California Provides Boost for EVs

"ElectricElectric cars and plug-in hybrids on Friday got what is expected to be a substantial boost.

The California Air Resources board approved Advanced Clean Cars rules that the board’s staff projects will lead to 1.4 million PHEVs and zero-emission vehicles (ZEVs)—most of the latter being powered purely by electricity—on the state’s roads by 2025.

The rules, which aim for dramatic drops in autos’ greenhouse gas and smog-forming emissions, would require that automakers produce PHEVs or ZEVs equal to roughly one in seven cars expected to sell in California in 2025. The requirements begin in 2015 and become more stringent over the next 10 years.

Rocky Mountain Institute sees EVs as a crucial step in moving the United States away from fossil fuels for reasons of national security, human health, environmental protection and durable economic advantage. EVs’ potential benefits go beyond fuel economy. Reinventing Fire, RMI’s new, peer-reviewed book backed by 30 years of Institute research, shows that EVs—ultimately made of ultrastrong, ultralight materials that dramatically speed energy savings—can become energy storage vessels that feed electricity back into a revamped, more-secure electrical grid. While Reinventing Fire calls for a business-led transition to a new energy economy, it recognizes that state-level regulatory changes can play a key role.

Because California accounts for 10 percent of new vehicle sales and because 14 states have adopted its current emissions rules, which are stricter than federal regulations but have won U.S. Environmental Protection Agency approval, the state carries great clout in setting standards for automakers.

"We are very supportive of CARB’s efforts," Mark Perry, Nissan’s director of North American product planning, told RMI. Maker of the Leaf EV, Nissan is "focused on achieving mass market volumes. ZEV mandates will force most (automakers) to join with Nissan to develop the market." 

Representatives from auto companies testified generally in support of the regulations, though the industry association that represents them expressed concerns about whether consumers will actually buy as many of the vehicles as the rules require automakers to produce.

“We generally oppose mandates, and this is a production mandate,” Gloria Bergquist, vice president for communications for the Alliance of Automobile Manufacturers told RMI shortly after the rules were approved Friday.

“The big policy question is how we get consumers to buy more,” Bergquist said, noting that automakers have invested billions in developing hybrids and early electric vehicles already on the road. “We want to sell these vehicles. At some point if they don’t sell, it’s going to be a huge economic issue for the automakers.”

She said consumer rebates and high-occupancy vehicle lanes have been shown to boost consumer demand for high-efficiency vehicles — as have gas taxes in Europe, though the alliance does not support higher gas taxes.

California currently offers a $2,500 rebate for hybrid sales, in addition to a $7,500 federal tax credit.

RMI’s Project Get Ready, which works with partner cities and private business to help prepare the nation for EVs, has seen growing movement toward incentives at the state and city level. RMI has long advocated carefully designed, revenue-neutral “feebates” that can be enacted at the state level. (In fact, the California Legislature passed such a program in 1980, but it was pocket-vetoed by Gov. George Deukmejian.)

A feebate system, which is agnostic toward vehicle technology, levies a fee on the least efficient models in each vehicle class to finance a rebate for the most efficient vehicles in the class. The more efficient the auto, the bigger the rebate. In this way, the government doesn’t pick winners or steer consumers away from, say, crossover vehicles that can carry four children, a dog and some sports equipment. Feebates provide a powerful price signal that influences auto-buying decisions the instant they’re made and maintain a continuous incentive for automakers to innovate.

California Air Resources Board Chairwoman Mary Nichols said the board hoped to work to put in place greater consumer incentives. The rules adopted say the board will within two years determine if requirements are needed to establish more charging stations, and agreed to review vehicle sales in 2017-18 to see if the targets are realistic.

Bergquist said California has more infrastructure in place than many states, but “has to develop a lot more widely available charging stations. It’s the proper role of government and the obligation of government if they are going to give us a production mandate.”

Board members acknowledged need to work on consumer demand.

“We have a lot of work to do there and a lot of work to do with dealers” to promote consumer adoption, said board member Sandra Berg, owner of an all-electric Nissan Leaf. “We need to acknowledge the fact that we are mandating new business models” and we have to ensure that they are sustainable, without subsidies over time.

Board chair Nichols was upbeat about EVs’ prospects.

“I think the auto companies that are bringing ZEVs to market are basically satisfied” despite a tough economy, she said.

“The steady drumbeat to get off of our dependence on petroleum is really what’s driving this thing,” Nichols said. “It’s taking longer than we’d hoped. The companies see that the future is going to be in electric drivetrains and they are getting there by different means, but they are getting there as fast as they can.”