Stellantis Stuck With California EV Rules Despite Federal Rollbacks
Settlement Deal Still Holds Automaker to Tough Sales Targets
Even though lawmakers and President Donald Trump rolled back California’s strictest-in-the-nation emissions rules, Stellantis (FCA US, LLC) is still on the hook for meeting aggressive electric vehicle (EV) sales targets in the Golden State, and that’s going to be a tough road.
According to The Detroit News, Stellantis signed a 2024 settlement deal with the California Air Resources Board (CARB), locking itself into future state EV rules regardless of what happens at the federal level. The agreement was made under the leadership of former CEO Carlos Tavares to avoid lengthy lawsuits and gain short-term relief from previous emissions violations. But in exchange, Stellantis promised to hit California’s zero-emission vehicle (ZEV) sales targets through the 2030 model year — even if the rules are overturned elsewhere.
That puts the company in a uniquely difficult spot.
Starting in model year 2026, 35% of Stellantis’ new vehicles sold in California must be zero-emission. That jumps to 43% in 2027 and a whopping 68% by 2030. These requirements are part of California’s now-defunct Advanced Clean Cars II rule, which was blocked in May after Congress and President Trump repealed the state’s Environmental Protection Agency (EPA) waiver. However, because Stellantis voluntarily agreed to follow the rules in the settlement, it remains legally obligated to meet the goals, even if its competitors do not.
CARB and Stellantis confirmed to The Detroit News that the deal is still in effect. “Stellantis continues to honor its agreement with CARB,” said Stellantis spokesperson Jodi Tinson. CARB spokesperson John Swanton added that the state fully expects compliance and has maintained “normal contact” with the company.
The problem? Stellantis isn’t quite ready.
In 2025, the company sold only one fully electric vehicles in the U.S. — the Fiat 500e. Early 2025 added three more: the Dodge Charger Daytona, Ram ProMaster EV, and the Jeep Wagoneer S. Still, total EV sales reached only about 5,000 units in the first quarter, accounting for less than 2% of Stellantis’ overall U.S. sales. Plug-in hybrids (PHEVs) provided some support, but they represented just under 8% of the company’s total volume for the year.
Adding to the confusion, automakers like Ford, Honda, and Volkswagen, which struck separate deals with California years ago, may now enjoy looser standards. Stellantis had attempted to strike a similar deal in the past but stated it was excluded, arguing that the more challenging path could lead to job losses in Detroit and Toledo. The final settlement included some short-term emissions credit relief, but also required Stellantis to reduce its greenhouse gas emissions by more than 10 million tons by 2026, invest $10 million in EV chargers in public parks, and refrain from challenging the agreement in court.
Dealers are worried, too. Sean Hogan, VP of Sierra Auto Group in Southern California, which owns Chrysler, Dodge, Jeep, and Ram dealerships, said they initially believed the deal was a win. But looking closer, he said, “it was not a great thing. We’re all nervous. If it doesn’t get resolved, then business could be very difficult for us and the consumer.”
Hogan says EV demand is still limited to wealthier buyers with home charging setups. With some Stellantis models only recently entering the EV space, the timeline for scaling sales quickly enough to meet California’s requirements seems extremely tight.
There’s also uncertainty about whether Stellantis can purchase emissions credits to meet its targets. Previously, automakers could purchase credits from companies that overachieved; however, if the ACC II rules no longer apply federally, that market could dry up. Some experts suggest there may still be enough leftover credits from other manufacturers to keep Stellantis afloat, at least temporarily.
Meanwhile, California Governor Gavin Newsom is doubling down. On June 12, he signed an executive order reaffirming California’s ZEV goals, directing the CARB to develop next-generation “ACC III” rules, and calling out federal rollbacks as illegal. “We won’t let this illegal action by Trump and Republicans in the pockets of polluters stand in the way,” Newsom said.
Despite the political tug-of-war, one thing is clear: Stellantis made a long-term bet when it signed that 2024 deal. Whether the automaker can fulfill its side of the bargain without major changes or extensive credit buying remains to be seen.
Source: The Detroit News
