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Market News

 January 31, 2012
Will California Be the New Clean Car Capital of the World?

 Last Friday, California regulators unanimously approved a robust package of progressive automobile standards known as the California clean car rules.

After three years in the making, this emissions-control program will increase the number of low-pollution vehicles available to consumers starting in 2017, with a goal to have 1.4 million zero-emission cars on the road by 2025. These vehicles, which include plug-in hybrids, electric battery-powered cars, and hydrogen fuel cell cars, currently make up a tiny portion of all the fleet in California and around the country.

The clean car rules will begin a new chapter for the automobile industry in California. By 2025 one in seven new cars sold in the state must emit little or no pollution. Half a million of these cars are expected to be fuel cell or electric powered. The clean car rules also set the goal that by 2050 87% of vehicles must be fueled by clean technologies.

The California clean car rules also address emission standards for gasoline and diesel-powered vehicles by extending limits on greenhouse gas emissions and smog forming pollutants. Again, by 2025 all new vehicles must emit 34% fewer global warming gases and 75% fewer smog forming emissions. These provisions should be welcomed in a state with over 26 million cars and the top five smoggiest metropolitan areas in the country.

Automakers have been given sufficient lead-time to adjust to these new demands and have largely been receptive. Although they have expressed concerns that new technologies needed to meet the standards may drive up the price of a vehicle by $1,900 and potentially lower consumer demand. However, the California Air Resources board estimates that the initial increase in cost will be offset by an average of $6,000 worth of fuel savings over a vehicle's lifetime.

Automakers also initially expressed fears that consumers would steer clear of new clean car technologies without alternative fueling stations in place. This problem has been addressed by a private-public partnership designed to build new infrastructure for vehicle charging and fueling.

With more than 26 million cars on California's roads, this ground-breaking clean car standard will help combat smog, reduce carbon emissions and spur a new era of innovation in the automobile sector.