaning that for now, ACF will only be in effect for California.
However, because California is the main port of entry for Pacific trade, and a major thoroughfare for US-Mexico trade, the ACF requirement that all heavy-duty trucks in California be zero-emission vehicles carrying goods from ports and railways by 2035 could have significantly increased transportation costs and introduced supply chain bottlenecks.
“With California’s international ports being a hub for much of the nation’s imports, [ACF] could disrupt the supply chain, slow transport of goods, and raise prices,” said an ongoing lawsuit by a large coalition of states against the rules. “While California can regulate emissions, they cannot regulate the emissions of vehicles moving from state-to-state without the approval of Congress under the Congressional Commerce Clause.”
It’s unclear what will happen to car manufacturers selling cars in California and states that have adopted its standards if consumers choose not to purchase a requisite number of electric, hydrogen, or plug-hybrid vehicles.
According to the California New Car Dealers Association, 25.6% of new vehicles were all-electric or plug-in-hybrid vehicles in the third quarter of 2024, leading Toyota’s CEO to say that the 35% mandate is “impossible” to meet because “demand isn’t there.”
To avoid a $20,000 fine per zero-emissions vehicle credit they are short, automakers can buy credits from other automakers with excess credits, such as Tesla, or sell fewer non-ZEV vehicles.
In 2023, Stellantis, which owns Jeep, chose the latter, making gasoline-powered non-hybrids available only as special order vehicles in California and other states that have adopted California Air Resources Board Standards.
