Maintain its ZEV Production Requirements -LONG

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Maintain its ZEV Production Requirements -LONG

http://www.crest.org/ev-list-archive/msg11902.html

-----Original Message-----
From:   David L Modisette [SMTP:dmodis@ns.net]
Sent:   Sunday, August 27, 2000 10:02 PM
Subject:        EV California Article

Here is the text of the CalETC Newsletter, EV California.  Some of you
may have seen the hardcopy which was mailed last week.  I know you
will be interested in the lead article.

EV California
Summer 2000
A publication of the California Electric Transportation Coalition
(CalETC)

Why California Should Maintain its ZEV Production Requirements

On September 7, 2000 the California Air Resources Board will decide
whether to maintain or modify California's long-standing Zero Emission
Vehicle production requirements. Originally adopted by the Deukmejian
Administration in 1990, and maintained by the Wilson Administration,
California air quality regulations require the six largest automakers
to produce a small percentage (1 to 4 percent) of their new light-duty
vehicles (not SUVs or full-size pick-ups) that are zero-emission
electric vehicles (ZEVs) beginning in 2003. The California Electric
Transportation Coalition supports this requirement for seven simple
reasons.

1. The ZEV production requirements are working.

The ZEV production requirements are doing exactly what they were
designed to do, and they have achieved their goals to date. First, the
requirements focused private sector efforts on ZEV technology
development (including battery electric vehicles, fuel cells, and
hybrid-electric vehicles), and spurred tremendous investment by all
stakeholders, including battery developers, component suppliers,
infrastructure providers, and others.

Stakeholder partnerships were created, and together they established
new statewide building and electrical code standards, and training
programs for building officials, law enforcement and safety personnel.
These same partnerships put in place federal, state, and local
financial incentive programs, HOV lane access, and the network of
public charging infrastructure that we have today.

Most importantly, progress in the development of ZEV technologies has
been dramatic. For example, ZEV drivetrain technology has achieved a
75 percent reduction in cost, size, and complexity. Battery
technologies have greatly improved, and new, advanced battery
technologies have come to market more than doubling the range of
electric vehicles (EVs).

There have been similar developments and cost reductions in power
electronics, use of lightweight materials and composites, and
recharging infrastructure. Moreover, the performance of EVs, over just
the past five years, has increased in all areas, including range,
acceleration, payload, and efficiency, as documented in independent
tests by the U.S. Department of Energy.

Additional progress in ZEV technologies, cost reduction,
infrastructure, market development, and public education will continue
if California maintains its ZEV production requirements.

"It seems clear that the mandate, by forcing the world's largest
carmakers to start the hard R&D march to electric vehicles at a time
when none but GM wished to do so, has been a triumph of social policy
as important to the betterment of this country in its day as the Clean
Air Act was a generation ago.  Quite literally, it has jumpstarted the
future of automotive transportation, and in doing so shown, in an age
of political selfishness and cynicism, that government can, on
occasion, offer enlightened leadership." - Michael Shnayerson, The Car
That Could, The Inside Story of GM's Revolutionary Electric Vehicle,
1996.

2. ZEVs are the cleanest automotive technology available.  ZEVs reduce
   air pollution by more than 99 percent, when compared to the
   cleanest gasoline cars, even after accounting for emissions from
   the generation of electricity, according to independent studies
   done by the California Air Resources Board (CARB), the Union of
   Concerned Scientists, and Natural Resources Defense Council.

ZEVs also reduce toxic air contaminants from vehicle exhaust by 99
percent, global warming gases by 70 percent, and reduce water
pollution caused by gasoline leaks and spills, motor oil pollution and
runoff.  Lifetime "real world" emissions for vehicles in the South
Coast Air Basin including fuel-cycle emissions for both electricity
and gasoline (in kilograms). Union of Concerned Scientists, 1994.

3. California needs ZEVs to meet state and federal standards for
   healthy air.

Ninety percent of all Californians live in areas that do not meet
federal or state standards for healthy air. And, over 70 percent of
our urban smog comes from mobile sources - primarily cars and trucks.
California will not be able to guarantee that we will have clean,
healthy air in the future without ZEVs and other clean car
technologies.

The introduction of ZEVs beginning in 2003 is an important part of
California's State Implementation Plan to meet air quality standards. 
Further, air quality gains made today are being eroded by population
growth, an increase in the number of cars, and the fact that people
are driving their cars more miles each year. These air pollution
impacts are enormous, and although we do not have all of the
solutions, we do know that one of the them is ZEVs. More specifically,
we know that we have to begin to develop and commercialize ZEVs today
if we expect to have them available in large numbers in the future.

If California fails to meet its air quality goals, it will exacerbate
existing public health problems. Billions of dollars of the State's
annual federal highway funds would be frozen, causing massive job loss
and an economic downturn, not to mention the toll it would take on
roads and transit systems. Additional fees could be imposed on
existing businesses and industries in California, and siting of new
industries could be halted.  Simply put, if we do not get the
emissions reductions we need and are counting on from ZEVs, reductions
will have to come from somewhere else.

That could mean putting more burdens and restrictions on drivers, such
as more and tighter "smog-check" requirements, or restrictions on
where and when one can drive. A benefit of getting emissions
reductions from ZEVs is that it is a quantum leap in emissions
reduction technology for vehicles, but without the imposition of
onerous new driving restrictions.  4. There is a market and demand for
ZEVs.

Over the past three years, eight models of ZEVs, 2,300 vehicles in
all, have been successfully demonstrated in both consumer and fleet
markets in California. In June, the California Energy Commission
released a statewide market research survey of EV drivers in the
state. Among the key findings:

- 80% of the drivers responding said they were more satisfied with
  their EV than with their current gasoline car.

- 70% said they use their EV as their primary vehicle; and 58% said
  they drive their EVs over 95% of the time.

- Up to 95% said they would lease another EV.

In fact, studies consistently show that when people are given
information about EVs and try them, they not only like them but
realize that EVs can meet the driving needs of their households or
businesses. How big is the market for ZEVs? A University of
California, Davis study found that the household market (not fleet
market) potential for EVs was 13 to 15 percent of the new car market
in California, and that California's ZEV production requirements could
be easily met in this market alone. CARB staff recently estimated that
just 10 percent of California's fleet vehicle market for new cars
alone would also more than meet the requirements.

Today, barriers prevent this market potential from being realized, and
low awareness of EVs is one of the greatest. A recent study in the San
Francisco Bay Area found that only one out of 11 (8.7%)
college-educated, 25 to 54 year olds, was aware of any available EV
product. This is testimony to the fact that automaker and government
efforts to inform and educate the public, and to market EVs, have been
extremely limited and inconsistent, as documented in recent CARB staff
reports.

CARB staff identified five factors that "are critical to the ongoing
success of the EV market:" continuity; availability of mainstream
vehicle platforms; public education; marketing to retail customers;
and competitive pricing. The problem today is that none of these
factors exists. Automakers and government are not fulfilling even one
of these. Today, even with the lack of information and marketing, high
prices, and other barriers, Californians want EVs but cannot get them.
Automakers simply are not making them available.

"Based upon test drives and research, we believe that today's electric
vehicles can meet some of our fleet needs, and that a significant
number of our employees are interested in securing these vehicles for
their personal use. To say that we are frustrated by the lack of
product and non-responsiveness of the automakers is an
understatement."  - Lisa Rawlins, Senior Vice President of Studio and
Production Affairs, Warner Brothers.

5. ZEV prices can and will be competitive.

Like all new technologies, ZEVs today are more expensive to make than
the average gasoline car. But costs are falling quickly, and will
decline even more as production volumes increase from a few hundred to
thousands, and even tens of thousands.

In volume production, EVs with advanced lead-acid batteries and
energy-efficient design, making them capable of a 100 mile range, are
projected to have costs comparable to similar gasoline models. For
consumers that want greater range, vehicles with advanced batteries,
such as nickel metal-hydride batteries, will be available at a higher
cost of approximately $2,000 to $2,800 per vehicle, before any
incentives are applied. This additional cost for advanced battery
vehicles, even without financial incentives, is not expected to
significantly restrict their market. It is well known in the industry
that the price for conventional gasoline vehicles varies widely, and
is based upon many factors that bear no relation to production cost.

Costs come down further with incentives. Existing incentives for EVs
in California, from federal, state, and local governments, total
almost $10,000, a figure well above projected incremental costs
figured by CARB's Battery Technology Advisory Panel. Further,
California recently established a powerful non-monetary incentive for
ZEVs, access to High-Occupancy Vehicle lanes (diamond lanes)
regardless of occupancy. Senate President Pro Tem John Burton is
proposing to increase the above incentives by $4,000 (see ZEV
Legislation Update, pg. 2).

In the near-term, automakers can and should treat EV prices like they
do for other new models. They should use "forward pricing," where
prices are set at levels that will build interest and sales for the
new product. This is precisely what automakers are doing with the new
hybrid gas/electric vehicles now on the market. These vehicles are
competitively priced at $19,000 to $20,000, even though reports
indicate each vehicle costs $10,000 more to manufacture.

6. The ZEV production requirements can easily be met by the 6 largest
   automakers.

Truth be told, the number of ZEVs required under California's existing
law is very modest, and easily achievable by six of the largest
corporations in the world. The 4% figure in the existing regulations
is a small percentage, but in reality the required number of ZEVs that
an automaker would have to produce is much lower, as low as one
percent or less.

The number of ZEVs that an automaker would have to produce is reduced
by several factors. Flexibility in the regulation allows vehicles with
higher range or those introduced before 2003 to receive more credits.
Also, the percentage requirement only applies to light-duty cars and
trucks, and does not count the SUVs and large pick-up trucks are the
majority of new vehicles sold.

Here is an example of how these factors combine to greatly reduce the
number of ZEVs that an automaker has to produce in 2003. Toyota is the
second largest producer of light-duty vehicles in California, with
244,000 vehicles sold in California in 1998. Toyota's electric RAV-4
has a tested range of 143 miles. According to the CARB Staff Report,
Toyota would have to make about 2,560 electric RAV-4s in 2003. This is
about one percent of Toyota's annual new vehicle sales.

Since Toyota leased more electric RAV-4s in 1999 than required, it
earned multiple ZEV credits that further reduce its 2003 ZEV
requirement. The 162 additional vehicles it leased in 1999 will reduce
its 2003 obligation by 780 vehicles, down to a total of 1,780, or 0.7
percent of total sales.  Toyota can further reduce its ZEV requirement
by leasing a small number of vehicles in 2001 and 2002. If Toyota
leased just 200 ZEVs in 2001, and 400 in 2002, it would reduce its
2003 requirements to only 700 vehicles, or 0.3 percent of total
sales.

If all six major automakers produced ZEVs with 120 mile tested range,
their 2003 requirement would only be 15,000 vehicles, or one percent
of their total sales. Again, automakers could further reduce this
number by making just 2,000 ZEVs in 2001, and 3,000 in 2002. If they
did this, then the 2003 requirement for all six automakers, would
total only 5,500 ZEVs or 0.35 percent of total vehicle sales.

"Does anyone really believe all this would have happened without the
California ZEV standards? And does anyone really believe progress will
continue at the same pace if the [standards] are now repealed or
watered down? . . . The bottom line is that the auto industry has
always been able to do a lot more than it claimed possible." -David S.
Freeman, General Manager, Los Angeles Department of Water and Power

What does this mean in real world terms? Picture a new car sales lot
with 100 new cars of all types. California's 2003 requirement says
that one of these cars, and possibly fewer, must be a ZEV. Automakers
want California to believe that they cannot sell one ZEV out of 100
cars. More accurately, they say they should not have to because it
takes more effort to market and sell a new technology ZEV than a
gasoline vehicle. One car out of 100 is an achievable and modest
contribution that major automakers could and should be making toward
California's future air quality.

7. Californians strongly support the ZEV production requirements.
   Public opinion polls conducted over the past decade have
   consistently shown that Californians overwhelmingly support the ZEV
   production requirements.  Here are some examples:

- 64% FAVOR California's ZEV production requirements - May, 2000,
  survey of 600 registered voters, Fairbank, Maslin, Maullin &
  Associates.

- 78% AGREE with California's ZEV and Partial ZEV production
  requirements - October, 1999, survey of 700 registered voters,
  Fairbank, Maslin, Maullin & Associates.

- 71% AGREE with California's ZEV production requirements - October,
  1994, survey of 400 people intending to buy a new car, The Dohring
  Company, for Automotive News.

- 70% FAVOR California's ZEV production requirements - May, 1994,
  survey of 600 registered voters, Fairbank, Maslin, Maullin &
  Associates.

What you can do to help:
Send a letter to Governor Gray Davis, urging him not to weaken or
delay California's long-standing ZEV production requirement. Send the
letter to:

The Honorable Gray Davis
Governor, State of California
State Capitol
Sacramento, CA 95814
---



David L Modisette
Executive Director
California Electric Transportation Coalition (CalETC)
916-552-7077
FAX-552-7075
dmodis@ns.net or CalETC@ix.netcom.com
-

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