CALIFORNIA EXECUTIVE ORDER DOUBLES DOWN ON EV MANDATE

Following the signing of a new executive order by California Governor Jerry Brown, the official target for all-electric vehicle sales in the state is now 5 million electric cars on California’s roads by 2030.

That target builds on the earlier target of 1.5 zero emissions vehicles by 2025 by quite a bit. The move demonstrates that Governor Brown’s previous comments about pursuing further actions to support clean tech regardless of federal policies weren’t just glib talk. The recently signed executive order states that it will function, “to curb carbon pollution from cars and trucks and boost the number of zero-emission vehicles driven in California.”

“To reach the goal, California will spend $2.5 billion between now and 2025 to install more charging stations and hydrogen fueling stations throughout the state. It will also beef up its incentives and rebate programs for people who buy zero emissions cars. Right now, there are about 350,000 zero-emissions vehicles on the road in California. Increasing the number 15 fold in 12 years will be a daunting task.

“The plan calls for expanding the number of EV charging stations in the state from 14,000 today to 250,000. Fast charging stations will increase from 1,500 to 10,000 and hydrogen refueling stations will jump from 31 today to 200. Some of the cost of expanding the charging infrastructure will be paid for money Volkswagen has agreed to pay to settle claims connected to its diesel cheating scandal. Proceeds from California’s cap & trade carbon emissions will also pay part of the cost.”

“California, joined by nearly a dozen other states, could seek to enforce existing emissions rules, even if the Trump administration softens the federal 2022-2025 requirements,” Reuters adds. “Automakers want the White House and California to reach agreement because a legal battle over the rules could result in lengthy uncertainty for the industry. They want changes to address lower gasoline prices and a shift in US consumer preferences to larger, less fuel-efficient vehicles.”

While this news is of course worth taking consideration of, it remains to be seen what it will amount to in practice. One thing that is certain, however, is that this move will definitely upset the Trump base and his Administration’s EPA!

By James Ayre, originally published by EVObsession.

Tesla Battles Other Car Makers Over ZEV Rules

In 2013, California promulgated new rules requiring car companies to sell 15% zero emissions cars by 2025. At present, only the Tesla Model S, BMW i3, and Toyota Mirai fuel cell sedan meet those ZEV rules.

Auto companies are permitted to make up a smaller portion of the ZEV requirements selling two types of low emission vehicles — plug-in hybrids like the Chevrolet Volt and Toyota Prius PHEV — and battery electric vehicles outfitted with a range extender engine — like the BMW i3 REx.

If a company does not sell enough ZEV vehicles, it must buy credits from a company that does. Toyota Mirai sales are expected to be extremely limited until many more hydrogen refueling stations are built. BMW i3 sales are doing well, but not as well as sales of Tesla’s Model S. That pretty much means car companies must go to Tesla to buy their ZEV credits.

 The other companies are crying foul, claiming that Tesla is really in the business of selling credits, not cars. “All they care about is protecting their market to sell credits,” harumphed one unnamed auto executive, according to Automotive News. Tesla’s income from selling ZEV credits came to $76 million in the 3rd quarter of 2014 alone.

Elon Musk has fired back, saying that those other companies had just as much opportunity to design and build electric cars as Tesla did. They just chose not to, largely because they all saw electric cars are money losers. Only Elon Musk was smart enough to figure out there was a market for high end electric cars costing $100,000 and more.

Now Honda and others are lobbying California to relax the rules and allow plug in hybrids to qualify. Not so fast, says Tesla. “The [rules are] already far too weak,” says Tesla’s vice president of business development, Diarmuid O’Connell. “I don’t think it was ever conceived that a pure-play electric car company like Tesla could exist, let alone thrive, but we have. The inconvenient truth is that our success has revealed the weakness of the [rules].”

O’Connell went on to say, “Credit revenue used to move the needle at Tesla. It doesn’t anymore, and it hasn’t for some time. What is a strategic driver of the company is to put as many EVs on the road as possible, whether they’re ours or whether they’re produced by other manufacturers.” In other words, Tesla figured out how to take advantage of the rules they were given and it’s just too bad if others did not.

During a hearing over the rules last month, Tesla executive Ken Morgan said companies like Subaru and Mazda “have access to the same financial markets that enabled Tesla to raise all of the funding it needed to launch electric vehicles.”

Will California officials bow to pressure from the other automakers? “I don’t think California is going to roll back the standards,” said Simon Mui, director of California’s Vehicles and Fuels, Energy & Transportation Program. “Now that we have leaders within the industry with a competitive advantage in EVs, it’s a very different game than it was 10 years ago.”

California May Alter ZEV Requirements

Since the 1970s the California Air Resource Board (or CARB) has regulated vehicular emissions in the Golden State, even requiring automakers to make a certain number of electric vehicles. Green Car Reports says that sales requirements for California’s best-selling brands could be altered at a CARB meeting later this week, but to understand how this affects things, first you need a little history lesson.

Back in 1990 CARB enacted the Zero-Emissions Vehicle mandate, which required the six largest automakers to produce enough EVs make up 2% of each automaker’s total sales in California. That number was going to rise to 10% in 2003, but automakers convinced CARB to reconsider the mandate, replacing the EV requirements with low-emissions vehicle credits, which could be bought and sold between automakers. This led many automakers to essentially abandon electric vehicles and accusations that CARB was in the pocket of the car industry.

For 2012 though the ZEV requirements came back, with the Big Six (Ford, Fiat-Chrysler, GM, Toyota, Honda, and Nissan) required to build 7,600 EVs between them from 2012 to 2014, and then rising to 25,000 vehicles from 2015 to 2017. Hydrogen and electric vehicles earn automakers a full credit, while hybrids have been worth a partial credit; CARB can fine each automaker up to $5,000 for every credit it falls short, and each credit expires after three years.

For larger automakers the solution has been to roll out “compliance cars” like the Chevy Spark EV and Fiat 500e, which don’t earn automakers much (if any) money but enable them to earn most (if not all) of the ZEV credits. The shortfall is made up through purchasing credits from the likes of Tesla Motors, which used ZEV credits to earn its first quarterly profit ever last year.

But for smaller automakers like Volvo, Mitsubishi, and Subaru, building an electric car just to meet regulations is a lot costlier and more difficult. This has these so-called “Intermediate Volume Manufacturers” (IVMs) scrambling to meet the upcoming regulations requiring X amount of ZEVs, so they’re arguing they should be able to earn full credit for plug-in hybrids as well.

Plug-in hybrids are much less costly to develop and more practical for consumers, and smaller automakers don’t need to spend millions of dollars on paper credits to meet regulations. On the consumer side, California just passed six new pro-EV laws designed to encourage the adoption of plug-in vehicles, but sales still haven’t taken off the way some had hoped.

Environmentalists obviously aren’t thrilled with the proposed compromise, but these smaller automakers are also asking for more time to deliver vehicles that meet California’s stringent requirements. As the largest car market for pretty much every automaker, California has a lot of weight to swing around when it comes to regulations. You can read the proposed regulation changes in detail here.

The question is, do these automakers deserve the break they’re asking for, or have they had more than enough time to get the ball rolling on truly zero-emissions vehicles?

Source: Gas 2.