Generally, while I think it's a step forward, I have to disagree that letting each individual state choose emission standards is the best idea or option. First, notice that those states like California, Vermont, Washington, etc. that are green-conscious in general. Most (other) states have, and always will, compete against each other for business-friendly and sales-friendly (for tax revenue)environment.
States currently fight each other over who has lower taxes, who can attract the most jobs, etc. States also will fight over who has the least burdensome emission standards. So, while some states or regions like California may increase standards, the nationwide average increase won't likely be as much as it could be if there were a national standard across the board. This will lead to some very large distortions.
Car companies are correct - this could lead to the most cost-effective outcome being that the same model of car is produced slightly differently in manufacturing and distribution clusters located in the midwest (sold in the midwest without heavy standards) than say in the Western or New England area where they have to sell to a large number of people with tougher standards.
What you'll end up with is akin to what Indiana ended up with when it allowed each individual county to set chose its daylight savings time and Eastern vs. Central time standard. What we have now is that the whole state is on the same page via daylight savings, but we still have the problem that there are many counties that are eastern time while their neighbors are central time - which still poses problems for businesses despite the adoption of DST.