8-state pact pushes for electric vehicles, but faces roadblocks

Source: Anne C. Mulkern, E&E reporter • Posted: Monday, October 28, 2013

Environmental, consumer and automaker groups yesterday praised eight states for teaming up to push sales of electric cars, even as some warned there are roadblocks in the market.

The agreement announced yesterday among California, Connecticut, Maryland, Massachusetts, New York, Oregon, Rhode Island and Vermont sets a goal of putting 3.3 million zero emission vehicles, or ZEVs, on the road within a dozen years. That’s more than 50 times the current 65,000 now in those states (Greenwire, Oct. 24).

The pact “will over the next few years help usher in a new chapter in transportation for the U.S.,” California Air Resources Board (ARB) Chairwoman Mary Nichols said in announcing the agreement.

“The basic word here is scale,” Nichols said, “scaling up the program from something that is just a California-only program to something that spans the United States, gives us bigger numbers. We’re dealing with 25 percent of the new car market here rather than the roughly 10 percent or so that California represents.”

The states’ plan several steps including pursuing consistent building codes for electric vehicle charging stations, setting targets for ZEVs in government fleets and evaluating financial incentives for car buyers.

Automaker groups said they supported the move. But they and industry analysts cautioned that selling battery electric, plug-in hybrid electric, hydrogen fuel-cell electric and other zero emission vehicles is complex.

“These advanced vehicles face significant barriers in even the most ‘friendly’ market environments,” Michael Stanton, president and CEO of Global Automakers, said in a statement. “Each state presents its own unique challenges such as consumer preferences, incentives, codes and standards, fueling/charging infrastructure, weather and topography.

“Getting the marketplace ready to support ZEVs is a shared responsibility and automakers are already making huge investments in developing the technologies,” he added.

Accelerating a transformation underway

The agreement among the eight states is the latest move by part of a larger group that earlier teamed up to limit auto tailpipe emissions. That rule — which started in California — forces automakers to produce vehicles that go farther on a gallon of gas. The seven states outside California also have adopted that state’s regulation that by 2025, ZEVs must constitute 15 percent of new vehicles sold.

The new agreement lacks any specific commitment on electric vehicle charging stations that will be built, or ZEVS that will be bought in government fleets. And the states could not attach a dollar amount to the value of the efforts.

But Nichols said that the states involved “start from a position of mandates. The states that are here all are states that have a zero emissions vehicle mandate. What we’re doing with this [memorandum of understanding] is building on that mandate to try and make the market successful in actually achieving the results that the mandate calls for.”

The states will be looking at the best way to steer around market obstacles, Nichols and other state leaders said, including higher prices for ZEVS and a lack of charging stations, particularly for people who live in apartments or don’t have garages

In some cases, the answers will vary by state, Nichols said. In California, one incentive that makes ZEVS more appealing is that they are eligible for stickers that allow a solo drivers to use high-occupancy highway lanes.

Nichols noted that “we can’t go out and force people to buy cars. There’s no intention to do that.

“We’re in the midst of a transformation,” Nichols added. “Our job is to try to make it happen faster and more successfully.”

States can help, but only so much, said Jeremy Acevedo, an analyst at Edmunds.com.

“Electrified vehicles are still a budding technology and many models have a limited range,” Acevedo said in an email. “When you couple the limited travel miles with the required access to ZEV fueling stations these models face a limited pool of buyers. The segment also feels the pinch from the small car and hybrid segment which have become increasingly fuel efficient and offer MPG-focused customers a more traditional car ownership experience.”

“States,” he added, “can directly address many of these factors, committing to the infrastructure; providing rebates on ZEVs to stimulate purchases. However, we’d expect much of this growth to be gradual as the range continues to grow to allay consumer’s range anxiety and the infrastructure grows to accommodate demand. ”

EV sales growing

Sales of electric vehicles and plug-in hybrids are up, according to Edmunds.com. Through September, consumers bought 32,718 of the cars, not including those sold by Tesla, which Edmunds does not have as part of its tally. That compares with 21,504 for the same period a year ago. The biggest gains were made by Nissan, which more than tripled sales of its Leaf. There also were new models on the tabulation this year, including Ford’s C-Max Energi and Honda’s plug-in Accord.

“Sales have actually grown considerably year over year,” Acevedo said. “The vehicles did start out prohibitively expensive for many buyers. However, with manufacturers slashing MSRPs, available rebates, and aggressive lease deals the market has found a new level [of] affordability. Indeed lease deals on some of the ZEVs out there are right on pace with those on many subcompact and compact models. The ZEV market has benefited from this new floor in pricing and sales have seen an encouraging surge.”

Currently, there are 16 zero emission vehicles sold by eight automakers, ARB said. Nine of those run on batteries and two on hydrogen fuel cells, and five are plug-in hybrid electric vehicles that can run on gasoline or battery power. The number of models is expected to increase for model year 2014.

By 2015, nearly every major auto manufacturer will offer a ZEV for sale or lease, ARB said, and more than 200,000 zero emission vehicles are expected to be on U.S. roads.

In the eight states that are part of the agreement, there are about 6,700 charging stations open to the public.

Currently, there is a large disparity between California and the other states when it comes to sales of battery electric and plug-in hybrid electric vehicles, said Wade Newton, director of communications at the Alliance of Automobile Manufacturers.

“In 2013, California’s sales rate was seven times higher than the average sales rate in the Northeast — and there’s reason for that,” Newton said. “California has made tremendous commitments to support ZEVs, from incentives to infrastructure investments and more.

“These are things that haven’t yet been made to the same degree in other states,” he added. “We’re hopeful that the [agreement] can reduce the gap in support for ZEV technology.”

Market expands to 26 models next year

At the same time, he said, “there are differences between California and the Northeast states that cannot be addressed — things like weather and population distribution.”

Many electric vehicle experts say that the cars perform better in temperate climates because using the heater drains the battery.

“Automakers are committed to these technologies; after all, automakers have invested billions of dollars in bringing these products to market,” Newton said. “By next year, there will be 26 battery electric vehicles and plug-in hybrid electric vehicles on sale — and we need a strong, robust, vibrant market for those vehicles.”

The same automaker groups that said they supported the eight-state pact are the same ones that earlier this year launched a petition asking U.S. EPA to deny or defer the California ZEV mandate, which 10 other states adopted (ClimateWire, March 13).

The Alliance of Automobile Manufacturers and the Association of Global Automakers argued that EPA, when it granted the state a waiver under the Clean Air Act, failed to adequately address automakers’ concerns about the feasibility of achieving the California ZEV mandate.

The agreement of the eight states puts a new onus on automakers, said Frank O’Donnell, president of Clean Air Watch.

“It calls the bluff of the car companies (which are fighting tooth and nail against mandates — they’ve asked EPA to reconsider letting California have authority to require ZEVs and have attacked state adoptions of CA standards as well),” O’Donnell said in an email, “by trying to take away some of their arguments: incentives to reduce costs, promoting better electric rates for home charging systems, putting more commercial charging stations into play and developing common standards for them, etc.

“I hope this will help transform the zero emission car into a true mainstream commodity — not just something for visionaries and the wealthy.”