California Governor vetoes Zero-Emission Aftermarket Conversion Project

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California Governor Gavin Newsom recently vetoed a bill that would have provided up to $4,000 to California residents who convert eligible fuel-powered vehicles to a zero-emission powertrain. Senate Bill 301, introduced in February 2023 by two Democrat state Senators, Anthony Portantino and Josh Newman, was passed unanimously in May of 2024 by both the state Assembly and Senate.

Among other groups, the bill was sponsored by Specialty Equipment Market Association (“SEMA”), an association whose website notes it includes manufacturers, distributors, retailers, auto restorers, car clubs, race teams and other groups. The bill was also called a “Job Creator” by the California Chamber of Commerce.

What Senate Bill 301 would have provided?

  • The bill sought to establish the Zero-Emission Aftermarket Conversion Project (“ZCAP”). It further proposed funding the rebates by moving money in the state budget from another clean transportation project. The bill also provided that a state board would develop guidelines defining qualifying conversions and eligible replacement motors, power systems and parts; establish warranty requirements for motors and battery packs; and establish eligibility criteria for the rebates.
  • The bill also would have required an inspection of the converted vehicle by the California Bureau of Automotive Repair and for the converted vehicle to have a range of at least 100 miles.
  • Finally, the bill would have required 25% of rebates provided through the ZCAP program to go to people with household incomes at or below 400% of the federal poverty level.

Governor Newsom’s veto statement

At the time he vetoed SB 301, Governor Newsom issued a statement to the Legislature in which he sought to explain the basis for his veto.

Citing budgetary restraints, Governor Newsom stated:

California is showing the world what’s possible - fostering innovation and creating space for an industry to flourish as the sale of ZEVs reach record highs, with over 1.8 million ZEVs now on California’s roads. The state continues to invest billions of dollars in ZEV deployment and supporting infrastructure to achieve our ambitious climate and clean air goals.

While I share the author’s desire to further accelerate the state’s transition to ZEVs, this bill creates a new program at a time when the state faces a $44.9 billion shortfall for the 2024-25 fiscal year. Additionally, there is no funding currently identified or available in the state budget to support this new program.

Based on his statement and his political leanings, it appears that Governor Newsom is generally in favor of the measure, he vetoed the bill solely because of the state’s funding and budgetary issues. If California’s budget situation improves in the coming years, we may see the bill revisited by the Legislature and Governor’s office.

What happens now?

The Governor’s veto does not necessarily doom SB 301. Rather, the California Legislature has 60 days from the date of the veto (or until August 15, 2024) to override the Governor’s action. Two-thirds of the members in both houses (State Senate and State Assembly) must agree to override the veto. If that occurs, SB 301 will become law despite the veto.

We will keep you posted on the Legislature’s efforts, if any, to override the veto, as well as future consideration of the bill by the California government.