CALIFORNIA PUBLISHES ROADMAP FOR 100% EVS IN NEW CAR SALES

by Christian Roselund

In September 2020, California Governor Gavin Newsom issued an executive order to stop the sales of new gasoline and diesel-powered vehicles in the state by 2035. The Advanced Clean Cars II (ACC II) regulatory proposal requires the sales of zero emission vehicles (ZEV) to account for 100% of the total vehicle sales in California by 2035. Recently, the California Air Resources Board (CARB) rolled out a roadmap to achieve this goal. According to the plan, 35% of the vehicles manufactured in 2026 will have to be ZEVs. Efforts would be made to increase this share to 68% by 2030 and 100% by 2035.

Increasing gasoline prices amidst the Russia-Ukraine war are putting pressure on the United States to reduce its reliance on Russia by putting more EVs on the road while gearing towards clean energy transition. The proposal requires the CARB to develop a tool for calculating the average annual consumption of gasoline or diesel by vehicles in the state.

The bill also requires the CARB to set the value of incentives in a way that would maximize the reduction in consumption of gasoline and diesel, and the reduction in emissions per dollar spent. Additionally, the Board must provide additional incentive payments per gallon reduction to applicants that fall in the low or moderate-income group. The recently released report by the CARB showed that the cost of manufacturing light-duty vehicles would be high in early years of the enforcement of the regulation, after which it would start declining.

The proposal opens doors to immense growth opportunities for the EV industry as it aligns regulations with EV makers’ plans, many of which are to bring new EV models on road by 2025. Increasing popularity of EVs, along with growing adoption by customers, is likely to aid the government in reaching this ambitious target. The share of EVs in Californian new-vehicle sales rose to 12.4% in 2021 from 7.8% in 2020. According to CARB, 74% of the drivers in California are interested in the EV market, while 40% are likely to consider buying an EV at the time of their next purchase. Yet only about 1 million of the 26 million cars currently on the Californian roads are ZEVs.

Although ride-hailing companies in the state are also considering replacing their gas-powered cars with EVs, lack of supporting infrastructure and high cost of EVs have been acting as major barriers in this transition. Additionally, a shortage of critical minerals will continue to limit the reduction in the prices of EVs in the state. Despite this, the proposal is expected to boost the sales of ZEVs in California to some extent.

However, the proposal does not apply to the sales of used vehicles, which is a fairly popular way of owning vehicles among U.S. customers. It also does not address the concerns pertaining to the accessibility and deployment of EVs in low-income communities. Currently, there is no provision for penalties on not achieving sales target as per the latest proposal.

The vote on the proposal is due in August, after a 45-day public comment period and a 9 June public hearing.

Read More

Source: Staff Report: Initial Statement of Reasons (CARB)

News coverage: California “gasoline superuser” bill advances; focusing ZEV incentives on reducing gasoline use (Green Car Congress)

Opinion: Will California Buyers Be Mandated To Purchase The Forthcoming Oversupply Of EV’s? (Eurasia Review)

News analysis: California’s 2035 ZEV Mandate Poses Big Challenges (Yahoo Finance)