• Electric Vehicles
  • California
  • Zero-Emissions Vehicles
  • Plug-In EVs
  • Automakers

ICE Bans Begin to Take Shape in the US

Raquel Soat
Oct 27, 2020

Guidehouse Insights electric car

Banning the sale of new internal combustion engine (ICE) vehicles is not a new concept in countries and municipalities outside of the US. Beginning in 2016, European countries and cities began to make commitments to ban the future sale of ICE vehicles. Countries like France, Norway, and the UK have all set dates for these bans, with Norway’s being the most bullish—all new car sales must be zero emissions (battery EV or fuel cell) by 2025. Several cities within Europe have announced similar bans on ICE vehicles, including Rome and Milan, which ban ICE vehicles from entering certain parts of the city.

In late September 2020, California governor Gavin Newsom announced that the state will phase out the sale of new gasoline and diesel-powered cars to reduce California’s demand for fossil fuels—the first policy of this kind in the US. The executive order requires that all new cars and passenger trucks sold in California be zero emissions vehicles (ZEVs) by 2035. Plug-in hybrid EVs (PHEVs) are included under current ZEV mandate definitions, but what the exact 2035 regulation will include in terms of powertrains is not yet clear.

How Will Stakeholders and Other States Respond?

Other US states like Washington and Hawaii are already considering ICE bans—and more aggressive bans at that—with goals of no ICE vehicle sales by 2030. While these bans have not passed yet, news of California’s ban could spur these states to pass the policies. Furthermore, states currently following California’s ZEV mandates (via California’s waiver from the Clean Air Act) could opt to follow California’s lead in passing ICE bans.

Automakers should ramp up PEV availability in California or risk losing market share come 2035 when the ban takes effect. Automakers committed to even partial electric lineups, such as Volvo, may have an early advantage as other automakers race to meet their announced PEV production dates. California accounts for around 12% of total US light duty vehicle sales. The production changes necessary for automakers to provide enough vehicles to California may encourage them to offer more PEV models in other US states—particularly ZEV states.

Some Say California’s Ban Is Too Much, Others Say It’s Not Enough

Of course, the California ICE ban does not come without criticism. Some believe that California’s ban should be more aggressive, given that the state’s proportion of transportation emissions relative to total emissions is higher than the national proportion. (Transportation accounts for 28% of US emissions but 41% of California emissions.) However, given the availability of PEVs and announced PEVs, even in California, a ban earlier than 2030 is not likely to be successful.

Others believe the ICE ban may have negative impacts on California’s already troubled grid by adding a significant amount of electric load. However, PEVs can be an asset to the grid as it shifts away from fossil fuels and toward more variable renewable energy assets such as wind and solar. In times of low electric capacity or grid operation errors, PEVs can be used as storage that feeds battery charge back into the grid via vehicle-to-grid technology. Using PEVs as a grid asset will require coordination between utilities and fleet operators of PEVs, not just with individual owners of PEVs.

Banning ICEs will move the PEV market forward and significantly decrease greenhouse gas emissions from a key contributing sector, particularly if other states follow California’s lead. As a result, automakers will be forced to ramp up PEV production or risk losing market share to automakers who already have a significant PEV lineup.