The U.S. Environmental Protection Agency (EPA) has decided to revoke California’s electric vehicle (EV) mandate, which was approved during the final weeks of the Biden Administration. This mandate, known as the Advanced Clean Cars II (ACCII) regulation, aimed to gradually eliminate new gasoline-powered car sales in California. The targets were set at 35% zero-emission vehicle (ZEV) sales by 2026, 68% by 2030, and 100% by 2035. California needed a waiver from the EPA to implement this regulation because states are not allowed to set their own emissions standards under the Clean Air Act.
The impact of this regulation extends beyond California, as 11 states and the District of Columbia have adopted the Clean Car II regulation. However, Virginia, which initially joined, withdrew from the regulatory scheme in 2024.
Currently, about 9% of new car sales are electric, and these vehicles are mainly purchased by high-income households as second cars. The main concerns for the average American include cost, convenience, and performance in cold weather. An electric compact SUV, the most popular vehicle class, costs around $53,048, which is 49% more than its gasoline-powered counterpart at $35,722. Additionally, EVs require recharging, which takes longer than refueling with gas and is only convenient with a home charging port, which many people lack. EVs also lose 20% of their battery range in cold weather.
The Trump administration’s argument is that the Government subsidies help reduce the cost of EVs but pass the costs to taxpayers. Federal tax credits for EV manufacturers, charging infrastructure, and consumers will cost over $100 billion in the next decade. It’s been reported that these credits disproportionately benefit higher-income households. In California, the top 20 ZIP codes with the highest EV adoption have median incomes above $100,000, while lower-income areas see little to no EV ownership. Eighty percent of individual EV tax credits go to households in the top fifth of the income distribution.