California Again Relaxes Zero-Emission Requirements

By Chris Haak

03.28.2008

Yesterday, the California Air Resources Board (CARB) voted to slash its requirement that the six largest auto manufacturers that sell vehicles in the state sell 25,000 electric- or hydrogen-powered vehicles during the 2012-2014 period by 70%, to 7,500 units. The six manufacturers affected are GM, Ford, Chrysler, Toyota, Honda, and Nissan.

This is the sixth time since 1990 that CARB has relaxed its original requirement that 10% of all motor vehicles sold in California be zero-emission vehicles by 2004, as technology for zero emission vehicles is either far too expensive for mainstream consumers to accept, or simply unavailable at nearly any price. The last time CARB relaxed its zero-emission requirements was in 2003. In fact, CARB’s admission that the rules were unreasonable – again, not for the first time, but the fifth time – again point to the fact that innovation cannot be legislated. For more evidence of that truth, look at how CAFE standards set in the 1970s increased fuel economy requirements, yet our nation’s thirst for petroleum continued nearly unabated through the 1980s and 1990s – and indeed into the early part of this century.

Other than the 7,500 true zero-emission vehicles, the same manufacturers will also be required to produce and sell about 58,000 plug-in hybrid electric vehicles in the same 2012-2014 timeframe. The previous regulations enacted in 2003 did not have any provision for PHEVs, because at the time, the technology was not thought to be feasible. Several manufacturers have announced plans to sell PHEVs in the US in the next few years, including GM (Saturn Vue and Chevy Volt) and Toyota (Prius).

While many see the news as a victory for the automakers, who lobbied fiercely against the higher standards, they were not exactly gleeful at the news. They were, instead, more reserved. Ford spokeswoman Jennifer Moore said, “We’re going to have to take some time and study it. The question is still what technology is ready and what is going to be commercially viable.”

On the other side of the spectrum, Chelsea Saxton, the executive director of Plug In America, an advocacy group, said, “It’s a huge blow. They sent the message to the carmakers that they can always get what they want from the board.”

While automakers may have dodged the worst news for the moment in California, many pitfalls lie ahead. Among these are new CO2 reduction requirements that will effectively increase the fuel economy requirement for some new cars sold in California to over 50 miles per gallon within the next several years, and the threat of requiring that far more strict zero-emission vehicles be sold in 2015 and later. “For 2015 and beyond, we’ll adopt a new program that will probably be even more aggressive than what is currently in effect,” said CARB member Daniel Sperling, without mentioning any specific targets.

With falling sales, additional regulatory requirements, and expensive fuel, 2008 is not an easy time to be an automaker.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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2 Comments

  1. Why doesn’t C just leave the rest of the US and do their own thing because they sure don’t want to do what the rest of the states want to do.

  2. Market forces are going to overtake any government regulation soon concerning alternative energy cars. I predict a lot of electric vehicles in the market in the next 10 years.

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