“By the time a child born this year is ready to enter middle school, only zero-emission vehicles [ZEVs] or a limited number of plug-in hybrids (PHEVs) will be offered for sale new in California." — California Air Resources Board
Credit: Dennis Schroeder | Flickr
When you put it that way, California’s new plan to phase out gas-powered cars by 2035 hits differently—the transition is real and will accelerate soon. And it’s more than a goal. It’s a new regulation that requires automakers to continue to transform the new vehicle stock statewide.
But, as we all know, those middle schoolers will be learning to drive just a few years later, and part of learning to drive is also learning how to fuel up the car. Will the electric charging and hydrogen fueling infrastructure be there to support the newly minted ZEV drivers after 2035?
But first, what’s a ZEV?
Before we start, let’s talk terminology. In California, “zero-emission vehicle” or “ZEV” is a wonky policy term for three different types of the cleanest cars on the road: (1) pure battery electric vehicles (battery only, no gas tank), (2) plug-in hybrid electric vehicles (battery plus a backup gas tank) and (3) hydrogen fuel cell electric vehicles (hydrogen only, no gas tank).
Pure battery electric vehicles and plug-in hybrids “fuel up” at charging stations. Fast charging can replenish a battery in approximately 30 minutes (depending on battery size); slower charging options can fuel up a battery in multiple hours (while at work, for example, or overnight). Hydrogen fuel cell electric vehicles fuel up in 3–5 mins (like gasoline) at a hydrogen station. Today, most hydrogen stations in California are co-located at existing gas stations. With that backdrop, let’s dive in.
What’s the California approach to phase out gas cars?
Many states are working hard to transition vehicle stocks to cleaner sources of fuel, and it makes sense. In California, the transportation sector accounts for 38% of total greenhouse gas emissions. It’s the largest single sector, with industrial next at 23%. Significant emissions mean significant room for improvement; and California has been a leader in this space for years.
Most recently, in August 2022, California’s top air regulator (the California Air Resources Board, or “CARB”) issued the second iteration of the state’s “Advanced Clean Cars Program” regulation. The first iteration positioned California as a leader in the transition to clean cars, and the second solidifies it. The new regulation builds on the successful framework of the first—requiring automakers to deliver a certain number of ZEVs to the market each year—but will increase the percentages significantly in coming years. Sales of new ZEVs (up to 20% of which can be PHEVs with at least a 50-mile all-electric range) must account for 35% of new car sales in 2026, climbing to 68% in 2030 and 100% in 2035. Like the original Advanced Clean Cars Program, the annual targets apply to automakers (not dealers) and do not affect existing vehicles, which will remain legal to own and drive.
The impact of California’s ZEV policy reaches beyond its borders. Not only is California the largest vehicle market in the U.S., driving innovation by market size alone, but the federal Clean Air Act also includes a provision that allows other states to adopt California’s more aggressive approach. Fifteen states adopted the prior iteration of California’s ZEV regulation—collectively accounting for approximately 25% of new vehicle sales nationwide—and the trend is expected to continue.
How does battery charging and hydrogen fueling infrastructure tie in?
The new regulation is focused on cars—ensuring automakers deliver an increasing number of ZEVs each year to meet California’s air quality and climate goals. But what does the regulation say about electric vehicle charging and hydrogen fueling infrastructure to support the influx of cars? It requires that new ZEVs (starting in 2026) be sold with a charging cord. That’s it. The lack of emphasis on charging and fueling infrastructure, however, is not for lack of attention to the need. The bulk of the authority to fund and deploy ZEV infrastructure lies with different state agencies—the California Energy Commission (CEC) and the California Public Utilities Commission (CPUC). In an ideal world, these ZEV puzzle pieces might be fit together by a single agency, but California government is structured such that one agency focuses on vehicles and others focus on infrastructure. Let’s take a look at how the 2035 ZEV target from CARB aligns with the projected infrastructure needs forecasted by CEC.
What’s the status of infrastructure rollout?
If you are a battery electric or plug-in hybrid driver in California, you can charge at any of the 36,499 public chargers throughout the state. In addition to public chargers, California has 43,528 shared private chargers (located at workplaces or apartment complexes, for example). If you’re a hydrogen fuel cell electric vehicle driver in California, you can stop by any of the state’s 62 light-duty retail stations. Because hydrogen fueling is akin to fueling up with gas, and because hydrogen-fueled vehicles are currently less prevalent than battery electric vehicles, fewer stations are needed (compared to electric vehicle chargers) to support the early market.
Despite becoming a forerunner in setting clean energy vehicle goals, California faces an uphill battle to meet the number of chargers and hydrogen fueling stations needed to support its ambitious vehicle rollout in 2025, 2030, and 2035. For charging, CEC’s inaugural Electric Vehicle Charging Infrastructure Assessment reports that California still has a 57,000 charger gap (the difference between existing and planned chargers) to meet the goal of 250,000 chargers by 2025. CEC estimates over 700,000 total chargers are needed to support an interim goal of 5 million ZEVs, and nearly 1.2 million chargers are needed to support 8 million ZEVs by 2030. That means California is currently only 6% of the way to meeting its 2030 charging needs (although this does not account for chargers under development). Projections for the number of chargers needed by 2035—the new regulation’s target year for phasing out the sale of new gas-powered cars—have not yet been released by CEC. For hydrogen fueling, an additional 32 stations are currently under development for a total of 94 stations statewide. CARB and CEC forecast the network of hydrogen stations will grow to 176 by 2026.
What funding sources can help close the gap?
Government assistance is pivotal to achieve ZEV infrastructure goals. California consistently allocates significant state funding to support the rollout of electric charging and hydrogen fueling stations. Infrastructure funding spans multiple agencies and programs, which makes it challenging to precisely summarize at a high-level, but here are some touchpoints to demonstrate the magnitude. The most recent budget included $2.7 billion to support ZEV adoption (cars and infrastructure) in fiscal year 2022–23 alone, which is a step toward Governor Newsom’s vision to invest $10 billion in ZEVs in coming years to support the transition away from gas-powered cars. The state’s two primary ZEV infrastructure agencies also recently announced significant investments to close out 2022: CEC approved a $2.9 billion investment in ZEV infrastructure that is expected to add 90,000 chargers (more than double existing chargers) statewide, and CPUC announced a $1 billion transportation electrification package to accelerate ZEV deployment through 2030.
Utilities in California are also making significant contributions to the ZEV infrastructure puzzle, with more investments on the horizon. In 2016, CPUC approved the first round of charging programs for each of California’s three major investor-owned utilities—PG&E, SCE, and SDG&E—adding a combined 10,000 chargers across service territories. In August 2020, CPUC approved the largest single-utility ZEV infrastructure investment in the country when it authorized SCE to invest an additional $436 million to fund 37,800 chargers at apartments, workplaces, and destination centers. CPUC authorized a similar expansion program for SDG&E in 2021, and PG&E’s application is currently pending approval.
A recent infusion of federal funds is also expected to boost infrastructure deployment nationwide. The 2021 Infrastructure Investment and Jobs Act created the National Electric Vehicle Infrastructure Program, which will provide $5 billion over five years in grants to states to build out a publicly accessible charging network, with more than $383 million available to California. The law also provides $2.5 billion in competitive grants to state, local, regional, and tribal public entities to build publicly accessible charging or fueling infrastructure for battery electric, hydrogen, propane, or natural gas vehicles. In addition to these dedicated programs, many other federal transportation programs could fund ZEV infrastructure.
How will ambitious vehicle goals and infrastructure come together?
California’s ZEV goals are ambitious—and the policies are working—but the discrepancy between vehicle targets and the infrastructure required to ensure those same vehicles stay on the road is noticeable. Keeping pace on infrastructure development likely requires increasingly accelerated investment over the next decade. The state recognizes this challenge, and stakeholders are cautiously optimistic. For example, a recent study by the Natural Resources Defense Council shows that the state is on track to invest $3.2 billion in charging infrastructure through 2027, which should enable California to meet its goal of 250,000 charging stations by 2025, but additional investments of $1.4 billion and $6.3 billion will be needed to meet ZEV demand in 2030 and 2035, respectively.
Possibly more concerning than the number of charging and fueling stations is how quickly consumers will embrace the change. ZEV drivers in California today are largely a patient group of early- to middle-stage technology adopters with a willingness to try something new. A less-than-great experience at a charging station might be a minor frustration, but won’t change their overall buy-in. A full phase-out of gas-powered cars, however, will require deep habit changes for tougher-to-reach segments of the population. For many Californians, ZEVs are still unfamiliar, cost-prohibitive, and may not be able to meet their existing travel needs without compromise. Fueling up at a gas station is second nature. While refueling a ZEV may differ from a gas station experience, we need that process to likewise be second nature for the public, where most everyone knows how to find a charging or fueling station and how to use it.
For example, CARB seeks to limit the number of plug-in hybrids on the road through the new regulation, presumably to avoid a situation where a majority of drivers opt for plug-in hybrids and only use the gasoline engine, minimizing the emissions reduction benefits. California is on the right track to avoid this outcome by advancing a technology-neutral approach. An overnight charge might work for some drivers; others might need a 3–5-minute fill at the hydrogen station. Either way, it will take significant work from everyone involved—the state, automakers, infrastructure companies, everyday Californians—to achieve this culture shift. By the time the child born today enters middle school, we will need most drivers to be at ease reaching for the plug rather than the pump.
Thank you to the amazing attorneys at Perkins Coie who contributed this article to the Santa Clara Business Law Chronicle.
*The views expressed in this article do not represent the views of Santa Clara University.