This is clearly a harbinger of things to come for California which will
ban the sales of ICE cars by 2035. It appears that the USA better start pushing for solar and battery storage subsidies for individuals so that homes can independently generate their own power to offset these power shortages. Maybe I'll hold onto my ICE minivan a little longer!
California's decision to ban ICE cars by 2035 has got to be one of the most short-sighted decisions I've ever seen, and this is not a political statement, it is simple math and economics. Already oil refiners are under-investing in gasoline and diesel refinery capacity because US gasoline consumption is projected to peak soon:
US gasoline consumption will peak by 2023 in the aftermath of the coronavirus pandemic as increased fuel efficiency and electric vehicle sales take hold, but domestic crude oil production will keep ri
www.spglobal.com
California, with its unique refining requirements, will likely be the tip of the spear with regards to rising ICE fuel prices over the next several years.
I find Reuters to be less-biased than most news sources, and this recent article quotes AlixPartners as projecting that by 2035 only 54% of global vehicle sales will be EVs.
Electric vehicle sales could reach 33% globally by 2028 and 54% by 2035, as demand accelerates in most major markets, consultant AlixPartners said on Wednesday.
www.reuters.com
Of course, even this projection assumes that the lithium and rare earth sourcing problems are solved long before then, and maybe they could be. I understand, for example, the Salton Sea in California is being considered for lithium mining:
Amid the shrinking, toxic Salton Sea, there's enough lithium to meet the United States' entire projected demand and fuel the electric-vehicle revolution.
www.cnbc.com
But any domestic mining will likely face stiff pushback and regulation proposals from the environmental lobbying groups, so I'm doubtful that domestic lithium sources, especially in California, could come online fast enough to support such a massive increase in battery production. And EVs are being pushed worldwide, so the supply chain pressure is worldwide, and, as everyone knows, the current leading sources for everything in EV batteries are in China, which we have an increasingly bumpy trade relationship with.
The problem is, total new vehicle sales in California alone plateaued in normal times at about 2.2 million units per year in 2019, and perhaps 10% of them are currently EVs.
Cal-Covering-4Q-20.pdf
Current EV sales for the entire US is headed towards, maybe, one million vehicles per year in 2022:
This much we know: New-vehicle sales in the second quarter struggled, up only modestly from the first quarter and down more than 20% from Q2 2021. The reasons are well documented – tight inventory, high prices, consumer sentiment dropping. There were a few positive notes in the Q2 sales numbers...
www.coxautoinc.com
Total US new car sales were over 17 million units per years in 2019, probably the last "normal" model year, as in normal supply chains:
car-sales-stats
The math for battery availability and EV vehicle production volumes doesn't seem to work to support California being able to stop ICE vehicle sales by 2035. California current new car sales exceed the entire US EV sales. 13 years is not an especially long time in the development of new vehicles and EV supply lines to satisfy California's requirements. This isn't anything like the emissions controls or safety regulations changes in the 1960s and 1970s that impacted the auto industry, the EV transition is a lot more costly and difficult.
Even if you keep your ICE vehicle by maintaining it well, the price you'll pay for gasoline and diesel fuels will certainly increase dramatically, because the refining companies will slow investing years prior to 2035. And who'll suffer most? Well, of course, people below the 80th percentile of income level, who will have trouble buying high-demand EVs and will suffer from high gasoline prices.
The math for 2035 looks like the current target is very optimistic for stopping the sales of ICE vehicles.