The Biden administration is poised to approve California‘s ambitious plan to phase out new gasoline-powered vehicle sales by 2035, setting the stage for a significant shift in the American automotive landscape – and a looming political battle. The Environmental Protection Agency (EPA) is expected to grant California and 11 other states the necessary waiver under the Clean Air Act in the coming days, according to sources familiar with the matter as reported by The Washington Post.

The policy’s implementation faces immediate uncertainty, however, as President-elect Donald Trump has explicitly stated his intention to revoke the waiver upon taking office. This potential reversal would impact not just California but the dozen states that follow its stricter emissions standards, collectively representing nearly half of the U.S. automotive market.

California’s outsized influence on the American automotive sector is evident in its electric vehicle adoption rates, reports The NY Times. The state recently surpassed two million zero-emission vehicle sales, with particularly strong uptake in major metropolitan areas. The San Francisco Bay Area leads with electric vehicles comprising over 30% of new car registrations in 2023, while Los Angeles follows at approximately 25%, according to S&P Global Mobility data.

The state’s clean air waiver authority, granted under the 1970 Clean Air Act, has historically focused on controlling local pollutants like soot and nitrogen dioxide. Its expansion to regulate greenhouse gas emissions, particularly carbon dioxide from transportation – the largest source of U.S. carbon emissions – represents a significant evolution in its application.

Governor Gavin Newsom has positioned California to maintain its environmental leadership regardless of federal pushback. The state plans to counter potential federal policy changes with enhanced state-level incentives, including expanded rebates to offset any elimination of the current $7,500 federal tax credit for electric vehicle purchases.

The legal framework surrounding these regulations faces additional scrutiny, as the Supreme Court has agreed to examine whether business groups have standing to challenge California’s use of the waiver program for carbon dioxide emissions control. This development adds another layer of complexity to the already contentious regulatory landscape.

For automakers, these policy uncertainties create significant challenges in long-term product planning and investment strategies. Major manufacturers have committed billions to electric vehicle development and production, driven in part by California’s regulatory influence. A potential reversal of the state’s authority could disrupt these plans and affect the broader EV market momentum.

The situation highlights the complex interplay between state-level environmental initiatives and federal policy, particularly as the automotive industry undergoes its most significant transformation since the transition from horses to automobiles. The outcome of this regulatory battle will likely influence not just California’s automotive future, but the pace of electric vehicle adoption across the United States.