EV1 : Victim of Liability Laws?
By Josh Landess
A couple of months ago I decided to investigate a bit more thoroughly the question of why GM was recalling (not renewing the leases of) and destroying its EV1 electric vehicles and apparently its S-10 electric trucks.
Why not just ask them?
I did call and spoke to two or three folks who were either in their media relations area or who had worked on the EV1 program. All of them were helpful and polite and followed up on my questions as best they could.
I verified the basics with Dave Barthmuss of GM's Communications Department, who checked with Ken Stewart and stated the following:
"There were roughly 1000 EV1's built. There was a portion of the first generation EV1's that were refurbished and re-leased. However, there are no more re-leases being offered, and we are no longer refurbishing any EV1s when they come out of service. We are either donating them to colleges and Universities, we are recycling them or we are using them for our own engineering purposes to advance the development of hybrids and fuel cells. Mainly they go to Colleges and Universities or they're recycled."
This verified what was happening, but it did not get at why?
I spoke to several other people. Some of the answers I got didn't seem to provide a coherent picture for me, or seemed diffuse and one or two of the media specialists were not experts on the EV1 program. After reviewing my notes and growing a bit weary, I let the project lie dormant.
However, one person - - speaking on condition of anonymity) had given me an extensive but speculative answer that did seem to help me understand a little of what was going on. The person was not a lawyer, and the answer was one person's educated speculation and not an official GM stance, so at the time I chose to let it lie until I could get a better idea of things.
Recently I saw that answer repeated almost identically, on an internet discussion forum, by a totally different person, in relation to the demise of a different EV program. Claire Bell, who has emerged on Evworld.com and elsewhere as a very outspoken and knowledgeable EV advocate, mentioned that she'd seen the demise of Pivco EVs (the predecessors of the Ford Th!nk City) and why it had happened.
In an online news group Ms. Bell commented, "I saw the Pivcos being crushed in a junkyard near Oslo. Seeing it ripped me up one side and down the other.
"The reason? The insurance carrier for Pivco/Think insisted on it to eliminate any future legal liability.
"Some of the Citibees went to museums and/or schools, however a precious few were rescued by determined and/or heartbroken individuals. It is rumored that one survives in the US.
"The Think Cities will have the same fate, unless some white knight steps in. The insurance carrier will, again, insist on it."
That is the same reason GM is crushing the EV1s.
Ms. Bell's thought on why GM is crushing the EV1s seemed to jibe with the answer I'd been given by a GM employee a month or two previous, who was trying to help me understand that situation a bit better:
This person observed that by GM retaining ownership of the vehicle, which it can do in a lease situation, at the end when the companyis able to take those vehicles back, that essentially removes the vehicle from the road. This removes any kind of liability issue GM might have down the road in case there was an electrical problem that caused a fire, which has happened two or three times EV1's. In two cases the car almost burning down the peoples' houses, he commented
"By taking it off the road they're is negating any chance of liability issues, so I just think it made the legal department at GM feel much more comfortable by saying let's make this a lease situation and not a sales situation."
I have also read second-hand reports of a similar answer being given on a radio show by a GM spokesperson. This answer, as to the legal liabilities of an auto manufacturer many decades into the future, seems to be a somewhat different legal quandary presented by the legal responsibility a manufacturer incurs to provide parts and service (for 10 years or so?) for vehicles it has sold.
GM has mentioned some of these points in some of their official press releases as to why they were finding it advisable to end the EV1 program (a separate issue from asking why the vehicles themselves must be destroyed rather than stored). My conversation with the anonymous GM employee did also touch on this other legal and cost-related matter:
"From what I was told initially, at the very beginning when this whole EV1 program picked up five or six years ago, the reason they were being leased and not sold [was] actually a legal reason. When you sell a car as opposed to when you lease it, it opens you-the-manufacturer up to a whole lot of costly obligations in terms of after-market parts, warranty issues, it is a much more complex and frankly much more costly proposition.
"When you're starting with a relatively small base of vehicles, to actually sell the cars as opposed to leasing them would have been really difficult for us.
"The vehicle was so unlike any other vehicle that GM had had. [The] Electric S-10 . . . was based off an existing vehicle that GM made, and the Electric Ford Ranger was an existing Ford pickup truck that Ford converted to an electrical version, so in terms of after-market parts and warranty costs and replacement stuff, a lot of the components for those vehicles, Ford and GM could get off the shelf.
"Not so with the EV1. It was a specially purpose-built vehicle. And so for us to sell them as opposed to lease them opens us up to a whole big obligation that I don't think GM really wanted to get into. So by leasing the vehicle, essentially we retained ownership of it, and therefore we don't open ourselves up to that whole set of massive set of obligations that we would have incurred had we decided to sell them."
To finish this piecing-together of explanations, a reader brought to my attention a recent Automotive News article by Dave Guilford in which he also looked at the present state of he EV1 situation and concluded that GM's decision to kill the EV1 program was simple economics and not politics.
"'Maintaining service and parts, along with customer-service representatives, gets pretty expensive for a fleet of 600 vehicles,' said GM spokesman Joe Lawrence.
"If the cars were kept on the road, GM would be required to provide replacement parts for 10 years. Because many of the parts were made in a single run, GM has to cannibalize off-lease vehicles for parts, Lawrence said.
"Also, trained repair technicians are scarce, and repairs are costly. Replacing a nickel-metal hydride battery costs about $30,000, he said."
Why go to such lengths not only to recall a car like this but also to seemingly destroy it needlessly?
The claim seems to be that there are important matters of liability law which seem to be influencing one manufacturer's decisions as to both manufacturing and maintaining and leasing EVs, as well as influencing their ultimate decision not only to get cars off the road but to recycle (destroy) them.
I think that some EV advocates would have some rebuttals as to whether this is the whole picture on the matter, but these few statements above seemed to paint a part of the picture.
If the legal liabilities and burdens of putting cars on the road are so difficult, and even more so with a small-volume car, then can we learn some lesson from this as to possibly changing our liability laws? Perhaps the Bush Administration and Andrew Card, (Bush's Chief of Staff and a former Anti-EV lobbyist for Detroit automakers) could score big by doing the unexpected and negotiating some compromise that would help keep these vehicles in existence and allow companies like GM to develop more of them?
Maybe GM, instead of "recycling" the brunt of their EV1's, could set them aside and create a modest program, such as leasing them all to one large business that could keep them on the road by some special agreement, keeping a tight reign over their use and upkeep.
Or, if it is too late for the EV1, at least let us examine if there is anything that can be changed with liability law to present a business environment that is less hostile to innovation while at the same time guarding and maintaining those aspects of the law that have apparently helped us do a better job of holding manufacturers responsible for the performance of their wares.
I would not presume to discuss such points, but I took another drive recently of a soon-to-be-destroyed EV1 via evrentals.com and what a great car! As some leasees have said: in their opinion, it's simply the best car they can find, period. It reminded me of an old Integra I once had: low to the ground, sporty handling, good acceleration at all levels (including in highway passing situations from 65 to 80 mph), quiet, etc.
Ok, so "best car" is a matter of opinion and there are plenty of readers who would not even like an EV1 at all, much less rate it so highly, but I have found it well worth driving, and others have too.
Once they are mostly all destroyed (and I take it for granted that they will be), I hope GM will at least be to put some good hybrids on the road that incorporate some of the good EV1 technologies. So far as I can tell, that hasn't happened yet.
What does seem to be happening is that GM has contracted for someone else to build some slower NEV's in case they are required to satisfy the California ZEV mandate after the legal wrangling is over. Those NEV's will be given away for free (if I understood the press releases), and will not be made directly by GM. Thus, not only does GM miss a chance to build some better highway capable EV's, but the low price of the proposed GM NEV will also hurt the nascent and successful for-profit EV business efforts of a company like GEM.
I've heard that GEM sales are going pretty well and I have seen quite a few statements of satisfaction from owners of NEV's, a bit surprising considering that the vehicles generally only go 25 mph or so.
It is true that we live in a largely free country where a company should not be forced ("mandated") to build a product, and where customers (for their part) should not have to put up with lies or deceit or defective products for which they have paid good money.
While many concerned with protecting the rights of all Americans have asked whether California's mandates represent an outright violation of the rights of companies owned by and employing free (not slave) individuals, I also wonder how long a company can continue if it does not see its way clear to doing a better job of listening to its customers (all of them) and proudly exploiting the matter when they make a home-run product that seems so popular (even amongst such a small sampling of buyers).
The GM folks I spoke to were genuinely helpful, and it seems like they gave some reasons to wind the EV1 program down. I wonder how long the company can go on though if they are not able to see their way clear to listening to and building products for such enthusiastic customers, or at least compromising and continuing to research the matter until they are able to overcome the roadblocks which presently prevent them from making more of what is presently a very expensive product.
For now, they don't even seem willing to continue leasing the EV1's to those who have sent them checks, or selling them to those who have offered money. Apparently, financially, the liability concerns are so formidable that they outweigh the relatively modest monies that could be gained by leasing or selling the remaining vehicles.
If they really are stifling innovation and business, then I hope in the future that we are able to modify those liability laws in a way that allows for greater production of more innovative American products while at the same time preserving the apparent intents of those laws, which are designed to protect product buyers and users and victims from defective or bad products.
Whatever the final outcome of the liability issue, let it be clearly understood that the EV1 was a tremendous success with those fortunate enough to have been able to lease it. They, if not GM, will sorely miss it.
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