On August 25, 2022, the California Air Resources Board (CARB) approved the Advanced Clean Cars II rule (Rule), requiring all new vehicles sold in California to be zero-emission vehicles (ZEVs) by 2035. Governor Gavin Newsom laid the foundation for the Rule with his September 23, 2020, Executive Order N-79-20. The Rule accelerates the increased sales percentages of passenger ZEVs, and plug-in hybrid electric vehicles (PHEVs) automakers are required to meet starting in 2026. This Rule is an important component of the State’s plan to achieve net-zero emissions by 2045.

Background

Clean Air Act Section 209 authorizes California to set stricter vehicle emission standards than the federal standards. To date, 14 states have adopted California’s prior ZEV program, which requires car manufacturers to produce and deliver for sale an increasing number of low-emitting and zero-emitting vehicles through model year 2025. Should these states adopt the Rule, it would affect a significant segment of the country’s passenger vehicles. Some states, including Washington and Massachusetts, have already supported the Rule.

Because automakers already follow California’s standards for their passenger vehicles, this Rule has significant implications for vehicle manufacturers. The Rule will substantially increase energy demands and thus will also affect utilities, electrical infrastructure development projects and firms, and of course, vehicle purchasers.

Vehicle Manufacturers

The Rule accelerates ZEV and PHEV vehicle sales requirements but also imposes stringent requirements on vehicles’ minimum range, battery durability, and manufacturer in-use testing and reporting. These requirements may disadvantage smaller automakers, given the cost of researching and developing newer, more efficient, and more durable batteries and electric vehicles. The Rule’s data standardization reporting requirements, which differ from current electric vehicle communication protocols, also raise concerns for automakers and could require significant investments of time and money relating to developing compliant digital infrastructure. Because the Rule also standardizes charging requirements, certain vehicle manufacturers have expressed concerns that they will either have to alter their current charging inlets or provide adapters to every customer.

Utilities and Electrical Infrastructure

California’s transition to ZEVs will bring increased demands on the state’s power grid. Researchers at the University of California Irvine have raised concerns over the power grid’s capacity, stating that “the grid does not currently have the capability to add millions of battery electric or even fuel-cell electrical vehicles today.” Some people are also skeptical that California’s existing investor-owned electric utilities are going to be able to safely build and maintain the additional infrastructure necessary to keep up with increasing demands on the grid. Compounding that skepticism are California’s increasingly extreme heat waves, which are causing record electricity demands from Californians cooling their homes and businesses. If demand exceeds capacity, the state faces the prospect of rotating power outages. The short-term solution to avoiding planned outages is for Californians to reduce their power usage during peak hours—a task which may be hampered as more residents will need to tap into the grid for their transportation needs.

While federal programs currently support efforts to develop the country’s electric vehicle charging network, more state and local action will be required to ensure the demand is met. Because California homeownership is among the lowest in the country, some ZEV owners may not be able to install charging stations in the rental homes or apartments where they live. Local agencies may also see an increase in applications by project developers for siting, building, and supporting public charging stations. In the long term, local agencies may need to confront the challenge of transportation charging with more holistic solutions, such as mandating new housing or business construction to include a minimum number of charging stations or to provide charger access to members of the general public.

Vehicle Purchasers

This Rule will likely further some vehicle purchasers’ existing concerns about purchasing electric vehicles, concerns such as range anxiety (i.e., the mileage from a charged battery is insufficient) and the lack of market options to meet their desired configurations. CARB notes that there are currently over 70 different makes and models of electric, plug-in hybrid electric, and fuel cell electric vehicles on the market including pick-up trucks, SUVs, and hatchbacks with 4-wheel-drive options. That number should grow as manufacturers introduce new models to comply with the Rule. CARB also states that new electric vehicles “typically have ranges above 200 miles,” which meet most daily driving needs. Furthermore, CARB believes that ZEVs “already save consumers thousands of dollars over the life of the vehicle compared to conventional cars . . . up to $4,600 in fuel costs in just the first seven years.”

Due to its scope, breadth, and potential effects on many relevant stakeholders in the transportation industry, challenges to this Rule are likely. Nevertheless, the transportation industry is already building its capacity to produce greater numbers of electric vehicles. Interested stakeholders may also want to consider relevant grants under the recently passed Inflation Reduction Act, which authorizes, among other things, grants for funding new infrastructure needed to charge ZEVs and certain tax credits for alternative fuel refueling stations in rural or low-income areas.