California Votes To Ban All Sales Of New Gas-Powered Cars By 2035

Is this good news for car dealers in neighboring states?

Robyn Beck | Getty Images

(CNBC) California, the country’s most populous state and the center of U.S. car culture, is banning the sale of new gasoline-powered vehicles starting in 2035, marking a historic step in the state’s battle against climate change.

The rule, issued by the California Air Resources Board on Thursday, will force automakers to speed up production of cleaner vehicles beginning in 2026 until sales of only zero-emission cars, pickup trucks and SUVs are allowed in the state.

The unanimous vote comes after Gov. Gavin Newsom set a target in 2020 to accelerate the shift away from internal combustion engines. The transportation sector represents the largest source of greenhouse gas emissions in California, which has suffered from record-breaking wildfires, droughts and air pollution worsened by climate change.

The decision is expected to have sweeping impacts beyond California and will likely pave the way for other states to follow suit. At least 15 states, including New Jersey, New York and Pennsylvania, have adopted California’s vehicle standards on previous clean-car rules.

A charging port on a 2022 Lincoln Corsair Grand Touring plug-in hybrid vehicle during AutoMobility LA ahead of the Los Angeles Auto Show in Los Angeles, California, Nov. 18, 2021.
A charging port on a 2022 Lincoln Corsair Grand Touring plug-in hybrid vehicle during AutoMobility LA ahead of the Los Angeles Auto Show in Los Angeles, California, Nov. 18, 2021.
Bing Guan | Bloomberg | Getty Images

Liane Randolph, chair of the California Air Resources Board, said the rule is one of the state’s most important efforts yet to clean the air and will lead to a 50% reduction in pollution from cars and light trucks by 2040.

The policy will not ban people from continuing to drive gas cars or from buying and selling them on the used market after 2035. The rule will also allow automakers to sell up to 20% plug-in hybrids, which have gas engines, by 2035.

But the rule does phase out such vehicles over time, requiring 35% of total new vehicle sales to be powered by batteries or hydrogen by 2026 and 68% by 2030. More than 16% of new cars sold in California in 2022 were zero-emissions vehicles, the state said, up from 12.41% in 2021 and 7.78% in 2020.

“California is once again leading the way by establishing commonsense standards that will transition to sales of all zero-polluting cars and light-duty trucks in the state,” said Kathy Harris, clean vehicles advocate at the Natural Resources Defense Council.

Motor vehicles drive on the 101 freeway in Los Angeles, California
Motor vehicles drive on the 101 freeway in Los Angeles, California.
Robyn Beck | Getty Images

California, home to congested freeways and the smog-filled skies over Los Angeles, has considerable authority over the country’s auto industry.

A federal waiver under the Clean Air Act allows the state to adopt stronger fuel economy standards than those of the federal government and it has set the precedent for the rest of the country on how to curb vehicle emissions.

California’s ability to control vehicle emissions has spurred innovations like catalytic converters that convert toxic gases and pollutants in exhaust gas into less-toxic pollutants, as well as “check engine” lights. The state established the nation’s first tailpipe emissions standards in 1966.

The Trump administration in 2019 revoked California’s authority to regulate its own air quality, but the Biden administration restored that authorityearlier this year.

State officials said the rule is critical to meeting the state’s goal of transitioning to 100% renewable energy by 2045, adding that resulting emissions declines would lead to fewer cardiopulmonary deaths and improved health for those suffering from asthma and other illnesses.

However, meeting the timeline will face challenges, including installing enough charging stations across the state and having adequate access to materials needed to make batteries for electric vehicles.

John Bozzella, president and CEO of the Alliance for Automotive Innovation, which represents major automakers, said California’s mandate would be “extremely challenging” for automakers to meet.

“Whether or not these requirements are realistic or achievable is directly linked to external factors like inflation, charging and fuel infrastructure, supply chains, labor, critical mineral availability and pricing, and the ongoing semiconductor shortage,” Bozzella said in a statement. “These are complex, intertwined and global issues.”

The rule comes after President Joe Biden signed the Inflation Reduction Act earlier this month, which provides funding for electric vehicle tax credits and clean vehicle manufacturing facilities. The Biden administration also issued new nationwide limits on tailpipe emissions last year for new cars and light trucks made through 2026.

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