Lawmakers okay $2.7 billion for zero-emission vehicles

California lawmakers have approved a dramatic expansion of the state’s commitments to all-electric vehicles, with the goal of ultimately increasing the number of electric and zero-emission cars on the road.

The $2.7 billion piece of the 2021-22 state budget was sent to Gov. Gavin Newsom’s desk on June 28. Newsom has not yet acted on it, but is expected to sign the legislation this week.

The plan strengthens California’s zero-emissions vehicles (ZEV) programs and builds upon language already contained the state’s anti-pollution Clean Transportation Program.

California, home to more electric vehicles than any other state, has about 425,000 on the road out of nearly 15 million registered automobiles.

The $2.7 billion in the overall budget bill, SB 129, includes $525 million for clean-vehicle rebates, $500 million for ZEV charging and fueling infrastructure, $500 million for low-emission off-road and other vehicles, $475 million for transit systems and school buses, $407 million for transit investment, $125 million in ZEV manufacturing grants, among other items.

It also beefs up environmental policies targeting interagency agreements for fuel and vehicle research, coordinates legislative programs with tribal groups and sets closer cooperation between California’s Infrastructure and Economic Development Bank and environmental funds.

The money for the programs comes from the state’s General Fund and other sources, but not from new fees, as originally envisioned.

California, home to more electric vehicles than any other state, has about 425,000 on the road out of nearly 15 million registered automobiles.

The California branch of the BlueGreen Alliance – a consortium of labor unions and environmental groups advocating for a low-carbon economy – reported that 33 domestically assembled battery electric vehicle models will be commercially available within 2 years. Maintaining domestic supply chains, through a proposed “Buy America” policy could create 6,250 vehicle assembly jobs and 41,250 supplier jobs annually, the Alliance reported.

The report also noted that the United States currently lags behind both China and the European Union in research, development, manufacturing, and selling EVs. However, investments in domestic production supply chains can change California’s part in this burgeoning market, estimated to be worth $300 billion by 2025.

These changes come almost a year after Gov. Gavin Newsom announced a state ban on the sale of all new gas-powered cars beginning in 2035.

“If we don’t use the full suite of policy tools to build industry in the U.S., we’re going to lose a lot of good manufacturing jobs to other countries. This will hurt communities, whole regions, and California if we don’t support domestic industry.” said Sam Appel, the California State Manager of the BlueGreen Alliance (BGA). “‘Buy American’ policies, can support a secure supply chain for US manufacturing and they can create economic opportunities for workers.”

Within the BGA’s California group, major players include the Natural Resource Defense Council, the United Auto Workers, the Teamsters Union, the League of Conservation Voters, the Sierra Club, the Union of Concerned Scientists, and the California Environmental Justice Alliance.

These changes come almost a year after Gov. Gavin Newsom announced a state ban on the sale of all new gas-powered cars beginning in 2035. The action is part of California’s ongoing  policies at a time when drought, water scarcity, and climate change threaten the state’s future.

The California Air Resources Board (CARB) set a goal of 1 million zero-emission vehicles on the road by the end of 2023, ramping up to 5 million by 2030. The BGA report estimates that “domestic assemblers will greatly exceed this baseline demand.”

Through predictive modeling, the current trends of ZEV sales in the state will be almost 175,000 in 2030, accounting for 30% of total domestic EV production.

The latest state budget impacts the Clean Transportation Program — formerly known as the Alternative and Renewable Fuel and Vehicle Technology Program — which was created through AB8 in 2008 and is renewed every few years by the Legislature. Its mission is to “drive the transition to clean, zero-emission electric vehicles throughout the state.”

Current CARB policy has created the Clean Vehicle Rebate Program (CVRP), which incentivizes purchasing or leasing ZEVs by providing rebates of up to $7000. The program, which fully exhausted its funds earlier this year, currently faces a steep waitlist for applications received after April 23. This ZEV trailer bill features $525 million, the largest dollar allocation in the entire bill, for refunding the CVRP.

“In order to reach California’s ambitious climate goals, the state will have to issue approximately 2.1 million rebates over the next 7 years at a rate of 300,000 rebates per year,” the study noted.
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Editor’s Note: Eric Furth is a Capitol Weekly intern from UC Berkeley.