The global automotive landscape is facing mounting uncertainty amid shifting political and economic winds.

The Trump administration in the United States is moving to dismantle major environmental and electric vehicle (EV) policies, and European lawmakers are tempering ambitious rules on ending the sale of new petrol and diesel cars by 2035.

The shift, embraced by some industry leaders but condemned by environmental groups, is reshaping car manufacturers’ strategies and raising questions about the future of clean transport, consumer choice, and climate goals.

Across the pond

In the US, the Environmental Protection Agency (EPA) this week repealed its 2009 “endangerment finding,” the scientific basis under the Clean Air Act that enabled federal regulation of greenhouse gas emissions from vehicles.

The administration claims the rollback will save Americans more than $1.3 trillion in regulatory costs and reduce consumer expenses by easing emissions standards and fuel-efficiency requirements.

But critics warn the move removes federal authority to limit vehicle pollution, potentially increasing emissions from transportation, the country’s largest source of greenhouse gases, and undermining climate science and public health protections.

Natural confusion

‘Drill drill, drill’ has been the mantra of President Trump, siding with those who believe global warming is a natural phenomenon and that there is little evidence to link it directly to human pollution.

At the same time, legislation limiting pollution undermines economies, leading to negative effects across the business community and society as a whole.

These US policy changes come alongside significant rollbacks in EV incentives: federal tax credits for EV purchases have been scrapped, funding for charging infrastructure has been cut, and ambitious targets, such as achieving 50% EV sales by 2030, have been reversed or abandoned.

These shifts have already reshaped automaker strategies.

Legacy US manufacturers like General Motors, Ford and Stellantis have booked tens of billions of dollars in losses from scaling back EV plans amid weakening demand and policy uncertainty, prompting a renewed focus on traditional internal combustion engine (ICE) vehicles and hybrids.

Unfortunate influence

In Europe, similar headwinds have emerged.

The European Commission recently moved to soften its planned 2035 ban on new petrol and diesel vehicle sales, reducing the requirement to 90% CO₂ reduction rather than a full ban and allowing a broader mix of hybrid and alternative-fuel vehicles to continue beyond that date.

The change, justified as offering flexibility to manufacturers facing economic pressures, has drawn criticism from climate activists who say it dilutes the bloc’s ‘Green Deal’ goals and weakens long-term emissions commitments.

For carmakers, these regulatory backdrops are prompting strategic rethinks.

Stellantis, which once championed a rapid shift to EVs, announced a massive €22 billion writedown tied to scaling back electric ambitions and refocusing on profitable ICE models such as SUVs and pickup trucks, a symbolic retreat from earlier electrification plans.

The huge motor manufacturing group is cancelling numerous EV projects, despite huge investment already, but with the huge US market abandoning environmental restrictions, the company realises demand will only increase for traditional combustion-engined vehicles (ICE).

After all, for the general public, ICE vehicles are cheaper to buy, cheaper to run, easier to fuel, and they are the transport system they understand and are used to.

Changing world

Industry analysts say this retrenchment reflects more than policy shifts steering public appetites.

They believe it reflects already-weakening consumer demand for EVs in some markets.

EVs remain significantly more expensive than comparable combustion vehicles, and traditional automakers struggle to compete with more affordable options.

Meanwhile, Chinese manufacturers continue to gain ground globally, leveraging low-cost production and massive domestic markets to export cheaper EVs.

In many global markets, Chinese brands are undercutting Western manufacturers on price and scale, intensifying competitive pressures and driving home the geopolitical dimension of the EV transition.

Repercussions

The confluence of retreating policies and market dynamics has several implications:

  • Environmental Impact: Rolling back emissions rules and delaying combustion-engine phase-outs almost certainly slows reductions in CO₂ and other pollutants, hampering climate goals and potentially increasing air-quality-related health costs.

  • Industry Strategy: Legacy carmakers are redrawing their plans, with some prioritising hybrid and ICE models while maintaining only essential EV projects. This shift reduces short-term risk but may leave them behind in the long-term global EV race dominated by China’s scale.

  • Consumer Choice: While policy rollbacks may make petrol and diesel vehicles cheaper and more accessible in the short run, reduced incentives for EVs could slow adoption and limit the variety of electric models available to customers, particularly in the US, where federal support once helped spur innovation.

  • Global Competitiveness: With Europe easing phase-out rules and the US retreating on federal mandates, Chinese automakers — already leading EV production — could become even more dominant, reshaping global automotive supply chains and potentially marginalising Western brands in key EV market segments.

As policymakers and industry leaders grapple with these shifts, questions remain about the balance between economic priorities, consumer demand and the urgent need to reduce the climate impact of transportation — a sector that today accounts for a large share of global emissions and environmental concern.