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The Biden-Harris administration ushered in a deluge of rules limiting emissions in the transportation sector, and the only way for automakers to comply would be to produce a lot of electric vehicles. 

The “Big Three” American automakers hopped on board the administration’s mandates and plowed full steam ahead on setting targets to produce ever increasing amounts of electric vehicles. The American consumer, however, was less enthusiastic about the plan, and the companies have lost considerable money trying to transition to EVs. 

Now those automaker investments are all more vulnerable. 

Incoming GOP President Trump was vocal during his campaign that he would be no friend of the Biden-Harris EV rules, and they are not likely to survive long after Jan. 20, when Trump takes office.

Trump has also voiced opposition to the EV tax credit. And though squashing them would require an act of Congress because they are part of the Inflation Reduction Act, that may still happen. 

Conflicting reports

Signals from the auto industry have been mixed. 

Citing unnamed “lobbyists and officials from several car companies,” The New York Times reported last month that car companies wanted to keep the mandates. The Times also pointed to a letter from John Bozzella, president of the Alliance for Automotive Innovation, which represents the manufacturers of almost all new vehicles sold in the U.S. The letter argued that automakers’ success depends on “stability and predictability in auto-related emissions standards.”

The Washington Free Beacon challenged the Times’ claims. A spokesperson for Stellantis told the news outlet that contrary to the Times the company had no plans to lobby the incoming administration to maintain the EV mandates, and its lobbyists weren’t among those cited in the Times story. 

The Beacon also reported that Bozzella’s letter criticized federal and state regulations, arguing they are “out of step with current auto market realities and increase costs for consumers.” 

Further disputing the Times report was an op-ed in the Wall Street Journal on Nov. 24 by Jack Hollis, chief operating officer of Toyota Motor North America. 

“Artificial mandates and subsidies aren’t working,” he wrote. “We believe the incoming administration should replace EV mandates and subsidies with policies that promote consumer choice while contributing to emissions reductions. A consumer-driven market will bring more stability and healthy competition to the auto industry, steady employment for workers and dealers, and more options for American families.” 

Bailout mentality

Executives at Ford and General Motors told The Detroit News they are confident they can navigate any changes to regulations and tax credits in the new administration. 

Jim Lawler, Ford’s chief financial officer and vice chairman, said the company provides choices in gas-powered, EVs, and hybrids, so it can “pivot” to other lines of business as needed. GM Chief Financial Office Paul Jacobson said the company will work with the incoming administration “on the best path forward while focusing on cutting costs.” 

Michael Buschbacher, partner at the law firm Boyden Gray PLLC, told Just the News that the automakers stuck to EVs despite the losses because they look at it like a startup. Those tend to lose money for many years before seeing any profits. 

The automakers bet that “electric vehicles are going to be the standard in the future, and so the company that can get there first with developing the tech and manufacturing capacity is going to be able to expand its market share. I think that’s how Ford thinks about it, and is willing to take these losses. But I think that the confidence that electric vehicles would be a good replacement was misplaced,” he said. 

Buschbacher has represented individuals, companies and organizations with a focus on energy and environmental matters. He said he wasn’t speaking for anyone he’s representing, and only offering his personal perspective on how changes to EV regulations might play out with automakers. 

Alex Stevens, manager of policy and communications for the Institute for Energy Research, told Just the News that with the federal bailout of Chrysler in 1980 and the 2008 bailouts of the Big Three, the American automobile industry became wedded to the federal government. 

“They can’t ever be on the opposite side of any administration. Because the way that they operate is, implicitly, with a sort of bailout mentality,” he said. 

Leading up the election, Stevens said, they were positioning themselves to go either way depending on the outcome. Now with Trump coming into the White House, they’re trying to cozy up to the new administration. 

“Maybe they’re not entirely on board with Trump’s policy agenda, but they’re not in a position to push back against it. They have no bargaining power,” he said. 

Stevens also speculates that there may be more internal disagreements over the EV vision at the companies than comes out in the media. The abrupt resignation this week of Stellantis CEO Carlos Tavares suggests, at least at one of the Big Three, that is the case. 

Future of less

Buschbacher said that the automakers could find some benefits with the coming regulatory changes. While Trump’s rollback of EV mandates will hurt their investments, his trade policy will expand overseas markets and check the rising competitive power of China, which is now the largest automotive exporter in the world. 

“The consequences of them having made a bad deal may mean that they have a little bit of a tough time adjusting to a America-first, pro-consumer, pro-American worker transportation policy. But that’s their own problem, and I think President Trump’s response to them is going to be something along the lines of, ‘You made a bad deal, but don’t worry. I’m going to make a much better one for you,” Buschbacher said. 

California was the first state to adopt EV mandates in the form of banning the sale of gas-powered cars. 

By 2035, all new passenger cars, trucks, and SUVs sold in California will be zero-emission vehicles. California Democratic Gov. Gavin Newsom is vowing that should Trump get the EV tax credit nullified, he’ll make his state’s taxpayers cover it. Tesla CEO Elon Musk has expressed support for ending the tax credit, and Newsom’s tax credit will exclude Tesla.   

Buschbacher said that the overall goal of the EV mandates wasn’t ultimately to get drivers to switch from one kind of car to another. As only wealthier Americans could afford the cars, which have limited ranges and inadequate charging infrastructure, the EV mandates would likely mean less travel. 

“So if you’re poor, you have to ride the bus or take a little Lime scooter or just stay at home. Because fundamentally, a lot of the climate policy that has been in the Biden-Harris administration, and in California, is de-growth in its outlook. It sees the solution to climate change not being new technology, but in just a future of less. And I think the automakers didn’t fully appreciate how the regulations were actually going to be written to do that, to have a future of less, rather than just to encourage the transition,” Buschbacher said.