California New Motor Vehicle Board Hosts 2021 Industry Roundtable Focuses on Zero Emission Vehicles | Seyfarth Shaw LLP

On September 8-9, 2021, the California New Motor Vehicle Board hosted its 2021 Virtual Industry Roundtable, titled Preparing for the Future of ZEV in California: A State and Stakeholder Perspective. The two-day event focused on California’s goals and strategies to facilitate widespread adoption of zero-emission vehicles (ZEVs) instead of gasoline-powered cars across the transportation industry.

In California, the transportation sector is responsible for more than half of California’s greenhouse gas emissions. On September 23, 2020, California Governor Gavin Newsom issued Executive Order N-79-20, which (i) requires 100% of state sales of new passenger cars and trucks to be zero emissions by 2035; (ii) set a goal that 100% of medium and heavy commercial vehicles in California be zero emission by 2045 for all operations “if possible” (and by 2035 for dump trucks); and (iii) set a target for the state to switch to 100% zero-emission all-terrain vehicles and equipment by 2035 “to the extent possible”.

Day one: The first day of the panel discussion opened with an opening speech by David S. Kim, Secretary of the California State Transportation Agency. Secretary Kim spoke about ZEV’s current sales landscape in California, the benefits of ZEVs for consumers and the environment, and the role of Executive Order N-79-20 in California’s fight to reduce air pollution. He underscored California’s position as a national leader on this front; currently, nearly 50% of VZE sales in the United States are in California, and VZEs were the state’s main source of exports in 2020. About 10% of new vehicle sales in the state in the first six months of 2021 were VZEs. Secretary Kim concluded his remarks by underscoring the state’s commitment to ensuring that ZEVs will be accessible to all Californians, regardless of race or income, through affordable products, incentives and discounts sponsored by government, and widespread access to charging stations and other required infrastructure communities.

After the opening speech, two representatives from the California Energy Commission (CEC) spoke in more detail about ZEV’s sales data and trends, as well as the infrastructure investments that will be needed to meet California’s 2035 targets. . Hannon Rasool, deputy director of CEC’s Fuels and Transportation Division, reviewed a number of pieces of legislation that have directed billions of dollars to various government agencies to support the deployment of charging stations and other infrastructure necessary to supply the ZEVs. Among the many ongoing efforts, CEC’s Clean Transportation Program is mobilizing public funds with private funds to incentivize and deploy statewide electric and hydrogen vehicle charging infrastructure, and is advancing ZEV technology through through demonstrations and pilots.

A representative from the California Air Resources Board (CARB) then commented on CARB’s current Advanced Clean Cars program, which has adopted a series of regulations and emissions standards designed to control smog-causing pollutants and emissions. greenhouse gas emissions from 2012-2015 model year vehicles. , and which required automakers to manufacture and sell an increasing number of ZEVs based on their average annual production. CARB staff are currently working on a new set of low-emission and zero-emission regulations for vehicles in model years after 2025 (called Advanced Clean Cars II), which will be designed to meet California’s ZEV targets for 2035 through increased stringency of vehicle emission requirements. , as well as ongoing incentive and rebate programs that help consumers pay the costs of purchasing ZEVs in order to increase ZEV market share.

Finally, a representative from the California Department of Transportation discussed the department’s highway charge program, which is evaluating an alternative funding mechanism for highway maintenance based on the number of kilometers driven by car owners. , instead of the number of gallons of gasoline they use. This effort is based on the state’s recognition that (1) revenue from gasoline taxes will decline dramatically as the market share of ZEVs increases over the next several years, and (2) in the current market where ZEVs are disproportionately purchased by the wealthiest residents, the gasoline tax system is becoming increasingly regressive, forcing people who cannot afford to buy ZEVs to pay a share higher burden of maintaining state public roads. The Department of Transportation is planning a pilot program to study the potential impacts of a “road charge” on various communities across the state.

Day two: The second day of the panel discussion featured a lengthy panel discussion on the opportunities and barriers for the automotive industry presented by California’s ZEV mandate. The panel included representatives from the Alliance for Automotive Innovation, General Motors’ Cadillac brand, Ford Motor Company, the California New Car Dealers Association, the National Automobile Dealers Association, and the National Association of Minority Automobile Dealers. Despite a panel representing constituencies that often have divergent and competing views, the enthusiasm and shared commitment of this group around VZEs was evident.

Panelists from Cadillac and Ford highlighted their companies’ commitment to shifting their product portfolios to VZEs, citing growing consumer interest, the ongoing preparations of their dealer networks for the successful launch of new VZE products and partnerships with existing and expanding electric vehicle charging networks to ensure wide accessibility across the country. The Cadillac representative underscored GM’s commitment to a fully electric future, starting with its plan to launch 30 models of electric vehicles by 2025, including the Cadillac LYRIQ. Ford’s representative touted a similar commitment to electrify its most iconic nameplates by 2025 and become carbon neutral by 2050.

Cadillac and Ford representatives noted that to support these commitments, their companies have worked with their National Dealer Councils and National / State Dealer Associations to help dealers understand the ZEV sales potential in their markets and the financial investments needed to get dealers ready to sell and maintain ZEVs. In response to these comments, panelists representing the dealer associations also praised the commitment of their member dealers, calling their members “all-inclusive” and “essential” partners in meeting government and private sector sales targets ZEV .

Reflecting the group’s unique solidarity, the panel refused the moderator’s invitation to link the transition to VZEs to a move towards direct sales. The NADA panelist called electrification and direct sales independent issues and dismissed the idea that a direct sales model was better suited to the growing deployment of electric vehicles, distinguishing the needs of Tesla’s customer base from the needs. of the mass market. The Cadillac panelist explained that GM is focused on improving the customer experience, and while it may mimic the digital experience used by direct selling companies, GM intends to leverage the strength of its dealer network. The Alliance panelist noted the trade association’s opposition to direct sales in the last legislative session, which largely favored new entrants of electric vehicles over traditional manufacturers.

The panelists also universally agreed that significant improvements in the infrastructure of ZEV charging stations, the reliability of the electricity grid and the pricing of electricity use, as well as consumer incentive programs sponsored by government and easy to understand for ZEV purchases will be needed to dramatically increase ZEV’s market share and ensure access to ZEVs for all communities. As the program drew to a close, all presenters agreed that developing the infrastructure necessary for widespread adoption of ZEVs in line with California’s ambitious goals will require substantial and lasting buy-in and investment from organizations in the field. Government, legislators, municipal entities, utilities, private businesses and ultimately consumers.

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