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The rising popularity of electric vehicles (EVs) and public concern about climate change have led to new regulations in the auto market. Two states—California and New York—recently passed legislation that will impact new vehicle sales and directly affect consumers and dealerships. Even with these changes, gas-powered cars are far from obsolete, making it important to fully understand what these new laws actually entail and how they may impact your business. 

What’s Changing in California?

The new regulations, proposed by the State of California Air Resources Board and signed as an executive order by Governor Gavin Newsom, ban the sale of brand-new vehicles that rely on gas after the year 2035¹. While the goal is to cut the sales of new gas-powered vehicles outright, the California gas engine ban will be done in phases over the coming years, with the percentage of allowable new gas-powered vehicle sales reduced over time. Dealerships that break this rule and sell new vehicles with non-qualifying zero-emission engines can be fined up to $20,000 for a single illegal sale². 

The goal of this legislation is to encourage drivers to switch to vehicles that use renewable energy technology to reduce carbon emissions, but it opens some questions. You may be wondering, are gasoline cars going away? Not likely. An important takeaway for consumers and dealers alike is that used vehicles are not impacted by this law. That means that you can continue to buy and sell pre-owned gas-powered vehicles after 2035. 

What’s Changing in New York?

In a similar move, New York governor Kathy Hochul instructed the state’s Department of Environmental Conservation to develop rules reducing the sale of gas-powered vehicles by 2035. Like California, the Empire State is also targeting a gradual reduction with 68% of new car sales being electric by 2030³. However, New York is also implementing the goal of transitioning medium- and heavy-duty vehicles to zero-emission models by 2045…where it’s possible to do so⁴.

The New York laws currently do not have California-style enforcement mechanisms or actionable steps for state agencies to execute the phasing-in of zero-emission vehicles. Additionally, there are questions as to whether this would affect vehicles that are purchased out of state but registered and used in New York. However, it’s reasonable to infer that the new regulations will only affect the new vehicle market. That means purchasing and driving used vehicles shouldn’t be an issue.

How Might These Changes Affect the Auto Market?

Both states’ sets of proposed rules governing what types of vehicles can be sold are positive steps toward combating the climate crisis. But, like any major regulatory change, there will be challenges. Limitations on consumer choice are likely to be controversial, and the switch to electric vehicles could create supply chain pressure for manufacturers as these vehicles’ components make up a smaller percentage of the market.

Additionally, electric vehicles tend to be more expensive than gas-powered models, partly due to being newer technology. The newness affects people’s comfort level with the EVs, especially over possible mileage limitations and the lower availability of charging stations compared to gas stations. This concern sparks range anxiety⁵ and worries about the likelihood of losing power while on the road or losing valuable time while waiting for a vehicle to recharge.

Ultimately, the hope is that all these issues will be resolved by increasing the percentage of electric vehicles on the market. Increased demand may also incentivize expanding the EV charging infrastructure, all while reducing car transportation’s environmental impact. Many manufacturers are already preparing for additional legislative changes to ensure they’re well-positioned in a growing market. Familiar brands like Ford, Hyundai, and Chevrolet are joining the ranks of luxury manufacturers and cutting-edge automotive startups launching electric vehicles in 2022 and 2023⁶. 

Are Gasoline Cars Going Away Soon?

The automotive industry is changing, but the switch from gas power to electric will be a gradual transition. Gas-powered vehicles are likely to be around for a long time—even the hardline changes in California and proposed legislation in New York leave room for pre-owned cars with combustion engines to be owned, used, and traded for the foreseeable future. Drivers don’t have to give up the technology they’re used to right away, and dealers can continue to fulfill the demand for pre-owned vehicles with gas-powered engines.

Work with ACV Auctions to Prepare Your Dealership for Whatever the Future Holds

Industry-wide changes can shape the new and used car markets, so it’s important to have the right source for quality pre-owned vehicles. Find out why dealers count on ACV Auctions for their inventory needs, from transparent auction bids to fully vetted vehicle condition reports and transport options. They’re the go-to marketplace for finding the vehicles your customers want at attractive prices.

Sources:

1. Newberger, E. (26 August, 2022) California bans the sale of new gas-powered cars by 2035. CNBC.com. Retrieved October 17, 2022 from https://www.cnbc.com/2022/08/25/california-bans-the-sale-of-new-gas-powered-cars-by-2035.html

2. De Leon, A. (26 August, 2022) California’s coming gas car ban: What it means. Los Angeles Times. Retrieved October 17, 2022 from https://www.latimes.com/business/story/2022-08-25/californias-coming-gas-car-ban-what-it-means

3. Vijayenthiran, V. (30 September 2022) New York to ban sale of gas cars by 2035, matching California. Motor Authority. Retrieved October 17, 2022 https://www.motorauthority.com/news/1133535_new-york-to-ban-sale-of-gas-cars-by-2035-matching-california

4. Ramey, J. (15 September 2021) New York Will Ban Sale of Gas-Engined Cars by 2035. Autoweek.com. Retrieved October 17, 2022 https://www.autoweek.com/news/green-cars/a37611449/new-york-gas-cars-ban-2035/

5. Wardlaw, C. (3 November 2020) What is Range Anxiety with Electric Vehicles? JDPower.com. Retrieved October 17, 2022 from https://www.jdpower.com/cars/shopping-guides/what-is-range-anxiety-with-electric-vehicles

6. Morris, A. (3 June 2022) Electric Car Companies Guide. Kelley Blue Book. Retrieved October 17, 2022 from  https://www.kbb.com/car-advice/ev-car-companies-guide/

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