Dodge Zeo electric concept car
The Dodge Zeo battery-electric concept car may someday be called on to help Chrysler LLC meet its California ZEV mandate requirements. Under California's newly proposed quota, the six large US and Japanese manufacturers would have to sell 12,500 of them between 2012 and 2015, and potentially as many as 150,000 in other states who are slated to adopt similar rules to California's.

California Calls for Tripling of Electric Car Numbers

EV World special report on the 27 March 2008 California Air Resources Board hearings

By Bill Moore

CORRECTION: -- Just to illustrate how confusing all this is, Dan Sperling has informed me that the 125,000 credits are NOT per manufacturer, but divided among the 3 largest US and 3 largest Japanese manufacturers and are apportioned based on their individual sales. The credits are spread over the 3 year period. So, please note that my assumption that the credits apply to each manufacturer is in error. Moore's the pity!

Electric car advocates aren't going to be happy, but then neither will carmakers. The California Air Resources Board (ARB) has now agreed to tripling the number "Gold" standard zero emission vehicles (ZEVs) over what ARB's staff originally proposed in its controversial ISOR report.

After hours of testimony in Sacramento from scores of witnesses offering impassioned reasons for increasing, not decreasing, the number of battery electric vehicles, the board, led by its new chairman Mary Nichols, have agreed, though at nowhere near the numbers being advocated, even by its own members. In a complicated system that now appears slated to be completely revamped in the future, the total number of "Gold" vehicles, which include fuel cell, battery and now plug-in hybrids, being proposed would range from a low of 63,700 to a high of just under 71,000 depending on how many BEVs and/or FCEVs a manufacturer builds during the upcoming Phase III period covering the three-years from 2012-2014.

While the number of ZEVs to be deployed in Phase III now have been increased, the total number of cars dropped from a potential high of just under 80,000 in the original ISOR proposal.

As explained by board member Dr. Dan Sperling -- who is also the co-director of UC Davis' Hydrogen Pathway program -- his proposal, which was approved by the board in its closing minutes, would equate to some 5,300 "real" fuel cell vehicles (taking into account carmaker banked credits, most of which are set to be used up by 2012) or as many as 12,500 battery electric cars, triple the number originally proposed. The rest of the projected 58,000+ "Gold" standard vehicles are anticipated being plug-in hybrids or "Enhanced AT PZEVs" in Staff parlance.

Here's how the original ISOR proposal compares to the Sperling proposal.

Gold Standard Vehicles
Gold ZEV Credits12,50037,500
E-AT PZEZs75,00058,333

* Carmakers are credited for any fuel cell vehicles they already have deployed in California and elsewhere.

The net result of the new ARB decision is more fuel cell and/or battery electric cars, but fewer plug-in hybrids.

To illustrate just how complex ARB's system is, consider the following math. The six largest manufacturers are essentially allotted 125,000 credits during Phase III. Under the proposed Staff ISOR, 12,500 of these credits had to be for "Gold" standard ZEVs. Each fuel cell vehicle earned 5 credits, so all the effected manufacturers like Honda and GM would have to build a total of 2,500 FCEVs in the 2012-2014 period (12,500 credits / 5 = 2,500). Or, they could opt to sell/lease Type II battery electric cars at 3 credits each or just over 4,000 units (12,500 credits / 3). The remaining 112,500 credits would be filled with plug-in hybrids.

The board's decision to triple the number of ZEVs -- as well as award 7 credits per "long-range" fuel cell vehicles that gets 300 miles or more per tank of hydrogen -- effectively reduced the available number of credits for the plug-in category. According to Analisa Bevan, the math now works out as 125,000 credits minus the 37,500 for "Gold" ZEVs, leaving 87,500 credits. Assuming 1.5 credits for each "Enhanced AT PZEV" plug-in hybrid, carmakers would have to build just under 60,000 in Phase III.

The economic bottom line is that this approach would cost car makers an estimated $1 billion annually for the three years, a number that Dr. Sperling contends would pressure carmakers, though various citizens who testified during the hearings that even the proposed 25,000 "Gold" standard vehicles target would hardly be that difficult for carmakers to achieve. If a manufacturer like Nissan decides to build electric cars instead of more expensive fuel cell vehicles, they would have to sell/lease only 2,500 a year in California (7,500 / 3).

For an industry that churns out nearly 20 million vehicles annually in the United States and some 2 million a year in California alone, this seems hardly a stretch from California's perspective. But in the larger scheme of things, as more states follow California's approach, these seemingly modest ZEV numbers begin to constitute a serious economic challenge for carmakers.

The rise of plug-in hybrids has added further complexity to an already complicated system of credits that attempts to offer some way to rationally compare the environmental merits of a bewildering spectrum of technologies from neighborhood electric vehicles to "fast" plug-in hybrids that meet the performance parameters of the new US 06 federal driving cycle, which early models apparently do not. These vehicles, along with those that have advanced batteries that give the car 40 miles of electric only range, would qualify for some additional fraction of credits. Receiving fewer credits would be yet another class of plug-ins known as "blended" hybrids, which rely more on their gasoline engines during the drive cycle. Toyota's early Prius plug-in hybrids would likely fall in this category.

Listening in on the ARB hearings on Thursday, I was struck by various board member pronouncements about how they want to push carmakers and how they want to see larger numbers of state-of-the-art green vehicles introduced in California first. But when everything was said and done, the numbers fell well short of expectations.

Case in point: board member Dorene D'Adamo stated she wanted to see the original 25,000 "Gold" standard number (125,00 credits / 5) increased to 40,000 ZEVs, but in the end, she acquiesced to Sperling's proposal, which would cost carmakers $33 million less annually, according to Staff estimates, but $147 million more a year more than ISOR numbers.

Similarly, Chairman Mary Nichols continually stressed her desire to push harder and to send a clear signal to carmakers and yet, the Staff's nearly 80,000 total vehicles projection ends up being cut to around 71,000. In her comments during the hearings -- all of which EV World recorded to MP3 -- she noted that carmakers are "more optimistic" about the technology than they were in 2003, adding that the board needs to seriously push them and to move the total numbers up significantly. She added that the consensus is that the number of battery electric vehicles (BEVs) projected in the ISOR need a "good increase" and the board needs to send a "strong message that we mean business."

Presumably the board and ARB staff would argue that they are just trying to adapt to changing technology -- like the introduction of PHEVs -- and the economic realities of our times. That argument won't, of course, assuage the anger and disappointment of the numerous witnesses who repeatedly pointed out that between the ZEV mandate and AB 32, the legislation that requires California to begin dramatically cutting its CO2 emissions by 80% by 2050, the state will have put millions of electric cars on the road, not a few thousand.

In the end, the board agreed that the whole ZEV mandate needs to be scrapped for something far simpler that reflects the original intent of the 1990 legislation. It appears that this will begin to happen near the end of 2009 when, if Dan Sperling's recommendations are implemented, all of the Bronze and Silver class vehicles known collectively as PZEV and AT PZEVs will be removed from the ZEV rules, leaving three classes of "Gold" vehicles: battery, plug-in hybrids and fuel cell vehicles.

The staff has also been directed to look at a number of potential "loopholes" to the legislation that were identified by the Union of Concerned Scientists and the NRDC. The ZEV Loopholes paper is available here for download.

The largely secretive process of banked car credits seems slated for a welcome dose of transparency so that the public knows who has how many credits and how those credits are traded among carmakers.

In what is likely to amount to a death sentence, the Board dismissed arguments by BMW that its hydrogen engine technology should be awarded credits. Chairman Nichols commented that although the company has spent many years and a great deal of money on the technology, "it doesn't meet the needs of the times."

Members also questioned the perceived bias towards fuel cell vehicles, cautioning that the board shouldn't be seen as favoring one technology over another.

And in what has to be the most telling comment of the day, Chairman Nichols remarked in the waning hour of the hearing that, "the big bet on fuel cells didn't pan out, and we have to cope with that." She added parenthetically that car companies are "clinging to the past."

Less clear from yesterday's proceedings is the "travel" provision of the 2003 amended mandate that allows carmakers to get California credits for "Gold" class cars they deploy in other states. This provision apparently sunsets in 2012, though automakers would like to see it extended for obvious reasons: they don't have to build as many vehicles. The board noted it is sensitive to the concerns of other states that want to emulate California's rules, but don't want the state getting the lion's share of these vehicles. From automakers' perspective, the eventuality of more than a dozen other states enacting copies of California's ZEV and CO2 laws has to be disconcerting, to say the least. Take those ZEV numbers and multiply them by six (and later 9) manufacturers and then by 13 or higher as more states (and at least one Canadian province) vote to adapt California's approach, and you get sense of what is facing the auto industry.

At the very least, the top six carmakers could be faced with building and then selling and/or leasing 975,000 162,500 BEVs in 13 states between 2012-2014, once the next administration grants California its EPA waiver, something Chairman Nichols observed during the closing hours of the hearings. Include the prerequisite Enhanced AT PZEV plug-in hybrids and carmakers could be looking at having to gear up to build more than 4.5 million 758,330 PHEVs in the same time frame.

As is to be expected in any consensus process, few came away entirely happy with the compromises, certainly not in the "envirolitical" caldron that is California where most of the state's citizenry live in communities with some of the dirtiest air in the nation and which the American Lung Association of California estimates costs the state $10 billion annually in health and social well-being costs.

And frankly, the market may make ARB's deliberations moot. General Motors is talking about production runs of 60,000-100,000 Volt-class extended-range vehicles that will easily meet their E-AT PZEZ quota. How they and other carmakers plan to meet the ZEV part of the quota is yet to be seen. They could elect to build more fuel cell vehicles -- which is likely to be the course Honda will take given its technological investment -- or they could develop their own battery electric cars, which is the approach Nissan has announced it will take. Or they may simply opt to work with small niche manufacturers like Th!nk, Tesla or Miles Electric, buying credits from them for the BEVs they produce and sell in the state, hence the call for credit trading transparency.

This much is certain, the struggle to know just how hard and how far to push both the technology and manufacturers wasn't resolved on March 27, 2008. As Chairman Nichols noted, what the board needs most is wisdom to put "back on track" a program that has "lost its way." It seems to have moved a bit further in the right direction.

Times Article Viewed: 15192
Published: 28-Mar-2008


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