New ZEV Bill Would Hurt the Least Well Off Californians

Ian Adams
Associate vice president of government affairs for the R Street Institute.

Some bad ideas go away others just morph from bad to worse. Last year, Senator Nancy Skinner (D – Berkeley) introduced legislation (SB 802) that would have required certain highly automated vehicles to be zero-emissions vehicles (ZEVs) as a requirement of their registration. Fortunately, that effort was amended into irrelevance and eventually failed. This year, efforts to ban conventional powertrains are back with a vengeance.

Assembly member Phil Ting (D – San Francisco) is sponsoring AB 1745, which seeks to ban the sale of new non-ZEVs outright by 2040. That bill, as characterized charitably by my colleague Steve Greenhut, is “the perfect mix of hubris and silliness.” For her part, Skinner’s latest ZEV push, SB 1014, has come out on the heels of the release of “shared mobility principles” endorsed by an assortment of mobility firms (Didi Chuxing, Uber, Lyft), and offers a plan to force all transportation network companies (TNCs) to exclusively utilize ZEVs by 2028. 

While it’s not clear the posture those firms will take on Skinner’s latest proposal, it is important to note that SB 1014 is more than a simply ban on the use of internal combustion in the context of TNCs. No, this year the Senator has decided to offer a carrot to go along with the stick. The bill creates a $30 million fund to facilitate rebates and incentives for the purchase of ZEVs that will be used as TNCs. In doing so, the bill effectively suppresses the real cost of operating a TNC – which is exactly the sort of incentive that is awfully hard for an industry to ignore. Even so, ignore it they should.

Going forward, while the market case for the use of ZEVs is bound to entice many to adopt the technology, banning the sale and/or use of conventional powertrains is bound to have an adverse impact on those Californians least well off and most eager for work.

Currently, driving for a TNC is an accessible way for Californians of limited means to earn income. In part, this is because the barriers to entry for the work are so low. Thus, folks between jobs and those that otherwise struggle to obtain work, like the formerly incarcerated, are excellent candidates to drive for a TNC. Yet, the availability of the opportunity is premised on ready access to a vehicle.

Consider that the average age of a vehicle on U.S. roads is 11.6 years. And, consider that the average price of a new vehicle is roughly $33,500. Given that TNCs commonly require vehicles to be no older than a certain age (vehicles often must be 10 years older or newer), many drivers are only able to drive for a TNC because they able to purchase and use second-hand vehicles that are far less expensive than a vehicle right off of the dealer’s lot.

Under SB 1014, those drivers would be forced into a universe of used ZEVs far smaller than the universe of used conventionally powered vehicles. Given that used ZEVs, until very recently, have had hugely compromised range, they would also be getting a less useful tool to do the work they are seeking.

In effect, SB 1014 would force low income drivers into an unwinnable scenario in which they would be compelled to make a choice between plowing themselves into debt by purchasing a new vehicle, spending more than they otherwise would on a used conventional vehicle to purchase a used ZEV that effectively limits their ability to work because of its compromised range and onerous charging times or to not work as a TNC driver at all. None of those options are good for drivers and, ultimately, none of those options are good for TNCs.

Perhaps worst of all is the low threshold one must meet to qualify for the TNC rebate and/or incentive in Skinner’s bill. Applicants need only certify that the vehicle will be used to provide TNC services and that they are replacing a conventionally powered vehicle. With that low bar, it is virtually certain that the Californians most likely to avail themselves of the windfall will be those already with the financial means to purchase a new ZEV. And, because TNC driver agreements are premised on an independent contractor relationship in which a TNC cannot dictate the hours that a driver works, it is utterly unclear that these ZEVs will even be used as TNCs!

Like most prescriptive legislative efforts, SB 1014 and its cousin AB 1745, are bound to distort markets that are already developing in a positive manner. Making the future happen faster, a ZEV-filled future in particular, is not a function of suppressing conventionally powered vehicles and should not be done on the backs of the Californians most in need of TNC-type work. Rather, California should avoid its worst cronyist impulses and continue to let private sector innovation lead the way.

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