The Beginning of the End of the Internal Combustion Engine? California to Phase Out Gas-Powered Vehicles by 2035

Robert C. Levicoff 

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A leader in stringent auto emission regulations, the State of California recently took additional steps in its effort to further protect the environment. On August 25, 2022, the California Air Resources Board (“CARB”) voted to require all new cars and light trucks sold in the state to be “zero-emission” by 2035.[1] The plan, officially known as the CARB Advanced Clean Cars II rule, was originally introduced via executive order by Gov. Gavin Newsom nearly two years ago.[2]

The plan mandates that “[i]t shall be a goal of the State that 100 percent of in-state sales of new passenger cars and trucks will be zero-emission by 2035. It shall be a further goal of the State that 100 percent of medium- and heavy-duty vehicles in the State be zero-emission by 2045 for all operations where feasible and by 2035 for drayage trucks. It shall be further a goal of the State to transition to 100 percent zero-emission off-road vehicles and equipment by 2035 where feasible.”[3]

The phasing out of gasoline- and diesel-powered vehicles will be gradually implemented, with these traditionally powered vehicles being phased out over time. The plan mandates that 35 percent of new passenger vehicles sold would need to be zero-emission by 2026, 51 percent by 2028, 68 percent by 2030, and 100 percent by 2035.

CARB’s approval of the Advanced Clean Cars II rule makes this 2035 goal official California State policy. Although the U.S. Environmental Protection Agency must still grant the state a waiver to set its own automobile emissions policies under the federal Clean Air Act, this is likely to occur during the Biden administration.

Tailpipe emissions are the leading source of greenhouse gas emissions in California and accounted for 40 percent of the state’s greenhouse gas emissions in 2019 and account for nearly 50 percent today. According to air quality officials, this new mandate has the potential to reduce greenhouse gas emissions from cars by more than 50 percent by 2040.

California’s history in reducing auto emissions and increasing fuel efficiency has led to some or all of its rules being adopted by 17 other states over the years, despite the fact that California’s tailpipe emissions standards are stricter than federal rules. As such, it is likely CARB’s Advanced Clean Cars II rule may eventually be adopted elsewhere. As it stands, both Washington and Massachusetts have committed to adopt similar policies, and other states could soon follow suit.[4]

Notably, CARB faces two formidable challenges in reaching its zero-emission goals—cost and charging infrastructure. With regard to infrastructure, the original executive order provided that numerous state boards, commissions and agencies are to use their authority to “accelerate deployment of affordable fueling and charging options for zero-emission vehicles, in ways that serve all communities and in particular low-income and disadvantaged communities, consistent with State and federal law.”[5] Further, the “Energy Commission, in consultation with the State Air Resources Board and the Public Utilities Commission, shall update the biennial statewide assessment of zero-emission vehicle infrastructure required by Assembly Bill 2127 (Chapter 365, Statues of 2018) to support the levels of electric vehicle adoption required by this Order.”[6]

Even assuming the many logistical hurdles with regard to increasing the charging infrastructure are overcome, the expense of fuel efficient vehicles themselves is an even greater hurdle. An electric vehicle (“EV”) purchase has been and remains substantially higher than the equivalent gasoline-powered vehicle. Kelley Blue Book pricing estimates indicate that the average electric vehicle sold for $66,000 in July 2022, compared to $48,000 for the average internal combustion vehicle. Despite the cost difference, electric vehicles have steadily gained market share in California over the years, from only 2 percent of new vehicle sales in 2002, to 7 percent in 2018, to approximately 16 percent of the new vehicle market this year. According to CARB, there are now 1.13 million zero-emission vehicles registered in California, which accounts for 43 percent of the total EV registrations in the United States.

Both the federal government and California provide incentives to help alleviate zero-emission vehicle “sticker shock.” The federal government just passed the Inflation Reduction Act, which includes tax credits worth between $3,500 and $7,500 for electric vehicle owners, and California has its own Clean Vehicle Rebate Project that provides $1,000 to $7,000 towards the purchase or lease of certain electric vehicles.

Is this truly the beginning of the end of the internal combustion engine? Likely not. With apologies to Mark Twain, reports of the death of the internal combustion engine are greatly exaggerated. For starters, the zero-emission vehicle mandate actually includes vehicles that are not 100 percent zero-emission. California will allow up to 20 percent of a carmaker’s sales to be plug-in hybrids, i.e., powered by both electric motors and gas engines, and still count as zero-emission vehicles, as long as the battery range is 50 miles or more. Further, and perhaps a relief to classic car aficionados, fans of motorsports, and automotive hobbyists, the new CARB mandate allows owners of internal combustion cars to continue to drive them after 2035. It will also remain legal to buy and sell used gasoline- and diesel-powered cars and light trucks.

Still to be seen is whether California’s ambitious goal in moving towards a zero-emission vehicle future will progress on schedule or will require an amendment to federal regulations. Other considerations that bear watching include the varying positions being taken by major automakers towards the mandate, and the effects on the state’s oil industry.[7] Regardless of how the mandate progresses as time passes, California continues to push the envelope in its attempt to reduce carbon emissions and combat climate change.

[1] This plan will phase out all gas- and diesel-powered cars, sport utility vehicles, minivans, and pickup trucks in favor of cleaner versions powered by batteries or fuel cells.

[2] Executive Department State of California, Executive Order N-79-20 (Sept. 23, 2020).

[3] Id. at 1.

[4] Washington’s timeline to phase out the sale of internal combustion engine vehicles is even more ambitious than California’s, with a plan to do so by 2030.

[5] Executive Order N-79-20 at 4.

[6] Id. at 5.

[7] At present, California is the seventh-largest oil producing state.