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California’s Long Game of Tug-of-War With the Auto Industry

California has banned the sale of gasoline-powered cars by 2035 and automakers retort with concern about the state’s electric grid and consumer preference for gas vehicles. This back and forth is decades long.

(TNS) — California was imposing tough new air-pollution restrictions — rules that would force automakers selling cars in the state to drastically reduce tailpipe emissions.

Carmakers were resisting, saying the changes California wanted were too costly and would hurt consumers in their pocketbooks. Rallying to his hometown industry’s defense, a powerful Michigan congressman accused California and its upstart governor — who was in just his second year in office — of ignoring economic and scientific practicalities.

The year was 1976, the governor was Jerry Brown and the issue was smog. California stuck to its plan, and the industry eventually fell in line. Cars were equipped with a new form of catalytic converter that slashed emissions.

Now another California governor, also in his second year in Sacramento, is insisting that the auto industry make more dramatic changes to its products. Last month Gov. Gavin Newsom, seeking a breakthrough on climate change during a year of record wildfires, signed an executive order banning the sale of new cars in California that run on gasoline starting in 2035. And once again, the auto industry is pushing back. Responding to Newsom’s order, automakers said they’re happy to build more electric cars — but they can’t force people to buy them. Industry executives said consumer demand for electric vehicles has been disappointing.

“Neither mandates nor bans build successful markets,” said John Bozzella of the Alliance for Automotive Innovation, the industry’s main trade association.

To California officials, the resistance sounds familiar.

Mary Nichols, chairwoman of the California Air Resources Board, said the auto industry routinely opposes the state’s anti-pollution initiatives, only to find a way eventually to make them work.

“There’s definitely a pattern at work ... in which the industry fights against any tightening or any new regulation, and then complies,” said Nichols, who served on the air board during the 1976 controversy. “We have been through this before.”

Newsom’s order certainly has a historic quality to it, taking the state’s decades-long crusade against air pollution to new levels — the capital of America’s car culture, and home of the world’s fifth-largest economy, is pledging to take fossil-fuel cars off the road.

To achieve that, the state will have to dramatically expand its infrastructure for electric cars, starting with the construction of thousands of additional battery-charging stations. Some in the auto industry, noting California’s recent rolling blackouts, question whether the state’s beleaguered power grid would be able to handle the demand.

“You’ll have more grid stress,” said industry analyst Karl Brauer, of the car-buying site

But as the largest market for consumer goods in the country, California wields enormous influence over car-buying habits across the country. Brauer said he expects other states to mimic Newsom’s 2035 directive.

Before Newsom acted, a handful of countries had already pledged to eliminate the internal combustion engine by 2035 or 2040, including Britain, Canada, Sweden and Israel. That’s one reason why Nichols is convinced Newsom’s order is “absolutely feasible.”

“They’re competing with each other to sell (electric vehicles),” she said. “They’re busting their rear ends to try to get there, not because of our mandate but because of worldwide competition.”

Californians Still Love Gas-Powered Cars

Katina Rapton, general manager of Mel Rapton Honda in Sacramento, said there’s one big problem with California’s efforts to eliminate gas-powered cars: Californians love them too much to give them up.

“Used car sales are going to quadruple,” she said. “(Owners) are going to be taping those things together ‘til the cows come home.”

It’s true that Californians have been enthusiastic buyers of hybrids, which run on gas and electricity. They’ve also purchased more zero-emission vehicles — including all-electrics, fuel cells and plug-in hybrids — than any other Americans. According to Veloz, a Sacramento nonprofit that tracks the industry, Californians have bought more than 726,000 zero-emission vehicles, or ZEV’s, since 2011. That’s nearly half of all ZEVs purchased in the United States.

But it’s still barely 4 percent of the more than 17 million cars and light trucks, including minivans and SUVs, purchased in California since then.

Stanley Young, spokesman for the Air Resources Board, said the agency forecasts that 8 percent of new-car sales in 2025 will be ZEVs. Around the auto industry, such numbers provide fuel for skepticism about Newsom’s goal of 100 percent ZEV sales by 2035.

“It’s something just to gain publicity ... a knee-jerk reaction,” said George Peterson, president of AutoPacific, a consulting and research firm based in Orange County.

Certainly, California has been aggressively promoting electric vehicle sales. Consumers can qualify for tax incentives of up to $7,000 under the state’s “clean vehicle rebate program.”

Manufacturers, meanwhile, must meet annual sales mandates for electric vehicles. The mandates vary according to company size, and those that exceed their targets can sell their excess “credits” to competitors that are struggling.

For all that, the sales lag. Peterson said surveys show few car-buyers — maybe 3 percent to 5 percent— even consider shopping for pure electric vehicles, even in California. The figures haven’t budged in a decade.

A major stumbling block is a fear of running out of electricity on the highway.

Most electric vehicles need to be charged every 250 miles at most. The Sacramento Bee has reported that California has plus another 35,000 shared facilities at offices and apartment complexes. The stations are mainly clustered in high-income ZIP codes in cities such as Santa Monica and Menlo Park, and are sorely lacking in most of rural California.

“Can you imagine being out on the Jackson Highway and you run out of charge?” Rapton said. “The infrastructure’s just not there. Just because they build them doesn’t mean people are going to buy them.”

Others are opposing Newsom’s order on economic grounds. Owners of gas stations say their businesses could be imperiled.

“The executive order by Governor Newsom is very scary for our industry,” said Michael Tooley, whose family-owned Tooley Oil Co. owns 13 stations in Northern California. Most are Shell stations.

Tooley said he’s installing chargers at Shell stations his company owns on Truxel Road in Natomas, and on Stockton Boulevard in Elk Grove. The cost: $200,000 for a pair of chargers.

Converting to a non-fuel future? Tooley is having trouble getting his arms around the idea.

“It would be expensive to replace (fuel) dispensers with EV chargers,” he said in an email. “There would be a great deal of underground work that would need to be done to accommodate this change and it’s hard to know if there is a business model for it.”

Auto Industry No Longer a Monolith

Five years before Newsom issued his order, a major automaker was making some very unwelcome headlines in California and around the world.

Volkswagen in September 2015 was caught in a horrific scandal over pollution from its diesel cars. Investigators from the Air Resources Board and the federal Environmental Protection Agency discovered that VW had installed rogue software on its vehicles, enabling the German manufacturer to evade restrictions on emissions of smog-forming pollutants. The incident cost the company billions of dollars in fines, repairs and other expenses.

Today Volkswagen has become an evangelist for electric vehicles. As part of its punishment, it’s invested $2 billion on charging stations and other programs to promote electric cars, including $800 million in California.

Nichols said the company is seeking to become a global ZEV powerhouse — in part to atone for its sins. The day after Newsom issued his order, Volkswagen announced European pre-sales of a new electric model called the ID.4.

“The cheating scandal ... definitely helped push them,” she said.

VW also was a charter member of a group of automakers that broke with their peers and sided with California last year in its ongoing legal fight with the Trump administration over greenhouse-gas reductions in conventional cars and light trucks.

The automakers — Volkswagen plus Ford, Honda, Volvo and BMW — recommitted in August to the California regulations, which call for significant cuts in carbon emissions in new cars sold through 2026. The Trump administration, in alignment with the other major automakers, has preempted California’s regulations and substituted a less stringent protocol for reducing greenhouse gases. California is suing Trump over the issue.

Trump’s administration, should the president win re-election, has already signaled it would over-rule Newsom’s attempt to phase out the internal combustion engine. That would surely spark another wave of litigation.

In the meantime, though, carmakers are continuing to roll out new electric cars.

“We agree with Governor Newsom that it’s time to take urgent action to address climate change,” Ford said in a statement. “That’s why we’re proud to stand with California in achieving meaningful greenhouse gas emissions reductions in our vehicles as we electrify our most iconic nameplates like the F-150 and the Mustang Mach-E.”

GM added: “General Motors has demonstrated an unwavering commitment to an all-electric future with sales of the Chevy Bolt EV, the first affordable EV with 259 miles of range, and new vehicles from our upcoming Ultium-powered line-up including the Cadillac LYRIQ EV, GMC HUMMER EV, and Cruise Origin.”

So why is much of the industry still taking a skeptical attitude toward Newsom’s 2035 directive?

Nichols said GM and many of its peers realize electric cars are the future but are still stuck in the past in many respects.

Because they carry such fat profit margins, “they don’t want to give up their gasoline and diesel vehicles,” she said. “They want to continue making them for as long as possible.”

It’s also a matter of principle. “They’ve opposed being told what to manufacture,” she said. “They don’t accept the notion that they should be required to do these things.”

Cars a Stubborn Carbon Source in California

Through a variety of programs, California reduced statewide greenhouse gas emissions by 14 percent between 2004 and 2017, the latest figures available.

There have been contributions from all over the economy. The electricity grid has shrunk its carbon footprint by 45 percent, according to the Air Resources Board. Heavy industry’s carbon pollution has fallen by 10 percent.

Cars, trucks, trains and other transportation vehicles are a different story. They generate 40 percent of California’s carbon inventory and have been stubbornly impervious to California’s efforts on climate change. They’ve fallen just 9 percent since 2004 — and have actually risen steadily since 2010.

“That sector has been so hard to get a handle on,” Nichols said.

The troubles began with a misstep by the Air Resources Board.

In the 1990s, the agency mapped out strict mandates on zero-emission vehicles: Electric cars would have to make up at least 2 percent of California’s new-car sales in 1998. The figure ramped up to 10 percent in 2003.

The industry never got close to hitting those mandates. “Ultimately, battery-electric vehicles failed to meet cost and performance goals,” the Public Policy Institute concluded in a 2007 postmortem. “Battery costs were too high and prevented (electrics) from competing with internal combustion engine vehicles.”

V. John White, a former legislative consultant and longtime environmental advocate, said California backed off from the mandates when it became clear they weren’t workable.

The program wasn’t a complete bust, however, White said, because it helped pave the way for hybrids. Their popularity has served as a bridge to the all-electric vehicles that are starting to gain acceptance today.

“There was a lot of heat,” White said. “We adjusted.”

California, Smog and Jerry Brown

Memorial Day was looming in 1976, and Tom Quinn, the 32-year-old chairman of the Air Resources Board, had a blockbuster announcement.

The air board had been working on tough new tailpipe regulations to reduce nitrogen oxide emissions and clear California’s notoriously smoggy air. Automakers in Detroit were saying they didn’t have the technological wherewithal to meet the standards.

Then came Quinn’s announcement, which made the front pages of the Detroit newspapers: Volvo, the Swedish automaker, had come up with a mechanism, known as a three-way catalytic converter, for slashing emissions. Quinn called it “the most significant breakthrough ever achieved.”

The industry seemingly recoiled in horror. The issue spilled into Congress. Rep. John Dingell, an influential Michigan Democrat and friend of the auto industry, railed against Brown and Quinn, saying they had distorted Volvo’s test results and were overlooking the costs involved.

Volvo’s product was a technology “that many automakers have not added to their engine fleets due to the extremely high cost which would have to be borne by the consumers,” Dingell wrote in remarks published in the Congressional Record. “It also is a system upon which there has been only limited field testing and is not technically ready or practicable for mass production at this time.”

Even Volvo tried to distance itself from the state’s announcement, telling the trade publication Ward’s Auto World that it didn’t like being used as a “political tool” by Quinn.

Still, Volvo went ahead with installation of the mechanisms. In 1977, Quinn traveled to Detroit for a speech to the city’s business leaders and boasted that the new converters were sweeping the industry. “Both GM and Ford will market the three-way catalytic converter in California next year,” he said.

Decades later, Volvo was happy to embrace the role it played in changing automotive history. In 2006 its publicity department issued a press release celebrating the anniversary of the mechanism’s invention.

“Today, 30 years later, virtually all petrol-engined cars built around the world are fitted with this ingenious and environment-saving component,” the company said.

©2020 The Sacramento Bee (Sacramento, Calif.) Distributed by Tribune Content Agency, LLC.

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