On September 8 and 9, 2021, the California New Motor Vehicle Board hosted its virtual 2021 Industry Roundtable, titled Preparing for California's ZEV Future: The State's and Stakeholders' Perspective. The two-day event focused on California's targets and strategies for facilitating the widespread adoption of zero emissions vehicles (ZEVs) in lieu of gasoline-powered cars throughout the transportation sector.
In California, the transportation sector is responsible for more than half of California's greenhouse gas emissions. On September 23, 2020, California Governor Gavin Newsom issued Executive Order N-79-20, which (i) requires 100% of in-state sales of new passenger cars and trucks to be zero-emission by 2035; (ii) sets a goal that 100% of medium- and heavy-duty vehicles in California to be zero-emission by 2045 for all operations "where feasible" (and by 2035 for drayage trucks); and (iii) sets a target for the state to transition to 100% zero-emission off-road vehicles and equipment by 2035 "where feasible."
Day One: The first day of the Roundtable opened with a keynote address by David S. Kim, the Secretary of the California State Transportation Agency. Secretary Kim spoke about the current landscape for ZEV sales in California, the benefits of ZEVs for both consumers and the environment, and the role of Executive Order N-79-20 in California's fight to reduce air pollution. He emphasized California's position as a national leader on this front; currently, nearly 50% of U.S. ZEV sales are in California, and ZEVs were the state's largest source of exports in 2020. Approximately 10% of in-state new vehicle sales in the first six months of 2021 were ZEVs. Secretary Kim concluded his remarks by highlighting the state's commitment to ensuring that ZEVs will be accessible to all Californians, regardless of race or income through affordable products, government-sponsored incentives and rebates, and widespread access to charging stations and other required infrastructure communities.
Following the keynote address, two representatives from the California Energy Commission (CEC) spoke in more detail about ZEV sales data and trends, as well as the infrastructure investments that will be required to achieve California's 2035 targets. Hannon Rasool, Deputy Director of the Fuels and Transportation Division at the CEC reviewed a number of legislative actions that directed billions of dollars to various state agencies to support the deployment of charging stations and other infrastructure needed to fuel ZEVs. Among many ongoing efforts, the CEC's Clean Transportation Program leverages public funding with private funds to incentivize and deploy electric and hydrogen vehicle charging infrastructure throughout the state, and advances ZEV technology through demonstrations and pilots.
A representative from the California Air Resources Board (CARB) next presented remarks on CARB's current Advanced Clean Cars Program, which adopted a series of regulations and emissions standards designed to control smog-causing pollutants and greenhouse gas emissions beginning with 2012-2015 model year vehicles, and which required automakers to manufacture and sell increasing numbers of ZEVs based on their average annual production. CARB staff is currently working on a new set of low-emission and zero-emission regulations for model year vehicles after 2025 (called Advanced Clean Cars II), which will be designed to achieve California's ZEV targets for 2035 through increased stringency of vehicle emissions requirements, as well as ongoing incentive and rebate programs that assist consumers with the purchase costs of ZEVs in order to increase ZEV market share.
Finally, a representative of the California Department of Transportation discussed the Department's Road Charge Program, which is in the process of evaluating an alternative funding mechanism for road maintenance based on how many miles car owners drive, instead of how many gallons of gas they use. This effort is based on the state's recognition that (1) revenue from gas taxes will decrease dramatically as the market share of ZEVs increases over the next several years, and (2) in the current marketplace where ZEVs are disproportionately purchased by wealthier residents, the gas tax system is becoming increasingly regressive, causing people who cannot afford ZEVs to pay a higher share of the state's public road maintenance burden. The Department of Transportation is planning a pilot program to study the potential impacts of a "road charge" on various communities across the state.
Day Two: The second day of the Roundtable featured an extended panel discussion on the opportunities and obstacles for the automotive industry presented by California's ZEV mandate. The panel included representatives from the Alliance for Automotive Innovation, General Motors' Cadillac brand, Ford Motor Company, the California New Car Dealers Association, the National Automobile Dealers Association, and the National Association of Minority Automobile Dealers. Despite a panel representing constituencies which often hold divergent and competing perspectives, the enthusiasm and shared commitment from this group surrounding ZEVs was evident.
The panelists from Cadillac and Ford highlighted their companies' commitments to transitioning their product portfolios to ZEVs, citing growing consumer interest, ongoing preparations of their dealer networks for the successful launch of new ZEV products, and partnerships with existing and expanding electric vehicle charging networks to ensure broad accessibility across the country. The Cadillac representative highlighted GM's commitment to an all-electric future, starting with its plan to launch 30 EV models by 2025, including the Cadillac LYRIQ. Ford's representative touted a similar commitment to electrify its most iconic nameplates by 2025 and become carbon neutral by 2050.
Both the Cadillac and Ford representatives emphasized that to support these commitments, their companies have worked collaboratively with their national dealer councils and national/state dealer associations to help dealers understand ZEV sales potential in their markets and the financial investments needed for dealers to be ready to sell and service ZEVs. In response to these comments, the panelists representing the dealer associations similarly touted the commitment of their dealer members, characterizing their members as "all in" and "essential" partners in achieving government and private sector ZEV sales targets.
Reflecting the group's unique solidarity, the panel refused the moderator's invitation to link the transition towards ZEVs with a move toward direct sales. The NADA panelist characterized electrification and direct sales as independent issues and rejected the notion that a direct sale model was better suited for the growing deployment of EVs, distinguishing the wants of Tesla's customer base from the needs of the mass market. The panelist from Cadillac explained that GM is focused on elevating the customer experience and, while it may emulate the digital experience used by the direct sale companies, GM intends to leverage the strength of its dealer network. The Alliance panelist noted the trade association's opposition to direct sales during the last legislative session, which has largely favored the new EV entrants over the traditional manufacturers.
The panelists also universally agreed that significant improvements to ZEV charging station infrastructure, electric grid reliability and electricity-usage pricing, and easy-to-understand government-sponsored consumer incentive programs for ZEV purchases will be needed to substantially increase ZEV market share and ensure equitable access to ZEVs for all communities. As the program drew to a close, all presenters agreed that developing the necessary infrastructure for widespread adoption of ZEVs consistent with California's ambitious targets will require substantial, enduring buy-in and investments by state agencies, lawmakers, municipal entities, public utilities, private companies and, ultimately, consumers.
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