California last week set an ambitious target: all new cars sold by 2035 must generate no greenhouse gas emissions. The UK has already adopted this worthy goal. The EU is seeking to follow suit. But America’s love affair with gas-guzzling vehicles runs deep. The move from the Golden State is punchy by US standards.
Electric vehicles made up 15.1 per cent of new car sales in the state in the first half of this year, according to the California New Car Dealers Association. Add plug-in hybrids and the total is close to 18 per cent. To get on track with the new target, sales must reach 35 per cent in the next two years.
This is not the first time California has set stretching emissions hurdles. Not all have been met. In the mid-90s, the state walked back a requirement that 2 per cent of cars sold were EVs — then set even tougher goals.
California has the highest proportion of EV sales in the US, with more than a third of the market. The California Energy Commission estimates the state also has the most extensive public charging infrastructure.
Rising petrol prices and tax credits could spur consumers thinking of making the switch. Tesla’s Model Y is the state’s most popular EV, suggesting the company stands to benefit most. Traditional carmakers hope to steal market share. Ford is a smaller EV maker but a more familiar brand for consumers.
Price and availability are obstacles. EVs are more expensive than the average car. Experts had predicted that gap would narrow. Instead, it may grow. Prices for lithium used in batteries are down from their March high point, but remain four times higher than last year.
As material prices rise, costs are passed on to consumers. Tesla increased its own prices 5 per cent in March. Ford has lifted prices for its Mustang Mach-E range by up to $8,000, blaming “market conditions”.
US companies are competing for materials with Chinese carmakers, which are scaling up their own production. BYD, China’s biggest electric vehicle maker, reported that sales tripled year on year in July. But Ford has already signed deals with a number of mining groups.
Only companies able to sustain and increase production will benefit from California’s phase-out plan.
The Lex team is interested in hearing more from readers. Is California’s plan to phase out combustion engine vehicles realistic? Please tell us what you think in the comments section below