Trump Administration, California Clash Over EV Regulations

Automakers caught in the crossfire as legal battle intensifies over state's emissions rules

Published on Feb. 25, 2026

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A legal clash between the Trump administration and California over auto-pollution rules is coming to a head, with enormous financial implications for EV makers like Tesla and traditional automakers dependent on fossil-fuel vehicles. California is challenging a move by congressional Republicans to kill a waiver allowing the state to enact its own emissions regulations, which 11 other states have adopted. If California wins, automakers could be forced to comply with two contradictory regulatory schemes, while a Trump victory could reduce pressure to sell money-losing EVs in the state.

Why it matters

The outcome of this legal battle will have significant impacts on the auto industry, electric vehicle adoption, and the future of emissions regulations in the United States. It highlights the political divide over environmental policies and the challenges automakers face in navigating conflicting federal and state rules.

The details

California is aiming to require automakers to sell 100% zero-emission vehicles by 2035, with aggressive interim targets starting this year. The Trump administration, however, has taken steps to roll back federal EV subsidies and policy incentives, crashing electric-vehicle sales nationally. Congressional Republicans last year killed a $7,500-per-EV subsidy and eliminated penalties on automakers failing to meet fuel-efficiency standards. If California wins its lawsuit, traditional automakers could be forced to develop different model lineups to suit the two contradictory regulatory schemes. If the Trump administration prevails, EV makers like Tesla could lose critical revenue from selling regulatory credits to other automakers.

  • In 2019, Trump's EPA rescinded parts of a waiver through a formal rulemaking process.
  • In 2022, the Biden administration reinstated the waiver.
  • In Trump's second term, Republicans tried a shortcut – killing the waiver through the Congressional Review Act.
  • In June 2026, Trump signed legislation to kill the waiver, and California sued the same day.

The players

California

The state is challenging the Trump administration's move to kill a waiver that allows it to enact its own emissions regulations, which 11 other states have adopted.

Trump Administration

The administration is seeking to end California's ability to set its own emissions rules, which are more stringent than federal standards.

Tesla

An electric vehicle maker that could lose critical revenue from selling regulatory credits to other automakers if California's rules are overturned.

Alliance for Automotive Innovation

An industry lobby group that argues California's rules would restrict consumer vehicle choice and create an "unaccountable, unachievable regulatory wormhole" for automakers.

Rob Bonta

California's Attorney General, who says the Trump administration's actions show "contempt for the law" and the use of "fringe" legal theories.

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What they’re saying

“The level of instability and confusion here is unprecedented.”

— Paul Libus, Attorney, Van Ness Feldman LLP (Reuters)

“The drunken holiday with the federal regs is probably not going to last.”

— Mike Murphy, Former Republican EV advocate (Reuters)

What’s next

A federal court hearing on the case is scheduled for Thursday in Oakland, California, where the judge will decide on the administration's motion to dismiss the lawsuit.

The takeaway

This legal battle highlights the deep political divide over environmental policies in the US and the challenges automakers face in navigating conflicting federal and state regulations. The outcome will have significant implications for the future of electric vehicle adoption and the auto industry's transition to cleaner technologies.