With “affordability” now dominating the headlines, the heads of the three largest U.S. automakers have been invited to testify before the U.S. Senate Commerce Committee at a hearing set for Wednesday, January 14, 2026, to address the sharp increase in the cost of new cars since 2010 and the role “new mandated technologies and climate regulations” may have played in driving that increase. Meanwhile, although recent federal action has given automakers some breathing room with respect to the electric vehicle (EV) mandate imposed by California and other zero-emission vehicle (ZEV) states, regulatory uncertainty and other state regulatory requirements seem likely to continue to impose hidden costs on consumers for the sale of new cars.

Committee Hearing to Focus on EV Mandates

In his announcement about the upcoming hearing titled, “Pedal to the Policy: The Views of the American Auto Industry on the Upcoming Surface Transportation Reauthorization," committee chair Sen. Ted Cruz (R-Tex.) observed that the average price for a new car in the United States rose modestly between 2000 and 2010, from $20,356 to $24,296, but has increased sharply since 2010 and now exceeds $50,000. The committee has invited the heads of General Motors, Stellantis, and Ford, together with a Tesla executive, to testify at the hearing that will, according to Sen. Cruz, “examine how radical global warming regulations and mandated technologies have driven up the cost of vehicles for American consumers.”

Sen. Cruz also alluded in his announcement to recent legislative changes enacted by the U.S. Congress in the One Big Beautiful Bill Act. These changes included the repeal of Biden-era emissions requirements imposed by the Environmental Protection Agency (EPA) and Corporate Average Fuel Economy (CAFE) standards imposed by the National Highway Traffic Safety Administration (NHTSA) for model year (MY) 2027 and later vehicles. Meanwhile, the White House announced on December 3, 2025, that the Trump Administration intended to “reset” CAFE standards, claiming the prior administration “imposed unrealistic fuel economy targets that effectively resulted in an electric vehicle (EV) mandate.”  In a parallel announcement that same day, NHTSA issued a notice of proposed rulemaking for amendments that would substantially reduce CAFE standards for MY22-31 vehicles.

Regulatory Uncertainty and State Regulation Impose Hidden Costs

While proposed changes to federal emissions and CAFE standards would give automakers breathing room, OEMs continue to face considerable regulatory uncertainty with respect to EV mandates. In early 2025, congressional Republicans invoked the Congressional Review Act (CRA) to reverse a decision by the EPA during the Biden Administration to waive the preemptive effect of the federal Clean Air Act. That waiver would have allowed California to adopt, among other things the Advanced Clean Cars II (ACC II) regulatory regime, which would have required the complete phaseout of the sale of new gas-powered vehicles in California—and other ZEV states that chose to follow California’s lead—by 2035.

California and a coalition of 10 states filed a lawsuit challenging Congress’s authority to reverse the EPA’s waiver shortly after President Trump signed the CRA resolutions into law in June 2025. Industry participants—including the Alliance for Automotive Innovation and the National Automobile Dealers Association, trade associations representing the interests of OEMs and dealers, respectively—sought to intervene in the litigation, arguing their members would suffer harm if the EPA’s preemption waiver were reinstated, particularly “in light of California’s threat that it will retroactively enforce the ACC II regulations as to vehicles already sold and as to model years already past, should it be successful in this litigation.” A hearing on the federal government’s motion to dismiss set for late January 2026, but in the meantime, the automotive industry must assume the increased cost of regulatory uncertainty while it awaits the outcome of the legal and political battle over EV mandates.

In exploring the reasons for the sharp increase in new car prices for consumers in recent years, the Senate Commerce Committee also may want to consider more than just “new mandated technologies and climate regulations.” For example, recent amendments to laws in a number of states require new car manufacturers to reimburse dealers for warranty repairs at dealers’ declared labor rates unless those rates are “materially inaccurate,” regardless of whether those labor rates are “reasonable” in a given market. In a recent change to New Jersey law, dealers can now claim not only their “average retail labor rate,” but also their “average retail labor time allowance.” These state-law requirements impose increased compliance costs on car manufacturers, which in turn drive up wholesale vehicle prices for dealers and ultimately increase retail prices for consumers.