The EPA has just dropped the mother of all deregulations. In minutes (two, to be specific), Trump’s hand-picked administrator of the department announced sweeping changes that critics are calling “the most disastrous day in EPA history.” Gone is the original mission of the EPA—that is, protecting the health of the public and the environment. Its new task, apparently, is making cars more affordable.

Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. Today we’re discussing the EPA’s pledge to undergo sweeping deregulation, Elon Musk’s promise to “double” Tesla production over the next two years, plus tariffs aren’t likely to persuade manufacturers or suppliers to move jobs to the U.S. Let’s jump in.

30%: EPA Declares “Greatest Day Of Deregulation” Ever; Former EPA Administrator Calls It “Most Disastrous”

Photo by: YouTube

If you thought the Environmental Protection Agency was about, you know, protecting the environment, I’ve got unfortunate news for you: not anymore.

In what former Obama-era EPA chief Gina McCarthy called “the most disastrous day in EPA history,” U.S. President Donald Trump’s appointed head of the EPA, Lee Zeldin, has proclaimed victory over “the green new scam.” The director has pledged to repeal limits on pollution, gutting regulations on tailpipe emissions (as well as power plans), and—perhaps most critically—is now trying to strip the EPA of its authority to regulate greenhouse gases entirely.

Zeldin’s victory lap didn’t even pretend to focus on public health or environmental safety—the two tenets that have guided the regulatory body since its founding in 1970. Instead, it was an announcement to change the EPA’s mission, which is now “lower[ing] the cost of buying a car, heating a home, and running a business.”

Politics aside, this is a massive shift from the agency’s actual purpose, which has historically been to limit pollution and protect the public’s health.

Here’s the New York Times with just some of the two dozen proposed changes:

Some of the most significant policy changes Mr. Zeldin said he planned include:

•  
• Rolling back restrictions on carbon dioxide emissions from power plants. Currently the E.P.A. requires existing coal-burning power plants and new gas plants built in the United States to cut their greenhouse-gas emissions by 90 percent by 2039.
• Rewriting tailpipe pollution standards that were designed to ensure that the majority of new passenger cars and light trucks sold in the United States are all-electric or hybrids by 2032.
• Easing limits on mercury emissions from power plants, as well as restrictions on soot and haze from burning coal. A Biden-era rule had aimed to slash by 70 percent emissions from coal-burning power plants of mercury, which has been linked to developmental damage in children.
• Greatly reducing the “social cost” of carbon, an economic estimate of the damage caused by each additional ton of carbon dioxide emissions in the atmosphere. That figure plays a significant role in weighing the costs and benefits of regulating industries.
•  
• Perhaps the most significant move, though, is an effort to revise a 2009 legal opinion known as the E.P.A. “endangerment finding” which concluded that rising greenhouse gas emissions are a danger to public health. The finding gives the agency the authority to regulate greenhouse gas emissions. Eliminating it would make it virtually impossible for the E.P.A. to curb climate pollution from automobiles, factories, power plants or oil and gas wells.

As expected, Big Oil is thrilled. Environmentalists, scientists, and pretty much anyone who breathes air? Not so much.

“Today is the day Trump’s Big Oil megadonors paid for,” said Rhode Island Senator Sheldon Whitehouse. “Administrator Zeldin clearly lied when he told us that he would respect the science and listen to the experts.”

McCarthy also weighed in: “Rolling these rules back is not just a disgrace, it’s a threat to all of us. The agency has fully abdicated its mission to protect Americans’ health and well-being.”

Now, repealing isn’t as easy as just saying that it will be done. The agency technically has to undergo a length change process which includes public comment, plus actual justification of the change. Not to say that it can’t (or won’t) be done, but Zeldin’s triumphant proclamation isn’t necessarily the equivalent of a judge’s gavel. If he ultimately succeeds, the process of reinstating earlier regulations will enter an uphill battle while industries happily lock in their newfound freedom to pollute.

At this rate, the EPA might as well change its name—because protecting the environment isn’t on the agenda anymore.

60%: Elon Musk Says Tesla Will ‘Double’ Production After Trump’s Whitehouse Infomercial

Photo by: White House

In case you didn’t happen to catch the new Tesla commercial that aired during the latest episode of The Apprentice, let me catch you up to speed. Trump just hosted what was essentially an advertisement for Tesla on the lawn of the White House, noting that he planned to buy one for himself.

Musk was so thankful for the support and the policies the president has helped to put in place that he pledged to double Tesla’s vehicle production output in the U.S. within two years.

 

Not so fast. We have some questions.

Electrek estimates that of its 1,025,000 production capacity, Tesla factories in the U.S. output around 700,000 units per year in 2024. This represents around 40% of the nearly 1.8 million vehicles produced globally by Tesla last year. Tesla must build an estimated 1.4 million vehicles in its U.S. facilities by 2027 to meet Musk’s goal. It would also need to expand domestic production capacity by around 37%. That’s not impossible, but simply building more cars doesn’t mean people will buy them.

In case you haven’t noticed, people aren’t very interested in Tesla right now. Musk’s political meddling has alienated some of its most important buyers and triggered the general public to protest at Tesla showrooms across the globe—something which Trump closely aligns with domestic terrorism.

But these issues predate Musk’s politics. Looking at the Model S and Model X, 2024 production output at Tesla’s Fremont plant seems to be at around 50% utilization. Meanwhile, its Cybertruck production line (which has an installed capacity of more than 125,000 trucks annually and plans to reach 250,000) produced less than 50,000 units last year. Tesla has already dropped cash on the hood of its Cybertrucks as demand appears lower than originally anticipated.

So why would Tesla increase domestic production if it doesn’t have the domestic demand to back it up? Could Tesla export vehicles from the U.S. to other key markets where Chinese-built cars are tariff magnets? Or are there hopes that the Cybertruck will take off in other key markets? There’s also the question of the Semi and Cybercab, which are all still lined up for wide domestic release at some point over the next two years.

Let’s not forget that Musk is no stranger to overly ambitious proclamations. Right now, Tesla needs a win. Its stock is in freefall, its CEO is awash in political turmoil, and board members are unloading stock like Martha Stewart before she became besties with Snoop Dogg.

If the President’s endorsement is a win for the automaker, then so be it. But one day, investors will come to collect on Musk’s promises, be it FSD, production output or something else. And if Tesla doesn’t have the numbers to back it up, Musk may have some explaining to do.

90%: Tariffs Likely Won’t Bring Auto Manufacturing Jobs To U.S.

Photo by: Cadillac

If Trump’s 25% import tariff on Canada and Mexico was supposed to scare auto suppliers into shifting production back to the U.S., it isn’t working.

Despite tariffs looming just around the corner, automotive suppliers aren’t packing up their factories for a move just yet. Instead, the suppliers are bracing for impact and practicing how to ask automakers to cover the increase in costs. In simple terms, three decades of supply chain infrastructure won’t disappear overnight and somebody is going to foot the bill to keep the status quo.

It’s easy to say “build it in America”—but there’s a series of major problems to overcome, most of them money-related. There’s also the notion of capacity, which experts say the U.S. simply doesn’t have.

“I don’t see anything coming back,” said Steven Wybo, senior managing director at Riveron, in an interview with Automotive News. “The capacity does not exist in the United States.”

Here’s the latest from Automotive News:

The Trump administration’s planned 25 percent tariff on imported goods covered by a trade agreement “has not led to an ongoing dialogue about bringing business back from Mexico,” said Ann Marie Uetz, a Detroit-based partner at law firm Foley & Lardner, which counts more than 200 suppliers as clients.

Instead, suppliers will likely seek financial support and cost recovery from major automakers to help withstand inflation and tariffs, she said.

“It’s about who’s going to pay for it and who can weather the storm,” Uetz said.

This means that instead of moving, suppliers will likely push the cost burden onto automakers who are already absorbing higher costs on the importation of the final product. And like Ford’s CEO, Jim Farley, has already said: tariffs “mean higher prices for customers.”

Let’s be real for a second—even if automakers and suppliers wanted to move business back to the U.S., many don’t have the financial flexibility to pull it off. For starters, billions of dollars have been poured into EV-related investments that are not yet profitable. Likewise, the uncertainty about EV incentives (and now the regulations pushing innovation) has turned these same companies more conservative with their decisions related to electric cars. And, of course, the constant turbulence of the auto industry has made future planning rather impossible.

Tariffs are going to hit the auto industry hard. But they’re not going to unravel the decades of supply chain strengthening, at least not overnight. So in the short term, if you’re wondering who’s actually going to pay for the tariffs, the answer is simple: you.

100%: Will Automakers Still Go Green?

Photo by: Toyota

Clean energy isn’t cheap. Those massive batteries, for example, make up a huge chunk of the cost of a new BEV. Not to mention the R&D that goes into developing the tech, and it’s all in the name of meeting strict environmental regulations like CAFE standards.

Now that the EPA is talking about loosening up regulations, do you think automakers will still prioritize EVs, plug-in hybrids, and other “clean” cars? Let me know your thoughts on what, if anything, might change in the future.