The federal electric vehicle mandate, an unholy alliance of regulatory overreach, market distortion, and crony capitalism, is finally meeting its end. Much is being said about the end of the $7,500 federal tax credit for EVs this week, but that was only one of a myriad of policies that Congress, the Trump administration, and the courts are rolling back, to the great benefit of American auto consumers.

The One Big Beautiful Bill Act also zeroed out the penalty for failing to meet corporate average fuel economy standards. For decades, this penalty functioned as a backdoor EV subsidy, levied against automakers for failing to meet ever-increasing fuel economy standards. Those automakers then purchased compliance credits from those who flooded the market with EVs. While the standards still exist, there is no longer an enforcement mechanism, which means automakers are free to build the vehicles consumers actually want without having to pay a hefty price for them.

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The other major action taken by Congress was to eliminate the waiver that allowed California and 15 other states to set zero-emissions mandates that superseded the federal Clean Air Act standards. By requiring automakers selling cars in their states to comply with these mandates, these states have been bifurcating the American market and forcing automakers to raise prices for consumers across the country.

The Trump administration is moving to eliminate the endangerment finding that allowed the Environmental Protection Agency to regulate greenhouse gas emissions from vehicles. Since there is no way or need to capture carbon dioxide emissions from a car’s tailpipe, the regulations acted as a de facto requirement to build more EVs.

Finally, the U.S. Court of Appeals for the 8th Circuit drove the final stake into the EV subsidy scheme by vacating the Department of Energy’s 2024 rule that artificially inflated the fuel economy credits given to EVs by 6.7 times.

The case centered on the Petroleum Equivalency Factor, a wonky multiplier that converts EV electricity usage into a miles-per-gallon equivalent. Since 2000, the Energy Department has applied a “fuel content factor” of 1/0.15, meaning an EV rated at 100 mpg received 667 mpg worth of credits. Combined with onerous fuel economy regulations, automakers had a huge incentive, worth tens of thousands of dollars per EV, to get more consumers to buy EVs by selling them at below cost while raising the prices of gasoline vehicles.

The court rightly found this scheme unlawful and is now requiring the Energy Department to rewrite its latest rule to get rid of the multiplier for EVs. It held that the fuel content factor lacked statutory authority and that the Energy Department “misinterpreted” the relevant law in a transparent attempt to incentivize EV production rather than calculate real-world petroleum equivalency. Worse, the Energy Department adopted a 40-year projection model at the last minute without proper notice and public input. The court called that maneuver what it was: a violation of the Administrative Procedure Act.

For American drivers, this means more affordable cars. Internal combustion vehicles remain the backbone of transportation, but the EV mandate distorted the market by diverting production capacity and compliance credits toward expensive, taxpayer-subsidized models that many Americans cannot afford or do not want. Eliminating the PEF multiplier, the CAFE penalty, the state EV mandates, and the federal tax credit clears the way for the return of popular, cost-effective vehicles: trucks, SUVs, and sedans that meet the needs of real families, not political activists.

It also relieves pressure on the taxpayer. The EV mandate created massive fiscal exposure. Subsidies, tax credits, grid upgrades, charging infrastructure, and state and local incentive programs were all downstream of the assumption that Washington, D.C., could and would force an EV transition from the top down. Without the mandate propping up artificially inflated demand, those taxpayer-funded programs will come under overdue scrutiny.

Finally, it means the return of regulatory sanity. For years, EV policy in the United States relied on executive fiat, not legislative authority. From the EPA’s Endangerment Finding to the Energy Department’s manipulative accounting tricks, unelected officials twisted the law to force compliance with a net-zero vision that Congress never approved. The 8th Circuit’s ruling reaffirms that agencies are bound by the law, not by ideology, the desires of the Sierra Club, and the emissions targets of multinational corporations.

The American Energy Institute and Texas Public Policy Foundation have long warned that the EV mandate was built on unsound legal and economic foundations. It distorted the CAFE framework, rewarded inefficient automakers, and punished working-class families. The latest court decision confirmed that we were right.

Nothing in this ruling prohibits Americans from buying electric vehicles. If consumers want them, and if they are truly better products, automakers will meet that demand. But EVs will now have to compete the right way, in the marketplace, instead of being propped up by elites on Wall Street, Sacramento, or Washington, D.C.

Brent Bennett is the policy director for Life: Powered, an initiative of the Texas Public Policy Foundation to raise America’s energy IQ, and a senior fellow with the National Center for Energy Analytics.

Jason Isaac is the founder and CEO of the American Energy Institute. He previously served four terms in the Texas House.