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New Jersey becomes latest state to announce looming ICE vehicle ban

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Market Trends | Technology
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New Jersey will require automakers to exclusively manufacture zero emission vehicles (ZEVs) by 2035, joining a growing number of states with plans to ban internal combustion engine (ICE) vehicles.

Under New Jersey’s recently filed Advanced Clean Cars II rule, which is set for adoption Dec. 18, OEMs must begin complying with the new law in 2027, when 43% of their annual production must be ZEVs.

The percentage will increase each year, peaking at 100% in 2035 and subsequent years.

Gov. Phil Murphy said the new legislation will help accelerate the energy transition.

“The steps we take today to lower emissions will improve air quality and mitigate climate impacts for generations to come, all while increasing access to cleaner car choices,” he said in a press release.

Like other states that have adopted similar laws, New Jersey has been working to build up its charging infrastructure to meet growing demand. Since 2019, it has funded 2,980 charging stations with 5,271 ports, officials said. They added that they’re also developing wind, solar, energy storage and other clean energy technologies to meet charging demand.

The new rule won’t affect car dealerships or require consumers to ditch their existing ICE vehicles, but is meant to serve as a roadmap for automakers, officials said when announcing the rule last week.

“Cleaner cars and trucks mean cleaner air for our children and families, because the tailpipes of our own vehicles are a leading cause of poor local air quality,” said Environmental Protection Commissioner Shawn M. LaTourette. “As New Jersey transitions to a zero-emission vehicle future, we will improve our quality of life and public health. At the same time, we will reduce climate pollutants from the transportation sector, the greatest source of planet-warming pollution in New Jersey and the nation.”

The rule will be published in the Dec. 18 edition of the New Jersey Register.

According to state officials, EVs now represent 12% of vehicle sales in New Jersey, where more than 123,000 vehicles are now electric. Since last December, EV sales have spiked by 50%, it said.

New Jersey’s new rule hasn’t come without criticism including business groups, trade organizations, and lawmakers. During the proposal stage, concerns were raised related to cost, negative effects on vehicle affordability and consumer choice, strain on the state’s energy grid, and implementation of the rule, according to NJBIZ. The Fuel Merchants Association of New Jersey, New Jersey Propane Gas Association, New Jersey Coalition of Automotive Retailers (NJCAR), and New Jersey Business & Industry Association (NJBIA) are among the trade organizations that have voiced opposition to the proposal.

“In the end, consumers will decide when New Jersey becomes a 100% EV market, NOT government decision-makers or a governor who won’t even be in office when these mandates kick in and won’t have to deal with the economic and consumer impacts of ACCII,” said Jim Appleton, NJCAR president, according to NJBIZ. “Adopting this California policy, when more flexible options are available, is ill-advised.”

California became the nation’s first state to announce a 2035 ICE ban with the passing of its Advanced Clean Cars II rule in 2022. The rule “establishes a year-by-year roadmap so that by 2035 100% of new cars and light trucks sold in California will be zero-emission vehicles, including plug-in hybrid electric vehicles.”

Since then, Vermont, New York, Washington, Oregon, Massachusetts, Virginia, Rhode Island, Maryland and Connecticut have enacted similar bans.

A number of automakers–including Volvo, Buick, and Bentley, for example–have pledged to stop selling ICE vehicles by 2030.

However, some other automakers including General Motors (GM) and Ford have scaled back on their electric vehicle (EV) goals, executives said during recent Q3 earnings calls.

Paul Jacobson, GM’s chief financial officer, told investors that the OEM is dropping its previously announced EV production plans. This includes its 100,000 EV target it had for the second half of 2023 and a separate 400,000 EVs goal it hoped to meet by the first half of next year, he said.

Mary Barra, GM’s CEO, called the road to EV transformation “a bit bumpy, which is not unexpected.”

“And so, what we’re moving to is something that we can react in a much more agile way to make sure that we have the right vehicles,” Barra told investors. “And I believe [the] portfolio that we have looks at the most important segments, and makes sure that we have the right entries. We’re already seeing strong demand for entries when we have EVs that people actually want to buy. So, I think there is a lot of focus in the portfolio to have the right cells, but just to give ourselves more flexibility.”

During Ford’s Q3 earnings all, its Chief Financial Officer John Lawler said the company’s EV branch, Model 2, lost $1.3 billion during the quarter. Given the “challenging market” for Generation 1 productions, he said the OEM is postponing about $12 billion in EV-related spending.

Meanwhile, a Mercedes-Benz executive said during the OEM’s Q3 earnings call that the current EV space is neither healthy nor sustainable moving forward.

“EV is a very competitive space,” said Harald Wilhelm, Mercedes’ chief financial officer. “I mean, come on, with price discounts or some of the other guys, more than 30%, some of the traditional players selling best vehicles below the pricing level of ICE [internal combustion engine] with variable costs probably sitting above, as you know. I would say this is a pretty brutal space.”


Featured image of a New Jersey highway courtesy of Olga Kaya/iStock

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