Six Automakers Still Bound By California Emission Laws

Six major automakers remain locked into voluntary agreements to meet California’s vehicle greenhouse gas emissions standards through at least the 2026 model year, even as the Trump administration eliminated the state's authority to set its own environmental rules. The agreements—originally signed in 2020 by BMW, Ford, Honda, Volkswagen, and Volvo, and later in 2024 by Stellantis—require those companies to continue reducing fleetwide emissions by 3.7 percent annually, regardless of changes in federal policy.

The contracts were forged in a sharply different regulatory and political climate, when automakers sought to provide stability during earlier efforts to weaken federal fuel economy rules. California’s authority to enforce tougher emissions standards, long recognized under a Clean Air Act waiver, was initially revoked during Trump’s first term, reinstated by the Biden administration, and again eliminated under the current administration in June. Despite the reversal, the six automakers’ agreements with the California Air Resources Board (CARB) remain intact and enforceable, according to state officials.

Critics of California’s standards, including President Donald Trump, argue that the state’s regulatory influence limits consumer choice and puts undue pressure on domestic automakers. The administration has taken sweeping action to dismantle those rules, using the Congressional Review Act to overturn California’s waiver and a recent federal spending package to eliminate penalties for automakers that fall short of National Highway Traffic Safety Administration (NHTSA) fuel economy standards. Trump administration officials also announced plans to revoke the EPA’s “endangerment finding,” a legal underpinning that enables federal climate regulation of motor vehicles.

Despite these moves, the agreements signed with California still require BMW, Ford, Honda, Volkswagen, Volvo and Stellantis to comply with the negotiated targets. These standards are slightly less stringent than California’s original plan of 4.7 percent annual emissions reductions, but they are tougher than the baseline federal rules now in place for the broader industry. Analysts say the costs associated with the agreements are likely limited, as affected vehicles are already deep into their product cycles, and compliance can largely be achieved through adjustments in sales mix, such as promoting more fuel-efficient models and hybrids.

Stellantis faces a unique set of requirements. The automaker, which signed its agreement with California in 2024, is subject to additional zero-emission vehicle (ZEV) sales targets extending through the 2030 model year. The contract requires Stellantis to meet ZEV benchmarks for the 2026 and 2027 model years in California, and to engage in good faith discussions with the state beginning in 2026 to determine appropriate ZEV targets for model years 2028 through 2030. The agreement also includes a clause allowing Stellantis to seek adjustments if its obligations result in competitive harm relative to other manufacturers.

Beyond California, Stellantis also pledged to make its best efforts to maximize ZEV sales in other states that have adopted California’s emissions rules. Though there is room for negotiation in the out-years, analysts say the agreement still represents a significant commitment by Stellantis to support an electric future—even as the federal government moves in the opposite direction.

A spokesperson for Stellantis confirmed to Automotive News that the company continues to honor its agreement with CARB but declined to elaborate on any concerns about long-term obligations. Volvo also confirmed its compliance and said its product plans remain unchanged, even after the federal rollback. The other participating automakers either declined to comment or did not respond to inquiries made by Automotive News.

California’s ability to set its own emissions rules has historically influenced national standards. More than a dozen other states have adopted California’s vehicle emissions program, creating a two-tiered regulatory landscape that many automakers have navigated through a blend of product planning, compliance credits and negotiated compromises.

The voluntary deals struck in 2020 were designed in part to avoid a public clash between California and the Trump administration. Automakers that joined the agreement signaled a willingness to support cleaner vehicles, maintain regulatory certainty, and sidestep legal battles. According to industry analysts, the agreements also allowed participating companies to present themselves as progressive, technologically capable, and cooperative with state regulators—a strategic posture during a time of public focus on climate policy.

Those agreements may now become the final bulwark of climate-related regulation for the automotive industry, depending on how far the Trump administration advances its proposed dismantling of federal authority over greenhouse gas rules. EPA Administrator Lee Zeldin said last month that the agency would move to repeal the endangerment finding, a foundational determination that greenhouse gases pose a threat to public health and justify regulatory action. If successful, such a repeal would effectively remove the federal government’s ability to enforce any emissions limits for vehicles.

In that scenario, the California agreements would stand alone as the only emissions-related constraints on automakers. Whether the administration attempts to invalidate the voluntary contracts remains to be seen. For now, industry observers say the commitments are likely to stay in place through 2026.

While the agreements no longer represent a blueprint for nationwide standards, they continue to shape compliance strategies for the six automakers involved. And for Stellantis, the road may stretch even further.