Unintended Consequences of California's ICE Ban

California’s bold move to effectively ban the sale of internal combustion engine vehicles by 2035 will have consequences, both intended and unintended. While the intended consequences, less reliance on fossil fuels and cleaner air are laudable, it’s the unintended consequences that could be of concern.
Closed Gas Station 1 photo
Photo: Designfactory/Unsplash
Case in point: Today’s popularity of full-size pickup trucks and SUVs can be laid directly at the feet of Corporate Average Fuel Economy rules that at first targeted traditional family cars. When CAFE was enacted in the 1970s, the average full-size car was a V8-powered rear-drive six-passenger sedan using robust body-on-frame construction.

Ever tightening fuel economy standards led to these vehicles employing transversely mounted V6 engines, unit-body construction and five-passenger seating. The alternative facing families was to settle for less or opt for a full-size SUV, which retained V8 power, body-on-frame construction and room for six passengers or more. The result? The traditional body-on-frame full-size V8 sedan is dead, long live the body-on-frame full-size V8 SUV.

So, given this turn of events, it’s no surprise that many of the EVs for sale now are either SUVs or pickup trucks. These are the vehicles, with their large footprints and higher seating positions, that people are used to. And it’s the result of CAFE standards that consumers prefer them over smaller and more efficient family sedans and compact hatchbacks.

What will be the unintended consequences of the ICE ban? Well, first off, it doesn’t really ban the sale of vehicles employing internal combustion. The California Air Resources Board has crafted the rules so that they require the sale of “Zero Emission Vehicles.”

It’s not the first time the Air Resources Board has done this. Back in 1990 it enacted rules that would require manufacturers to sell at least 10 percent of their vehicles as ZEVs by 2003. When it appeared that manufacturers were unable to meet the mandate, it was amended to qualify natural gas or flex fuel vehicles as meeting the ZEV requirements. Also, manufacturers could earn or buy credits from other makers (read Tesla) that would allow them to continue to sell ICE vehicles without needing the requisite 10 percent of their fleet being EVs.

The new rules have a similar exemption for the plug-in hybrids, although manufacturers are limited to selling no more than 20 percent of their total volume. The unintended consequence here is a competitive disadvantage to brands that have committed to full electrification, like VW, Cadillac and Volvo over those, like Toyota, Hyundai and Kia, that offer a wider product range that includes plug-in hybrid vehicles.

Other loopholes also exist in the law. While it may prevent the sale and registration of new ICE vehicles in California, it doesn’t stop conventional cars and trucks, both new and used, purchased in other states from being registered and used in the state. It also grandfathers in existing ICE vehicles and allow the sale of these used vehicles.

With fewer non-electric vehicles available on the market, California will also likely see a boom in demand for used vehicles, not only on the sales side, but also service and restoration. Some see, as an unintended consequence, older vehicles staying on the road much longer than they normally would have (think Cuba), polluting the air with emissions much worse than those that would come from a brand-new ICE vehicle with the latest technology.

The bottom line here is that if manufacturers are still allowed to build ICE vehicles anywhere else in the United States, they will be sold. The fact that they can’t be sold in California will certainly drive up the price of both new and used ICE vehicles in the state and perhaps nationally. In reality, this may be an intended consequence by making these conventional vehicles more expensive to erase some of the cost differential of going electric.

While manufacturers publicly state they understand the need for the new rules, they will, nonetheless be scrambling to meet the rather aggressive targets laid out by CARB. As currently written, the requirement call for 35% ZEVs by 2026 (which is now one traditional four-year product cycle away), 43% in 2027 and 51% by 2028. By 2031 76% of the vehicles sold must meet the standard, which will grow at a 6% rate annually until it hits 100% in 2035.

It's an ambitious goal especially when you consider that the average cost of a new EV is over $60,000 and there are only eight models with stickers below $40,000 on the market today. To meet the demand for new cars in California, which is about two million units per year, manufacturers will have to offer a much wider range of EVs, especially in lower price ranges.

Even though the push is for battery electric vehicles, we will likely see more hydrogen fuel cells and maybe even hydrogen internal combustion, which could conceivably meet the ZEV standard. The question of whether manufacturers will be allowed to use ZEV credits to continue to sell traditional cars and trucks is also left to be seen.

So far, the ban has little effect in the short run other than to generate some sensational headlines. Some rather big questions remain. Will manufacturers be able to scale up production of affordable electric cars to satisfy the market? Will car buyers embrace EVs? Will California’s electric grid, which is already is mandated to get 50% of its energy from renewable sources by 2030, be able to support this wholesale shift to EVs?

Even though there are 16 states that currently follow California emission standards, it’s not clear whether they are on board with these new requirements. The bottom line here is that for any ICE ban to work, you must ban fossil fuels and that’s not something that’s going to happen overnight. And as long as there some wiggle room built into the CARB rules, the death of the internal combustion engine in California and elsewhere, will be in the words of Mark Twain, greatly exaggerated.
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