Opposing Camps Square Off on California Electric Car Mandate

By · December 03, 2012

Nissan LEAF rolling off assembly line

Nissan LEAF rolling off assembly line.

To an electric vehicle advocate, the worst epithet to hurl at a new EV is to call it a “compliance car.” The term is used to denote a plug-in electric car that is made only to comply with California’s zero emissions mandate (or other regulations)—rather than being produced out of a firm conviction that electric cars will be robust profitable automotive products. EV fans believe that automakers are misguided in not enthusiastically supporting the early electric car market with large production numbers.

But the Wall Street Journal, in a live web interview on Nov. 23 with its reporter Mike Ramsey, expressed the opposite view: that it’s the state of California that is misguided in forcing an EV mandate destined to fail because there’s no demand. “Electric cars. The government wants it. The people don’t,” states the host of WSJ Live.

Ramsey concedes that there is a small market for EVs, and that “California would probably attract a number of people to electric vehicles even if the [state] weren’t demanding it.” But he says electric cars are not popular because the vehicles are “very expensive, have limited range, and take a long time to recharge.” The price of the Nissan LEAF, the most popular all-electric car, starts at $35,200. The effective price drops to about $25,000, after a $7,500 tax credit and a $2,500 rebate in California.

Of the dozen or so plug-in cars currently on the market, most are being produced in low quantities that closely align with what California requires—a couple of thousand over a two to three period. Honda only committed to leasing 1,100 Honda Fit EVs—or about 366 cars a year—over the next three years. Toyota will produce only 2,600 units of the RAV4 EV during the same time period, selling them only in California. The Chevy Spark EV and Fiat 500e are also characterized as compliance cars, due to low production and sales mostly or exclusively in California.

The exact number of zero emission vehicles required for each automaker involves a complex calculation, and credits can be bought and sold between manufacturers. The basic rule states that each automaker will have to sell a minimum of approximately 263 fully electric or fuel cell vehicles per 100,000 total car sales to meet the requirement.

A Flood Or a Trickle?

Nissan stands out as the most committed player in the EV market. But Ramsey said it will be “almost impossible” for Nissan to be a success, because ZEV requirements are “flooding” the electric niche market.

Presumably, electric car advocates believe that auto companies should go well beyond the minimum requirement—because it’s not only good for environment and for jobs, but because there is a large untapped market that would purchase plug-in cars only if they were available on the market in sufficient numbers and variety. The advocates would hardly describe a couple of thousand plug-in cars per year as a flood.

Ramsey pointed to dealership discounts offered on the Nissan LEAF and Chevy Volt as evidence that prices will have to significantly come down to make the EV market viable. He believes the lower prices are “good for consumer, but not so good for the carmakers.” Ramsey reported that Toyota officials, speaking on background only, told him that the company is losing money on the Prius Plug-in Hybrid because it lowered its price to compete with the Chevy Volt.

Ramsey cast doubt on California’s larger environmental goal with the program. “California wants to get its air quality back to what it was pre-1990 by 2025,” he said. “To do that, they calculated that they have to have a certain number of zero emissions vehicles on the road. Unfortunately, I don’t see how it’s going to be possible when you’re only selling a couple thousand vehicles a year now.” By the end of the year, there will be approximately 50,000 plug-in cars sold in the United States in 2012—with California (and other states that follow the state’s emissions regulations) representing the lion’s share of those sales.

Comments

· Anonymous (not verified) · 1 year ago

The people don't want them because they're making expensive, ugly, uninteresting, short range cars. Tesla has it figured out and they're in high demand. Duh.

· Spec (not verified) · 1 year ago

Well, we are NEVER going to get zero emission vehicles unless we try.

This initial generation of ZEVs is just a first step along a very long journey. As the technology improves, the prices will drop. Meanwhile, the price of gas will continue going up over time. That is what happens with a finite product with increasing demand. Eventually, there will be a cross-over point where the EVs are more desirable than the gas cars. That may take many years.

Back in the late 1990s, it was too early. Gas was cheap and the batteries available were not very good. But the situation has changed. Gas is much more expensive and the batteries available are much better. Are we at the point where EVs are better than gas cars? No! But we are in the ballpark and it is time to help push it along.

· Spec (not verified) · 1 year ago

" Tesla has it figured out and they're in high demand." GM has sold more plug-in cars in a month than Tesla has sold over its entire existence.

No one has figured out the optimal plug-in car yet but they are all getting better.

· · 1 year ago

I agree with some of his statements that some of the companies are just building EV's to make people happy, but Nissan is building a global car in the Leaf unlike many others. Obviously Nissan cares about selling cars in California but they want to sell them globally and 1,500 a month right now is a possitive sign. The next generation FY13 model will hopefully bring a boost in sales.

· Objective (not verified) · 1 year ago

"As the technology improves, the prices will drop." Yes, Tesla has already dropped, oops... I mean raised the price $2,500.

"Eventually, there will be a cross-over point where the EVs are more desirable than the gas cars." That's what your crystal ball says, eh?

"Are we at the point where EVs are better than gas cars? No!" But let's force tax expense to subsidize the rich so they can drive their feel good cars a little cheaper.

· Spec (not verified) · 1 year ago

@Objective

Tesla is a struggling new car maker with a history of bait & switch. That is not a representative data point. Raw Li-Ion battery prices have dropped and quality has gone up over the past decade . . . just look at cellphones.

"That's what your crystal ball says, eh?" No, just logic & economics. Do you dispute my sentence of "That is what happens with a finite product with increasing demand."? Gas prices have risen faster than the base rate of inflation over the past decade due to increased demand and depletion of conventional oil. The long term trend is clear to anyone who is not in denial about it.

"let's force tax expense to subsidize the rich so they can drive their feel good cars a little cheaper" The average new car costs around $30K. The Leaf, Mitsubishi-i, and Spark EV all cost less than the $30K amount after the tax-credit. So no, EVs are not just for the rich. If you feel the tax-credit is so generous, why not take advantage of the tax-credit yourself? You'll save on gas, reduce pollution, reduce our dependence on foreign oil, reduce CO2 emissions, employ domestic electricity utilities, etc.

· · 1 year ago

@Objective,
I'd rather "subsidize the rich so they can drive their feel good cars a little cheaper" than subsidize the poor by holding their oil costs down until we can no longer afford to do so. At least the effect of the rich buying EVs will be a reduced price for EVs and a reduced demand for the oil that the poor depend on today. The effect of subsidizing gasoline for the poor only seems to lead to their buying bigger cars that use more gas and drive prices higher.

· Objective (not verified) · 1 year ago

You got that backward... we tax gas. We subsidize electric cars, their charging stations, the electricity used to charge them, etc.

"oil that the poor depend on today" The poor enjoy the benefit of far less oil than the rich. That's what it means to be poor. Oil is the energy behind distribution, without which none of us could enjoy the benefits of mass production.

"the average car is $30k, so EV's are not only for the rich" LOL. Poor people spend far less than that average on their cars. If EV's are withing such easy financial reach for so many, why do they require so much subsidy just to maintain their pitiful sales numbers?

Today's EV's will go nowhere.

· Anonymous (not verified) · 1 year ago

Todays EV's open the door for tomorrows EV.

nuff said.

· Anonymous (not verified) · 1 year ago

Please list "the dozen or so plug-in cars currently on the market". I have been following electric vehicles for the last 8 years and can tell you that I can only name three, the Tesla Roadster and Model S, and the Nissan Leaf. And no the Chevy Volt is not an electric car, it has a gasoline engine in it. The Ford Focus electric is still not available. So what are the other nine?

· Objective (not verified) · 1 year ago

It's not a car... it's a door opener. Just look into the crystal ball... you see?

No.

· Spec (not verified) · 1 year ago

Please list "the dozen or so plug-in cars currently on the market".
Nissan Leaf
Tesla Model S
Mitsubishi-i
Coda
Ford Focus Electric (yes, it is available)
Chevy Volt
Plug-In Prius
Ford C-Max Energi
Ford Fusion Energi
BMW ActiveE
Honda Fit EV
Toyota Rav4

The last 3 of those barely count because they are low volume compliance cars.

"And no the Chevy Volt is not an electric car, it has a gasoline engine in it."

You said plug-in cars and now you are saying electric cars. Make up your mind and use your terms carefully.

· Paul Scott (not verified) · 1 year ago

We either allow the "carrot" of tax incentives for electric vehicles, or we use the "stick" of internalizing the external costs of oil. I'm fine with either choice, but it seems most people would prefer to keep buying gas at heavily subsidized prices.

The external costs of oil include $80 billion in yearly military costs (RAND study), the war in Iraq ($1.5 trillion and counting), thousands of premature deaths every year from internal combustion pollution, massive environmental degradation from the extraction, shipping, refining, distributing and burning of oil.

If Mr. @Objective will tell us he's willing to pay the $8/gallon actual costs of gas, maybe we'll listen, but somehow I doubt he's willing to pay.

· · 1 year ago

@Objective,
"The poor enjoy the benefit of far less oil than the rich.". True, but it also makes up a much larger part of their expenses than for the rich. I'm always saddened to drive in a poor part of town where I see mainly pickups and large SUVs while the richer parts are littered with Priuses. It just isn't fair is it.

@Paul Scott,
I suspect Mr. Objective would demand to open our strategic oil reserves to meddle with the oil market if someone even suggests he should pay even $4/gal for his beloved oil. He believes he's entitled to a $20K car and $3.50 gasoline to put into it. It's his birthright.

· · 1 year ago

EVs are for people who can do math.

· · 1 year ago

And the math is so dang EASY!

· · 1 year ago

ex-EV1 said . . .

"I'm always saddened to drive in a poor part of town where I see mainly pickups and large SUVs while the richer parts are littered with Priuses."

Quite true. What has to be understood is that most who are poor (and that's a relative term, depending upon how much one makes) are not in a financial position to buy any sort of new car. They buy used ones. In many ways, they are at the whim of what comparatively rich people were buying in meaningful quantities some 3 to 8 years before.

Gas was cheap in the 1990s and early 2000s. It was the heyday of the relatively well-off buying big SUVs and designer monster trucks. Once the upholstery started to wear a little or the paint began to chip, the well-to-do sold these vehicles and they (the cars, not the people) started filling up the used lots.

The so-called poor didn't start buying these larger vehicles simply because they're intrinsically less intelligent (I've seen that implied in posts on this blog and it's a statement that reeks of misplaced ignorance) but it's because the current generation of used car buyers has little choice than to purchase whatever is relatively affordable and available them.

As soon as gas prices started to rise around 2006, the price of used high mpg cars started to rise. Used car prices really went through the roof after the big financial collapse in 2008-09. Those big SUVs and pickups? Fewer new ones were being manufactured and the price of used ones plummeted. Hybrids, which were written off as misplaced green technology by much of the media just a few years earlier (similar to how EVs are lambasted today) suddenly became chic and desirable for those who could afford new examples. Those who could afford to sell off their Lincoln Navigators before the resale values took a nose dive did so.

If you only have $10K or less to budget for a used vehicle, your options are always limited. If a low mileage F150 is on the used lot for $9K and the gas-sipping Honda is $15K, it shouldn't have to be explained that the person who can only qualify for a $10K loan is going to take home the big truck, since it's the only thing that the market is offering to them. Yes, some on the financial margins really want to own those big gas guzzlers. But quite a few are given little other choices.

Those Priuses in today's affluent neighborhoods? They are going to become passe' as soon as plug-ins and pure EVs start to catch on. The less affluent used car buyer will start to see those become more available and affordable in the near term. Indeed, I think it was cited here on this blog some months ago that most buyers of Leafs and Volts were trading in their Priuses to get them. That's good new for today's used car buyers. A low mileage and affordably priced used Prius is a good thing.

Even better news for those who want to own a turn-key EV one day but know that a purchase price in the $30K range is simply out of the question (and, please remember, that federal tax credit is a sliding scale contingent on how much is paid in . . . less money made, less taxes paid in and, consequently, less of that $7500 you're going to be able to take advantage of,) is that today's Leaf and i buyers will be trading up to newer and better EVs before too long.

Those of who live at the comparative margins can only hope that the rich and infamous aren't stupid enough to be suckered into buying a new gas-guzzling SUV again, simply because they have enough disposable income to do so when they happen to need a new car.
Whenever you hear on the news that SUV sales spiked as soon as gas prices dropped, please remember that it's being done by people who have enough money to impulse buy in that manner . . . not the poor bumpkin who can't come up with the rent on his or her apartment.

Obviously, I don't have a universal appreciation of the terminally affluent. As with the poor, they are capable of doing stupid and impulsive things . . . maybe even more so, since they can afford to buy their way out of a lot of their mistakes more readily. But if their better angels are now telling them to buy an EV today for all the proper reasons (environment, long term operating costs, domestic energy independence, etc.) - and Uncle Sam makes it little easier for them to take a vacation in Telluride or Monaco for doing so with that tax break - I benefit when it's time to finally park my old ICE ride and actually be offered a choice of used EVs down at the local resale lot.

· Lad (not verified) · 1 year ago

The EV evolution will be slow. The reason is the current BEV motor/battery technology has not matured to the point that it can compete with the fossil fueled engine. The current OEM electric cars are truly for early adopters and are experiments in attempting to bring a new disruptive technology to market. The OEMs will be successful over time; but, the lessons will be expensive and painful.

Right now there are a lot of DIYers working on building EVs as home to job commuters and race cars to use in sprint races. This has created a secondary market for batteries, motors, inverters and other EV related components which I believe will sell the people on EVs from the grass roots level.

But, there are no problems that a good low-cost, 200 mile range, 65 mph, battery can't solve.

· Tom Mac (not verified) · 1 year ago

Great conversation
I like the carrot and stick analogy, as well as doing the Math.

Reminds me of Shai Agassi comment at about 9:00 in his "TED" talk in 2009 about a better Place
http://www.youtube.com/watch?v=FcoJt2KLC9k

Denmark went about this the correct way:
CLEAR price signal to everyone:
180% on ICE cars = 60,000 Euros
0% tax on EV cars = 20,000 Euros

Tom

· Paul Scott (not verified) · 1 year ago

@Benjamin Nead, well said! And welcome to this conversation. All I'll add is that there are now a few used LEAFs selling for low $20's. This is a great deal since they drive like brand new, and will for many years to come. This is starting to get to the range even relatively "poor" people can afford. You take into account the cost of operation and the numbers are there. I'm leasing the LEAF for $2,500 down and $260/month. That's less than a lot of people pay for gas each month. Here in CA, the state refunds the $2,500, so essentially there is no down payment.

@Lad, I disagree with your conclusion that "The EV evolution will be slow. The reason is the current BEV motor/battery technology has not matured to the point that it can compete with the fossil fueled engine."

We're very close to par with battery prices falling fast. I give it about 5 more years, tops. You're making the assumption that gas will remain steady at $3.50/gallon and LiIon prices don't drop to $250/kWr. When a technology trends in a direction, it's best not to bet against it. Clearly you were awake when cell phones, flat screen TVs and iPads first come out. The trend for EVs is exactly the same.

The adoption rate is slower than I, and most of the early adopters, thought it would be. But it's absolutely going to take over for the simple reason it's a superior ride. All of us who are driving these cars are saying the exact same things. The satisfaction rate for plugins is near 100%. No other car has ever gotten close to that figure, yet all of the plugins on the market are virtually universal in their acceptance with consumers.

· · 1 year ago

Thanks, Paul. I'm probably going to get an earful from ex-EV1 for poking fun at the foibles of all those people that Robin Leach fawns over. But, given that he regularly likes to characterize me a loafer hippy, we'll both get over it. :-)

Actually, Lad isn't all that far off base, especially when he talks about the DYI market, which is something I expose myself to at local electric car club meeting, but doesn't get discussed on this blog all that often.

If the used Leaf market doesn't flesh out here in Tucson in a few years, you may see me over in your Santa Monica lot some day. The crusty Saturn still runs remarkably well for now and realities dictate I'll help celebrate it's 20th birthday in another couple of years. I'm also going to get a decent bicycle this winter.

While we're sharing TED videos, Tom Mac, here's one I like: from Ann Marie Sastry, who is developing next generation solid state (non-aqueous electrolyte) lithium batteries . . .

http://www.youtube.com/watch?v=HPgAbG70qPc

Scroll forward to 07:17 for a good laugh.

· · 1 year ago

@Objective: "You got that backward... we tax gas. We subsidize electric cars, their charging stations, the electricity used to charge them, etc."

We tax MOTOR FUELS as a proxy for road use, which goes towards road maintenance.

We subsidize the oil industry through allowing use of federal lands and eminent domain seizures (see: tar sands pipeline protests), through allowing the write-off of various expenses despite record profits, through direct subsidies of various types of fuel production (ethanol especially), through undeserved foreign tax credits, and through covering most if not ALL of the external costs such as environmental cleanup and waste disposal - not to mention military force to protect their interests. We spend tens of billions every year covering the oil industry's costs and tens if not hundreds of billions more letting them off the hook for taxes and expenses they can easily afford many times over and still have enough profits to wipe their asses with hundred dollar bills three times a day.

· · 1 year ago

While reading this comments as of late, claiming the poor can't afford an EV and that people should drive less, use bicycles and such rather then buy an EV (angry GM employee) I came to realise something.

We simple folk back here in europe quite fit well into this "sollution", many of us like to use city transportation, which is often powered by electricity or natural gas (back in the town "Zilina" nearly all of the buses are electric using energy from hydro-electric power plant, also in the capital most of the buses are CNG powered) or buy very small, very cheap gas efficient vehicles and make them even more afforadble and greener by various means. And NOT because we are all rich hippies (quite the opposite) but because we have to save money wherever we can.
Back here in most of the europe the price of gasoline is well above 6 eruos per gallon, plus our annual income is nowhere near yours.

As you know I like to use my country (Slovakia) as an example, plus I recently got employed, even tho I'm still a student so I have a bit different view on things now.
I was lucky (or clever enough) to choose a good proffesion path rather then just mindlesely trying to achieve an academic title, like most of the students here do.
That, plus the fact that I am emplyed by at&t puts my salary where only 6% people from this country are. You can figure that out more precisely from this picture. (showing euros per month and % of people that earn that amount)

http://www.profesia.sk/images/info/Newsletter/082012_merces.jpg

And yet, there is no way for me to afford an EV today, even tho I would really, really love to.
And you people have such an awesome opportunity and variety of electric cars and all you do is fight about it...
Just try to look at the rest of the world, or as we at my work call it the MOST of the world.

To give you an example of small efficient cars, most of the cars made today for mainstream have above 60 MPG, non hybrids that cost less then 10 000 euros. (new citroen elysee, peugeot, dacia, skoda)
The numbers I did on my 12 year old skoda fabia are : avg. of 31 MPG of liquified petroleum gas, or 113 g of CO2 / 100 km while a galon of LPG costs 2.7 euros (161g / 100 km of CO2 on gasoline and 35 MPG).
The weekly 400 km trip I do would be more poluting and expensive on volt / ampera / prius / cmax energi and imposible on pure EVs - no charging stations.
This small shaky car of mine cost 2500 euros (it had 150 000 km when bought) and the conversion to LPG cost me 1600 euros.

So please, do help the enviromet as much as you can and value things that you have.

· Objective (not verified) · 1 year ago

We have the federal government heaping money into everything EV, battery, solar, etc., many of whom fail miserably.

· · 1 year ago

@Ben,

Thanks for the long, well-spoken post. It is easy to point fingers at others, and even easier to simply fail to realize the conditions under which people make their decisions.

On the topic of used EVs, something tells me that starting around 2014/2015, there will be a lot of off-lease Leafs and Volts available for purchase. Many of those who leased them in the first place will probably look for a new model with a few years' enhancements (and maybe a better battery?) and to take one last stab at that $7500 credit, before it either gets exhausted or we get a Republican in the White House.

@Lad: "The reason is the current BEV motor/battery technology has not matured to the point that it can compete with the fossil fueled engine"

I disagree. The EV doesn't have to do everything that an ICE can do (e.g. 10 minute refuel, 300+ mile range) in order to be an overall superior product. The EV already does things that an ICE can never do: simple, hands-free refueling while you sleep; silent, smooth ride; peppy, instant torque; zero smog/GHG emmissions from the car (and the energy source gets cleaner every year, not dirtier); etc...

@Teq: "you people have such an awesome opportunity and variety of electric cars and all you do is fight about it..."

I agree completely. Three years ago I had to buy a "large" car (4-door compact - compared to my 2-door, 2-seater) for my growing family. No plug-ins were available, so I begrudgingly bought a hybrid. Today, we have several options available and even more will show up in 2013. I for one welcome all plug-in cars (even the wimpy PiP) as a means to move forward.

· Lad (not verified) · 1 year ago

To those that disagree:

Thanks for the attention, it's good to see the interest and support of the EV movement. Please understand I'm also a member of that movement in that I own a 2011 Nissan Leaf #669.

We have lost a number of start ups already; Think, Aptera, A123, Zebra, etc. And, the Nissan company has still to turn a profit on it's EVs. We are told by the MyLeaf forum members not to expect a great range increase in the new 2013 model Leaf. And, Tesla hasn't proven it can sustain itself yet. In fact, they are trying to milk their buyers for additional money via a maintenance charge and a $2500 price increase. No, at this point in the evolution we are only walking; we have a lot of irons in the fire but none are really ready to work.

There's a lot of research on large format batteries for autos; but, we are still waiting for the first truly "high density battery" to become feasible enough for mass production. And, this in my opinion, is the necessity to make the BEV a common sight on the roads. Until that happens, we must contend with the various false EVs; you know the microhybrid , the EHEV, the PHEV and all that PR around a gasoline car with a battery/motor helper.

You will know we are at the point of EV acceptance by the Public when Exxon enters the battery business in an attempt to continue to control our energy.

· Modern Marvel Fan (not verified) · 1 year ago

The problem with EV is the fact that high MPG version of hybrids are so much cheaper and better (on average) than the comparable EVs.

Even if gas is $8/gallon, more people will flock to Prius than Leaf. It will sure help Leaf sales, but let us be realistic. People love the "freedom" of moving around without restriction. I love EVs. I believe that is the future. But we have a chick/egg problem where the success of EVs depending on infrastructure and infrastructure depending on the numbers/poplularity of the EVs.

On the other side, the high MPG hybrids such as Prius is creating the largest road block to the EV movement b/c it takes advantage of the existing infrastructure and use it as "efficiently" as possible to maximizing the MPG. Sure, the EV experience is far superior to Prius. But most people buy on $$$$. Prius can bought at below "average" new car price of $20k to $23k. That is a great entry price point.

You would EVs to take off? Find a cheap battery solution that can go 500 miles per charge (and fully charge overnight, ~ 15KW charger and 150KWh battery) and make the car cost less than Prius, it will take off. Until that happens, high MPG hybrids will continue to dominate the EV/Plugin market.

New to EVs? Start here

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  3. Electric Cars Pros and Cons
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  4. Eight Rules of Electric Vehicle Charging Etiquette
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  5. Seven Things To Know About Buying a Plug-In Car
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  6. Eight Factors Determining Total Cost of Ownership of an Electric Car
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  7. Federal and Local Incentives for Plug-in Hybrids and Electric Cars
    Take advantage of credits and rebates to reduce EV costs.
  8. Guide to Buying First Home EV Charger
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  9. Electric Car Utility Rate Plans: Top Five Rules
    With the right utility plan, electric fuel can be dirt cheap.
  10. The Ultimate Guide to Electric Car Charging Networks
    If you plan to charge in public, you'll want to sign up for charging network membership (or two).