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California bans all new gas-powered car sales by 2035

The state of California has approved a first-of-its-kind rule that will ban the sale of all new gas-powered cars in the future.

The California Air Resources Board (CARB) voted to require automakers to only sell new electric and certain hybrids in the state by 2035.

The action is is the strictest ruling banning gas-powered cars in the U.S. and worldwide. The E.U.’s proposal to ban the sale of new gas-powered cars is still being hammered out by member countries.

"The climate crisis is solvable if we focus on the big, bold steps necessary to stem the tide of carbon pollution," California Governor Gavin Newsom said on Wednesday. Newsom proposed the 2035 ban two years ago with an executive order that directed CARB and others to determine how to implement the plan.

The rule requires automakers to hit milestones along the way: By 2026, 35% of new cars in the state must be zero-emission vehicles and that rises to 68% by 2030.

Traffic moves along a freeway as vehicles travel towards Los Angeles, California, U.S., March 22, 2022.  REUTERS/Mike Blake
Traffic moves along a freeway as vehicles travel towards Los Angeles, California, U.S., March 22, 2022. REUTERS/Mike Blake (Mike Blake / reuters)

California’s adoption of the rule could have a huge ripple effect as many other states adopt California's rules for their own emissions regulations. California is the only state that can ask for an EPA waiver to make its own rules.

There are 17 other states that follow California’s emissions standards, and those states would be next to enact new rules.

Some automakers are on board with this measure.

“We’re committed to building a zero-emissions transportation future that includes everyone, backed by our own investments of more than $50 billion by 2026 in EVs and batteries,” Ford’s (F) chief sustainability officer said in a statement. “The CARB Advanced Clean Cars II rule is a landmark standard that will define clean transportation and set an example for the United States."

Toyota (TM) has also recognized the state’s ability to enact its own emissions standards. However, an industry group that represents automakers and other suppliers believes the new rule is too aggressive.

“California today is about 18 percent EV market share and leading the nation which stands at 6.3 percent market share," John Bozzella, CEO of Alliance for Automotive Innovation, said in a statement to Yahoo Finance. "Despite this positive trend, California’s EV sale mandates are still very aggressive – even in California with decades of supportive EV policies – and will be extremely challenging.”

“Whether or not these requirements are realistic or achievable is directly linked to external factors like inflation, charging and fuel infrastructure, supply chains, labor, critical mineral availability and pricing, and the ongoing semiconductor shortage," Bozzella added. "These are complex, intertwined and global issues well beyond the control of either CARB or the auto industry.”

For its part, Tesla (TSLA), which is not part of the Alliance for Automotive Innovation, believes the rule doesn’t go far enough.

In a statement to CARB that offered amendments to the proposal, Tesla said the ban should go into effect by 2030 and that rules allowing the use of hybrid or PHEV sales should be more stringent.

But Tesla was critical of CARB’s rules for battery durability requirements, claiming those rules will harm “the rate of electric vehicle uptake through imposition of substantial new costs and designs” and won't have any benefit to reducing emissions.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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