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EVs on the rise as Virginia adopts California vehicle standards
With Virginia Governor Ralph Northam's signature on 19 March, Virginia became the 15th state, alongside the District of Columbia, to adopt a zero-emissions vehicle (ZEV) mandate and impose stronger GHG emissions standards than the federal government on US automakers.
Under Section 177 of the US Clean Air Act, California has been allowed to impose tougher motor vehicle emissions standards than the rest of the nation. Invoking that authority, California set up a ZEV program that requires EVs or transitional EVs, such as plug-in hybrids, make up 22% of each automaker's new in-state vehicle sales by 2025. By model year 2035, 100% of light-duty vehicles would have to be EVs.
States can apply for a waiver from the US Environmental Protection Agency (EPA) to set the same standards as California.
Colorado, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington already have received waivers from EPA. Assuming Virginia's waiver is approved by EPA, IHS Markit estimates 35% of US new car sales would be covered by the California standards.
IHS Markit forecasts that sales of EVs are set to exceed a 3.5% overall market share in 2021 and climb to more than 10% in 2025. More than 100 new EV options are expected to launch between 2021 and 2025, it said in a recent report.
President Donald Trump opposed California's ZEV program, and during his administration EPA and the National Highway Transportation Safety Board issued the Safer Affordable Fuel-Efficient (SAFE) Vehicles Act in September 2019 to strip California's authority. The Sierra Club and Earthjustice sued to stop the new regulation. In February 2021, with President Joe Biden ordering a review the SAFE Vehicles Act, a federal court agreed to suspend the lawsuit.
Now, with a presidential administration and EPA that are more favorable to ZEVs, the question is whether Virginia's action is the start of a wave of additional waiver requests.
"The clean transportation future is here, and Virginia has answered the call for cleaner vehicles. Momentum is building across the nation as more and more states and territories move forward with bold, life-saving policies to accelerate electric vehicle adoption and reduce dangerous transportation pollution," said Rebekah Whilden, campaign representative with the Sierra Club's Clean Transportation for All campaign.
"It is certainly possible, if not likely, that more states will join over time," said IHS Markit Research and Analysis Director CSE Mike Fiske. "Depending on the type and severity of regulation that the federal government develops, we may see additional states opting for a more stringent standard."
Indicative of the surging momentum, California Senators Dianne Feinstein and Alex Padilla, both Democrats, sent a letter to Biden on 22 March to ask him to restore California's Section 177 authority and to set stronger national standards as well. "We believe the national baseline should, at an absolute minimum, be built around the technical lead set by companies that voluntarily advanced their agreements with California. We also urge you to follow California's lead and set a date by which all new cars and passenger trucks sold be zero-emission vehicles," they wrote.
Biden has made it clear that he supports an expansion of EVs, especially the infrastructure needed to give buyers confidence that they will be able to conveniently and quickly recharge their vehicles. Biden has promised to install at least 500,000 new EV chargers (at about 28,000 charging stations) across the nation.
On 2 March, National Climate Advisor Gina McCarthy and other senior administration officials held a meeting with CEOs from EV charging infrastructure companies. "The officials and EV charging infrastructure leaders agreed it was important to encourage collaboration across the government, automotive industry, and other sectors involved in vehicle electrification as the country aims to lead the world in a clean energy revolution while supporting the economic recovery and creating good-paying, union jobs," the White House said in a statement.
Virginia's legislature passed three pro-EV bills in a special session last month. House Bill 1965, which would seek the Section 177 waiver starting with model year 2025, passed the Senate on a 21-15 vote and the House of Delegates by a margin of 55-44.
According to a legislative analysis, the bill phases in requirements over the next few years. At least 8% of vehicles sold in Virginia are mandated under the new law to be electric or hybrid electric by model year 2024, with that percentage increasing in the following year to 22%.
The Sierra Club said the legislation is necessary for the state to meet its net-zero emissions goal for 2050, signed into law by Northam in April 2020. "Transportation accounts for the greatest share (48%) of greenhouse gas emissions in Virginia, and associated air pollution from cars and trucks is also an immediate health risk," noted the Sierra Club in a statement after the bill was passed.
Also in February, the legislature passed two other bills to incentivize the shift to EVs, but with gaps that have left the state's auto dealers wary. The first of these was HB 1979, which provides a $2,500 point-of-sale rebate for Virginians purchasing new, used, or leased ZEVs (and an additional $2,000 for low- and moderate-income buyers). Also, HB 2282 directs the State Corporation Commission to investigate how to pay for an estimated $700-$750 million needed to develop ZEV charging infrastructure and to provide policy recommendations to increase EV use.
HB 2282 was signed on 19 March, and Northam has until 31 March to sign HB 1979.
The problem, explained Jeff Kelley, spokesperson for the Virginia Auto Dealers Association, is that neither HB 1979 nor HB 2282 are funded. Although the dealers association supported the three bills as a package, Kelly said the group is concerned about the impact on car buyers and dealers absent funding to support the transition. "We have two years to work on the funding issue," he told IHS Markit.
To help implement its new vehicle program, Virginia could join the Transportation and Climate Initiative Program (TCI-P), an emissions trading program started in December 2020 by the District of Columbia, Connecticut, Massachusetts, and Rhode Island. Those states will now require large gasoline and diesel fuel suppliers to purchase allowances correlating to GHG emissions, and they estimate that the initial revenue will be $300 million per year. This will be invested by the jurisdictions "in equitable, less polluting, and more resilient transportation," the states said in a joint statement.
By reducing the number of allowances each year, the states say they will cut vehicle emissions by 26% from 2022 to 2032.
Over time, other states in the California EV program are expected to join, the founding members said.
The TCI-P is just of many forces accelerating production and sales of EVs. Ford, General Motors, Volvo, and Volkswagen have each announced targets of either 2030 or 2035 for phasing out sales of gasoline-powered new light-duty vehicles.
Automakers take a global approach to investment in research and development and work on new vehicle lines, Fiske explained. The future is clear about what types of vehicles will be expected by the public and by regulators. "Emissions and climate-focused regulations are the driving force, to be sure. And while California may be leading the charge in the US, the US is still far behind other global regions," Fiske said.
"Particularly among foreign automakers, the regulations coming out of the EU and China are already more stringent than what we see in the Americas and are a more significant consideration," he said. "As [Original Equipment Manufacturers] are planning future product development and lifecycles, they are carefully weighing the costs and benefits of another generation of internal combustion engine-based [ICE] product against EV-based (or flexible EV/ICE) platforms. In other words, are they better off planning for an EV future or investing in ICE technology that has a limited shelf life?"
Growth in EV sales could be a positive feedback loop, he said, as greater familiarity with the vehicles and more charging infrastructure incentivizes greater sales. And it won't just be in states adopting California's plan. "Aside from any regulation forcing EV and PHEV [plug-in hybrid EV] sales, we expect the most significant growth of electrification to occur in the states where sales have not yet been forced. As we see significant portions of domestic vehicle production transitioning towards electrification, we will see a natural increase of national EV penetration rates," Fiske said.
EVs are now being seen as part of the next wave of American auto manufacturing as well. Cleveland media outlets reported that on 12 March, the United Auto Workers (UAW) union sent a letter to Ford management opposing an announcement that Ford will build a new factory in Mexico to manufacture the electric version of its iconic Mustang muscle car, rather than retool a plant in Avon Lake, Ohio. Ford said in 2019 it would invest in "next generation" vehicles at the Ohio factory, according to the letter, which UAW said should be electric vehicles. "We expect the company to honor its contractual commitments to this membership and when it fails to do so we will take action," UAW wrote.
The UAW produced a white paper with its recommendations for improving American competitiveness in manufacturing EVs.
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