The rats plan is to regulate ICE vehicles out of existence. The next round of CAFE standards are designed to do just that. They will be damn near impossible to meet. The car makers are well into converting all future cars so they aren’t putting up a fight.
You’re right. The car companies are going to downsize dramatically for various reasons, the biggest reason being not many people will be able to afford the EVs.
Toyota has already said they are not going to build many EVs until the infrastructure to support them is in place.