Donald Trump returned to office to serve as the 47th president of the United States yesterday and kicked off his second term with a flurry of executive orders. One of them could have an impact on the next car you buy. But it’s far from certain what any of the actions mean or how and when they will take effect.
What Is an Executive Order?
For all the media focus on executive orders, few Americans have any reason to know what they are. A president has many levers for affecting laws and the economy. Executive orders are among the weakest. They are, effectively, memos from the boss.
The Associated Press explains, “They are signed statements about how the president wants the federal government to be managed. They can be instructions to federal agencies or requests for reports.”
An executive order can tell a federal agency what the president wants it to do. Until the agency does it, nothing practical has changed. Agencies write regulations – the specifics that effect how laws are carried out. They don’t write laws.
So, in an executive order, a President can tell an agency to rewrite a regulation, or change work policies for federal agencies.
The AP notes, “Both Congress and the courts can potentially block executive orders.” Congress can review any regulation and vote to change it. Courts can declare it an improper interpretation of the law it tries to execute, or declare that the agency doesn’t have the authority it claims.
One Order Important to Car Shoppers
Most of President Trump’s instructions affecting the auto industry appear in an order titled “Unleashing American Energy.”
It includes somewhat vague language on many topics, but we can interpret its text to predict what actions the president is likely to expect from federal agencies.
“End the EV Mandate”
The order promises “to eliminate the ‘electric vehicle (EV) mandate’ and promote true consumer choice.”
The phrase “electric vehicle (EV) mandate” is in quotes in the order because there is no EV mandate. President Trump spoke often of ending one on the campaign trail, but no federal law or regulation requires anyone to buy or build an EV.
However, several federal regulations encourage automakers to build them. Other sentences in the order suggest that Trump is ordering federal agencies to modify those.
The order tells federal workers to focus on “removing regulatory barriers to motor vehicle access; by ensuring a level regulatory playing field for consumer choice in vehicles.”
“Considering” Ending Subsidies
Trump tells the government to do that by “considering the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies and effectively mandate their purchase by individuals, private businesses, and government entities alike by rendering other types of vehicles unaffordable.”
This may refer to the federal government’s $7,500 EV tax credit, which helps Americans afford EVs as long as the buyer falls under income limits and the car meets certain rules about its price and where it’s built.
But the order only tells agencies to consider the subsidies because they can’t end them — the rebate was created by a law, so only Congress can undo it. Trump might encourage members to do so. But with many EV and battery factories in Republican-dominated states, Congress would have to end many constituent jobs to do that.
The same law that created the rebates also used subsidies to help build those factories.
Changing Fuel Economy and Emissions Rules
That same sentence could affect federal rules on fuel economy and tailpipe emissions.
One set of federal regulations controls what pollutants a car can produce. The administration of former President Biden enacted a tougher set of those in 2024. It did not require automakers to build EVs. But it set strict limits on the pollutants cars can produce between 2027 and 2032. Most automakers planned to meet them by building more EVs.
A second set requires automakers to sell a lineup with an average fuel economy rating of 38 mpg by 2031. The Biden administration also passed that rule in 2024. Similarly, most automakers planned to meet that number by building more EVs, though the rule never told them how to do it.
Trump stated on the campaign trail that he’d like to return to older, easier thresholds his first administration had written. That wouldn’t end fuel economy rules or federal controls on tailpipe emissions; it would just let automakers meet lower, pre-2024 standards.
Federal agencies could quickly rewrite those. To rewrite a regulation, an agency needs to publish a proposed rule for public comment, allow public comments for a set period of time, and then finalize its rule. The rule takes effect once the final version is published.
Federal agencies could begin rewriting both of those rules almost immediately, and, with public comment periods, have them in place in a few months.
Many of those agencies, however, are currently leaderless. They must await approval of the president’s cabinet nominees before they can begin the long tasks asked of them.
Even if the policies change, automakers may not change their long-term product plans. They base decisions on which cars to build on many factors, few with a horizon as short as four years.
Fighting State Rules
The order also tells federal workers to focus on “terminating, where appropriate, state emissions waivers that function to limit sales of gasoline-powered automobiles.”
This could revive an old legal fight.
California writes its own separate emissions rules, under a waiver granted by the EPA. Bloomberg Law explains, “The Clean Air Act generally forbids states from regulating motor vehicle emissions. But the law lets California, which has some of the nation’s worst air quality, apply for special permission in the form of a waiver to regulate emissions more strictly than the EPA.”
Some states follow looser federal rules. Others use California’s stricter standards.
California has said it will require all new cars sold in the state to be electric or plug-in hybrid by 2035. Other states have followed its lead, including New Jersey, New York, Oregon, Maryland, and Washington.
Bloomberg Law explains, “Trump rescinded California’s Advanced Clean Cars waiver during his first term, citing consumer costs. President Joe Biden reinstated it shortly after taking office, before a court could hear arguments challenging Trump’s decision. Biden’s support for the waiver is still tied up in litigation.”
Should Trump attempt the same move, the legal battle will restart. That will delay any practical change, perhaps for years.
A Threat to Tesla’s Profitability
If Trump does succeed in ending California’s separate emissions rules, it could hurt his most prominent supporter.
Tesla CEO Elon Musk has become a prominent Trump surrogate, and will reportedly have an office in the White House starting this week.
Under California’s rules, automakers earn credits for selling low-emissions cars. Those that don’t earn enough credits must buy them from automakers that do.
This was Tesla’s primary source of revenue for most of its existence. The company lost money on every car it sold from 2003 until 2021, earning money only from the emissions credits.
Today, Tesla profits from some car sales. However, the credits are still a significant part of its business plan. Axios notes that “In the nine months through September 2024, 43% of Tesla’s $4.8 billion in net income came from selling regulatory credits to other carmakers.”
Should Trump follow through on his plan, he could cut Tesla’s revenue almost in half. That move would come shortly after Tesla reported its first-ever annual sales drop in 2024.
Pausing Federal Funding for EV Chargers
Finally, the order instructs federal agencies to “immediately pause the disbursement of funds” under two laws that set aside money to build EV chargers.
The president, by himself, can’t revoke those laws. So the executive order tells agencies to pause their funding while they “review their processes, policies, and programs for issuing grants, loans, contracts, or any other financial disbursements of such appropriated funds for consistency with the law.”
That could delay new charger projects.
Grid Changes That Could Improve Life for EV Owners
One section of the order doesn’t directly address EVs but could affect them.
The order tells energy agencies to do everything they can to simplify permitting for new energy projects. This could lead to faster approval for some fossil fuel projects. But it could also speed improvements to the electric grid, including some proposed under the Biden administration, that could improve the resiliency and speed of the nation’s electric grids.
All of This Will Take Time
All presidents seek to make their first actions seem monumental and immediate. If there’s one lesson to take from a deep read of the executive orders, it’s that all of these changes will take time and some may be blocked.
Agencies will likely change some of the policies Trump has instructed them to change. But that is a slow process with several steps, and those agencies can’t even begin that process yet without leaders in place.
Other sections of the orders tacitly acknowledge that the president can’t change laws, simply asking agencies to pause or study options.
Finally, most of these actions could be subject to court challenges that will slow them or end them.
