Trump administration voids California’s Clean Air Act waivers using contested legal mechanism.
DOT accused of withholding $3.3 billion in EV charging funds despite legal obligation.
Federal EV tax credit and battery manufacturing incentives targeted in new budget legislation.
Might this impact the Canadian government’s 2035 plans?
President Donald Trump has revoked California’s authority to set stricter emissions standards. His goal is to unwind electric vehicle support policies enacted under the Biden administration. The decision is being challenged on legal grounds and is expected to face court review.
The rollback targets a decades-old waiver system that allows California to establish emissions standards exceeding federal limits. The authority originated with the 1967 Air Quality Act and was confirmed by the 1970 Clean Air Act. Under President Biden, new waivers had been issued to enforce more stringent rules beginning with 2026 model year vehicles.
Congress relied on the Congressional Review Act to repeal those waivers, though it’s been determined by those in the know that they are ineligible for disapproval under the Act. California officials said they will file legal action in response.
In a parallel move, the Department of Transportation halted approvals for the National Electric Vehicle Infrastructure (NEVI) program. Congress had appropriated $5 billion to build a national charging network, but only $527 million had been obligated as of early February.
Budget Legislation Proposes to End EV Tax Credit and Impose New Fees
The big news is this: On May 22, House Republicans passed a budget bill that would eliminate the $7,500 EV tax credit with limited exceptions for automakers yet to exceed 200,000 eligible sales. The bill also outlines a gradual phase-out of incentives for battery manufacturing by 2028 and restricts parts sourcing from certain countries.
On top of the credit loss, a new annual federal tax is proposed under the same bill: $250 for EV drivers and $100 for hybrid vehicle owners. These fees are intended to support the Highway Trust Fund, which is typically funded by gasoline taxes.
Some manufacturers have expressed support for the changes as compliance and financial burdens will be lessened, not to mention that consumers still vastly prefer ICE vehicles nationally. However, analysts caution that policy shifts could be reversed depending on the outcome of upcoming elections. One way or another, a slowing of EV sales in the country and state seems inevitable.
Despite the federal policy shift, the EV market has continued to grow. According to S&P Global Mobility, EV registrations rose 16% in the first quarter of 2025, while market share increased to 7.7%, up from 6.9% in the same period the year before. The same thing occurred in Canada in the same period. Analysts attribute part of the increase to consumers purchasing ahead of anticipated policy changes.
Should the Trump Administration manage to pass its Bill, the repercussions will be felt beyond the Golden State’s borders, perhaps reaching as far north as Canada. The country’s often-criticized Electric Vehicle Availability Standard is partially dependent on the continued involvement of numerous states. It also relies heavily on Provincial and Federal incentives, which have faced difficulties since the beginning of this year. If the 4th largest Global economy loses its ability to enforce ZEV (Zero Emission Vehicle) mandates, there is little hope that Canada will be able to implement its plans for 2035.
Source: Automotive News
This move not only affects California but also the 17 other states that have adopted its emissions standards, potentially disrupting nationwide progress toward cleaner transportation. The decision has sparked legal challenges, with California officials vowing to defend their environmental policies in court.
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The construction and real estate sectors may feel the impact of these policy changes, especially in regions where green building practices and EV infrastructure are integral to development plans. As the legal battles unfold, stakeholders across industries will need to stay informed and adaptable to navigate the evolving regulatory landscape.