Spring is just a month away, and that means out with the old, in with the new. Apparently Sacramento, California feels that way too, but about its vehicle support infrastructure. The Golden State’s capital city may soon become one of the major cities aiming to ban the construction or expansion of gas stations.

Welcome back to Critical Materials, your daily roundup of all things EV and automotive tech. Today, we dig into Sacramento’s proposed ban on new gas station infrastructure, Ford’s perceived “colossal” threat of Chinese EVs, and the EV tax credit’s huge $135M payout to dealers so far in 2024.

30%: California’s Capital Looks to Ban New Gas Stations as ICE Ban Approaches

A proposal within the 2040 Sacramento General Plan, which is created by the city ahead of more specific planning and ordinances, would prevent new gas stations from being built sometime in the near future.

Existing gas stations would also be denied permitting unless plans also included the installation of DC Fast Chargers rated at a minimum of 50 kilowatts. The number of chargers would also need to match the number of fuel nozzles on a one-to-one basis.

Now, Sacramento isn’t the only city to propose pausing the rollout of new gas stations. A number of other California cities have passed similar statutes since 2021, or, like Los Angeles, have similar bans pending. Likewise, other major metropolitan areas in the country have also drummed up similar bans. That doesn’t make this move any less impactful, especially to auto enthusiasts and business owners.

In a letter of opposition to the proposal, California Fuels and Convenience Alliance (CFCA) says that the ban would “disproportionately harms small, minority businesses and consumers the most”:

It is disheartening to see yet another city consider a regressive policy that disproportionately harms small, minority businesses and consumers the most. Gas station bans threaten local economies with increased job loss, decreased tax revenue and will only lead to more pain at the pump for consumers. Empowering businesses, promoting competition and considering the diverse economic landscapes within a community are vital elements in shaping a resilient future for the fuel and convenience industry.

Whether or not Sacramento moves forward with this ban feels like a moot point. Other major hubs across the nation have also proposed similar legislation, which means that the days of the combustion car truly are numbered.

Perhaps this is what begins to drive the market for either synthetic fuel or EV conversions to keep classics alive into the next generation of enthusiasts.

60%: Ford Calls Chinese EVs a ‘Colossal’ Threat

Yet another automaker is calling out Chinese EVs as being a threat to the domestic auto industry. Last month, Tesla CEO Elon Musk warned that China’s automakers would “demolish” the world if not for trade barriers. Now, Ford is warning of a “colossal strategic threat” from China’s impending march of vehicles into the U.S.

Marin Gjaja, COO of Ford’s electrified Model e business unit, spoke about this matter during a panel discussion on disruptive technology in Detroit last week. During that time, Gjaja addressed the automaker’s less-than-stellar consumer demand for its more costly plug-in cars. Part of the worry, according to Gjaja, is that Chinese automakers could essentially overrun the domestic market with more affordable electric cars, and that’s going to force domestic automakers to run lean and smarter to succeed. Via Bloomberg:

They are ahead of us in this technology. We look at that and say, ‘That’s coming here eventually, so we’d better get fit now and better get going on EVs or we don’t have a future as a company.’

More specifically, Ford sees China gaining access to the U.S. market through Mexico. As part of the United States-Mexico-Canada Agreement (USMCA), both Canada and Mexico receive preferential trade agreements with low tariffs for vehicle imports. For example, rather than pay a 25% tariff on light trucks, the USMCA gives both countries a more favorable 2.5% tariff should the vehicles not meet the agreement’s Rules of Origin requirements. In theory, China could set up shop in Mexico and start sending cars into the States while still maintaining low costs.

Last week, the United Auto Workers union penned a letter to U.S. Trade Representative Katherine Tai addressing this very concern. Jason Wade, an assistant to UAW President Shawn Fain, stressed that the issue could lead to disastrous consequences for domestic automakers:

We have to make it so the consequences of not following the rules of origin underneath the USMCA is not considered a minor infraction. [Chinese automakers] will take the infrastructure and ecosystem that’s been developed over the last 25 years and just pay the fee and have access to the U.S. market.

Congress isn’t blind to the issue either. A 2021 report from the Congressional Research Service also called out this very threat, though a solution has not yet been adopted to close the loophole.

“If I was sitting in China right now running a Chinese OEM, I’d be looking for land in Mexico because you’ve got a supplier base, low cost of construction, low cost of labor and the USMCA that gives you access to the U.S.,” said Gjaja in a later interview. “They’re going to come here, just as the Japanese ended up here, the Koreans ended up here and the Germans ended up here. It’s a big market.”

So, trade barriers aside, it seems that it’s not if, but when, Chinese automakers will begin selling massive amounts of cars stateside—and the only thing that may stop it are trade barriers.

90%: U.S. Has Issued $135 Million in Point-of-Sale EV Tax Credits in 2024 So Far

This year’s approach to the EV tax credit was a much-needed reform, especially as it permitted for the credit to be applied at the time of sale rather than with the buyer’s taxes at the end of the year. And with just a little more than a month under its belt, the U.S. has paid out $135 million in tax credit payments to dealers.

Between Jan. 1 and Feb. 6, the Internal Revenue Service has received more than 25,000 time of sale reports. Of those, 78%—or 19,500—have been advance payment requests for new and qualifying used electric vehicles.

Concerns that the domestic demand for EVs is cooling off have been fairly common over the past few months. However, Deputy Treasury Secretary Wally Adeyemo says that the time of sale credit payout is evidence of strong demand:

One month into implementation of this provision, there is strong demand for this new upfront discount, which will continue momentum in growing this industry in the United States,

Currently, there are fewer than 45 EV models for sale in the U.S. And of those, only about 20 qualify for the EV tax credit due to protectionist component sourcing requirements. This has created an incentive for automakers to move their component sourcing and vehicle production to favorable trade countries in order to qualify for the tax credit.

It’s clear that buyers are taking advantage of the tax credit when buying a new car. After all, it essentially feels like a $7,500 vehicle discount at the time of sale—well, as long isn’t significant dealer markup to counteract it. And if you were cross-shopping similar EVs and one received a $7,500 discount, would save $140 on the monthly payment sway you towards the qualifying vehicle? I know it would certainly help to influence mine.

100%: What Happens To The ICE Cars Long-Term?

With gas stations potentially drying up in the future (at least in some states), it would appear that the demise of the combustion car is nigh. Granted, a lot of us likely won’t be around to see the complete dissolution of the gas car market, but in the next 30 or so years, there will likely be significantly fewer combustion cars on the road should the market continue down the path of battery-electric powertrains.

That doesn’t mean we still won’t have modern cars as future classics. If you have a brand new Toyota Supra or Nissan Z in your garage today, what does the future of that car look like 30 years down the road from now?

Or, heck, even your gas-powered beater car used for work or road-tripping could be something you need to evaluate for the future. Do you plan on keeping it, converting it to battery power, or selling it off ahead of a gasoline-induced vehicle purge?

Let me know down in the comments.