California Finalizes Details on Banning Gas-Powered Car Sales

Source: By David R Baker, Bloomberg • Posted: Thursday, August 25, 2022

Rule expected Thursday could speed up electric-car transition

A vehicle at a Tesla Supercharger station in El Cerrito, California, U.S., on Wednesday, Sept. 29, 2021. 

A vehicle at a Tesla Supercharger station in El Cerrito, California, U.S., on Wednesday, Sept. 29, 2021. Photographer: David Paul Morris/Bloomberg

California is poised to phase out sales of nearly all new, gas-burning cars by 2035 under rules regulators are expected to approve Thursday, a move that could dramatically accelerate the transition to electric vehicles nationwide if other states follow suit.

Governor Gavin Newsom first announced the 2035 goal in an executive order two years ago, but the new rules would set a firm timetable for reaching it, requiring automakers to steadily increase their sales of zero-emission cars in the nation’s largest auto market. And because 17 other states typically follow California’s auto-emissions standards, Thursday’s vote by the California Air Resources Board could reverberate far beyond the Golden State’s borders, forcing the auto industry to speed up its switch to electric cars.

It could also burnish Newsom’s climate-change credentials at a time when the Democratic governor is widely believed to be weighing a run for the White House.

The move would dovetail with President Joe Biden’s efforts to push electric car sales. The Inflation Reduction Act he signed last week includes tax credits of up to $7,500 to EV buyers, although income restrictions apply. And last year’s infrastructure law included $5 billion to build a nationwide network of charging stations along major highways, to convince drivers they won’t get stranded without power on a trip if they make the switch.

While most automakers have announced plans to ramp up production of EVs, the industry has expressed concern about getting locked into specific timelines for their adoption and that many consumers may not be ready to ditch gasoline. Electrics made up less than 6% of new car sales in the first half of this year, according to the Edmunds automotive information service. And EV prices, already higher than gas-powered cars, are rising as the war in Ukraine, supply chain problems and rising demand make the metals inside their rechargeable batteries more expensive. The average sales price for an EV in July was nearly $62,900, according to Edmunds, compared with $47,200 for all vehicles.

“It’s a worthy goal, but may be unrealistic given the charging infrastructure and likely increasing demand for power,” Brian Moody, executive editor for Kelley Blue Book and Autotrader, said in an emailed statement.

Still, Edmunds analyst Jessica Caldwell said Wednesday that the industry should be able to meet California’s goals. “If automakers can pick up production, sufficient investments are made in charging infrastructure and the power grid, and financial incentives can be made more available, this milestone should be achievable—if not surpassable,” said Caldwell, the company’s executive director of insights.

— With assistance by Zach Bright