Posted on 05/31/22

What The California Bill Could Do For The Future Of The Auto Industry

What The California Bill Could Do For The Future Of The Auto Industry

In 2020, California's Governor Gavin Newsom issued an executive order requiring that all new automobiles be emission-free by 2035. California's mandate, if passed later in the Summer, would allow for increased sales of electric vehicles (EVs) and other zero-emission cars up to 35% by 2026. This would be the first such bill.

Although there are positive aspects to this bill's creation it is undeniable that it will have significant repercussions on the automotive industry and forever change it for the better or worse. Let's look at what this bill could mean for the future auto industry.

Others States and Countries will follow suit

Kathy Hochul, New York's governor, signed a bill almost identical to California's. This bill will also ban gasoline-powered vehicles by 2035. With both New York City and California leading the way in reducing ICE (internal combustion engines) emissions, it is likely that other states will pass similar bills in the near future.

With the goal to eliminate ICE vehicles becoming more common, it seems that they will eventually be phased out over the next decades. Although 2035 is still a long way off, it's unlikely that most people will need to rush to buy an EV anytime soon. However, manufacturers are making efforts to transition.

More than 40 countries, including Germany, Greece, and Italy, have announced plans for phasing out or limiting the use of fossil fuel vehicles. These include New Zealand, South Korea (among others), and Ireland. The increased attention paid by the U.S. to reduce emissions may help reduce our carbon footprint and benefit the environment over the long term.

Significative Job Loss

Although there are numerous benefits to permanently switching to EVs and eliminating ICE vehicles, there is one problem. Electric vehicles require significantly fewer moving parts than their gas-powered counterparts. According to Ford Motor, this is about 30% less. Including suppliers, the vehicle-manufacturing industry employs just a little under one million people domestically, so we'd see nearly 300,000 fewer jobs as a result of transitioning fully to EVs.

This would be a major hit to the economy unless there was a significant effort to compensate it. Josh Bivens, an economist, shares his views on the subject. He states that America could save hundreds and thousands of jobs by increasing the number of parts made in the United States, as opposed to those imported. About half of the parts for electric cars are made in America at the moment, while three-quarters of those for gas-powered vehicles are made overseas. If more parts were produced locally, this could offset any potential job shortages.

Auto transport will also be affected

Several states have proposed plans to switch to zero-emission vehicles. All medium-sized trucks will be required to switch to zero-emission alternatives by 2050. The initiative will begin in 2024.

Since California's zero-emission truck rule was announced in 2020 by the White House, it has accelerated its efforts to achieve its goal. The U.S. Department of Energy will expand zero-emission truck technology by launching the SuperTruck 3 program. This will provide $127 million in funding to help accelerate the transition.

The biggest obstacle at the moment is the limited number of battery-electric trucks. This is due to the fact that the batteries can only hold so much electricity and are very expensive. This issue is being actively addressed, and thanks to investments made by the federal government and states, it may be possible sooner than expected.

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