Reaching 100% Zero-Emission Vehicle Sales by 2035 Could Save Californians $300 billion by 2050

Despite recent federal policy changes, California still has an opportunity to transition to a zero emission transportation system, and, according to our new study, doing so will save the state and its citizens about $300 billion dollars over the next 25 years. But time is of the essence–the State will need to redouble its policy efforts to achieve these benefits. Allowing the transition to be delayed by even a few years will reduce the savings by billions.

As described in our report, Californian vehicle owners, taxpayers, fleet operators, and other transportation stakeholders would save the $300 billion by reaching the State’s current target of 100% zero-emission vehicle (ZEV) sales by 2035-6 rather than a later date. The savings would be cumulative to 2050—i.e., the sum of annual savings shown by the solid blue line in the figure below. This takes into account vehicle purchase costs and operating costs, including for maintenance and fuel. The savings do require Californians to “invest” in ZEVs over the next 6-8 years, by spending about $25 billion more on ZEV purchase costs than they would on internal combustion engine vehicle (ICEV) purchase costs. However, ZEV purchase costs are expected to match those of ICEVs by around the mid-2030s. Operating and maintenance costs (dotted grey line in the figure) are already lower for ZEVs than ICEVs as of 2025. The total costs would be lower by about 2033 (where the blue line becomes negative).

Figure. Cost differences between a scenario where California reaches ZEV targets by 2035-2036
and a scenario where it progresses slowly towards ZEV targets.

Given the reluctance of many people to buy more expensive vehicles, the State may have to provide financial incentives to cover some of the higher ZEV purchase costs over the next several years, until they drop to the level for ICEVs. Such incentives are especially important because existing regulatory requirements, such as Advanced Clean Trucks and Advanced Clean Cars II, face uncertain futures under the Trump Administration. But even without a complete set of ZEV-supportive policies, the global embrace of electric vehicles and resulting cost reductions from innovation and scale economies should lead to significant, though slower, ZEV uptake in California, with substantial environmental benefits and savings.

This possibly slower uptake of ZEVs in California is reflected in an alternative scenario in our study, where ZEV sales reach 100% by 2040 instead of the targeted 2035 (for light-duty vehicles) and 2036 (for heavy-duty vehicles). This 4-to-5-year delay in ZEV uptake would reduce overall cost savings by tens of billions of dollars and it would lead to California’s CO2 emissions being about 12% higher cumulatively between 2025 and 2050.

Overall, our study finds that the state’s goals and ZEV targets are compelling in terms of cost savings and CO2 reduction. However, achieving these targets and realizing the related benefits will likely depend on the current regulatory policies and/or stronger State incentives to subsidize ZEV purchase costs until parity is reached.

Read more here: https://escholarship.org/uc/item/40k5w5h9

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Lewis Fulton is director of the Energy Futures Program at ITS-Davis
Marshall Miller is the co-director of the Sustainable Freight Research Program at ITS-Davis
Daniel Sperling is the founding director of ITS-Davis and distinguished professor emeritus of Civil and Environmental Engineering and of Environmental Science and Policy