In March, the government of India released the draft proposal for TREM V emission norms, setting in motion what could become the most significant regulatory transition for the off-highway sector since the adoption of TREM IV.

Covering construction equipment, agricultural machinery, mining vehicles, and gensets, the proposed norms represent a decisive push towards global alignment, tighter emission control, and advanced digital monitoring.

TREM V aims to sharply reduce particulate matter, nitrogen oxides, and ultrafine particle emissions by mandating technologies such as diesel particulate filters (DPF), selective catalytic reduction (SCR) systems, enhanced engine calibration, and robust onboard diagnostics. While this brings India closer to frameworks like EU Stage V, it also sets the stage for a disruptive cost cycle for OEMs and customers alike. Early estimates indicate that machine prices may rise between US$ 1,600-US$ 3,200  (₹1.5–3 lakh) depending on horsepower and engine configuration, creating immediate uncertainty around demand planning and inventory strategies.

Source: Autocarproessional     Read The Article  

PSR Analysis. For OEMs, the proposed norms trigger a complex balancing act. Global players stand to benefit from platform standardization and shared engine architectures already compliant with Stage V in overseas markets. Domestic manufacturers, however, face a steeper climb, requiring R&D reorientation, supplier upgradation, thermal redesign, and new product validation cycles — all in an environment where margins are historically thin. Suppliers of sensors, ECUs, injectors, after-treatment hardware, and telematics could see significant upside, but Tier-2 and Tier-3 vendors risk being left behind if they cannot meet the precision and consistency these technologies demand.

The customer impact could be equally transformational. TREM V machinery will demand cleaner fuel, systematic DPF maintenance, periodic regeneration cycles, and better-trained operators. In price-sensitive segments such as agriculture, resistance to cost escalation may prompt calls for exemptions or extended timelines. Meanwhile, industries like mining and infrastructure, under pressure to adopt cleaner standards, may adopt TREM V faster than expected.

Yet the proposal has gaps that will require careful policy calibration. It remains unclear how TREM V aligns with India’s emerging push toward alternative fuels such as hydrogen, biodiesel, and CNG/LNG for off-highway applications. Fuel quality readiness also presents a challenge, especially outside urban centers, where high-sulfur diesel could jeopardize DPF systems. Economic support for small OEMs and clarity on digital compliance architecture are still missing.

Despite these uncertainties, one fact stands out: TREM V marks a strategic shift rather than a routine emission upgrade. Its successful rollout will determine India’s competitiveness in global machinery supply chains and shape the technology pathways that define the next decade of the country’s off-highway ecosystem.  PSR

Aditya Kondejkar is Research Analyst – South Asia Operations for Power Systems Research

The update was initially reported by The Los Angeles Times.

Tesla reportedly is positioned to receive roughly $165 million in California clean-truck incentives for its Semi.

As per the Times, the Tesla Semi’s funding will come from California’s Hybrid and Zero-Emission Truck and Bus Incentive Project (HVIP), which was designed to accelerate the adoption of cleaner medium- and heavy-duty vehicles. Since its launch in 2009, the HVIP has distributed more than $1.6 billion to support zero-emission trucks and buses across the state.

In recent funding rounds, nearly 1,000 HVIP vouchers were provisionally reserved for the Tesla Semi, giving Tesla a far larger share of available funding than any other automaker. An analysis by the Times found that even after revisions to public data, Tesla still accounts for about $165 million in incentives. The next-largest recipient, Canadian bus manufacturer New Flyer, received roughly $68 million.

This is quite unsurprising, however, considering that the Tesla Semi does not have a lot of competition in the zero-emissions trucking segment.

To qualify for HVIP funding, vehicles must be approved by the California Air Resources Board and listed in the program catalog, as noted in an electrive report. When the Tesla Semi voucher applications were submitted, public certification records only showed eligibility for the 2024 model year, with later model years not yet listed.

State officials have stated that certification details often involve confidential business information and that funding will only be paid once vehicles are fully approved and delivered. Still, the first-come, first-served nature of HVIP means large voucher reservations can effectively crowd out competing electric trucks. Incentive amounts for the Semi reportedly ranged from about $84,000 to as much as $351,000 per vehicle after data adjustments.

Unveiled in 2017, the Tesla Semi has seen limited deliveries so far, though CEO Elon Musk has recently reiterated that the Class 8 all-electric truck will enter mass production this year.

Article Source: TESLARATI

The updated article was initially reported by The Los Angeles Times.

PSR Analysis. Will the truck subsidies from CARB along with the other state and federal subsidies be enough to support a scale up of the Tesla semi-truck production during the next few years? 

Ultimately, Tesla along with the other OEMs will need to reduce the up-front cost significantly and overcome various other barriers before mass adoption can occur.  Aside from the high up-front truck cost, charging infrastructure, duty cycles and reduced battery weight to increase payload will need to be overcome to achieve mass production.  At some point, the subsidies will likely end.  Class 8 battery electric truck demand will need to increase significantly in order to reduce the truck cost otherwise demand will likely end when the subsidies end.  PSR

Chris Fisher is Senior Commercial Vehicle Analyst at Power Systems Research

A fresh tender will be prepared only after updated studies and technical surveys; no timetable has been announced. The original procurement had been suspended in December 2025 amid industry requests for clarifications, including from Volkswagen Caminhões & Ônibus. The cancelled tender would have included 13 different bus models, with capacities ranging from 15 to 60 seats and specifications for rural and urban routes.

The Caminho da Escola program, established in 2007 to support school transportation for students in rural and remote areas, represents a significant source of new bus demand for manufacturers.

Source: Diário do Transporte    Read The Article

PSR Analysis. FNDE’s revocation introduces uncertainty into the bus manufacturing market by delaying a major public procurement that was expected to support fleet renewal and stable production volumes in 2026. Aligning the tender with recent tax-exemption changes will require additional technical work and may alter vehicle specifications or cost assumptions.

The lack of a defined relaunch schedule adds timing risk for OEMs and suppliers, potentially compressing order books and affecting capacity planning. While the program’s eventual relaunch could restore demand visibility, interim delays may impact production forecasts and cash flow for industry players with exposure to Caminho da Escola contracts.

Our PSR Brazil office monitors this topic closely, since it may affect a significant portion of bus production in Brazil and all MHV segment in Brazil.   PSR

Fabio Ferraresi is Managing Director, South America, for Power Systems Research

In January 2026, the Brazilian federal government launched the Move Brazil Program, a credit support initiative totaling approximately USD 2.0 billion. The program aims to support the domestic truck manufacturing industry and stimulate fleet renewal amid a sharp downturn in heavy-duty vehicle demand.

Financing will be provided through BNDES with annual interest rates between 13% and 14%, grace periods of up to six months, and repayment terms of up to five years, capped at approximately USD 10 million per beneficiary. Eligible beneficiaries include independent truck drivers, cooperatives, transport companies, and large fleet operators, with 10% of total funding reserved for independents and cooperatives.

Financing is restricted to new trucks manufactured in Brazil and compliant with Proconve P8 emission standards, as well as used trucks (model year 2012 onward) meeting Proconve P7 requirements and local content criteria. The program will be available for six months and is positioned as a short-term measure to mitigate layoffs and production cuts in the heavy truck segment.

Source: AutoData     Read The Article

PSR Analysis. The Move Brazil Program is strengthened by financing rates set below the country’s base interest rate (SELIC), easing credit constraints and prompting previously deferred fleet renewal decisions to advance. With base interest rates expected to decline over the next six months, the program’s temporary nature should be offset by the reduction of the base interest rates. This end result is the increased likelihood of continued order flow and production stabilization.   PSR

Fabio Ferraresi is Director, Business Development, South America, for Power Systems Research

The program’s key points include:

• A national initiative aiming to popularize 20,000 electric motorcycles in 2025

• The national subsidy is US$ 10.86 million  (16 billion won), which significantly reduces the purchase price when combined with local government subsidies

• Particularly favors battery swap systems (BSS), subsidizing up to 70% of the vehicle price (previously 60%)

• Plans to establish 500 new battery swap stations to develop swap infrastructure

• A separate US$ 3.4 million (5 billion won) will be invested in swap station development

• Subsidies are limited to batteries and stations that comply with national standards (KS specifications)

• A policy mechanism will promote standardization to prevent fragmented specifications among manufacturers

• Additional subsidies will be provided for high-performance models with fast-charging capability (3 kW or higher) and battery condition monitoring

The primary target for adoption is commercial two-wheelers for delivery riders to solve charging wait times through the swap system

The objectives are to reduce noise and exhaust emissions, improve the urban environment, and accelerate the integration of electric motorcycle (EV) infrastructure

Battery-swap electric motorcycles: 1,654 units in 2023, doubling to 3,429 units in 2024. As of 2024, there are 1,872 swap stations nationwide. The plan is to add another 500 stations.

Source: Seoul Shinmum

PSR Analysis: This initiative is more than just a policy to distribute 20,000 electric motorcycles. Rather, it is a comprehensive package that encompasses infrastructure, standards, and demand creation.

The goal is to rapidly establish a “battery-swap EV motorcycle + standardized battery-swap station network” across South Korea. This system aims to advance the electrification of delivery bikes, eliminate charging wait times, standardize fragmented specifications through national regulation, and promote high-performance electric motorcycles. The strategy seeks to drive low-quality, low-cost vehicles out of the market. If sustained, the system will likely create a structure in which those controlling the battery pack, swap station, and subscription model will profit more than manufacturers selling vehicles alone.   PSR

Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research

The EU-US trade agreement is facing intense criticism from European policymakers and industry leaders who deem it unbalanced, unfair, and a “significant policy mistake.” The persistence of high US tariffs and mounting non-tariff barriers are severely hurting Europe’s export-oriented industrial sector. Experts warn the deal has cornered the EU, increasing its dependency on critical raw materials and semiconductors.

Specifically, US Section 232 tariffs on steel and aluminium derivatives are crippling the machinery sector with complex compliance rules. Failure to comply can trigger punitive tariffs up to 200%, prompting some firms to halt US exports entirely and leading to a sharp drop in sales (e.g., German machinery exports have fallen 18.5%). EU lawmakers are now pushing for amendments, including sunset clauses and safeguards, amid concerns that the current framework is unsustainable.

Source: Euractiv     Read The Article

PSR Analysis: These mounting export barriers are projected to negatively impact European vehicle production volumes, both on-road and off-road, in 2026. For on-road vehicles (passenger cars), while a modest production recovery of approximately 1.9% is possible in 2026, volumes are forecast to remain significantly below pre-pandemic levels due to new, escalating US tariffs (up to 15-50% on EU-made cars) and intense competition from global rivals.

To bypass these tariffs and preserve market share, European automakers are incentivized to shift new production and investment to the US, which risks the long-term contraction or “hollowing out” of EU manufacturing capacity.

For off-road vehicles (construction, agriculture, etc.), which are steel-intensive and rely on general machinery, the production outlook is severely depressed. Punitive tariffs, high compliance costs, and restricted access to the US market for components ensure that the sector will face reduced volumes, margin erosion, and sustained challenges to global competitiveness in 2026.    PSR

Emiliano Marzoli is Manager of European Operations for Power Systems Research

The U.S. Environmental Protection Agency is moving forward with the 2027 timeline for its heavy-duty NOx rule—currently set to take effect with the 2027 model year—but says changes are in store.

The American Trucking Associations (ATA), National Tank Truck Carriers, Truckload Carriers Association, and 49 state trucking associations in August penned a letter to EPA, asking the regulator to push implementation to 2031, citing “substantial compliance costs and operational burdens at a time when the trucking industry is already contending with historically difficult market conditions.”

Administrator Lee Zeldin in March announced that the EPA was reevaluating the Biden-era 2022 Heavy-Duty Engine and Vehicle rule that regulates oxides of nitrogen (NOx) and other emissions beginning with Model Year 2027.

EPA told CCJ the agency continues to reevaluate the rule and plans to propose a rule in the spring of 2026 that will take effect the following model year.

“If finalized,” EPA said, “the action will make major changes to the program requirements while maintaining the Model Year 2027 start of the standards, which can significantly reduce the cost of new heavy-duty vehicles, while still protecting human health and the environment, and avoiding regulatory distortions of the heavy-duty vehicle market.”

A spokesperson for Daimler Truck North America told CCJ Monday that the company appreciates EPA’s efforts to reduce costs while maintaining a focus on air quality and legislative consistency, adding “[This] announcement provides the regulatory certainty needed for effective production planning and customer support.”

The new limits currently tighten tailpipe NOx emissions to a level 80%-plus below the current standard and reduce the particulate matter limit by 50%. The agency also will require that OEMs extend warranties to 450,000 miles from 100,000 and useful life limits to 650,000 miles from 435,000 miles.

EPA did not disclose plans for its 2026 revised proposal, but the extended warranty has been cited by OEMs as a major driver of increased costs for MY2027 trucks. Given that EPA expects its changes to the current NOx regulations to drive down costs, warranty provisions are likely to be affected.

Source: CCJ

PSR Analysis: It appears the EPA will proceed with the implementation of the Phase 3 GHG emission regulations for medium and heavy vehicles for MY2027.  However, they are likely to make significant adjustments to the standards.  It is also likely they will eliminate the extended warranty for the MY2027 vehicles thus significantly reducing the up-front purchase price. 

While we will not know the final outcome until this spring, it is possible the EPA will maintain the 2027 nitrous oxide emission rule at the 0.035 g/hp-hr standard moving forward from 2028-2032.  If the EPA flattens the nitrous oxide rule, it would eliminate the need to transition from ICE engines toward zero-emission vehicles during this period.  PSR

Chris Fisher is Senior Commercial Vehicle Analyst at Power Systems Research

The Indian automobile industry has received a significant policy boost with the rollout of GST 2.0, a major change in indirect taxes aimed at restoring affordability and stimulating consumption. The reform, which reduces GST rates on vehicles and components, arrives at a crucial juncture when entry-segment sales, rural demand, and OEM margins have been under pressure.

Scale of reduction and market impact. GST 2.0 lowers the rate on small cars and two-wheelers from 28% to 18%, while standardizing the rate on most auto components at 18% instead of the earlier 18%–28% range. Larger SUVs and luxury models now fall under a simplified 40% composite slab, down from nearly 50% earlier. These changes translate into tangible price cuts—ranging from $750 USD (₹65,000) for hatchbacks to over $3,400.00 USD (₹3 lakh) for premium models—resulting in an estimated 10-percentage-point drop in overall tax burden for the sector. Analysts see this as a long-awaited correction that could lift FY26 passenger-vehicle demand by 8–10%.

Policy rationale and macro triggers. The government’s objective extends beyond short-term relief. Automobiles are a high-multiplier industry, supporting 35 million jobs and 7% of GDP. By making vehicles more affordable, GST 2.0 aims to reignite consumption, improve manufacturing utilization, and counter weak rural sentiment. Preliminary data suggests a potential $7.952 billion USD (₹70,000 crore) boost in consumption with a manageable fiscal impact of about $5.45 billion USD (₹48,000 crore). The uniform component tax also removes inverted-duty complications, improving liquidity for Tier-1 and Tier-2 suppliers.

OEM strategies and initial response, Automakers have quickly adapted. Maruti Suzuki reported a 70% surge in bookings for small cars within weeks of the announcement. Tata Motors and Hyundai fully passed on tax benefits, cutting prices across the board, while Mahindra and Kia are using the reform to reposition compact SUVs. The consensus across OEMs is clear: short-term margin sacrifice in exchange for long-term volume recovery. Dealerships, however, face the immediate challenge of clearing old inventory purchased at pre-GST prices.

Rural vs urban demand shift. The sharpest benefit is expected in rural and semi-urban markets, where affordability is the primary constraint. A $575.00 USD (₹50,000) cut in entry-car prices significantly improves financing access, particularly as rural credit expands through NBFCs. Urban consumers will also benefit, though elasticity remains lower among SUV buyers. OEMs are therefore ramping up Tier-2 dealership presence and focusing marketing on first-time car owners and two-wheeler upgraders.

Segment-wise implications. Entry cars and commuter motorcycles are the clear winners, while luxury cars see limited incremental demand despite partial relief. EVs, still taxed at 5%, lose some cost advantage, as petrol and CNG models become cheaper. That said, lower component GST supports both ICE and EV supply chains, potentially reducing production costs. The rationalization also strengthens component manufacturers, improving cash flow and compliance efficiency across the ecosystem.

Industry economics and supply-chain gains. Uniform input taxation is expected to lower working-capital lock-ups and simplify refund cycles. Over time, higher plant utilization and smoother supplier cash flow should offset the short-term hit from price pass-throughs. The reform also improves export competitiveness by streamlining credit accumulation for CKD and component shipments.

Strategic implications. The new tax environment is pushing OEMs to re-segment product portfolios towards the $6,800 USD to $9,100 (₹6–8 lakh) bracket, where price sensitivity and replacement demand are highest. Financial institutions anticipate growth in small-ticket auto loans, aided by improved LTV ratios. EV makers may re-evaluate pricing and localization strategies to preserve competitiveness in a now narrower cost gap.

Outlook and conclusion. Industry analysts project double-digit volume growth in FY26, led by rural demand and small-car revival. The sustainability of this uptrend, however, depends on stable input costs, steady credit flows, and fiscal prudence to avoid compensatory taxes. If these align, GST 2.0 could permanently lift India’s vehicle penetration curve and reinforce its position as a global manufacturing base.

In essence, GST 2.0 is more than a tax revision—it’s a strategic reset. It could restore affordability, strengthen supply-chain efficiency, and rekindle consumer sentiment at the grassroots. For OEMs that adapt swiftly with pricing agility, rural outreach, and financial innovation, the policy could well mark the beginning of India’s next automotive growth cycle.  PSR

Aditya Kondejkar is Research Analyst – South Asia Operations for Power Systems Research

The report suggests that the two-year extension of the targets allowed carmakers to take the foot off the gas and will lead to 2 million fewer electric cars being sold between 2025 and 2027

Mercedes-Benz, which holds the presidency of the EU auto lobby (ACEA) and is the loudest opponent of the EU targets, is the only European car manufacturer that would fail to reach them on its own. It would be 10 gCO₂/km under compliant and would need to pay Volvo Cars and Polestar to purchase credits from them in a so-called pooling deal.

Source: Clean Technica: Read The Article

PSR Analysis. Despite the extension of the target from 2025 to 2027, the EU is under pressure from carmakers to weaken their 2030 and 2035 emissions targets. There is a big risk for Europe’s car industry if the EU postpones these targets even further as Chinas is unlikely to relax its drive towards electrification and the related innovation. The most likely outcome of any further delay would be to consign the European car industry to being the second tier in the EV market.   PSR

Guy Youngs is Forecast and Technology Adoption Lead at Power Systems Research

How things have changed.  Less than a year ago the industry was gearing up for a huge 2026 class 8 truck pre-buy ahead of the phase 3 GHG emission regulations that would add significant cost to the price of a truck.  Road freight was expected to rebound after the post covid freight recession, and the heavy truck replacement cycle was expected to begin.  OEMs filled dealer lots in anticipation of strong demand starting in early to mid-2025 and lasting through all of 2026.

As a result of very strong freight shipments and supply chain disruptions during the Covid era, fleets were purchasing as many trucks as possible which resulted in very high truck sales from 2022 – 2024.  This resulted in truck overcapacity within the market.

The post Covid freight recession has continued through 2025 and is expected to remain through much of 2026.  Primary drivers behind the freight recession include higher levels of inflation and interest rates along with truck overcapacity during the past few years.

Heavy dealer inventories in anticipation of a 2026 pre-buy and expected improvement in the freight market has resulted in high dealer inventories that are not currently shrinking.  OEMs will need to further reduce production levels in order to re-balance the inventory.

Higher material costs due to increased tariffs are also reducing new truck demand and the uncertainty of how future tariffs will impact truck cost and road freight are weighing heavily on fleet decisions to replace older trucks.

The industry is also facing uncertainty surrounding the phase 3 GHG emissions regulations, which are being reviewed by the EPA. Historically, the fleets pre-bought trucks ahead of regulation implementation to avoid additional vehicle cost and possible reliability issues surrounding the new emission technology. 

The outcome of this review could result in the implementation of the phase 3 GHG emission regulations or remain with the current phase 2 emission regulations or amend the phase 3 GHG regulations. 

I suspect the EPA will amend the phase 3 regulations and keep the MY2027 engine rules but eliminate the costly warranty extensions and cancel all future emission regulations through 2032.  However, there will certainly be legal challenges to any regulatory rollback.

Currently, the biggest barrier to new truck adoption is the uncertainty surrounding the above issues.  Hopefully, the economy has bottomed out and the industry will get more clarity during the next few months.  New truck demand is expected to rebound later in 2026 and continue through much of 2029 as the fleets will need to update their trucks.    PSR

Chris Fisher is Senior Commercial Vehicle Analyst for Power Systems Research