California forges ahead with new emissions regulations

California Air Resources Board (CARB) Chair Lauren Sanchez has told Reuters on 29 January that state officials are meeting with Detroit automakers this week to discuss the next phase of greenhouse gas regulations. Governor Gavin Newsom also plans an announcement for early February detailing a new US$200m electric vehicle (EV) incentive programme aimed at bridging the gap left after Trump’s Big Beautiful Budget bill eliminated federal tax credits last October.

Several months prior to the tax credit elimination, congress rescinded California’s waivers aimed at bolstering EV sales after General Motors, Ford and Stellantis lobbied for significant relief from emissions regulations. GM stated that the rollback of federal rules could save it up to US$750m. Newsom previously criticised Chief Executive Mary Barra for having “sold us out”. 

The Trump administration used the Congressional Review Act to rescind California’s Advanced Clean Cars II waiver, phasing out the sale of internal combustion engine-powered cars by 2035. The administration also revoked the state’s Advanced Clean Trucks waiver and its Heavy-Duty Engine Omnibus Low NOx waiver, which would have cut nitrogen oxide emissions from diesel trucks. Now, the administration is seeking to end the Environmental Protection Agency’s greenhouse gas regulation authority by rescinding the “endangerment finding”, with a repeal expected in the coming weeks.

Sanchez indicated that California plans to challenge the endangerment finding repeal in court. As for the other rescindals, Newsom has said that California will challenge these in court too. Prior to Trump’s inauguration, CARB officials withdrew waiver requests for locomotive pollution rules and diesel truck replacement timelines, with Sanchez characterising those as strategic withdrawals that leave regulators open to pursue alternative strategies.

California’s Advanced Clean Cars II regulations require 35% of all new light-duty vehicles sold during 2026 to be zero-emission vehicles. Actual sales data suggests that market share has plateaued between 19% and 25%, prompting major automakers to label the target unachievable. The federal US$7,500 tax credit expired on 30 September 2025, significantly increasing out-of-pocket costs and materially impacting sales.