California bans gasoline cars. Now the electric vehicle race begins

California has just set the clock for a future that would have been unthinkable a few years ago: dealerships filled with nothing but zero-emission cars.

On Wednesday, Gov. Gavin Newsom, a Democrat, ordered regulators to phase out the internal combustion engine and ban the sale of all new gasoline-powered cars after 2035. With that, California became the first US state to impose such a ban and delivered the biggest jolt yet for automakers already under pressure to ditch fossil fuels and offer a new generation of electric vehicles.

While for now the industry relies on gasoline-powered SUVs and trucks for most of its profits, traditional automakers are pouring billions of dollars into electrification and announcing new models of electric vehicles, with startups like Rivian. Automotive and Lucid Motors Inc. their heels. California’s ban ups the ante.

“There is an arms race here,” said Mary Nichols, president of the powerful California Air Resources Board that regulates emissions from everything from oil refineries to power plants to automobiles.

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Newsom’s announcement adds to this week’s global push in the fight against climate change, which comes less than a day after China pledged to be carbon neutral by 2060, a bold move by the world’s biggest polluter that Although there are still 40 years to go, it caught environmentalists by surprise. California joins more than a dozen countries, including the UK, France and Canada, in phasing out the internal combustion engine, data from BloombergNEF shows. The UK is considering bringing forward its ban until 2035.

What California wants would be a big leap for the auto industry. Less than 8 percent of the new vehicles registered in California during the first half of the year were electric. And in 2035, BNEF projects that roughly half of passenger vehicle sales in the US will be battery-powered and plug-in hybrid electric vehicles by 2035.

The target is “aggressive,” but it has the potential to accelerate the pace of EV adoption among automakers, said Stephanie Brinley, lead automotive analyst at IHS Markit.

“If it really happens, it creates a reason and momentum to make change happen faster,” Brinley said. If “you have the opportunity to increase volume there, and you will be able to sell the car, then you can invest more money and increase your capacity faster.”

Newsom’s order, signed on the hood of the next electric Ford Mustang Mach-E, will inevitably set the tone for America’s states. California is not only the largest car market in the US, it is also one of the largest consumers of gasoline in the country and the second largest market for electric vehicles in the world, behind only China. The soundness of its transportation policy has always depended on the fact that automakers, other like-minded states, and often the nation have tended to follow suit.

The ban is “a death kiss for gasoline and oil, as California tends to set trends,” said Patrick DeHaan, head of oil analysis at fuel pricing firm GasBuddy.

Key questions remain, including whether California will allow plug-in hybrid sales (gas used car sales will be allowed) and whether the rest of the US will actually join in. Much of the latter depends on the upcoming presidential elections. While the Trump administration has aggressively fought California’s efforts to cut emissions from transportation, Democratic presidential candidate Joe Biden has advocated for the widespread adoption of electric cars and a national charging network to power them.

There’s also the question of enforcement: the phasing out of combustion engines in other parts of the world has lacked the teeth to be effective, such as penalties for dealers breaking the rules and selling gasoline cars. Newsom’s executive order doesn’t set out exactly how California will see to it that only zero-emission cars are eventually sold.

Still, Golden State has long been a champion of battery- and fuel-cell-powered hybrid and electric cars, with aggressive targets that have pushed and encouraged automakers to deliver. Its zero-emission vehicle program, or ZEV, requires automakers to sell electric cars and trucks and has been adopted by several states, including New York, New Jersey and Oregon.

The ZEV regulation has allowed local companies like Palo Alto-based Tesla Inc. to earn revenue by selling emission credits to automakers unable to meet the mandate. And while 2035 has long been a goal for California to reach zero emissions, Newsom is doubling down on that timeline as the state grapples with the grim consequences of climate change – heat waves and massive wildfires that have burned millions of acres. and suffocated much of the West. Coast with toxic air pollution.

The 2035 deadline “gives everyone who works in transportation, including fuel suppliers, planners, manufacturers and fleet managers, a real goal to work toward,” Nichols said.

Anyone who thinks Newsom’s goal is symbolic, only cemented where California was already headed, is wrong, said BloombergNEF analyst Nick Albanese. “Despite its ambitious policies, I don’t think California was on track to reach a 100 percent share of passenger electric vehicle sales in 2035 prior to this announcement,” he said.

Nichols said the next 15 years will be one of transition as automakers introduce more cars, consumers become more comfortable driving electric and the cost of batteries goes down. Tesla’s “Battery Day” on Tuesday did not go unnoticed in Sacramento. Nichols pointed to the electric car maker’s plan to cut the cost of batteries in half and consequently build electric vehicles that more people can buy.

“It’s an electrical race for cheaper and more efficient batteries, and it’s one that manufacturers around the world are competing in,” Nichols said. “That is the prize: the zero-emission vehicle available to everyone.”

Not everyone is happy. Questions remain about charging infrastructure and how low-income consumers will be able to afford electric vehicles that are largely associated with coastal wealth. Approximately 2 million new passenger cars and light vehicles are sold in California each year, and the California New Car Dealers Association has several questions about how the directive will be met.

“Banning new non-ZEV vehicles and limiting options, even 15 years from now, is significantly more difficult than striving to achieve the goals the governor has set,” CNCDA’s Brian Maas said by email. “While we support the state’s goals to combat climate change, there are many questions and factors that must be carefully considered.”

Newsom’s executive order instructs Nichols’ agency to write the regulations. There may be some leeway on how automakers can achieve the state’s goal. In the past, the air plate has made changes when it was clear that the market and technology could not play by the rules.

“There are still some things to be resolved, but it is an important direction to take,” Brinley said.