The Daily - Is California Jump-Starting the Electric Vehicle Revolution?

Episode Date: September 8, 2022

As California watches the impact of rising temperatures devastate its environment with brutal heat waves and raging fires, the state is taking increasingly far-reaching steps to combat climate change.One of those measures — banning the sale of new gasoline-powered cars by 2035 — could prove a turning point for the transition to electric vehicles.Guest: Neal E. Boudette, an automotive correspondent for The New York Times.Background reading: Not only is California the largest auto market in the United States, but more than a dozen other states also typically follow California’s lead when setting their own auto emissions standards.Automakers such as General Motors have equally ambitious aspirations for electric cars, but moving away from internal-combustion vehicles will not be easy.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday. 

From The New York Times, I'm Natalie Kittrow-Eff. This is The Daily. In the midst of a brutal heat wave and devastating fires, California is taking increasingly dramatic steps to combat climate change. State regulators voting unanimously late today to put the internal combustion engine on the extinction list. California state regulators agreed to ban the sale of any

new powered gasoline cars by 2035. Today, my colleague Neil Beaudet talks about one of those measures. California is the first state to take action like this, and it could prove to be a watershed moment for the electric vehicle movement. A rule that may bring about the end of gas-powered cars for everyone.

It's Thursday, September 8th. It's Thursday, September 8th. Neil, so California in recent weeks has passed a bunch of measures to tackle climate change, and we want to zero in on one of those. You've covered the auto industry for decades, and this new rule about cars feels like a pretty major shift by the state of California. Tell me exactly what the state just did. The state announced that in 2035, they will no longer allow the sale of new gasoline-powered cars. So after that, you'll have to buy either battery electric vehicles or, if they're around, hydrogen-powered vehicles or something

that has zero emissions. But after 2035, you won't be able to buy your regular gasoline-powered car or diesel truck. So are they banning buying gas cars? Or is it that you can't drive a gas car entirely after 2035? drive a gas car entirely after 2035? No, it's just the sale of vehicles. So you'll still be able to buy used gasoline powered cars and there'll still be gas stations and people will still drive cars that have tailpipes as we know them today. It's just that new cars sold after that date have to be zero emission or mostly battery electric. So that seems pretty huge, even for liberal California. This feels like a dramatic lean into climate conscious policy, especially given how car centric the state is. It is a big step. California is a huge market for vehicles. They sell almost two million a year in California. But there are several other states, about a dozen, New York is one of them, for example, that follow along on California's lead. In other words, they adopt the same policies that California takes with emission controls. So in effect, California's decision will mean probably

about a third of the country will go along in this direction. It's not the whole country, and there are a lot of big states, Texas and states in the middle of the country that don't go along with it. But California does have a lot of pull in environmental issues and especially in regulating auto emissions. Neil, can we talk about why that is? Why does California affect so many other states in terms of these rules? Well, California has for a long time set more restrictive guidelines on emissions than the federal government. And it's done that because, you know, the smog problem in Los Angeles is famous. And so years ago, they took steps to have stricter emissions controls. They had

required the automakers to sell low emissions or zero emissions vehicles. California was a pioneer in giving the high occupancy vehicle lanes to electric cars to make electric cars more attractive to their consumers. They have done this because of their own environmental concerns. So having these other states go along with California's regulations is one way California has influenced. The other is that the auto companies have to comply with California's regulations. And for years, they have built electric vehicles that they sell in California and the other so-called California states to comply. So the auto industry has had to tailor their product lines to comply with California. And in many cases, what they have had to produce for California, they have ended up selling in other parts of the country.

So California has had this influence on regulators in other states, but they've also influenced what the automakers actually make. but they've also influenced what the automakers actually make. So it sounds like California is at least trying to force a pretty wholesale shift onto the auto industry writ large. Well, that's the interesting thing about this particular instance. Here, yes, California wants a shift, but the industry is ahead of the state. They have been talking about similar goals. So this is a case where California is putting out some regulations and they're catching up to the industry. The industry is ahead of them. And the long history of this has always been

California pushing and the automakers resisting and fighting and dragging their feet in some ways to go along with the least amount of effort and least amount of expense to meet what California wants. And so California's announcement, while it's impressive, that's something that auto industry has been talking about for a year and a half now. Yeah, I am surprised to hear you say this because my impression of the auto industry is a bit what you just described, that it hasn't generally been super invested in building cleaner cars. How did this shift happen? In the past, automakers resisted environmental regulations because they saw it as a cost. It was not something that consumers were demanding. They wanted fuel economy, but they weren't buying cars based on which vehicles emitted the fewest greenhouse gases. And it was just something that they had to do to comply. So it was something the auto industry resisted going along with. Right, right. I mean, from their point of view, there was no upside.

So they fought this stuff tooth and nail. Right. But the automakers did make efforts at electric vehicles. The electric car is here. General Motors developed this experimental car called the EV1. That car is GM's EV1, the car of the future today. It was battery powered. 26 lead acid batteries give this aluminium, magnesium and fiberglass hybrid 137 brake horsepower.

They had a small fleet of them that they leased out to people. It was really a test fleet and they never put it on the market. Gas prices were really low. Americans were buying SUVs, and they scrapped the product and didn't push it any further. And then after that, Toyota came out with the Prius. There's a change happening. It begins with Prius, Toyota's revolutionary hybrid vehicle. Which was getting about 45 to 50 miles a gallon.

And it was kind of a sensation. Transportation is finally evolving. And that was really the first sign that, hey, wait a minute. You know, high mileage cars might actually have a market there. What if everything ran on gas? And then... Then again, what if everything didn't? Nissan came out with the Leaf. The 100% electric, zero gas Nissan Leaf. Which was an

electric vehicle. It only went about 80 miles before you needed to recharge it. It was really aimed at environmentalists and people who just didn't want to use gas. But other than the fact that it didn't use gas, there wasn't really much interesting about it. Right. David Letterman drove the Leaf, right? I think I remember that. I don't remember that. He did. It's a sort of absurd thing, but keep rolling, Neil, just as if I didn't interrupt you with the Letterman aside, even though it's hilarious that he did drive it. Letterman aside, even though it's hilarious that he did drive it.

So you get to about 2010, and the lesson the industry has is that you can't sell electric vehicles in large numbers, and you can't sell them profitably. Well, another episode of Jay Leno's Garage. We're here with the Tesla Model S. This is the car they said would never be produced. There are a lot of naysayers, a lot of negative people's Garage. We're here with the Tesla Model S. This is the car they said would never be produced. There are a lot of naysayers, a lot of negative people out there, but here it is. And then Tesla comes along, and Tesla got started in 2003,

but it was really 2012 when they made their mark. It is time to deliver. They introduced the Model S. Model S. Yes! This was a luxury car. Yes! And the interesting thing they did was... The world has been under this illusion that electric cars cannot be as good as gasoline cars. They took the electric motor and the battery power and used that to make a car that was super cool and fun to drive. What the Model S is fundamentally about is breaking that illusion. It's showing that an electric car

can in fact be the best car in the world. That's what makes it really important. And they also developed it as a software device. Now to show you how this works, right now it's taking up the entire screen with a map. It really is enormous. So that they could download updates and change the way the brakes work, the way the acceleration works, the way the battery works.

So it was a completely different type of vehicle than anything anybody had ever seen before. And it was a sensation. People are buying Tes sensation. People aren't buying this car for the cost difference. They're talking about the high performance, the user experience, the fact that it's an incredible car. And very quickly, 2013, 2014, 2015. The luxury electric automaker says it delivered 10,000 cars in the first quarter of the year. Suddenly, the Model S is taking customers away from BMW and Audi and Mercedes. And by around 2015, 2016, the rest of the industry realized, hey, this is not just a fad. It's not just an interesting thing by this little startup company.

This is a real trend and we have to take it seriously. this is a real trend and we have to take it seriously. Right. Teslas are not exactly my thing, but I get that a lot of people do think they're cool and kind of sexy in a way, like a hot computer on wheels. And it sounds like you're saying that made all the difference. In many ways, it did. I mean, it's a completely different experience driving a Tesla than another vehicle. You've got this giant video screen. There's computer games in there. The volume goes up to 11.

They did all kinds of things that, in sort of an iPhone sort of way, they had these cool little features that people love. So there are all kinds of things that Teslas are capable of doing that the traditional auto industry never thought of. And so it took off. It was an electric car, but it was more than just a car. It sounds like what Tesla is proving with its success is that people will buy these cars and they'll buy them instead of other luxury cars, BMWs, Mercedes, Audis. So is that when other car companies start to catch on? The real moment is 2018 when Tesla starts making the Model 3 in very large numbers and sells them

in very large numbers. This was a smaller car than the Model S. It's priced at around $40,000, a little bit higher these days. In any case, that was a vehicle that was accessible to a lot more consumers than the Model S and the Model X SUV. And that was the moment where it was clear, this is the way the future is going. And the traditional auto companies had some electric vehicles on the market, but they were small cars. General Motors had the Chevrolet Bolt, which was an electric vehicle, a compact. It didn't have quite the battery range that Tesla's had. And it just wasn't as cool and as appealing as Tesla's. And so we get to about 2020.

And by then, all the auto companies have realized electric is the future. And they've been working for a couple of years to try to catch up. Please welcome GM Chairman and CEO, Mary Barra. It was at the beginning of March in 2020 and General Motors announced they were having this big media event of their own. Well, good afternoon and thanks for joining us for an in-depth look at our electric vehicle technologies and upcoming products.

It was in Warren, Michigan, just north of Detroit, at what they call the Design Dome. And this is this domed building, very large, where they show cars, often internally, not necessarily to the press. But in this time, they let the press in. And there were 12 or maybe 14 vehicles all arranged around this dome in kind of a semicircle. And there were a couple of pickup trucks. There was a big SUV, a small SUV, a Hummer, a couple of Cadillacs.

Everything you will see today, including every vehicle, is real. And these were all electric vehicles that GM was promising to produce in the future. What we're going to show you comes down to this. We want to put everyone in an EV and we have what it takes to do it. And it was clear after that press conference that the GM wasn't just dabbling in electric vehicles. They were clearly betting the future of the company on EVs. betting the future of the company on EVs.

And then we get to January 2021, and GM announces that they want to make the company carbon neutral. In other words, you know, their buildings and their factories, they're going to somehow find a way to make them carbon neutral. And at the same time, in the press release, almost as a second thought, they said their aim is to stop making internal combustion vehicles by 2035. And it was really an un-GM statement to do something so bold and so daring as to put a date on when they're going to stop making internal combustion vehicles. I mean, the gasoline engine is the heart of the industry. That's why the company is called General Motors and why Ford is Ford Motor, because that's what they made was motors. And here is this large company at once the largest

automaker in the world saying, we are going to stop making the thing we have specialized in and done for the last century. And it strikes me, they're announcing this long before California went forward with their rule. I mean, they did this unforced. This was purely a business move. Yes, they did. Tesla showed that you could sell electric vehicles in mass volumes and make a lot of money. And that's what the auto companies realized, that this isn't a fad. It's not a niche.

This is going to be the heart of the industry, and they better get on board or fall by the wayside. I think the catalyst really is the consumer, that people want to buy these vehicles. So that motivates the automakers to invest in producing them and selling them. It's really the fact that all of this is backed up by the profit motive. You can sell these EVs to consumers. Consumers want to buy them, and you can make money doing it. That's really the wind that's behind the sales in all of this. The California decision is important, and it's symbolic. It doesn't force anybody to do anything. It's really the direction that the industry, the auto industry and other industries see there's money to be made

here. And that's what's motivating them to charge in this direction. So, Neil, is that kind of it? I mean, are we ready to go here? Is it safe to say that the California rule is going to be easy to comply with by 2035? Well, there's a lot of excitement about the new vehicles that are coming out and a lot of buzz, but there are still a lot of hurdles along the way. We'll be right back. Neil, you said there are hurdles to getting California to a place where new gas-powered cars can't be sold by 2035. What are they? What are those obstacles? Well, the first is that they have to be able to make millions of electric vehicles, and they're not geared up to do that right now. Plus, you've got to make them

affordable so that, you know, the mass market can buy these cars. And then you have to be able to charge them up and get them repaired and serviced. And there's very little infrastructure for that right now for such a big change. There's charging stations available, but not for millions and millions of EVs. Got it. Okay, let's start with the first problem you mentioned, the ability to make the cars themselves. Well, they've got to build plants to produce them. They have to retool plants to actually assemble the vehicles, but they also have to build plants to make the batteries that will power these vehicles. And they're rushing to do that now. General Motors just started production at one

in Ohio. They're building another one in Tennessee and the third in Michigan. Ford has started construction on a couple of plants in Kentucky and Tennessee. Toyota is building one in North Carolina. But it takes a long time for that to happen. And then to reach the numbers of vehicles that you'll need to meet this California goal, they're going to need even more plants beyond that. So there's a lot of construction, a lot of investment that has to go on. And then in addition to that, there's just the question of the minerals that are used in these batteries, lithium, nickel, cobalt, and several others. They're produced in reasonable quantities now, but not the kind of quantities

that you'll need if lots and lots of people are going to be driving electric vehicles. And just to give an example, Ford has a plan to make 2 million electric vehicles by 2026, plan to make 2 million electric vehicles by 2026, 2 million a year. And they say they have 70% of the raw materials secured to hit that goal. That's only 70%. And that's just a small step along the way to getting to 2035. Okay, so that's producing the cars. But what about making them more affordable? My understanding is that electric cars are still pretty expensive. Yeah, the industry has a lot of work to do here. They're trying several different things. One is working on different battery chemistries so that they can come up with batteries that use less of the more expensive elements and minerals like nickel.

elements and minerals like nickel. And hopefully they'll be able to come up with a battery that gives you 300 miles of travel, but doesn't use as much of the more expensive raw materials. They're also working on developing economies of scale. This is something that GM in particular is focusing on. They've developed this modular battery design. They're kind of like Legos that snap together. And so you can build a battery pack for a big pickup truck or a small compact car. And you're basically using the same parts and components over and over. And if you're making millions and millions of them, you can drive down the cost. And that's what they're betting on. They just announced

they're going to do a Chevrolet SUV next year. They're hoping that the price is going to be about $30,000, which is pretty much in line with what people are paying these days. So they're hoping to do that. But still, it's a long way to go from the day when you have an EV at every price point that people want to buy cars at. Interesting. So it's not a done deal that these vehicles are definitely going to get less expensive. Not for sure. Not 100% certain. In the automaker's favor, there is the fact that electric vehicles have a lot fewer parts. There's no transmission. There's no exhaust system. There's no hydraulic system. So they're a lot simpler, and that takes costs out. But the real cost problem is in the

batteries. You said there's also an infrastructure problem to consider. Explain that one. The biggest thing is charging stations. If you're going to have millions of electric cars on the road, you need way more charging stations than we have now. There are charging stations out there, especially in urban areas. Tesla has its own network, but we need way more than what we have. And I just had an experience of my own. I was test driving an electric vehicle a few weeks ago. It was late at night, about 11 o'clock, and I was down to about 10% charge.

I found a charger, but it was an old technology, slow charger. After about a half an hour, I got up to about 16%, which was enough to ensure I got home. The next day, I went out to charge it. The first charger I got to was out of order. And finally, I got to a fast charger and I hooked up the car and I went and had dinner. And all together, I had to wait about an hour to go from six percent charge up to 90 percent. And so that's the kind of challenge that people face. When you get an electric car, you have to think about where you're going, where on the way or at my destination are there charging stations. And that's a big issue because, as I said, in urban areas, there are a good number

of charging stations. But a state like California, there are a lot of wide open spaces where people go, you know, national parks. I don't know, what are they going to do? Put charging stations at national parks? You might need that. So it's going to take literally billions in investment to build out the charging network that we're going to need for 2035. And where will those billions come from? I mean, should we expect that the government will be building that charging infrastructure? Well, in this big Inflation Reduction Act that was just passed and it had a lot of money going toward climate change issues, know, that's the business they're in of charging networks. So they're building them out. In some places, having a charging station is part of the real estate.

Like for a shopping center, that would be a way of the property owner, the commercial property owner may install that to give an incentive for consumers to go there to shop. So there's investment coming from many different angles, but there's a lot of work to be done. So it sounds like you do expect some of the money to come from the government, from the federal government, from state governments, but that we also might see private companies step up and start to build them because it makes financial sense to do so. Yes, I think you'll see a combination of the two. So whoever builds them, many more charging stations are needed. But I'm also imagining that if you put way more electric vehicles on the road, California is also going to need a lot more electricity

to keep them running, right? Yeah, electric cars do put a load on your electric grid. And we just saw that recently in California, where there was a heat wave and the state asked people to limit how much they were charging their electric vehicles. So there is going to have to be a change in energy production. The hope is that they can really ramp up renewable sources of energy. And with the development of these batteries, there's hope that they can store energy more efficiently. In other words, produce energy from wind or solar, store it in giant battery farms, and then you'll be able to use that later. But it's unclear

what the picture is going to look like in 2035 in terms of energy production and how you're going to power up all of these electric cars. Yeah, I mean, if the whole point of this transition rate is to lower carbon emissions, I mean, supplying these electric vehicles with electricity that would need to be produced by oil or coal, I mean, that would kind of defeat the point. In a way, yes. You can argue that just by taking out the tailpipe emissions of that equation, you're getting a net gain in terms of greenhouse gases. But yeah, that is a concern. And the idea is that hopefully we'll be further down the road in terms of renewable sources of energy and the overall net impact you're taking greenhouse gases out of the atmosphere. We've been talking about all of these challenges in California, but you also said that this rule is going to have an impact across the country.

And I just have to imagine that we're going to have to see a lot of states grappling with these things, that this is going to require a pretty radical shift across the United States. It is. It's a fundamental change in the way people go from point A to point B, the way we organize our personal transportation. If you look back, you know, a hundred years ago, horses were a main mode of transportation. There were thousands of people employed in New York City to clean up horse poop from the streets. And when cars came along, all of the infrastructure around managing this horse-based transportation went away.

And that's what we're seeing here, the beginnings of. went away. And that's what we're seeing here, the beginnings of. And so it's not just a matter of Ford making some electric vehicles and people buying them, but you need a lot of changes on the ground to happen so that people can then easily go from point A to point B, wherever they want to go to. And the electrification of the automobile is a massive change, and we've only sort of scratched the surface on where that's going to take us. Ford has started making this F-150 Lightning electric pickup truck, and people have seen that an electric pickup truck can be a totally different vehicle. It's this big power plant on wheels. So if you're a contractor, you can go to a job site and you don't need a generator.

You just plug your tools into your truck if you're into camping or going out into the wilderness. You could put a fridge in the back of the truck and have food for a week. You can plug it in in your garage and charge it. And then if the power goes out, it can power your home for a couple of days. So it's in a way almost like when the iPhone came out, it was a phone. And then we've discovered all these many other non-phone things that you can do with it. I think as people get these vehicles, they'll find there are all kinds of ways they can use them that they never thought of. It sounds like you're saying this all could mean much more than just a different way of getting from here to there. Yeah. And I don't know where it's going to go in the future, what shape or what form

it will take, but its role as how you get from one place to another, it's going to expand way beyond that. The auto industry has been around for a little over a century. And for most of that time, the product really hasn't changed all that much. We've gotten more pistons. We have gotten more gears. You know, we've gone from manual transmissions to automatic transmissions. But the product has remained fundamentally the same. The electrification of the car is a totally different world than the old internal combustion engine world. And there's

all kinds of possibilities that go along with that and what your car can do and what role it will play in your life. And automobiles have been a big part of American life. The car is a central feature of American culture, more so than in other countries. That's why Beach Boys sang about 409 and, you know, there are movies made about cars. It's just embedded in American culture. And I don't know where it's going to go in the future, what shape or what form it will take, but it's certainly going to remain a big part, but its role as personal transportation

and how you get from one place to another, it's going to expand way beyond that. Thank you, Neil. It's been a pleasure. Thanks for having me. We'll be right back. Here's what else you need to know today. Juul Labs agreed this week to pay more than $400 million to settle an investigation by nearly three dozen states which argued that the company's marketing and sales practices

had set off the teen vaping crisis. The investigation found that the company had marketing and sales practices had set off the teen vaping crisis. The investigation found that the company had courted young people on social media and by using young models and giving out free samples. The tentative settlement bars Juul from marketing to youth. And in a defiant speech on Wednesday, Russian President Vladimir Putin claimed the country had not lost anything in the invasion of Ukraine, despite estimates that more than 80,000 Russian soldiers have been wounded or killed in the war. Putin also said he was planning to meet with President Xi Jinping of China next week, a

move that could help Russia deepen its relationship with a country Putin sees as a key partner. Today's episode was produced by Michael Simon Johnson and Will Reed, with help from Asta Chaturvedi. It was edited by Paige Cowett and John Ketchum, contains original music by Marion Lozano, and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Lansford of Wonderly. That's it for The Daily. I'm Natalie Kitchoeff. See you tomorrow.