EV Market Welcomes a New ZEV State

In March 2020, the Washington State Senate and House of Representatives passed SB5811, a zero emissions vehicle (ZEV) mandate that would make Washington the twelfth state to adopt California’s ZEV policy. Under the bill, 5% of each automaker’s sales must be EVs, and these sales must increase to 8% by 2025. Washington’s governor, Jay Inslee, is expected to sign the bill in the coming weeks. SB5811 will join Colorado—which passed a ZEV mandate in August 2019—as a new ZEV state, further boosting EV adoption and investment.

ZEV History

A ZEV mandate was first enacted in California in 1990 as part of the low emissions vehicle regulation to bring more electrified transportation (including hydrogen fuel cell EVs) onto the roads and reduce emissions from the transport sector. ZEV mandates represent a unique policy approach to reducing emissions because they require automakers to sell a certain amount of EVs in a state or face a financial penalty. The first ZEV mandate in California was not a success due to a lack of available EV models. However, the second phase from 2005-2017 encouraged the production of vehicles with some electrification (like plug-in hybrid EVs), which led to declining battery costs and set the stage for the current phase of ZEV mandates.

In 2018, California enacted the current phase of its ZEV policy, which has been the model for other states adopting ZEV policies. Through 2019, there were 11 total ZEV states: Colorado, Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Vermont.

Increased EV Adoption through Policy

In most states, the ZEV policy has been successful at increasing EV adoption. In 2018, nearly 2% of light duty vehicle sales in the US were ZEVs, and over 40% of those ZEV sales came from California. In Guidehouse Insights’ 2019 Market Data: EV Geographic Forecast—North America report, seven of the top 10 states for forecasted light duty plug-in EV sales are current ZEV states—eight of the top 10 if you include Washington. Furthermore, by 2030, Guidehouse Insights expects around 60% of all plug-in EV sales to come from ZEV mandate states (including Washington). Policy measures mandating the sale of EVs seems to be an effective way to increase adoption of EVs in the US.

The Future of ZEV

In addition to adopting the policy structure set forth by California, some states have made other commitments to ZEVs. In 2019, North Carolina Governor Roy Cooper signed an executive order that seeks to increase the number of registered ZEVs in the state to at least 80,000 by 2025. The executive order also sets greenhouse gas emissions and energy consumption reduction targets for the state. While not as stringent in terms of automaker compliance, other forms of EV targets and goals further spur the market, especially when paired with an emissions reduction policy.

As more and more states adopt the ZEV mandate and automakers make more EV models available in those states to meet the requirements, investment in other aspects of the EV market are increasing as well, such as EV charging infrastructure. ZEV policies, combined with air quality and emissions reductions requirements, have helped to spur the EV market.