California regulators are to put in place a plan to restrict and ultimately ban the sale of gasoline-powered cars, which Governor Newsom said is the beginning of the end for the internal combustion engine. The new policy is expected to accelerate the global transition toward electric vehicles because California is the largest auto market in the United States, and because over a dozen other states typically follow California’s lead when setting their auto emissions standards. If those states follow California’s lead, the restrictions would apply to about a third of the U.S. auto market. The rule, issued by the California Air Resources Board, will require that all new cars sold in the state by 2035 be free of greenhouse gas emissions and will set interim targets, requiring that 35 percent of new passenger vehicles (cars, SUVs, and small pickups) sold by 2026 produce zero emissions, 51 percent by 2028, and 68 percent by 2030. The quotas also would allow 20 percent of zero-emission cars sold to be plug-in hybrids. The rules would not impact used vehicles, so far allowing those vehicles to stay on the roads.
To enforce its rule, California would fine automakers up to $20,000 for every car that falls short of production targets. The state also could propose new amendments revising the sales targets if the market does not react as state leaders hope. The rules will also require auto makers to meet durability and warranty requirements for battery life, range and powertrain components. For example, by 2035, new zero-emission vehicles sold must maintain 80 percent of their electric range for a minimum of 10 years or 150,000 miles. According to state officials, about 16 percent of cars sold in California today are electric, up from 12.4 percent last year—higher than the national average of 6 percent. State regulators project that by 2030, there will be 2.9 million fewer new gas-powered vehicles sold, growing to 9.5 million fewer conventional vehicles by 2035. About 183,000 out of the estimated 2 million vehicles sold in California in 2035 are projected to be plug-in hybrid.
Through the new rules, California Air Resources Board will be implementing Governor Gavin Newsom 2020 executive order mandating that all vehicles sold in the state must be zero emission by 2035. The Biden administration reinstated California’s ability to set its own vehicle emission standards earlier this year, which the Trump administration had rolled back in 2019. President Trump had fought California’s authority under the Clean Air Act to set its own rules regulating automobile emissions, and a future president could also do the same. Also, attorneys general from 17 states have filed a lawsuit challenging California’s ability to set its own emission rules. California has had the authority to set its own rules with pollutants harmful to health, but has been using carbon dioxide as a proxy to justify compelling the sale of electric vehicles.
While auto manufacturers want to see more electric vehicles on the roads, they believe California’s mandates would be “extremely challenging”. External factors like inflation, charging and fuel infrastructure, supply chains, labor, critical mineral availability and pricing, and the ongoing semiconductor shortage are all factors that would limit achievability of these mandates. Also, sticker prices for electric vehicles are much higher than for similar gasoline powered cars, averaging 66,000 per vehicle. Further, the conversion to electric vehicles could put a strain on electricity grids that President Biden wants to be carbon free by 2035, needing to replace about 60 percent of current electricity generation from fossil fuels with renewable energy. There is also the issue of toxic waste from the tens of millions of batteries that would need to be disposed at the end of their useful life and the growing U.S. dependence on China for the batteries and the critical minerals needed to make them.
The rule is expected to reduce California’s greenhouse gas emissions from passenger vehicles by over 50 percent in 2040 from the levels that would have been emitted without the policy, which amounts to 395 million metric tons of greenhouse gas emissions over that time period—the equivalent of 915 million barrels of oil over the next 18 years.
California will send its final rule to the Environmental Protection Agency to request the waiver. Since the Biden administration has already indicated that it expects states to help to achieve Biden’s goal of a 50 percent reduction in greenhouse gas emissions by 2030, it is expected to grant the waiver. California must first get approval from the EPA for its own rules before other states can enforce similar restrictions. A few states including New York, Washington and Massachusetts have similar legislation in the works.
President Biden last year signed an executive order calling for the government to try to ensure that half of all vehicles sold in the United States be electric by 2030, up from 5 percent today, but the order has no binding legal force. Biden has also sought to enact federal policies that would increase the nation’s use of electric vehicles. The recent climate/tax bill includes $7,500 in rebates for people who purchase new electric vehicles, although there are major restrictions to eligibility with automakers having to assemble their vehicles in North America and source their batteries from allies to qualify for the full credit. In California, that provision would combine with $10 billion in a state program to make electric automobiles more affordable and build charging stations and other electric-vehicle infrastructure, particularly in low-income communities.
The governments of Canada, Britain and nine other European countries, including France, Spain and Denmark, have set goals of phasing out the sale of new gasoline-powered vehicles between 2030 and 2040, but none have introduced mandates or regulations such as the California rule. An Australian bank plans to stop giving loans for new gasoline and diesel cars as the country tries to catch up with other developed countries in encouraging electric vehicle deployment. Australia’s new vehicle sales are just at 2 percent electric currently. The loans for new fossil fuel vehicles would be scrapped from 2025. While there will be no more loans for new combustion engine vehicles, including hybrids, from 2025, Bank Australia will continue to provide loans for used ICE vehicles until there is a viable and thriving market for electric vehicles. Since Bank Australia is a smaller bank that is not in the top 15 banks in Australia, some have suggested their actions reflect a public relations campaign, rather than a trend.
According to the International Energy Agency, electric vehicle sales totaled 6.6 million in 2021, with half of those in China. In fact, more electric vehicles were sold in China in 2021 (3.3 million) than in the entire world in 2020. In the first quarter of 2022, electric vehicle sales totaled 2 million—a 75 percent increase compared to the first three months of 2021.
California is telling people what is best for them, rather than letting them choose what type of vehicle they want to buy to suit their wants and needs. Unfortunately, there are too many problems with going all-electric that could make this transition very ugly, ranging from the increasingly higher cost of electric vehicles to the availability of charging stations to the disposal of toxic substances from dead batteries to the dependence on China for critical minerals and batteries. Further, the U.S. electric grid will already be taxed from replacing coal and natural gas generation with renewable energy to meet Biden’s goal of carbon free electricity that having sufficient electricity at home to charge an electric vehicle is questionable. Overnight charging of 2 electric vehicles, which most homeowners with electric vehicles would do, is equivalent to running 2 extra air conditioners or heaters during the night, or as much as 25 refrigerators per car. Thus, the transition is not painless and is not cost free. Further, implementation of the climate/tax bill that is touted to reduce emissions by 40 percent will only reduce temperatures by a negligible 0.0009°F to 0.028°F in 2100, according to UN warming models. That is a huge amount of pain for an unnoticeable potential gain.