Against the backdrop of raging wildfires, California took another big step towards decarbonization by becoming the first state in the US to ban the sale of new gas cars, starting in 2035. This monumental step for Electric Vehicle (EV) adoption forces automakers to build cars of all types to meet the needs of every Californian. It also signals the end of a pure incentive model which encourages the well-off to purchase EVs and the start of an era requiring significant investments by municipalities, and automakers to make EVs accessible to all. Today, less than 10% of cars sold in the state are electric, primarily to higher income individuals. EVs have to be made more accessible to the average Californian if the number of  EVs sold is to increase. If successful, EVs will become broadly accessible to all Americans.

California defines the rules of the world’s largest and most diverse regulatory market

California is the largest car market in the US. Approximately 2 million cars and light trucks were sold in the state in 2019. The sheer volume of cars on the road, and the way that its hills, valleys, and mountains trap pollution means that the state is uniquely allowed to define environmental regulations for its cars. The Clean Air Act gives California (and no other state) the right to set emissions standards stricter than the federal government’s. Other states are free to adopt either the Federal or the California rules. Several other states voluntarily follow California’s rules, and the EPA tends to apply these rules nationwide within a few years. When the California Air Resources Board (CARB) - then the Motor Vehicles Pollution Board - released the first emissions standards in 1966, the EPA quickly adopted the National Emissions Standards Act and applied them nationwide in 1968. Since then, California has regularly tightened emissions regulations, including mandating catalytic converters and regular emissions tests, and states regularly adopt the same rules before they even take effect.

Where California goes, so goes the nation. The latest gas ban will be no different. Several other states will likely announce similar mandates in the coming months, just as they did in the wake of CARB’s ZEV trucking mandate. California’s actions align with those of international governments, such as South Korea banning public sector diesel vehicles after 2025 and Japan transitioning to a full net zero economy by 2050, a majority of the worldwide car market will very rapidly shut out new gas and diesel cars.

Ultimately, California is not just a leader on the national stage but around the world, setting rules followed by so many different governments around the world that together they act as the world’s largest and most diverse regulatory market.

Designing a new car is expensive, and EVs require expertise that many automakers lack

Manufacturers have found it economical to design their cars to meet California’s rules because of how widely they apply. This allows them to sell the same car design in all 50 states and, with minimal changes, around the world, reducing engineering, manufacturing, and logistics costs. Many foreign governments also study and design their own regulations around CARB rules so that their local manufacturers can easily export into any other market that has adopted California’s rules.

It costs several billion dollars and between 5-10 years to bring a car from concept to production. Once in production, an automaker would expect to sell the car for nearly a decade with minor design changes every few years before replacing it with the next version. With the impending ban, however, an automaker would only have 6-10 years to sell a newly designed car in California, and the number of markets which would allow sales to continue would dwindle over that time too. Except for a handful of automakers which plan to greatly expand the number of cars they’re designing and manufacturing, most will decide not to design any more gas cars. 2035 is closer than it seems, and the return on investment from designing a new gas car becomes worse with every passing day.

To add to their predicament, most automakers don’t yet have the deep bench of knowledge needed to replace their entire lineups with attractive EVs. For these companies, their first foray into building EV cars will take significantly longer to design and ramp manufacturing because they will be learning just as much as they’ll be doing. Put another way, any automaker who doesn’t yet have an extensive EV lineup, and whose design and R&D teams aren’t 100% focused on EVs today are going to miss the 2035 deadline and will likely be shut out of several of the largest and most influential markets around the world.

Charging and grid infrastructure is lagging behind

Automakers aren’t the only ones who need to move quickly to meet the deadline. Access to charging is highly unequal. Less than 2% of the cars registered in California today are entirely electric or plug in hybrids, and most are owned by individuals with chargers in their garages at home. Charger deserts are prevalent throughout the state. Most public chargers are located for topping up while running errands or for quickly charging during a long road trip, not for daily deep charging. It’s going to take a proactive approach to design charging networks that are usable day-to-day by people who are renting, living in apartments and condos, or parking on the street.

Transitioning to an all-electric car fleet will also require increasing the electric grid’s capacity. Significant investments in electrified transit will also be critical to meet the 2035 deadline and broader climate goals, further increasing load on the grid. Today, people typically charge their cars at home at night when demand for power is low. However, a lack of chargers at home means that people will be charging more during the day when they’re at work or running errands. GIven a typical EV efficiency of around 0.3 kWh per mile and typical driving patterns of about 30 miles per day, a total switch to EVs -- which would happen by 2050 given the ban and the typical lifetime of cars on the road -- would require approximately 135 GWh per day of additional electricity production. California would need to double its existing renewable or nuclear generation footprint and add sufficient storage because generation and demand will not necessarily be perfectly balanced. There is a silver lining though. At a typical EV battery size of 50 kWh (likely larger by 2035), there could be up to 750 GWh of instantly available storage capacity to deal with imbalances, baseload needs, and other challenges that come with an increased transition to renewables. As recent power alerts by the California ISO have shown, storage is going to be key to a renewable future, and EVs can easily play a natural role.

Everyone has a role to play

There are many challenges standing in the way of meeting the state’s 2035 mandate. Even though the last gas car has already been designed, we are still in the infancy of EV design, infrastructure support, and public acceptance. It is not a foregone conclusion that EVs will be accessible to every Californian by 2035 since people will only adopt these cars which meet their needs, can be reliably used in their communities, and are available at a reasonable price.

• Governments must make it easy to acquire permits to install chargers, batteries, transformers, and other infrastructure. They must also provide a robust backstop for infrastructure and vehicle demand in the form of incentives such as rebates and tax credits.

• Automakers must make a range of EVs that are affordable and meet the diverse needs of the state’s large and varied population.

• Utilities must ensure that the grid has adequate capacity.

• Charger operators must make sure that they’re deploying chargers equitably and not creating charger deserts.

• Investors must think holistically and take a user-centered approach to portfolio construction.

ACTUAL gives infrastructure originators, investors, and other stakeholders confidence as they model and track the cost, impact, and outcomes of sustainable and net-zero infrastructure projects. ACTUAL can help determine cost, returns, and impacts in a neutral and unbiased way as your organization design infrastructure to meet California’s mandates in an inclusive way. Visit www.actualhq.com or contact us to learn more about how our digital-twin based models can help unlock new savings and revenue streams for your projects. Follow ACTUAL on Twitter and visit our blog to learn more about our other projects and perspectives.

Illustration by Stefan Gustafsson.