The California EV Mandate is Expensive, Impractical, and Likely to Fail (Part 3)

Last week, the California Air Resources Board (CARB), an unelected regulatory body, announced a plan to try to force the state’s car fleet to change over to electric vehicles. The plan seeks to ban the sale of new purely hydrocarbon-fueled cars in California by the year 2035. The plan will be very expensive, is completely impractical, and is certain to fail, as even CARB seems to acknowledge by reserving the right to amend the targets if the market fails to respond to their diktat. The only question is how much cost and disruption will happen before CARB is forced to accept reality.

This is part three of a three-part series focusing on the CARB 2035 plan.

Part one can be read here.

Part two can be read here.

Part 3: Likely to fail

Despite all the fanfare of the announcement, California’s attempt to ban the sale of ICE vehicles by 2035 is certain to fail. We have already covered the huge expense involved and the impracticality of an EV mandate, both of which on their own make the mandate unlikely to be successful. Beyond those factors, though, is a whole panoply of deficiencies in the rule itself, economic factors, and legal factors that make the program a guaranteed failure right out of the gate.

Poorly designed

The design of the mandate leaves numerous holes that assure that CARB will fail to prevent new ICE vehicles from coming to California and indeed may even impede the claimed goal of the program, reducing greenhouse gas emissions. First, the rule does not prevent a Californian from traveling across the state line and purchasing an ICE vehicle.  Indeed, CARB likely cannot prevent such an action given the obvious constitutional infringement on interstate commerce. Second, the rule does not cover used cars, which can continue to be bought and sold normally. Modern cars are exceptionally durable, lasting decades with proper maintenance. This rule will likely inflate the value of used cars, but those used ICE vehicles will be on the roads for a long time. The used car exemption also opens up an enormous loophole, as cars can be bought new in another state and then resold later in California as “used.” A lucrative arbitrage opportunity, but hardly a recipe for successful regulation. Third, the rule does not require the purchase of an EV, indeed that would probably be illegal. So, consumers can, and will, simply hold on to their existing cars even longer than they otherwise would have. Given that new ICE vehicles are exceptionally clean and efficient, any rule that encourages the retention of older cars actually slows emissions reductions. Both the used car exemption and optional EV purchase element encourage the continued use of older, less efficient cars, thus undermining the stated goal of the entire program.

Economically illiterate

There are glaringly obvious economic factors that are already undermining the rule before it has even been implemented. We are already seeing limits on supply of many of the mineral inputs for EV. This has caused some price increases among EVs, but the supply constraints also limit the sheer number of EV that can be manufactured. There are no projections of massive increases in mining capacity in the near term, so the likelihood of this supply limit easing anytime soon is nonexistent.

What’s more, the regulation just assumes a massive increase in EV manufacturing capacity. While that may materialize, it is far from a guarantee. It seems an instance of “if we mandate it, they will come.” What happens when a deadline is reached and car manufacturers simply don’t have EVs to sell?

Legally dubious

Finally, there are major legal hurdles for this regulation to overcome before it can go into effect, significant enough that the rule going into effect as designed is highly unlikely. First, as mentioned previously, the compliance with California EV mandate raises the cost of vehicles in other states. Attorneys General in the harmed states have a strong case to make that this rulemaking is extraterritorial regulation: while California may be able to harm their own citizens, they are not empowered to harm the citizens of other states. 

A second major legal hurdle is related to the Clean Air Act, and California’s special waiver ability under that Act. The CAA grants California, and California alone, the ability to request a waiver of the CAA to allow it to implement regulations that are stricter than those set by the federal government. Such regulations are presumptively banned by the CAA, subject to this caveat that California may make such an application. However, that waiver authority was granted for California to address air quality challenges that are unique and particular to that state (for example: smog in the Los Angeles area). It is not a general waiver authority to implement their own stricter regulations whenever the state feels like it. Clearing this hurdle is made extremely difficult because CARB justified its regulation by citing the need to fight climate change. But climate change is not an air quality issue particular to California, it is global and impacted by global emissions. Thus, CARB actually undermined the state’s case for claiming a waiver under the CAA.

A third obvious legal challenge is the previously mentioned issue of interstate commerce. Banning the sale of any good across state lines by one state is presumptively illegal, one of the core historical reasons that the Constitution was drafted to replace the Articles of Confederation. It’s not clear how California thinks it can get around this basic constitutional issue. Citing a CAA waiver authority to regulate isn’t going to cut it because that just invites the Supreme Court to invalidate that waiver authority for impeding interstate commerce, the last thing that California’s hyperactive regulators would want.

Designed and Destined to Fail

On practically every level this EV mandate seems designed to fail. The program has gaping loopholes, is out of touch with economic reality, and has numerous serious legal deficiencies. CARB itself seems to acknowledge this reality as in its announcement it reserved the right to alter the deadlines if the market does not develop as they want it to. Thus, despite all the happy talk about a historic ban on ICE vehicles, CARB has already preemptively surrendered. When the deadlines are not met, they will move the goalposts. In this, they will be no different than the numerous countries and localities which have announced sweeping ICE bans, but which are always conveniently 10 or more years in the distance. The politicians and regulators of today get to pat themselves on the back for being so virtuous, leaving future officials to deal with the fallout.

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