California’s decision to buy only from carmakers that have agreed to follow its clean car rules may well cost GM’s Chevrolet tens of millions of dollars.
Starting immediately, California state agencies will no longer buy gas-powered sedans, officials said Friday. And starting in January, the state will stop purchasing vehicles from carmakers that haven’t agreed to follow California’s clean car rules.
The decision affects General Motors, Fiat Chrysler, Toyota and multiple other automakers that sided with the Trump administration in the ongoing battle over tailpipe pollution rules. The policy will hit General Motors particularly hard; California spent more than $27 million on passenger vehicles from GM-owned Chevrolet in 2018.
California’s Department of General Services, the state’s business manager that oversees vehicle purchases for California’s fleet, announced the bans on Friday afternoon. The immediate ban on state purchases of cars powered only by gas will include exceptions for public safety vehicles.
“The state is finally making the smart move away from internal combustion engine sedans,” California Gov. Gavin Newsom said in a statement emailed to CalMatters. The new policies align with Newsom’s September executive order urging the state government to reduce greenhouse gases. “Carmakers that have chosen to be on the wrong side of history will be on the losing end of California’s buying power,” Newsom said.
It’s the latest volley in the fight over climate-changing pollution from cars and trucks. “It certainly sends a strong message to the automakers that have come out on the other side of California in this litigation,” said Julia Stein, supervising attorney at UCLA’s Frank G. Wells Environmental Law Clinic. “It’s taking steps to encourage automakers to be on what it views as the right side of that dispute.”
The Trump administration has long proposed rolling back Obama-era standards curbing greenhouse gases and increasing fuel economy of passenger vehicles. Those rollbacks have yet to be finalized, but in September, the Environmental Protection Agency and the National Highway Traffic Safety Administration stripped California’s authority to make its own greenhouse gas rules — rules that 13 other states and the District of Columbia follow.
The move kicked off what’s likely to become a lengthy court battle — and, indeed, California and 22 states sued the EPA today, after suing the National Highway Traffic Safety Administration in September.
To fend off the uncertainty of a long fight in court, four major automakers — Ford, Honda, BMW, and Volkswagen — cut a deal with California. California agreed to relax the Obama-era greenhouse gas targets somewhat, and the carmakers agreed to follow the state’s rules.
Earlier this year, California officials indicated they were optimistic that more carmakers would sign on. But amid growing pressure from the White House, two auto industry trade groups representing more than a dozen auto manufacturers including General Motors, Fiat Chrysler, and Toyota aligned themselves with the Trump administration by calling for a single set of clean car standards nationwide.
Now California’s Department of General Services is crafting policy that will prohibit state purchases from carmakers that haven’t signed on to its clean car deal — and manufacturers could stand to lose millions in sales to the state. In addition to the $27 million in purchases from Chevrolet, the state also spent more than $11 million on Fiat Chrysler brands, and more than $3.6 million on Toyota. Toyota, well-known for its environmentally-friendly Prius, is also facing public backlash for its alliance with the Trump administration.
The move might deepen the divide in an already fracturing auto industry, Stein speculates. “There’s already been a little bit of a wedge driven,” she said. “You could see something like this driving the wedge even further.”
Gloria Bergquist, vice president of the Auto Alliance trade group that represents automakers that signed on with California’s clean car deal and companies that sided with the Trump administration, said automakers have invested heavily in electrified vehicles. “So we support efforts by fleet managers to buy more of these vehicles,” she said in an email. “As consumers see more electrified vehicles on the roadways, we hope to see a tipping point where they become more mainstream.”
This isn’t the first time that California has hinted it would use its power as the world’s fifth largest economy to reward carmakers that followed its rules, and punish those that didn’t. In remarks written for a May workshop, California Air Resources Board Chair Mary Nichols warned that federal tailpipe emissions rollbacks could force “an outright ban on internal combustion engines.”
More recently, CalMatters discovered that legislation written in September would weaponize the state’s clean car rebates by restricting them to only the carmakers that signed on to California’s deal. The bill didn’t receive a vote, but its language urging the state to spurn “companies that are not helping to achieve the state’s public health and climate goals” foreshadowed Newsom’s comments today:
“In court, and in the marketplace, California is standing up to those who put short-term profits ahead of our health and our future.”