8 states push to get 3.3 million ZEVs on road by 2025

Consumer demand for ZEVs, which include plug-in hybrids, battery-powered and hydrogen fuel-cell cars, hasn't been as robust as some expect.

UPDATED: 5/29/14 3:59 pm ET - new story, more details

LOS ANGELES -- Eight states, including California and New York, announced today major incentives to place a cumulative 3.3 million zero-emission vehicles on the road by 2025.

The 3.3 million ZEVs -- powered by batteries or hydrogen fuel cells -- would represent a market penetration of 15 percent of the eight states’ sales from present day. The states represent about one-quarter of U.S. vehicle sales.

The eight-state coalition, which includes Connecticut, Maryland, Massachusetts, Oregon, Rhode Island and Vermont, said in a report today they plan reciprocity agreements for nonmonetary enticements, such as carpool lane access and preferential parking for ZEVs. But the “action plan” also includes a continued commitment to consumer incentives and tax credits.

“We’re looking at a big transformation, no question about that,” said Mary Nichols, chairwoman of the California Air Resources Board.

Asked whether the 3.3 million figure is a goal or a mandate for automakers, Nichols said the plan was based on state emissions requirements under the federal Clean Air Act.

“The states have mandates which are legally enforceable because of the Clean Air Act. But states have had a history of adjusting numbers based on circumstance,” Nichols said in a conference call with reporters.

‘We want them to succeed’

The California Air Resources Board has tried to “technology force” zero-emissions vehicles for more than two decades. Its original ZEV mandate requiring the largest seven automakers to have 10 percent of their vehicle fleet be ZEVs beginning in 2003 was scrapped in 2001 -- when CARB sharply diluted the requirement to just 8,137 pure electrics, of which only 4,670 needed to be freeway legal.

CARB spokesman David Clegern declined to give an aggregate figure of what the action plan -- in terms of infrastructure construction, sales incentives and tax credits -- will cost taxpayers in the eight states.

Christine Kirby, deputy director of the Massachusetts Department of Environmental Protection, said her state is investing in DC fast-charging stations to help promote EV usage and will continue to offer sales incentives to purchase battery-electric and plug-in hybrid vehicles.

“This is a big tent we are creating here,” Nichols said. “We are demonstrating the commitment the states have for creating a healthy market for these vehicles.”

When asked about Fiat Chrysler Automobiles CEO Sergio Marchionne’s contention that the automaker loses $14,000 on every Fiat 500e sold, Nichols countered that Toyota once claimed it lost money on the Prius.

“Everyone understands that going into new technology requires a commitment from auto companies, and they don’t normally turn a profit as quickly as everyone would like. But through a sustained commitment, they will. We’re coming to this collaboration as a way of helping companies. They’ve done a great job of producing great cars. We want them to succeed and want them to make money on this,” Nichols said.

Not all measures in the action plan are financial. The plan calls for streamlining building codes and liability insurance regulations so that future commercial buildings can allow for charging EVs. It also seeks uniform signage and payment systems for public charging stations.

Hydrogen highway

U.S. sales of plug-in hybrids and battery-electric cars have risen 26 percent through April to 31,027, according to HybridCars.com’s monthly dashboard.

Consumer demand for ZEVs, which include plug-in hybrids, battery-powered and hydrogen fuel-cell cars, hasn’t been as robust as some expect, Adam Jonas, an equity analyst for Morgan Stanley, said in a research report Wednesday.

A few years ago, forecasts for global electric vehicle penetration were as high as 5 percent or 10 percent by 2020, Jonas wrote. “From today’s perspective, we think penetration in the 1 percent range would be respectable.”

Representatives from several states said they were working on increasing the number of battery-charging stations, as well as hydrogen fuel-cell fueling stations, to help generate consumer interest. Currently, only California has a working, funded plan in place for a “hydrogen highway,” although Rob Klee, commissioner of Connecticut’s Department of Energy and Environmental Protection, said his state is committed to growing its hydrogen infrastructure.

“California is committed to the infrastructure to get these technologies on the ground, and automakers are behind the effort,” said Alberto Ayala, CARB deputy executive officer. “I hope other states take lessons from California and expand the market for fuel-cell electric. We need both batteries and fuel cells to get to our goals.”

Bloomberg News contributed to this report.

You can reach Mark Rechtin at mrechtin@crain.com -- Follow Mark on Twitter: @markrechtin

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