In key respects President Trump’s budget legislation represents a huge Christmas gift to legacy automakers. Although it may take time to better understand the many ramifications of a bill that stretches more than 900 pages, early indications are that it could bring about some of the most significant changes to the U.S. auto industry in years.
The regulatory rollbacks would appear to dwarf those of the Reagan era. This may be welcome news to those who believe that the “magic of the marketplace” should drive how the auto industry deals with such issues as climate change. However, auto executives could someday curse this new-found freedom.
Why? Because if legacy automakers follow their bliss too far they could face a backlash somewhat akin to what happened in the late-50s, when imports first gained a major foothold in the American market. We will explain how in a moment, but first let’s talk about the bill.
U.S. government gives up fighting climate change
It’s ironic that a heat wave has engulfed much of the U.S. and western Europe just as Trump is poised to sign a bill gutting the nation’s capacity to fight climate change. However, for those who consider global warming to be a hoax, it may be more relevant that the cuts are projected to export two million jobs and increase the average home’s energy costs by $400 annually (Dow, 2025).
At least that was Electrek’s take. Although Automotive News mentioned in its headline that electric vehicle subsidies would end on September 30, a major portion of its story focused on other bill provisions, such as effectively killing CAFE standards by eliminating fines, ending California’s vehicle emissions standards, and giving a tax break to buyers of cars assembled in the U.S. (Boigon, 2025).
Also see ‘Laurence Iliff’s Automotive News story on EV truck sales lacks nuance and balance’
The regulatory rollbacks have been on the wish lists of legacy automakers for years, so they may feel a bit like the dog that manages to catch a car it has been chasing. All of which raises the question: What will they do now?
One factor that could mitigate against legacy automakers going hog wild with gas-guzzling vehicles is that they now operate in a significantly globalized industry. Regulations in other major markets such as the European Union are likely to continue pushing to reduce greenhouse gases through vehicles with lower emissions as well as by the electrification of the automotive fleet. Legacy automakers may shift toward a more bifurcated lineup to take advantage of U.S.’s regulatory rollbacks, but they may face financial limits in their ability to do so.
Could collapse of EV makers lead to more conformity?
One of the biggest questions I have is what happens to EV manufacturers as a result of the legislation. One commentator at the Tesla Investor’s Club argued that the automaker would be operating in the red right now without EV tax credits for car buyers and regulatory credits (Rainyfriedtofu, 2025). Others debated whether that was true, but Tesla and other EV startups have clearly entered a much more challenging environment.
That raises other questions: Might we see the collapse of EV startups? And might reduced competition lead to greater conformity among remaining automakers?
Also see ‘Which EV startups will succeed in crossing the Valley of Death?’
In other words, might we see a vaguely similar situation as occurred in the mid-50s, when the collapse of independent automakers arguably helped to spur a wave of design conformity among the Big Three that resulted in a public backlash — which opened the door to imports?
Climate change isn’t going to go away on its own — and low-cost Chinese EV makers are waiting in the wings. Legacy automakers pondering how much to capitalize on their new regulatory freedom would do well consider the dictum, “History Doesn’t Repeat Itself, but It Often Rhymes.”
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RE:SOURCES
- Boigon, Molly; 2025. “House passes budget bill, including Sept. 30 end to EV tax credits.” Automotive News. Posted July 3.
- Dow, Jameson; 2025. “Congress votes to send 2 million US jobs to China, increase deficit, energy costs.” Electrek. Posted July 3.
- Rainyfriedtofu; 2025. “Tesla is now operating in the red due to the big beautiful bill.” r/teslainvestorsclub. Posted July 1.
ADVERTISEMENTS & BROCHURES:
- ads.aacalibrary.org (Antique Automobile Club of America): Oldsmobile (1958)
- oldcaradvertising.com: Edsel (1958)
One of the reasons pick up trucks have become so widespread in America is the perceived added safety they provide, thus in order to successfully market cars in the US automates will still have to provide at least “safe looking” vehicles, and after all the notorious (although not mandatory) “small overlap crash test” is carried out by private entity IIHS, which will obviously still exist.
This will also unfortunately mean that soccer parents ferrying their children to various extra curricular activities on board a 21 ft pick up truck will still reign the road in the US, but if Americans so wish vox populi vox Dei.
Didn’t CAFE standards who was less strict for pick-up trucks and SUVs might also played a role as well?
I’d love to see wagons make a comeback, but I’m not holding my breath or selling my Volvo XC70. I’m not a fan of small SUVs with raked back ends and giant D pillars.
SUVs of all species (“actual” SUVs, crossovers like the Qashqai, coupe crossovers…) are the unfortunate result of an unfortunate mix of societal factors such as:
– aging population that requires higher seating height in order to ingress and egress the vehicle somewhat gracefully
– literal dependence on the passenger car in order to accomplish daily errands (I live in Europe without a car but, at least right where I live, public transit beyond urban but within 60 miles is abysmal, I can’t go almost anywhere without very careful planning), which brings to the next point
– the need for rear room ample enough to host at least children and teens comfortably, plus a high sill to install the baby seat if required, given that the activities they attend are scattered all over the place (and again, public transit does not help)
– a population that has fear of almost everything and wants to feel tank-like protection when driving (but if everybody drives a big SUV or worse a truck, that is nullified). When the 2020 thing occurred, the 99%’s behaviour (including mine) could be best described as “hysteria-driven”
– electric cars are structurally taller due to skateboard batteries and this feeds well into the spread of taller bodystyles: even sedans are often 150 cm tall when they are purpose built EVs .
Dodge may be able to get the Hemi and Hellcat back into the Charger soon. So far the sales have been dismal.
Why ? I have driven a Police Interceptor Durango with the Hurricane 6 optional engine that is more powerful and economical than the Police Interceptor Hemi. Buying more inefficient engines that cannot legally be driven on most roads and highways is ludicrous, in my opinion. I guess it must be “the small penis syndrome”. (Since I am both a survivor of prostate cancer and later bladder cancer, my penis may be smaller than any “Indie Auto” reader !) In spite of the national majority political thinking, our refusal to face scientific facts will ultimately lead to our downfall, in my opinion.
Back in time now then you mention it, if Chrysler have offered the Hemi 6-pack in North America as it was originally planned for pick-up trucks and also extending that offer to the C-body for example instead of being only sold in Australia and New Zealand, things might have been different.
The demographic who buys Chargers wishes it were still 1970 when they could get a 426 Hemi or 440 Six Pack, and rejects EV’s and turbo sixes, no matter the superior performance and efficiency. Those of you with advanced degrees living in the big metros on the coasts won’t understand. (I’m not in the Charger demographic; a Corolla would be good enough for me.)