California Gov. Gavin Newsom signed an executive order Wednesday that would ban the sale of new gas-powered cars and pickup trucks in the state by 2035.
About Newsom's Order: California residents would still be able to drive gas-powered cars and sell them used under Newsom's order.
“Let us no longer be victims of geopolitical dictators that manipulate global supply chains and global markets,” Newsom said.
California, with almost 40 million residents, is the most populous state and represents 1 in every 10 new automobiles sold.
The Democratic governor's move would cut greenhouse gas emissions by 35%, according to his administration.
Newsom is also calling on new regulations for medium- and heavy-duty trucks to be 100% zero-emission by 2045, but the measure was not part of Wednesday's official order.
California state agencies are being called on to speed up the development of electric vehicle charging stations across the state.
Why It’s Important: The move by California could have a huge impact on the automobile industry, especially if other states follow its lead.
Automakers like Toyota Motors Corporation (NYSE: TM), Ford Motor Company (NYSE: F) and General Motors Company (NYSE: GM) may need to speed up their progress in producing electric vehicles or miss out on sales in the largest U.S. state.
Potential Auto Winners: Tesla Inc (NASDAQ: TSLA) stands to benefit from this new regulation, especially with its headquarters being in Palo Alto.
The company could achieve net-negative greenhouse gas emissions using renewable natural gas with its technology.
Tesla is also working on an electric semi-truck.
What’s Next: Tesla CEO Elon Musk promised a $25,000 electric vehicle car from his company in the next three years.
Tesla's long-term production goal is 2 million vehicles per year, the CEO said.
Ford expects to have 15 electric vehicle models by the end of 2020 and for electric vehicles to represent 10% of fourth-quarter wholesale volume.
General Motors has announced plans to vertically integrate part of its production to help lower costs and increase the efficiency of electric vehicles.
Disclosure: the author owns shares of SHLL and SBE.
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