California has committed to becoming the first U.S. state to ban the sale of new gasoline and diesel cars, promising to do so by 2035. The executive order announced by Gov. Gavin Newsom last week stunned automakers, industry players, and even consumers—and it’s accelerated America’s inevitable move from fossil fuels to battery electric power.
Though it won’t yet affect the dozen other states that follow California’s emissions rules, the state is still the largest new car market in the country. And Newsom’s order may be met with legal challenges by the Trump Administration or other entities. But for now, California has made clear that its vehicular future is an electric one, and automakers had better get on board with that.
However, the reactions from OEMs show that not all car companies seem ready to embrace the order with open arms, despite the general industry trend toward electrification. But Ford in particular—which makes the bright red Mustang Mach-E on which Newsom signed his executive order—was quick to say this: We’re ready.
What Automakers Had To Say
After hearing the news that California wants to lead the U.S. into a fossil fuel-less future, The Drive reached out to every major brand doing business in the States for their reaction. While some were prepared to fire back with their commitments to sustainability, other big players—like General Motors, Nissan, Fiat Chrysler—instead punted to a statement from one of their industry lobbying groups.
“The auto industry needs the electric car market to succeed, and Auto Innovators members are committed to expanding vehicle electrification. Our members already offer more than 40 electric car models, and by 2025, that number is expected to more than triple.” John Bozzella, CEO of the aforementioned lobbying group Alliance for Automotive Innovation (of which Ford is also a member), said in a statement. Optimistic, but get ready for the but.
“But neither mandates nor bans build successful markets,” Bozzella said. “What builds successful markets is widespread stakeholder engagement: a combination of efforts by federal, state, and local governments, as well as automakers, dealers, utilities, hydrogen providers, electric infrastructure providers, builders, and others.”
He added: “Currently, electrified vehicles account for less than 10 percent of new vehicle sales in California. While that is the best in the nation, much more needs to be done for California to reach its goals. It will require increased infrastructure, incentives, fleet requirements, building codes, and much more.”
After speaking with several other automakers, it became clear that many brands shared a common viewpoint on environmental impact and have been planning to electrify a significant portion of their respective fleets in the coming years.
“Directionally, we’re headed to the same place,” a Volkswagen spokesperson told The Drive. “The governor’s order sets a more aggressive target, but the only way we get where we need to go as a planet is with government and industry charting a more ambitious path together.” And Volkswagen, in America and globally, openly admits climate change is both real and a danger to humanity, and it’s aiming for perhaps the largest EV shift of any established automaker. (Then again, let’s not forget the reasons it’s doing this.)
Though it didn’t always feel like the case, Ford isn’t blanching at this anymore either. As Ford Vice President Bob Holycross told us, “We will not concede the future to anybody.”
If you’ve been watching domestic automakers dip their toes in the waters of electrification, you’d certainly see that Ford is up to its knees. That wasn’t always the case, or at least, it didn’t feel like it—the Blue Oval brand was often dinged by investors and Wall Street analysts for having an unclear path to electrification and autonomy.
That perception started shifting this year. Iconic brand nameplates like the Mustang and F-150 have been lent to the EV cause. It inked a deal with EV truck startup Rivian. And many more electric vehicles are planned for Ford and its luxury division at Lincoln.
After being one of a handful of automakers to denounce Trump’s relaxed EPA regulations, Ford has been working with the California Air Resources Board for months in order to come up with a framework to meaningfully reduce greenhouse gas emissions. In August, Ford signed on as the only automaker who was willing to commit to the requirements of the framework for light-duty vehicles from Model Year 2021 through 2026.
The timing of Ford’s CARB deal and Newsom’s announcement of a ban on combustion-powered vehicles by 2035, are, according to Ford, purely coincidental. As is, they say, the fact that Newsom was front and center with a Mustang Mach-E. (EVs from other automakers were gathered for the announcement as well, but the Mach-E—a car that’s not even out yet—was easily the most conspicuous.)
It just so happens that the automaker has been working to outline a way to become more environmentally friendly—and now, it has an early in.
As made apparent by Newsom’s announcement, this “in” is Ford’s timely commitment to electrification, a move which is partially exemplified by the wet ink on its CARB deal. Realistically, Ford has found the need to stay current with the market that California-native automaker Tesla has helped to boost in recent years. This has led to Ford readying groundwork to rapidly deploy its electrification strategies across the U.S. market—including an $11.5 billion investment in battery-powered products and a $700 million improvement to its River Rouge complex solely focused on readying it for electric trucks.
A Carbon-Neutral Future Means Cooperation
Tailpipe emissions are an easy problem to solve, right? Just replace all the gasoline-powered cars with shiny new EVs and call it a day.
We can ignore the fact that the average vehicle spends nearly 12 years on the road, and that no supply chains large enough to mass produce all of the necessary parts to build the powertrains exists, and that economies of scale to produce such a bleeding-edge product make the vehicles quite expensive to purchase.
In actuality, this is a very complex and layered problem to solve. Even if Ford was able to secure the funding, resources, and could roll enough cars off the line to supply every single household in America with a new vehicle, it would still need to make sure that its factories were producing low enough levels of pollutants.
Ford has since committed to making its factories part of this equation as well, giving a deadline of 2050 to meet this goal. The automaker has begun searching for locally-sourced renewable energy to power its facilities across the United States. The first factory to receive this treatment will be the iconic River Rouge F-Series production facility which is currently undergoing a $700 million renovation to prepare it for the all-electric F-150.
But what about cost? Tesla has been in the electric car game for over a decade and still can’t get the Model 3 down to its promised $35,000 base price (though CEO Elon Musk swears a cheaper EV is coming.) If consumers can’t get a vehicle for a reasonable price, they may not accept the adoption of BEVs and PHEVs.
Enter the federal EV tax credit.
This same scenario was visited by U.S. politicians during the Obama administration, and the answer to the problem of expensive battery-powered cars was to offset the cost to consumers with a $7,500 federal tax incentive.
Some automakers began marketing the savings as a discount on the cost of vehicle despite it just being a reduction of federal tax liability. Many Americans who just file their taxes every year and aren’t fiscally vested into the world of sophisticated accounting aren’t going to necessarily benefit as much as others. So at the end of the day, many people are going to see the $44,000 Mustang Mach-E as a new car priced slightly above average.
This begs the question of how California legislators plan to outright ban the same of cheaper vehicle alternatives without a more aggressive subsidy than the $7,500 tax credit—which, by the way, likely won’t last until 2035 anyway.
And while Holycross couldn’t commit to Ford advocating for (or against) future EV subsidies, Ford’s 2020 Climate Change Scenario report does indicate that the automaker plans to “monitor and advocate for key enablers that support [its] goal of carbon neutrality”, which may include pushing for government incentives if the buying climate calls for it.
It’s officially crunch time. Legacy automakers and SPAC-backed startups alike are looking to the future of motoring and can see electrification as a core product, however, the transition away from gasoline requires breaking financial and psychological barriers. One must question if all the manufacturers on the road today will remain relevant in a decade’s time without making an immediate shift in resources and capital to steer towards an ultimate goal of electrification. And that’s assuming that both the public utility companies and raw material suppliers can keep up with an influx of demand.
The world of motoring is changing right before our very eyes. We may not see the shift happening in real-time, but the next 15 years will likely go down as the most rapid change in commercial propulsion in history. Faster than the steam engine overtook the horse and carriage, and more quickly than gasoline became available on every street corner. Whether we like it or not, the batteries aren’t just coming—they’re already here.
Ford’s move in that direction hasn’t always felt clear, but it’s a key part of new CEO Jim Farley’s plans for the future. The rejection of reduced EPA regulations as Ford worked on a CARB deal and the product cycle shifts towards electrification just as California announces its impending ban on the internal combustion simply couldn’t have been placed better to paint Ford as a proponent for a greener world.
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