<article><p class="lead">California's support of electric vehicle use poses a long-term threat to the state's gasoline industry, but will not dampen demand in the near term. </p><p>The state made significant moves over the last year to accelerate adoption of the vehicles. But bullish factors prevail on the US west coast for refined products — including ongoing trucking demand and a growing export market to Mexico — so few market participants expect a significant drop in gasoline or diesel use in the coming years.</p><p>California leads the nation in electric vehicle sales, with 153,000 vehicles sold so far this year, including 22,000 in November, according to EV industry advocacy group Veloz. The sales numbers are for all-electric, plug-in hybrids and hydrogen fuel cells. </p><p>The state has set a goal of 5mn so-called zero-emissions vehicles (ZEVs) on the road by 2030 and is using programs like its Low-Carbon Fuel Standard (LCFS), which awards credits to utilities for electricity used to charge vehicles, to reach it. These vehicle technologies include full battery-electric, hydrogen fuel cell, and plug-in hybrid-electric vehicles.</p><p>The California Air Resources Board (ARB) in September voted to allow powerful charging stations, known as fast chargers, and hydrogen refueling stations to receive LCFS credits based on their capacity, not just fuel sold. Other changes to the LCFS recently adopted by the ARB will require electric utilities to contribute a portion of their credit revenue to a statewide rebate program that buyers of an electric vehicle could tap at the point of sale.</p><p>The state has made other moves to accelerate ZEV adoption. The ARB on 14 December adopted the Innovative Clean Transit Program, requiring transit agencies to run entirely zero-emission fleets by 2040. To reach that goal agencies have to gradually ramp up their purchase of zero-emission buses, with the schedule based on the size of the fleet. Starting in 2029, all new buses purchased by the agencies must be zero-emission models.</p><p>State assembly member Phil Ting (D) is also expected to reintroduce legislation in 2019 requiring all new passenger vehicles sold in California to be zero-emission models after 2040.</p><p>While west coast products traders acknowledge electric vehicles may pose a long-term threat to gasoline and diesel markets, few foresee an immediate impact. They predict the trucking industry will continue to run on diesel, with electrification less of an option for heavy duty vehicle fleets. </p><p>Many west coast refiners are also bullish on growing gasoline exports to Mexico in coming years.Increased product flow to Mexico and central and South America could tighten the US market and cut some of the excess supply, particularly in the Pacific northwest and San Francisco Bay area. </p><p>The ARB has said that electric vehicle use is at a tipping point. But to the refined products industry, the point at which this technology begins to make a significant dent in gasoline or diesel demand remains far down the road. </p></article>
