The Approaching Showdown over California's Zero Emissions Mandate

By · April 19, 2013

EV charging in Laguna Beach

Charging a row of EVs in Laguna Beach, California. The state definitely leads the nation in public charging infrastructure. (Flickr/LukeGordon1)

It’s taking on the aspects of a showdown. California wants automakers to fall into line and agree to comply with its Zero Emission Vehicle (ZEV) plan. But some carmakers don’t see that consumers are going to want them—they see the expensive cars they build at great expense building up on dealer lots.

And now California Air Resources Board head Mary Nichols is ramping up the confrontation. “Talk about shooting yourselves in the foot, or maybe I could say, tripping over your own halo,” she said about the automakers’ appeal at a Society of Automotive Engineers (SAE) conference. “We don't have time to delay the infusion of these technologies.”

More Than a Million Cars?

The state plan sees a smooth transition to 1.4 million battery electric and plug-in hybrids on state roads by 2025. Some 500,000 of them would be either battery cars or fuel-cell vehicles. It’s hoped that in 12 years, one in seven cars sold, 15.4 percent, will use plugs.

There's some evidence to justify the automakers’ position, solely based on battery car sales so far. Yes, California has by far the most robust network for public charging and healthy EV sales. Currently, one in 40 sales there are plug ins. But the state mandate applies to car companies, not to consumers, and there would have to be a massive change in attitude to get to one in seven sales.

Consumers in the Driver's Seat

I talked to Gloria Bergquist, a spokesperson for the Alliance of Automobile Manufacturers (AAM), and she was blunt:

“Automakers have invested billions of dollars in new powertrains, including zero emission vehicles like plug-in hybrids, fully electric vehicles and hydrogen cars, so automakers have a huge stake in their success in the marketplace. The reality is that consumers are in the driver's seat when it comes to putting ZEVs on California roads. While automakers have invested heavily in these technologies and are working hard to sell them, the ZEV mandate carries no requirement that consumers buy them. So this is a ‘Field of Dreams’ mandate: if we build the cars, the customers will come and buy them. We hope so, but if not, the state will need to revisit the mandate.”

To be fair, California is not expecting the cars to sell themselves. The state has a “ZEV Action Plan” released in February. By 2020, it assumes all of this:

  • The state’s ZEV infrastructure will be able to support up to one million vehicles.
  • The costs of ZEVs will be competitive with conventional combustion vehicles.
  • ZEVs will be accessible to mainstream consumers.
  • There will be widespread use of ZEVs for public transportation and freight transportation.

The State Steps Up

The state is putting its money where its mouth is—“10 percent of state departments’ light-duty fleet purchases must be ZEVs, climbing to 25 percent of light duty purchases by 2020.” The state realizes that, in its own words, “Many consumers are unaware that ZEVs are available for purchase or lease,” and many don’t fully understand the benefits—such as the free use of High Occupancy Vehicle (HOV) lanes. Expanding consumer awareness and demand is goal #2 of the state plan, as well it should be.

Bergquist points to Nichols’ statement that EV sales are up “five times” from what they were a year ago. But she wants to put that in context—last year, there were 50,000 plug-in and battery car sales nationwide, up from 10,000 in 2011. In March, 4,553 were sold. The numbers are not big.

California is being very proactive about EVs, and that’s a good thing. My worry is solely that the ramp up required by the mandates is too optimistic for what consumers will actually want to do. There’s no question that the EV revolution is underway. But it’s the pace of it that’s still in question. My hope, of course, is that EV acceptance will outpace the mandate and there will be an EV in nearly every driveway by 2025.

Comments

· · 1 year ago

Is it so unreasonable that the price of non-ZEVs should include a premium used to subsidize ZEVs, thus using price to drive the consumer to the ZEVs? Finally the externality of pollution cost could be included in consumer decisions.

If an auto manufacturer finds the whole mess unprofitable, they are welcome to leave the California market making it more lucrative for those that remain.

Of course, this will make car ownership somewhat more expensive out of the consumer's pocket since now they are starting to pay for the pollution they generate.

· · 1 year ago

In my mind, it should be impossible for the auto companies to force retraction of the ZEV mandate AGAIN. The state and CARB need to stick it out and simply make it an economic decision for automakers. Either pay the fines, buy the credits, or put incentives on qualifying vehicles to make the numbers.

You can already see that Toyota is willing to put incentives on the RAV4 EV, their compliance vehicle, to push it towards the numbers Toyota needs in order to reach compliance. The March sales figures show that it's starting to work since the $10,000 Southern California and $8,800 Northern California incentives increased sales from 52 units in February to 133 units in March. Inventories in Northern California are now drawn down to about one per dealer with some customers waiting a couple weeks for delivery of the color they want. The RAV4 EV is a good vehicle, so I'm sure it will work out for Toyota.

This is simply the cost of doing business in California. Deal with it.

· · 1 year ago

Certainly, we could all see this coming. Toyota, in particular, has plenty of rhetoric of pure battery electric cars being "bad", and with the compliance Rav4 EV not selling well, they've put themselves in the front seat to complain.

This is CARB's game to lose. Hang tough, as you know what happened ten years ago when you didn't.

· · 1 year ago

CARB needs to increase the vehicle license fee for all non-plugins and increase the gasoline cost, then people will flock to the the plugin markets...

Like I said, the biggest threat to all plugins are high MPG cars such as Prius (which is #1 selling brand in CA). Starting to tax all cars including Prius, but give more exemptions to plugins will move the cars...

· · 1 year ago

Tony:

The original ZEV requirements were junked by a Republican Governor named Pete Wilson by replacing the chair of CARB. Some say He was paid off by Big Auto working with Big Oil. And, it is interesting to note his wife at one time worked for Chevron.

I doubt the Democrat Governor, Jerry Brown, will support a change in the ZEV regulations, especially since the California legislature is also run by Democrats.

· · 1 year ago

TW> This is CARB's game to lose. Hang tough, as you know what happened ten years ago when you didn't.

My thoughts exactly, Tony. The main reason EVs are not selling well is because automakers are not promoting them well enough and the salespeople on the lots are not fully briefed and incentivized to sell them. That became very clear over the past couple of months as I visited dozens of dealers before leasing my EV.

The automakers are in a tough position - they don't want to cannibalize gas engine car sales because they'll lose the service revenue. The new technology is expensive. In large bureaucratic organizations, it's difficult to change attitudes, retool, retrain.

But once more people get the message from current EV drivers, the demand will be there. CARB just needs to stand their ground. The alternative is to affix the externalities - including increased health care costs - to emitters. Electric Cars will look really cheap then.

· · 1 year ago

I think suggestions to directly tax ICEVs to subsidize BEVs are a sure fire way to kill EVs for good - EV buyers would be stealing their neighbors' money to pay for what some regard as fancy playthings. That's a non-starter - try to remember that we live in a democracy and just let it go.

A carbon tax would be far more straightforward, and answers many of the "how clean are EVs really?" arguments. Both gasoline pumps and power plants would be taxed based on carbon content of their fuel, affecting both ICEV drivers and electricity consumers (including EV owners) in direct proportion to their environmental impact (or at least their carbon emissions). It's fair, it's easy to explain, it will incent buyers to consider EVs, and best of all advances the real agenda, which is to reduce net carbon emissions. Transportation fuel is just one part of the overall problem.

· · 1 year ago

CARB does need to hang tough, and automakers do need to stop dragging their feet. California is doing its part by giving EV buyers very substantial subsidies, which probably should continue until economies of scale get EV battery technology into a virtuous circle of declining cost and rising sales. But that won't happen if the automakers cling to the hope that grudgingly meeting the minimum legal requirements while doing nothing to promote EV sales can get them off the hook when consumers "refuse" to buy the product. CARB needs to make clear that meeting the targets is the manufacturers' problem, and if they don't want to be forced to move product at big losses or leave the CA market, they'll need to put at least as much effort into pushing EV sales as anything else in their product line. That includes not just advertising and promotion, but also equipping and pricing cars to sell (e.g., Nissan's new basic S trim level).

If, as has been suggested, part of the problem is the reluctance of dealers to sell cars with so little service revenue potential, I think the cure for that is pretty clear, if brutal - update dealership franchise laws to exempt EVs, allowing manufacturers to set up EV demonstration, delivery & service centers to sell direct to the public over the web, bypassing the dealer network. That would really incentivize manufacturers. State-coddled automobile dealers are parasites anyway, and have become increasingly burdensome to both buyers and manufacturers as quality levels have improved; the introduction of low-maintenance EVs might wind up being the catalyst for dismantling this last bastion of "devil take the hindmost" consumer abuse (imagine going in to Lowe's to buy a washing machine and having to guess at a fair price, then spend the afternoon arguing about it).

· · 1 year ago

Let's put this another way. The 2012-2014 ZEV "Obligation" in the CARB rules is 0.79% of vehicle sales in California. Let's say that the free market requires a manufacturer to discount an EV $20,000 in order to get the public to purchase enough EVs to satisfy their Obligation. That means that the manufacturer could simply raise the price of the rest of their CA vehicles by $158 each (20,000 * 0.0079).

I don't think this is a significant burden on manufacturers.

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