California Just Banned Gas-Powered Cars. Here’s Everything You Need to Know

While many of us were on vacation last week, the transition to electric vehicles took a monumental leap.

On Aug. 25, California regulators adopted rules that would ban the sale of new gasoline-powered cars and light trucks by 2035.

Responding to news reports of California’s action, Washington Gov. Jay Inslee said his state would follow suit and “adopt California’s regs by end of this year.” Massachusetts and Virginia also are poised to also adopt bans on gasoline vehicles by 2035 because of trigger laws that automatically follow California’s lead on clean transportation. (Virginia Gov. Glenn Youngkin has said he will try to repeal the law, which was signed by his predecessor.)

The states are joining New York, which passed a similar law last year banning the sale of gasoline-powered cars and light trucks by 2035, and then expanding the ban to cover heavy trucks by 2045.

And, an additional 13 states (Colorado, Connecticut, Delaware, Maine, Maryland, Minnesota, New Jersey, New Mexico, Nevada, Oregon, Pennsylvania, Rhode Island and Vermont) and Washington D.C. have policies tied to California’s, which makes them leading candidates to adopt their own versions of the 2035 ban.

The state actions could end up being among the most consequential policy shifts toward clean cars the United States has ever seen, sending an unmistakable signal to industry and the public about the direction the market is heading.

The new rules raised some questions about the future of cars. Here are some of the answers: 

Does this place any restrictions on used-car sales?

The California rule only applies to new car sales, so consumers could still buy and own used cars that run on gasoline, and they could cross state lines to buy new cars that run on gasoline. And nobody is going to take that classic Corvette away from you.

A larger point is that the change in policy for new cars will take a while to translate into highways that are nearly emissions-free because a new vehicle stays on the road for an average of nearly 20 years.

Does the California rule have teeth?

The answer is “yes,” according to Stepanie Searle, director of the clean fuels program and the U.S. region for the International Council on Clean Transportation.

The rule was adopted by the California Air Resources Board, or CARB, an agency that has a track record as a policy leader.

Also, the rule has interim targets, which means that automakers need to be making steady progress toward the 2035 goals. The rule says that zero-emission vehicles must be 35 percent of the new cars and light trucks sold by 2026; 68 percent by 2030; and 100 percent by no later than 2035.

For perspective, zero-emission vehicles were 16.5 percent of all new cars and light trucks sold in the first half of this year in California, which was the largest share of any state.

How does the auto industry feel about California’s new rules?

Automakers were already preparing for a largely electrified future by the mid-2030s. Rather than forcing the companies to do something they didn’t want to do, the states are helping the industry stick the landing of a major transition.

“At Ford, combating climate change is a strategic priority, and we’re proud of our partnership with California for stronger vehicle emissions standards,” said Bob Holycross, chief sustainability officer at Ford Motor, in a statement, adding that the new rule “is a landmark standard that will define clean transportation and set an example for the United States.”

California is the national leader in sales of cars and light trucks, with 11.9 percent of the country’s total this year, according to S&P Global Mobility. The state’s market is so large that automakers can’t afford not to serve it.

How does the rule treat gas-electric hybrids?

Plug-in hybrid models, which run on gasoline and electricity, may still be sold in 2035 and after, as long as they are capable of running at least 50 miles exclusively on battery power and as long as hybrids are less than 20 percent of an automaker’s new vehicles sold in the state.

CARB staff has estimated that the hybrid vehicles that qualify will be running on electricity for the vast majority of trips.

“These are essentially electric cars with conventional motors for special circumstances,” said David Clegern, a CARB spokesman.

Standard hybrids, which have no plug and rely much more on gasoline than plug-in models, are treated the same as gasoline models.

What are the climate and clean air benefits of the rule?

CARB is projecting that greenhouse gas emissions from cars and light trucks would be 62 percent lower in 2040 than in 2026.

Nitrogen oxide emissions, which are a pollutant with severe health effects, would be 70 percent lower in 2040 than in 2026.

The rule will lead to cumulative health benefits that are worth about $13 billion by 2040, according to the agency.

Transportation is the largest source of greenhouse gas emissions in California, so this is an important step but it’s only one part of a larger picture. The state and country are just beginning to figure out how to reduce emissions from heavy trucks, aviation and other modes of transportation.

What about concerns that EVs are too expensive?

Today, an EV is more expensive than an equivalent gasoline model. Even after tax credits, customers are usually paying a premium for an EV, which would be a problem if that was still the case when gasoline models are no longer sold.

But, as Searle notes, the sticker prices of EVs are dropping and her organization is projecting that some electric models will reach cost parity with equivalent gasoline models in about five years, while the average new EV will reach cost parity with the average gasoline model by about 2030.

Already, some EVs have an edge in total cost of ownership because of savings on fuel and maintenance.

Rules like the one in California will help to accelerate the cost parity, she said, as automakers will increase production of EVs to meet demand and that will help to push costs down.

“We can’t just expect to see these cost reductions (happen) on their own without also having the supporting policies and regulations,” Searle said. “Policies like California’s are kind of forcing greater production volumes of electric vehicles and more (research and development) into electric vehicles, and that’s what’s really going to bring the price down.”

Who stands to lose from this rule?

The oil and biofuels industries are understandably upset at rules that would reduce the use of their products.

Here’s a taste of the reaction:

“While we support the state’s goal of achieving carbon neutrality by 2050, we strongly disagree with the notion that electric vehicles are the only way to get there,” said Geoff Cooper, CEO of the Renewable Fuels Association, a trade group for the ethanol industry. “Policies that dictate technology winners and losers often backfire and rarely deliver the desired results.”

Could a future president force California and other states to scrap these rules?

California has been able to set rules to reduce emissions from vehicles because it has received a waiver from the U.S. Environmental Protection Agency that gave the ability to have rules that are more stringent than the rest of the country’s.

Former President Donald Trump revoked the waiver, a move that led to a legal fight which ended when Joe Biden was elected and granted the waiver.

A future president could try to do something like this with the 2035 ban. If that happens, it would be met with a legal challenge.

What governments outside the United States have adopted bans on gasoline-powered vehicles?

California and the other states would join more than a dozen countries that set targets to stop the sale of gasoline vehicles, including Canada, the United Kingdom and Norway, according to the International Council on Clean Transportation.

Norway stands out among the others because its target year, 2025, is the soonest and because its EV market share is already in the neighborhood of 90 percent. As I’ve written before, Norway has used financial incentives to encourage EVs on a scale far beyond any other country.

What’s next?

The fact that California took its action in late August, when many people aren’t paying attention to the news, means that the reaction may have been muted. I expect the potential spread of this rule to other states will be a major political issue going forward, as the oil and biofuels industries aim to slow the transition.

Get ready to hear a lot about how unelected bureaucrats in California are dictating what kinds of cars you can buy.

Other stories about the energy transition to take note of this week:

Federal Government Begins Accepting Applications for $425 Million in New State Clean Energy Funding: The Department of Energy has announced a major expansion to funding for state clean energy projects like EV charging systems and solar canopies on parking lots. The $425 million in funding is the result of the bipartisan infrastructure law passed last year, as Robert Walton reports for Utility Dive. The law increased the money available to the state programs by about 10 times and will cover fiscal years from 2022 to 2026. “States are the vanguard of our nation’s energy planning and implementation efforts, driving the deployment of clean energy infrastructure to lower utility costs and ensure an equitable clean energy transition,” said Energy Secretary Jennifer Granholm, in a statement.

Honda and LG Energy Will Jointly Build a U.S. Battery Plant: Honda and LG Energy Solution said this week that they will jointly build a plant in the United States to make batteries for a planned sale of electric vehicles. The companies did not say where the plant will be located, but it is likely to be close to Honda’s existing plants, which are in Ohio, Indiana and Alabama. The plant is one of about a dozen battery factories in the United States that automakers and their partners are planning as part of a broader push to increase production of EVs, as Neal E. Boudette reports for The New York Times.

Climate Law Incentives Prompt First Solar to Build Another U.S. Factory: The largest U.S.-based solar panel manufacturer is going to get much larger. First Solar has said it will build a new factory in the Southeast with a capacity of 3.5 gigawatts of solar panels per year, which is enough to power several million houses. The company also said it will expand its capacity in Ohio by 0.9 gigawatts. This is in addition to a previously announced factory coming online in Ohio. The moves are a response to the Inflation Reduction Act, which gives a financial edge to solar equipment made in the United States, as Julian Spector reports for Canary Media. Once First Solar has completed the expansion, it will have capacity to produce more than 10 gigawatts of solar panels per year, which is nearly as much as the current capacity of all U.S.-based factories.

Electric Battery Maker to Locate Factory in West Virginia, Employ Former Miners: Sparkz, a battery manufacturing startup, has said it will open a factory near Bridgeport, West Virginia. The California-based company had previously announced an agreement with the United Mine Workers union to recruit former miners to work at the plant, which will have about 350 employees, as John Raby reports for the Associated Press. Sparkz has developed an EV battery that will initially be used by forklifts and other industrial vehicles. “This is the perfect location to begin re-engineering the battery supply chain to end China’s dominance in energy storage,” said Sanjiv Malhotra, founder and CEO, in a statement.

A previous version of this story did not include Minnesota in the list of states with policies that follow California’s, and incorrectly described the waiver that President Donald Trump revoked. The waiver applied to emissions standards.

Inside Clean Energy is ICN’s weekly bulletin of news and analysis about the energy transition. Send news tips and questions to [email protected].