Several major carmakers have urged the U.S. Congress to override a 2035 electric vehicle mandate set by California. As the largest electric vehicle market in the U.S. and the world, California has set an incredibly ambitious target of banning the sale of internal combustion engine cars by 2035. Nearly a dozen other states in the United States have adopted similar electric vehicle mandates and put carmakers operating in the country on a path to electrifying most of their vehicle lineups.
However, automakers say that they may have to stop shipping some cars to states with similar mandates within the next few months. Most established carmakers are struggling to break into the EV industry and have recorded mounting losses in their electric vehicle divisions as demand for costly electric cars has dwindled.
2024 was a turning point for America’s auto industry as a sharp fall in EV demand coupled with several months of falling sales showed that many automakers had overestimated market demand for their often premium electric cars. Many of them went back to the drawing board and scaled down their electrification plans, opting for strategies that included battery electric vehicles (BEVs), hybrids, and gas-powered cars rather than just focusing on BEVs.
With the U.S. House of Representatives set to vote on legislation that would repeal the Biden-era waiver allowing California to set a mandatory goal of at least 80% EV sales by the year 2035, automakers are calling on congressional leaders to repeal the waiver. If the waiver isn’t repealed, automakers argue, they may be forced to halt vehicle shipments to states that have adopted California’s 2035 EV mandate.
In a letter released at the start of the week, the Alliance for Automotive Innovation said that car companies may soon be forced to limit the number of cars they have on sale to indirectly boost their portion of sales that comprises EVs. The alliance represents major automakers like Volkswagen, Hyundai, Toyota, and General Motors.
States like Massachusetts, Oregon, and New York that have adopted the California Air Resources Board’s rules may soon be looking at a reduced inflow of new cars as automakers attempt to remain compliant with the EV mandate. According to the Alliance for Automotive Innovation, allowing the bans on traditional cars to continue would increase vehicle prices and reduce available choices for drivers who already have to deal with a 25% tariff on imported auto and vehicle parts.
Other auto industry players like Massimo Group (NASDAQ: MAMO) will be hoping that a way that addresses the current market realities is found by lawmakers to combat climate change while avoiding hamstringing carmakers with burdensome mandates given the realities on the ground.
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