Does California's ban on gas-powered vehicles impact the auto industry in Southwestern PA?
California made a dramatic legislative move recently, announcing a ban on the sale of new gasoline-powered vehicles starting in 2035. This marks a watershed moment in the state’s environmental policy and a pivotal moment for automakers and sellers.
With 2,441 miles between the WTAE Hearst Pittsburgh station and the Hollywood sign, and 13 years until the 2035 deadline, it may seem like a distant shift, but that is far from the case. Here’s how this new law, and existing electric vehicle (EV) market trends, could impact the auto industry right here in our region:
01 | California leads and the country follows California doesn’t just set trends in pop culture; it’s also been the epicenter of innovative environmental legislation for over 70 years. The state's unique geography and weather patterns, coupled with population booms and a growing number of vehicles on the road, unsurprisingly lead to intense air pollution. When the earliest episodes of severe smog were recorded in the 1940s, the state reacted with nation's first air quality legislation. California's sweeping efforts to combat air pollution caused by automobiles predated the federal response, and actually served as a guideline in developing one. The Clean Air Act of 1963, the United States’ primary federal air quality law, was enacted just three short years after California's own air quality regulations were put in to place. Flashforward to today, and California is leading the country in environmental regulation yet again. More than a dozen states, including Pennsylvania, have historically followed California’s lead when setting their own auto emission standards. In the coming months or years, the auto industry of southwestern PA can expect to see similar pushes away from gas-powered vehicle sales.
02 | Automakers are ramping up EV production California’s laws will impact original equipment manufacturers (OEMs), who are already working on expanded and improved EV product lines. (These regulations will not be the first set of rules from California that spurred innovation from automakers. Take the catalytic converter for example. After California’s Air Resources Board pushed the development of the modern catalytic converter, the EPA required that all new vehicles sold in the US have one, starting with the 1975 model year.) In the wake of this latest rule, OEMs are continuing, and in some cases accelerating, electric vehicle production.
Automakers are committing to the following EV targets:
By 2025, Audi plans for battery-electric vehicles to comprise 35% of its sales globally, with 30 electrified models (20 of which will be fully electric).
BMW plans to launch 10+ battery electric vehicles in the next few years, which the company anticipates will boost hybrid and all-electric vehicle sales to 50% by 2030.
Beginning in 2025, all new Mercedes-Benz models will be electric-only, and by the end of the decade the company plans to be all-electric.
Ford is investing $22 billion in electrification through 2025 and anticipates 40% of its global sales will be EVs.
General Motors (GM)
GM plans to offer 30 new EVs globally by 2025, and by 2035 the company plans to sell zero-emission vehicles (ZEVs) only.
Honda’s North American sales targets for battery-electric and fuel cell electric vehicles are set for 40% by 2030, 80% by 2035 and 100% by 2040.
Hyundai / Kia
Hyundai Motor Group, which includes Hyundai Motor Company and Kia Corporation, plans to invest $7.4 billion in producing EVs in the U.S. by 2025. Hyundai Motor and Kia will build American-made battery electric vehicles and the Hyundai Motor U.S. facility will begin EV production starting in 2022.
By 2030, Mazda estimates 25% of its vehicles will be fully electric and all other models will be electrified in some form.
By the early 2030s, Nissan plans for 100％ of all-new vehicle offerings in key markets to be electrified.
In the next five years, 50% of all new Porsche models will have an electric motor. By 2030, the company aims to increase that percentage to 80%.
Stellantis (Fiat / Chrysler)
Stellantis, the global automaker made up of PSA Group and Fiat Chrysler Automobiles (FCA), is targeting 70% of sales in Europe and 40% in the United States to be low-emission vehicles by 2030.
Subaru plans to launch its first all-electric vehicle in 2022 and sell only electric vehicles by the first half of the 2030s.
By 2030, Toyota plans for its battery-electric vehicles, fuel-cell electric vehicles, hybrids, and plug-in hybrids to total 70% of Toyota and Lexus sales combined.
Volkswagen originally set its 2030 EV target at 35% but recently raised it to 70% of European sales and 50% of sales in the U.S. and China.
Volvo Cars plans for 50% of its sales volume to be fully electric by 2025.
Source: Union Pacific
03 | Continued growth in the consumer demand for EVs The ban on gasoline-powered vehicles will certainly accelerate the country's transition towards zero emission transportation , but consumer demand for EVs has grown on its own in recent years. Once considered a novelty offering with minimal market appeal, global EV spending reached nearly $280 billion (USD) in 2021. Just 10 years ago, 120,000 electric vehicles were sold worldwide. Last year, that number was 6.6 million. After two years of consecutive decline, electric car sales increased in the United States in 2021. Tesla accounts for over half of all electric units sold in the United States. In fact, there is a months-long wait time for every single Tesla model.
This surging demand will impact dealers in our region, who not only will need to adjust their inventory, marketing messages, and targeting strategies; they'll also need to hire and train adequate staff to sell and service EVs. Source: IEA, Tom’s Guide
The auto industry, which has experienced dramatic market shifts in recent years, can expect continued disruption. California's laws are not the beginning of the EV revolution, but the acceleration an existing trend. Once a matter of "if," it is now a matter of "when." While these changes will impact many industries, from mining to logistics and transportation, dealerships and service centers will meet consumers at the forefront. Their ability to match the demands, both regulatory and consumer-driven, and adjust their strategies will determine success for years to come. WTAE Hearst Pittsburgh is available as a partner to help dealerships: