California Bans Gas-Powered Cars

November 2, 2020
California Bans Gas-Powered Cars

California has set 2035 as the deadline for requiring all new automobiles to be zero-emission.

This move will eliminate new gasoline powered vehicles from being sold in California.  Existing gasoline powered cars could still be owned and sold.  The ban will also include medium and heavy-duty trucks by 2045 where feasible.

The measure is estimated to reduce California’s greenhouse gas emissions by 35%.  California’s Governor encouraged other states to join their ban for the good of the environment.  At the moment, over 15 countries already have similar commitments in place.  Additionally, California will not issue new permits for fracking as part of their commitment to the environment.

Video Spotlight: 

This post is based on the Rapid City Journal article, California Moves to End Sales Of New Gas-Powered Cars, by Adam Beam, September 23, 2020, and the YouTube video in the Spotlight. Image source: Prachaya Roekdeethaweesab/Shutterstock

Discussion Questions:

1. What industries will be impacted by the ban?

Guidance: This ban could potentially have a negative impact on automobile manufacturers, and gasoline production and distribution.  Moreover, other industries could benefit from the shift to electric vehicles (EV).  This would include EV manufacturers, and their suppliers such as battery and electric motor producers.

2. How will this impact the planning at traditional automobile manufacturers?

Guidance: Californians purchase over 10% of all new automobiles.  They have also purchased about half of all plug-in vehicles in the United States.  Very little will change regarding short-term planning.  However, long-range planning will be impacted.  One immediate area of concern will be forecasting how many additional states will follow California’s ban.  This forecast needs to be combined with the forecast for the natural demand of electric vehicles.  Already, many customers are moving towards electric cars for the benefit of the environment.

The information from these forecasts should then be combined with auto makers’ current plans to convert to EVs.  Most automobile manufacturers have already recognized the trend towards EVs, and are shifting their production.  However, the California law puts a deadline, at least for California, as to when this conversion takes place.

An additional consideration would be that the ban is across all types of automobiles.  A voluntary switch could potentially allow for certain types of models to be introduced at a slower pace as the technology is developed.  Another consideration will be whether all production will be shifted to EVs, or whether some production will remain with traditional gasoline engines for other markets.

All of these considerations lead to automobile manufacturers’ long-term capacity planning.  This includes whether older plants should be closed or retooled for EVs.  Do new plants need to constructed for production of the new models?

Another aspect is the focus of research and development (R&D).  In the past, some R&D focused on improving the internal combustion engine to make it environmentally friendly by improving its fuel efficiency, and reducing emissions.  With the scheduled ban, further development of the internal combustion engine has little value.

3. Where should charging stations be located?

Guidance: In addition to production of EVs, charging stations will be needed.  Most EVs will be charged at home overnight for local trips.  However, charging stations will be needed for extended trips.

Current gas stations may not be the best location for charging systems as charging takes more than a couple of minutes.  As a result, charging stations will probably be located in parking garages or parking lots where customers can do something else, such as eating dinner, shopping or going to work, while their EV is charging.  This conversion will put gas stations in danger of following the internal combustion engine into extinction.


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