California moves to ban sales of new gasoline cars by 2035

Bloomberg September 24 | Updated on September 24, 2020 Published on September 24, 2020

The move comes after wildfires burned over 3.6 million acres in the State

California’s Gover Gavin Newsom said that the state will phase out sales of new, gasoline-powered cars by 2035 as part of its fight against climate change - the first state to set an expiration date for the traditional automobile.

The move comes as California battles historic wildfires that Newsom has blamed squarely on global warming, with more than 3.6 million acres burned so far this year. It could prompt other states that have followed California’s climate and auto policies in the past to set similar goals.

Also read: Flood, fire and plague: Climate change blamed for disasters

Newsom cast the step, enshrined in an executive order he signed on the hood of an electric Ford Mustang Mach-E, as an economic opportunity as the state transitions away from fossil fuel production and consumption. He said that 34 electric vehicle companies, including Tesla Inc, already operate in California, which accounts for about half of the nation’s EV market.

“The opportunity is limitless for the state of California to compete,” Newsom said in a televised press conference. “This is the next big global industry, and California wants to dominate it,” he added.

Reaction from the auto industry was muted, with only Ford Motor Co issuing a statement praising the step. General Motors Co and Fiat Chrysler Automobiles NV deferred comment to their industry trade association, which said more needs to be done to increase consumer demand for electric vehicles. Newsom’s announcement had little impact on stocks of Detroit automakers.

“We agree with Governor Newsom that its time to take urgent action to address climate change,” Ford said in the statement. “That’s why were proud to stand with California in achieving meaningful green house gas emissions reductions in our vehicles.”

The executive order gives automakers 15 years to make the shift. It doesn’t specify whether the passenger cars sold by that date would be powered by batteries or hydrogen fuel cells - only that they have zero emissions. Sales of used gasoline-powered cars would still be allowed. The order also directs California regulators to ensure that all new medium- and heavy-duty trucks are zero-emission by 2045. The state has already set a goal of eliminating all net emissions from its economy by the same year.

Trump Battle

California, home to 40 million residents and the world’s fifth-largest economy, has for years forced automakers to sell zero-emission vehicles in the state or buy credits from companies that do. The state has also been locked in a legal battle with the federal government over the Trump administration’s efforts to lower future fuel mileage requirements for gas-powered cars.

Six automakers, including Ford, have voluntarily agreed to abide by California’s higher efficiency standards, and Newsom cited them Wednesday as proof that the industry can make the switch.

“They’re not willing to suffer a future of dirtier air, dirtier water and more climate disruption,” he said, adding that 15 countries have already set time-lines for phasing out cars with internal combustion engines. “If you’re an American manufacturer, how can you compete globally unless you’re in that business?”

“The transition won’t be easy for the industry,” said Jessica Caldwell, executive director of insights for the Edmund’s auto information service. Many automakers, she said, have set electrification targets only to let them slide.

The Alliance for Automotive Innovation, which includes Ford, GM and Fiat Chrysler, said a coordinated effort toward electric vehicles is needed among federal and local governments, automakers, dealers and power providers, among others.

“Neither mandates nor bans build successful markets,” the group said. Electrified vehicles account for less than 10 per cent of new vehicle sales in California. “While that is the best in the nation, much more needs to be done to increase consumer demand for Zero Emission Vehicles in order for California to reach its goals,” it said.

Electric line-up

Ford is investing $11.5 billion to electrify its lineup, including its top-selling F-150 pickup. Executive Chairman Bill Ford, whom Newsom praised in his remarks, was among the first Detroit executives to acknowledge the role gas-burning cars play in climate change.

GM’s Chairman, Mary Barra, has pledged to electrify the automakers entire lineup and is reviving the hulking Hummer brand with a 1,000-horsepower electric pickup.

Also read: Tesla’s value drops $50 billion as Musk’s promised cheaper battery 3 years away

“It’s really putting a stake in the ground and saying ‘This is what were going to do and how we are going to get there’”, said Daniel Sperling, a member of the California Air Resources Board, who is also the founding director of the Institute of Transportation Studies at the University of California.

Sperling said the goal was doable, but a lot needs to happen. Falling battery and vehicle prices signal things are going in the right direction, he said. The first 50 per cent is going to be fairly easy, relatively, Sperling said. The next 50 per cent will be much harder.

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Published on September 24, 2020
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