New York State is banning the sale of new gasoline-powered vehicles by 2035, following California’s lead. California officially approved its regulations last month, banning the sale of new gasoline-powered cars and trucks by 2035. The Clean Air Act allows California to set its own environmental rules and other states can choose to adopt them. New York Governor Kathy Hochul issued an edict to the state’s Department of Environmental Conservation to implement the regulations to ban gasoline vehicles, which will be filed by the end of the year.
Like California, New York’s rules would apply to all new cars, pickup trucks and SUVs. The regulations would establish annual targets for the share of zero-emission vehicles automakers must sell in the state, starting at 35 percent in 2026, ramping up to 68 percent by 2030, and 100 percent by 2035—the same mandates as California. Some car makers, such as GM, have bought into the electric vehicle transition and are working toward an eventual phase-out of gas-powered vehicles.
New York towns and cities can apply for grants to help them buy zero-emission vehicles for their fleets, and to help build electric-vehicle charging stations. According to Governor Hochul, $175 million in federal funds from the 2021 Infrastructure Investment and Jobs Act would go toward building electric-vehicle charging stations. President Biden has set a goal for half of U.S. auto sales to be zero-emission by 2030.
California’s Situation
California’s electric grid might not be ready for the ban on fossil fuel vehicles as the state has trouble generating enough power to meet demand during its heat waves and has had to institute rolling blackouts. To add millions of battery electric vehicles by 2035, California will need to make investments in its electric grid. The state’s heavy reliance on solar and other renewables — upon which it intends to depend for 60 percent of its energy by 2030 — has proven destabilizing in recent years. In 2020, the state’s residents endured rolling blackouts, which made the state generate more electricity from natural gas in 2021 to avoid similar blackouts and to add expensive batteries to back-up intermittent wind and solar power. California now has one of the highest electricity prices in the nation. In June 2022, California’s residential electricity prices ranked second highest, second to Hawaii, totaling 28.98 cents per kilowatt hour—88 percent higher than the national average.
The Western States Petroleum Association indicated that the “electrification of the state’s transportation sector will increase demand by around 300,000 gigawatt-hours, which would be equivalent to a doubling of present electricity demand. Charging an electric vehicle is like adding one or two air conditioners to a residence in terms of its energy demand increase, and many households have multiple vehicles.
There is also the issue of whether there will be enough charging stations to service all the electric vehicles. As of January 2022, California had 837,887 light-duty electric vehicles (i.e. battery electric, plug-in hybrid, and fuel cell) and 1,943 medium- and heavy-duty electric vehicles. The state plans to have 1.5 million zero-emissions vehicles on its roads by 2025 and at least 5 million on its roads by 2030. According to a 2021 California Energy Commission report, in order to support 5 million electric vehicles, California will require over 700,000 public and shared private chargers. In a later estimate, that same agency indicated the state will require 1.2 million chargers by 2030. California currently has 79,023 public and private electric vehicle chargers—only 6.4 percent of what it will need in 2030.
Another issue is where the critical minerals such as nickel, lithium and cobalt needed for electric vehicle batteries will come from. While the United States has some of these minerals, regulatory roadblocks and lawsuits from environmentalists are in the way of developing those mining industries. A new mine in the United States can take seven to 10 years to complete all the permitting and paperwork before going online while in Canada and Australia, that process only takes two to three years. One mine in Minnesota (Twin Metals) has been waiting to get the go-ahead to mine since 1966. The only electric vehicles that will be eligible for the $7,500 tax credit in the climate/tax bill (the so-called Inflation Reduction Act) are ones that are made in North America using batteries with minerals obtained from U.S. mines or from its allies. These requirements are largely viewed as unachievable by many observers because of the auto industry’s heavy reliance on battery materials and components from China.
For electric vehicles to represent 100 percent of new car sales in line with California’s goal in 2035 — 17 million annually — current lithium carbonate equivalent production would only meet 0.05 percent of total domestic EV battery pack demand. A US Geological Survey estimated that to fully electrify its vehicle fleet, the United States will need 1.27 million and 160,000 metric tons of battery-grade nickel and cobalt per year, respectively — both of which exceed total global production in 2021. The United States currently has one operating nickel mine, in Michigan, whose resources are expected to be exhausted by 2026. In January, the Biden administration revoked the federal leases for the Twin Metals mine in Minnesota that contains copper, nickel, cobalt, and platinum-group elements and environmentalists have several mines tied up in lawsuits such as the Thacker Pass lithium mine in Nevada. The International Energy Agency estimates that the world will need roughly 20 times as much nickel and cobalt by 2040 as it had in 2020, and 40 times as much lithium. Needless to say, prices of these minerals are expected to soar to cover the enormous investments required to meet the anticipated demand.
The Energy Crisis Affects Electric Vehicles
Electric vehicle prices average $66,000–far higher than conventional autos, keeping them out of reach for most consumers. Finding the lithium and other metals needed for their batteries is a costly challenge and puts China, who dominates the supply chain for electric vehicle batteries in the driver’s seat, making the United States dependent on a Communist country and our chief competitor for energy. The United States is almost four times more dependent upon China for the electric vehicle supply chain than it was dependent upon the Middle East for oil.
The process of manufacturing batteries is highly energy intensive and can be expensive, depending on the fuel used and the manufacturing location. In Europe, energy-intensive manufacturing is often either unprofitable or has been forced to scale down production due to regulatory demands to conserve energy. Due to soaring electricity costs, electric vehicles are losing their fuel cost advantage in Europe. Charging a Tesla in Europe, for example, has become more expensive than fueling a comparable internal combustion engine vehicle. For example:
The Tesla Model 3 uses 17 kilowatt hours per 100 kilometers. A comparable ICE car, such as the BMW 3 series, uses around 5.0 liters of diesel for the same 100 kilometers. Tesla currently sells electricity for €0.70 per kilowatt hour at its superchargers in Germany, where it recently opened one of its gigafactories. So, driving a Model 3 for 100 kilometers results in fuel expenses of €11.90 ($11.50). Diesel currently costs €1.98 per liter in Germany, on average. The BMW 3 series uses €9.90 ($9.60) per 100 kilometers. Using an ICE-powered BMW that is comparable to Tesla’s electric vehicle costs around 20 percent less in fuel expenses today in Germany. In other European countries, the costs are comparable. In the UK, for example, the diesel-powered BMW 3 costs around $10 per 100 kilometers, while the Tesla Model 3 costs around $11 per 100 kilometers.
Since the United States under President Biden is pursuing policies that seek to emulate Europe’s “energy transition,” Americans may soon find themselves facing more expensive vehicles requiring more expensive energy sources. Personal transportation might become a thing of the past for many Americans if policy changes are not made.
Conclusion
New York is following California’s lead in banning gasoline new car sales by 2035, forcing electric vehicles on the public, whether they like them or not. It is unclear, however, whether the electric grid will be able to handle the increased demand, where the critical minerals will come from that are needed to manufacture batteries and other parts of the vehicles, whether there will be sufficient charging stations, and how Americans will afford the higher purchase costs.
One of the key arguments for buying an electric vehicle is lower fuel costs. However, electric vehicle fuel costs are no longer lower in some markets. In the United States, where electricity costs differ from state to state, there are markets where electric vehicles are cheaper to fuel, but other markets that are more favorable for gasoline and diesel vehicles. Consumers are likely to ask themselves why they should buy a new vehicle for many thousands of dollars to just end up with higher fuel expenses. Governors Newsom and Hochul, and President Biden need to study the issues better before they eliminate vehicle choices for American consumers.
