New Jersey Governor Phil Murphy announced a proposal to adopt the Advanced Clean Cars II plan (ACC2), which would require car manufacturers to increase zero-emission vehicle shipments to 100% of all deliveries by 2035. The strategy was originally implemented by the California Air Resources Board (CARB) last year and has since been adopted by multiple states. On this episode of Inside Automotive, hosts Jim Fitzpatrick and Shyann Malone are joined by Jim Appleton, president of the New Jersey Coalition of Automotive Retailers (NJ CAR), to discuss the proposal and how it could affect the retail automotive sector.
Prior to the governor’s proposal, NJ CAR filed comments on the bill pointing out a number of weaknesses in the ACC2 plan. A key area of contention between lawmakers and the organization was the speed and scale with which manufacturers would be required to fully replace ICE vehicle sales with zero-emission vehicle sales. “I don’t think anybody in the automotive space doubts that EVs will play a major role in the coming years and decades,” remarks Appleton, “but 100% by 2035? I doubt it.”
Electric vehicle demand has certainly grown in a relatively short amount of time. In fact, according to the California New Car Dealers Association, Tesla sales outperformed Toyota, the state’s long-time frontrunner, in the last quarter. Although dealers are also increasingly excited by the growth of the zero-emission vehicle segment, many are concerned that the government’s goals will be unattainable without a rapid increase in demand. Appleton notes that the EV market is expected to grow to 9% by 2027 (Tesla comprises 4% of this total). Under the ACC2, this percentage would need to increase to 35% by the same timeframe, four times the anticipated amount.
Consumers have also voiced concerns. Affordability has become a major obstacle to new car ownership, especially for those in lower income brackets. While prices in the zero-emission vehicle segment have fallen over the last year, the average transaction price for such cars remains above $50,000. “This proposal, I think, will make a new car unaffordable for middle and working-class people in the state of New Jersey over the next three to five years,” predicts Appleton.
The ACC2 would also place disproportionate responsibility on different sectors of the automotive industry. Under the plan, car manufacturers would only be required to ship the targeted ratio of zero-emission vehicles into states which have adopted the CARB’s guidelines. Since ZEVs are expensive to make and have yet to offer meaningful returns on investments for most brands, this could encourage automakers to reduce their overall production as they slowly ramp up ZEV sales to improve cost efficiency. This could artificially constrain inventories and drive prices up even further. Customers and dealers would both be placed at a disadvantage if OEMs were to adopt such a strategy.
To increase sales of zero-emission vehicles, Appleton urges state and federal governments to “put their money where their mandates are.” In order to achieve the goals listed in the ACC2 without disadvantaging the middle class or dealerships, lawmakers should start by addressing the underlying issues currently blocking widescale ZEV adoption. Initiatives that lower car prices and improve infrastructure would naturally seed demand among hesitant car buyers. Appleton also recommends removing the proposed timeline. “I don’t think we can set a date,” he notes. “We have to set the pre-conditions for the marketplace to fall into line with the government mandates.” Once this is accomplished, the industry will be able to move much faster toward the goals envisioned by the ACC2 and the CARB.
