Is this the beginning of our transition away from internal combustion engines?
The Environmental Protection Agency (EPA) this past Wednesday proposed strict new automobile pollution limits this week. According to industry and environmental officials briefed on the plan, at least 54% of new vehicles sold in the U.S. will be electric by 2030, and as many as two of every three by 2032.
The EPA’s proposed regulation isn’t expected to become final until next year, but the new plan is likely to get strong pushback from the auto industry, which pledged in August 2021 to make EVs half of U.S. new car sales by 2030 (a figure vastly different from what was just proposed).
Lofty carbon emissions goals have seen governments draw optimistic plans in years past. This plan could be a historical transition away from internal combustion engines, but some see it as an arbitrary target they won’t realistically meet. To meet requirements, the auto industry will need to foster enough market demand to boost the sales of EVs exponentially.
The effort to make this a reality would need to be absolutely massive
Environmental groups see the auto emissions rules as enormously consequential in meeting the overall U.S. climate goals and boosting the sales of EVs has been identified as a fast track way to address climate change. This shouldn’t come as a surprise to policymakers or automakers, as right after taking office President Biden signed an executive order for half of all new car sales to be tailpipe emissions-free by 2030.
But it won’t be as easy as banning the sale of gas-powered cars or mandating that companies only sell vehicles with electric powertrains. Rather, the new EPA rules have set an emissions limit on the total number of new cars each automaker sells in a year, forging a shift in production that could determine how quickly and cheaply Americans will be able to purchase EVs.
Automakers have already set out on the path to more EV sales, but plug-in vehicles still only account for a fraction of the overall car market in the US. Getting them from where they are today (around 7% of new car sales) to where they supposedly need to be, (roughly 68% of all car sales) will be unlike anything ever attempted in the history of the auto industry.
Rapid shifts in consumer demands
Much will depend on how the auto industry responds. Take for example California, which is the largest auto market in the US and one of the largest in the world. Trailblazing a new course of action last year, the California Air Resources Board issued new rules requiring 100 percent of new cars sold in the state to be free of carbon emissions by 2035. Creating a ripple effect throughout the rest of the country, other states have since followed California’s lead in setting their own deadlines to phase out the sale of gas cars, including Maryland, Massachusetts, New Jersey, New York, Oregon, and Washington.
Technology transitions tend to get messy when companies fail to respond effectively to rapid shifts in consumer demand. Ultimately, it’ll be the automakers who respond most nimbly to these changes in consumer demand that will be most successful.