So two important developments about electric vehicle transition in the marketplace:
Policyholders are starting to promulgate some new rules and some new incentives to get the transition to electric vehicles to accelerate. Here’s an article from CNBC where some banks in Australia, will stop loaning on new vehicles that are gasoline or diesel.
So if you go to buy a car at a car dealership and you are buying a car that’s not an electric vehicle, you can’t get a loan. You have to pay cash. Even if those cars are still available from the manufacturer, then available on the dealers’ lot, the lending sources may not lend you money to buy that car. This is one bank in Australia, but it’s something that’s starting to have a little bit of a domino effect. Other banks are jumping on the bandwagon and some manufacturers are doing the same thing. There’ll be no more new loans on new combustion engine vehicles. They still will continue on used vehicles but not on new vehicles. That’s the first thing.
The second thing is in California where the government there is trying to ban gas-powered car sales. So they’re going to make it illegal to sell new gasoline vehicles. This is different than financing. They’re going to just make it flat-out illegal. What are the details? Well according to the article, CARB which is the California air resources board that’s kind of their version of the EPA is finalizing a plan to ban the sale of gasoline vehicles by 2035.
Now, that’s 10-plus years away, but that will accelerate the transition to electric vehicles. California is the largest market for vehicles in the country. It’s the biggest state and more vehicles are sold there than in any other state. The ban will require a hundred percent of new cars sold in California to be free of fossil fuel emissions. That is going to accelerate the manufacturers to stop making them because that mandate, which will only allow electric vehicles to be purchased will be adopted by 12 other states soon.
So for the car companies, it’s not going to make sense to build vehicles that you can’t sell in half the country or for half the market. California is the country’s largest auto market and that’s going to make it extremely challenging for manufacturers to meet that standard.
So they’re recognizing it might be a challenge. What do you think? Do you think this is going to be a challenge? Do you think people are going to buy electric vehicles enough to make this work? Between banks not lending money on it and states not allowing it, is this going to accelerate the transition or is it just going to make people look at other alternatives? Are people going to move to other states? Are they going to keep their vehicles longer? Obviously, if you stop selling them in 2035, you know you buy a 2030 vehicle, you can keep it for 10 years and still have a gasoline vehicle, but you may have trouble finding parts. If manufacturers are not making new ones, there may not be parts in their parts department to fix old ones. There may not be mechanics to fix the old ones. So, what are the unintended consequences? What else can you think of, maybe we’re missing something. Are you in the automotive industry? Are you in the lending industry? How is this going to affect you? Or even if you rely on gasoline transportation, what are the side effects of this that maybe no one’s thinking about? Tell us in the comments.