Illustration: Eniola Odetunde/Axios

Gasoline-powered cars may be going the way of the woolly mammoth, even if it will take decades to replace them and seems hard to fathom today.

The big picture: Internal combustion engines (ICEs) have powered automobiles for more than 100 years. But the shift to electric vehicles, slow to materialize at first, is now accelerating due to tightening government policies, falling costs and a societal reckoning about climate change.

Driving the news: California said this week it plans to phase out sales of conventional new cars by 2035 in favor of zero-emission vehicles that run on electricity.

  • Gov. Gavin Newsom's executive order no doubt faces a giant legal fight and could depend heavily on the election outcome and the shape of the Supreme Court, Axios' Ben Geman explains.
  • The rest of the world is far ahead, with at least 15 countries already banning new gasoline cars and others adopting strict policies to spur EV adoption.
  • “Europe and China have woken up to the fact that [the combustion engine] is dead,” Arndt Ellinghorst, automotive analyst at Bernstein Research, told the Wall Street Journal. “Now, it looks like the U.S. is waking up.”

Automakers are already pivoting, investing some $200 billion on EV technology over the next five years, per AlixPartners.

  • “We have to realistically believe that around 2035 there will be a serious discussion about banning the internal combustion engine, and not just in California,” Volvo Cars CEO Håkan Samuelsson told the Journal.

Why it matters: Climate change is here and eliminating emissions from cars and trucks is front and center in efforts to curb CO2 emissions.

  • Urban planners aim to redesign cities around people, not automobiles, by investing in walkable neighborhoods instead of suburban freeways.
  • Until that happens, people will keep driving, warns Brookings fellow Adie Tomer.
  • "Metropolitan America is stuck with driving for the time being so we have to electrify the fleet immediately," he told Axios.

Where it stands: Fewer than 2% of U.S. cars today are electric (and barely 6% in California).

  • Even if every state followed California's lead by 2035, it would be decades before all gasoline vehicles disappeared from American roads.
  • BloombergNEF sees EVs growing to 58% of new car sales worldwide by 2040, but still only 31% of all cars on the road.

Even so, investors are already amped up: Stocks of EV and renewable energy companies have been soaring, even those that haven't yet produced any vehicles.

  • Shares in little-known SPI Energy jumped by as much as 4,000% Wednesday after the company announced it was getting into the EV business.

Yes, but: There are serious hurdles that must be overcome before EVs are affordable and convenient for everyone, including lower-cost batteries and more widely accessible charging infrastructure.

What to watch: Tesla this week laid out a road map for cheaper batteries with higher energy density and the goal of selling a $25,000 EV. But CEO Elon Musk acknowledged that milestone is still a few years off.

Meanwhile, Volkswagen thinks it has the right formula with its new ID.4, unveiled this week.

  • VW is offering three years of free charging and an attractive price — $39,995— on the ID.4, which is aimed at the heart of the compact SUV market.
  • With a $7,500 federal tax credit and potentially thousands more in state tax rebates, the ID.4 could well undercut gas- and hybrid-powered competitors like the Honda CR-V and Toyota RAV4.

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