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Posted on  

September 12, 2000

California Upholds Zero-Emissions Rule for Automakers

California regulators voted to keep a rule that within three years 10 percent of new vehicles sold in the state produce no emissions, which would force automakers to resume making electric vehicles.

Major automakers starting in the 2003 model year would have to build a total of about 22,000 electric vehicles annually, 10 times the number sold or leased in the state so far. The state Air Resources Board ruling affects the six largest automakers in the U.S. -- General Motors Corp., Ford Motor Co., DaimlerChrysler AG, Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co.

The decision followed staff reports indicating that the board favored keeping the rule. Cars and trucks powered by electric batteries are now the only vehicles recognized by the state as producing no emissions. Automakers including GM and Honda suspended production of electric vehicles after they met the state's previous quota of 2,300 by this year.

The nine-member board's unanimous decision ``puts us back in gear,'' said Cecile Martin, deputy director of the California Electric Transportation Coalition, a group that includes utilities such as the Los Angeles Department of Water & Power and Sempra Energy's San Diego Gas & Electric unit.

GM produced its last batch of electric vehicles last year and doesn't plan to resume production until the board releases its final report in January, said company spokesman Donn Walker.

Honda, which in early 1999 stopped production of its EV Plus electric car, didn't immediately return calls.

Weak Demand

Automakers argued that there's little consumer demand for electric vehicles, which have short driving ranges, limited recharging stations, high prices and slow acceleration. To produce no-emissions vehicles, most automakers are focusing on fuel cells, which won't be ready for mass production by 2003.

Automakers already are planning 2003 models, so the target ``is going to be difficult to achieve,'' said Gloria Bergquist, spokeswoman for the Washington-based Alliance for Automobile Manufacturers, a lobbying group that represents 13 companies.

California's regulators expressed concerns about the prices of electric vehicles, which by 2003 will cost as much as $20,000 more to make than an internal-combustion vehicle, according to a staff report. The board directed its staff to meet with automakers to find ways to lower the cost, including creating state and local tax incentives and other measures.

``GM will assume that the board is taking the cost issue very seriously,'' said Walker, the company spokesman. ``Very significant incentives will be required'' to make an electric car attractive to customers, he said.

Scaled Back Twice

California's mandate has been scaled back twice since it was passed in 1990. The most recent modification, in 1998, let automakers meet 6 percent of the 2003 requirement by selling the lowest-emission non-electric vehicles, called super ultralow emission cars and trucks. Under the 1998 modification, Nissan's Sentra CA car is the only vehicle that qualifies for credits toward the zero-emissions rule.

California is the largest new-vehicle market among U.S. states, representing about 10 percent of all cars and trucks sold in the nation. The state's decision could set the pattern for at least three other states -- Massachusetts, New York and Vermont -- that matched California's requirement.

Shares of Ballard Power Systems Inc. and some other fuel-cell companies rose after Credit Suisse First Boston Corp. analyst Marko Pencak upgraded Ballard to a ``strong buy'' from a ``buy'' because of the California board's decision.

``Fuel-cell vehicles are the leading technology actively being developed that qualify as pure zero-emission vehicles,'' Pencak wrote in a report.  

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