California will be voting to ban the sale of new gas-powered vehicles starting in 2035.
California is poised to ban the sale of gas-powered vehicles starting in 2035 in a move that will put additional pressure on automakers to bolster an already stressed supply chain for electric vehicles.
California is poised to ban the sale of gas-powered vehicles starting in 2035 in a massive push toward EV adoption being heralded as a major win in the fight against climate change.
Why it matters: The plan would effectively start the clock on what would be a huge challenge for an industry already facing production shortfalls, stressed supply chains and unforeseen cost challenges for electric vehicles.
Driving the news: The California Air Resources Board will vote Thursday on a rule requiring all new vehicles to be fossil-fuel-free by 2035. The widely expected move comes after Gov. Gavin Newsom issued an executive order in 2020 calling for such a goal.
- "It's ambitious, it's pioneering, it's what we must do if we're going to leave this planet better for future generations," Lauren Sanchez, senior climate adviser to Newsom, said Wednesday on a conference call.
- EVs made up 15% of California new-vehicle sales in the first half of 2022, according to the California New Car Dealer’s Association.
- Shortages of battery components, including crucial raw materials, have hampered output, leading to long wait times.
- John Bozzella, CEO of the Alliance for Automotive Innovation, which represents the major automakers on policy issues, said the targets will be "extremely challenging" to hit.
What they're saying: “I don’t know if it’s realistic,” Autotrader analyst Michelle Krebs tells Axios. “Everybody’s working toward that goal, but there are some hurdles — and some we had not anticipated.”
- "Whether or not these requirements are realistic or achievable is directly linked to external factors like inflation, charging and fuel infrastructure, supply chains, labor, critical mineral availability and pricing, and the ongoing semiconductor shortage," Bozzella said in a statement. "These are complex, intertwined and global issues well beyond the control of either CARB or the auto industry."
- The average transaction price of an EV in July was $62,893, up 14.8% from $54,797 a year earlier, according to Edmunds. That compares with an average of $47,198 for all vehicles in July.
- “Affordability is the biggest issue,” Krebs says. “I don’t know if there will be enough vehicles at an affordable price by 2035.”
- But California has a long-established track record of pressing the auto industry to achieve higher fuel efficiency targets than the federal government requires.
- And those requirements have prompted automakers to boost fuel economy in the past, sometimes even as they grumble about it because they can’t afford to miss out on the lucrative Californian market.
What we’re watching: Whether automakers can obtain sufficient supplies to meet demand.
- “We always reserve the right to amend the regulation at any point,” Jennifer Gress, CARB’s sustainable transportation chief, said on the conference call. “We will certainly be monitoring this one closely is — how is the market doing.”