california to phase out gas-powered cars

The Golden State recently announced its plan to ban sales of new in-state gas and diesel vehicles starting in 2035, a move by California regulators to help reduce greenhouse-gas emissions. Only electric vehicles will be available for purchase as new vehicles from 2035 forward in the state. The executive order does not ban the sale of used gas-powered vehicles after the date or try in any way to remove them from the road. The plan would also set a goal for all heavy-duty trucks on the road in California to be zero emissions by 2045 where possible.

California has led the nation in emissions rules since the 1970s, and this latest executive order by Governor Gavin Newsom pushes that further. It is the first state in the U.S. announcing such a ban, following 15 countries that have already called for similar bans on the sales of new vehicles. “This is the most impactful step our state can take to fight climate change,” the governor said in a statement.

Fight Against the Ban Likely

Whether or not the executive order sticks remains to be seen. The state is already in a court battle with the Trump administration, which is looking to remove the waiver that gives California the ability to set its own emissions standards. The Environmental Protection Agency (EPA) on the heels of Newsom’s announcement raised concerns about the ban, arguing that the mandate is impractical and possibly illegal. EPA Administrator Andrew Wheeler said, “The order likely wouldn’t be able to be implemented by the California Air Resources Board without approval from the EPA,” noting that the Trump administration in 2019 took away California’s power to set its own vehicle tailpipe emissions standards.

Automakers Are Getting on Board

The car industry is already accelerating its efforts to shrink its carbon footprint, and is invested in pivoting toward electric vehicles due to Europe’s tighter regulations and following Tesla’s success. For example, BMW announced in July it was targeting a 40% reduction in carbon emissions per kilometer driven and putting seven million electric vehicles on the road in the next 10 years. Swedish automaker Volvo announced recently that it will be launching a green bond to fund its electric-vehicle program, similar to Volkswagen AG and Daimler AG, which have both turned to tap into growing investor appetite for clean mobility

By 2035, when California’s ban comes into effect, electric cars are expected to account for about 50% of all new cars sold globally, rising to more than 80% by 2050, reported Morgan Stanley based on interviews it had with 30 manufacturers.

There are huge hurdles, of course, including having an available charging infrastructure due to the increased demand for electricity. “Neither mandates nor bans build successful markets,” said John Bozzella, the Alliance for Automotive Innovation’s chief executive, in a statement. “Much more needs to be done to increase consumer demand for zero-emission vehicles in order for California to reach its goals. It will require increased infrastructure, incentives, fleet requirements, building codes, and much more.” We will keep you updated as this and other related regulations and changes take place, including how the insurance industry is responding to climate change and its impact on individuals, businesses and the environment.