Today, September 23, 2020, Governor Gavin Newsom issued a new Executive Order directing the California Air Resources Board (CARB) to develop regulations that lead to all new passenger vehicles and light trucks sold in California being zero-emissions by 2035. It also requires that new medium- and heavy-duty trucks and buses sold and operated in the state be zero-emissions by 2045.

The Governor’s Executive Order is only the first step in what is likely to be a long fight. This new mandate must first be fully fleshed out in formal regulations by CARB, and then will almost certainly be subject to legal challenges, including to its authorization under California law and the state’s right to mandate zero-emissions vehicles separate from the federal government. However, this move represents the most dramatic step yet in what has been a long-term push towards California adopting zero-emissions technology, and should be seen as another sign of the changes coming in the automotive industry.

As we await the details of regulations from CARB, franchised dealers should be on the lookout for communications from their franchisors related to retail of zero-emissions vehicles. We anticipate that the factories will make demands of their franchisees in order meet the new mandate, including demanding investments in zero-emission infrastructure and staff training. Some of these demands may constitute a change to the franchise agreement and should be reviewed with counsel before the dealership agrees to any changes.

The attorneys of Scali Rasmussen will be watching as the law develops and are prepared to address any questions you may have about the future of your business in California. Contact us today to discuss how to protect your investment long into the future.