Explained: California’s decision to phase out new petroleum-powered vehicles

“This is a historic moment for California, for our partner states, and for the world as we set forth this path toward a zero-emission future,” said Liane Randolph, chair of the California Air Resources Board that voted on the plan Thursday.

How does this work?

The rule would kick in with a 35 per cent limit on new passenger vehicle sales to be “zero emission” (or Battery Electric Vehicles) by 2026, which then goes up to 68 percent by 2030, and 100 per cent in 2035. The 35 per cent figure set for 2026 is up from over 16 percent of new car sales being “zero-emission” in 2022, and up from 12.5 percent in 2021 and 7.8 percent in 2020.

“It’s ambitious, it’s innovative, it’s the action we must take if we’re serious about leaving this planet better off for future generations,” Newsom said in a statement. “California will continue to lead the revolution towards our zero-emission transportation future.”

Why is this important?

California, besides being the biggest US state, is one of the largest markets for car sales in the world. So, California’s position on new car sales is extremely important given the state’s status as a torch bearer for clean air regulations. So far, 14 other US states have adopted California’s zero-emission vehicle program for passenger vehicles, which was launched in the early 1990s.

The state is prepared to make the necessary investments to spur the shift to EVs, including $10 billion in vehicle incentives, charging infrastructure, and public outreach over the next six years. The state is paying low-income residents up to $9,500 to trade in internal combustion engine-powered cars for an EV, as well as $7,000 for any resident who wants to buy or lease an electric car.

Are there challenges?

One potential obstacle has been the rising sale price for most EVs on the market, although experts predict that prices will come down as more models are available to customers. There are also concerns about whether the state can push charging infrastructure to power the EV transition.

California’s rules are seen as taking off from the Joe Biden Administration’s Inflation Reduction Act’s climate provisions, especially new tax credits that are aimed at incentivizing EV sales and the domestic supply chain.

What is India’s stance?

India has a target of meeting at least 65 per cent of all new vehicle sales to be electric by 2030. Progress has been patchy though, with 6.38 lakh EVs registered in India since 2012 – less than 1 per cent of the total vehicle count. What is encouraging is that over 15 states have issued or adopted EV policies so far. A CEO-led panel of more than 25 companies, including automakers Mahindra & Mahindra and Volvo, oil major Shell, and clean mobility startups, however said India should set firm targets and frame policies to support the transition to EVs, according to the World Business Council for Sustainable Development.

California’s move could catalyse that push.