California bet big on electric cars. Should you?
(NerdWallet) – California is on its way to banning the sale of new gas-powered cars in the state. The Advanced Clean Cars II regulations, approved Aug. 25 by the California Air Resources Board, would require all new cars, trucks and SUVs sold in California to be zero emissions by 2035.
While it’s a far cry from national reform, the California rule impacts the largest car-buying market in the U.S., and it’s already being adopted by some other states. Does that mean you’ll be forced to buy an electric vehicle, or EV? Nope. But the pressure is on for the auto industry.
What is the California rule?
Under the new regulations, California set benchmarks for new-vehicle sales starting with model year 2026, when 35% of new-car sales in the state have to be battery-electric, hydrogen fuel cell electric or plug-in hybrid vehicles. Right now, more than 16% of new vehicles sold in California are zero-emissions or hybrid models, according to California regulators.
With that kind of head start in the state, Jessica Caldwell, executive director of insights at auto site Edmunds, believes automakers could meet the first benchmark. But realizing California’s goals also depends on improving infrastructure that supports more electric vehicles.
“Although California’s net zero emissions ruling might have been characterized as a rather aggressive goal when it was first introduced in 2020, automakers have long prepared for an electric future, and notable progress across the industry has been made since then,” Caldwell said in a news release. “If automakers can pick up production, sufficient investments are made in charging infrastructure and the power grid, and financial incentives can be made more available, this milestone should be achievable — if not surpassable.”
The standards tick up incrementally every year after 2026, requiring electric or hybrid vehicles to make up more than two-thirds of car sales by 2030 and 100% by 2035.
New standards would also be aimed at making zero-emissions vehicles more reliable and durable so that consumers actually want to buy an electric vehicle or hybrid instead of their favorite gas-powered models.
Before the new regulations can be enforced, the state will have to request a waiver from the U.S. Environmental Protection Agency, allowing it to set stricter rules than the federal government.
Don’t live in California? This could still be your future
California is known as a trendsetter when it comes to environmental protection. So, while these regulations are an outlier right now, they’re likely to be adopted in other states and supported at the federal level.
Seventeen states have adopted past zero-emissions vehicle standards set by California and could follow suit with these new rules. (A few already have, including Massachusetts, New York, Oregon and Washington.) These 18 states made up 40% of the market for new vehicles in 2021, according to a National Automobile Dealers Association report on the financial profile of new-car dealerships in the U.S.
The Inflation Reduction Act put a spotlight on the federal government’s priority to reduce carbon emissions. Initiatives funded by the act include incentives for green energy and electric vehicles. The new law, signed by President Joe Biden on Aug. 16, renewed a tax credit for consumers who buy qualifying new electric vehicles and added one for used-EV purchases. But the incentives come with a set of qualifications meant to encourage the auto industry to beef up its domestic supply chain, and most EVs on the market right now aren’t eligible.
Yes, you can keep your gas-powered car
Rules like the one in California apply specifically to automakers’ production of new cars. They don’t dictate what people can drive, nor do the current rules affect the sale of used gas-powered cars.
We’re also more than a decade away from the goal of seeing only electric models on every car lot. So, if you’re looking to buy a new car in the next few years, there’s still a lot to consider about whether it should be an EV.
Here are a few ideas to help you think through your next car purchase.
What car can you afford?
Cost remains the biggest factor for most people when buying a car, says Karl Brauer, executive analyst at ISeeCars.com. Whether you’re considering a new or used car, an electric or gas-powered model, make sure you know how much you can spend.
In July, the average price of an EV sold through a dealership was $62,893, according to Edmunds. That’s compared to an average of $47,198 for all vehicles that month.
Tax credits on electric vehicles might help bring that technology into your price range, but there are rules about which cars are eligible. As production ramps up, it’s likely that EV prices will come down. But that could still be years away.
On the other hand, as standards in California ramp up beginning in 2026, gas-powered cars will become scarcer there. That could raise prices on those new and used models, Brauer says. If you want to stick with a gas-powered model for a while still, he suggests timing that purchase sooner rather than later, if you can afford it.
“If there’s a thing to take away now, you should probably buy your traditional vehicle before 2026 because they’re going to only go up in price,” Brauer says.
What car fits your life?
If you’re thinking about switching to an EV, you’ll want to consider a few other factors, including how far you drive, whether you could charge it conveniently and what you’d use the car for.
When it comes to infrastructure for EVs, not all hometowns are created equal. If you live in Los Angeles, you might know of several charging stations nearby that you could use to keep your car powered for your daily commute. But that’s not yet the case everywhere.
How far you can drive on a single charge, as well as the variety of EVs available, will continue to improve over time, Caldwell says in a phone interview.
“We’re still in the early stages of adoption for electric vehicles,” Caldwell says. “EVs are going to become more mainstream. There’s going to be more infrastructure. I think that’s what regular people are going to notice.”
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