States vow to juice ZEV demand

LOS ANGELES -- Eight states, in a coalition including California and New York, have signaled that they're willing to meet automakers part way in an effort to put 3.3 million zero-emission vehicles on their roads by 2025.

The eight states represent about one-quarter of total U.S. vehicle sales and have adopted rules requiring that about 15 percent of new vehicles sold by 2025 be ZEVs -- powered by batteries or hydrogen fuel cells.

Under a plan announced by the group last week, the states would continue to offer consumer incentives and tax credits to support ZEV sales. They also agreed to coordinate the rollout of nonmonetary perks for ZEVs, such as carpool-lane access and preferential parking.

"We're looking at a big transformation, no question about that," said Mary Nichols, chairman of the California Air Resources Board.

CARB spokesman David Clegern declined to quantify the cost to the eight states' taxpayers of the incentives and infrastructure support. But not all measures in the plan are financial. For example, the plan calls for streamlining building codes and liability insurance rules so that commercial buildings can allow for recharging EVs. The group also seeks uniform signage and payment systems for public recharging stations.

The plan comes into play as Tesla Motors ramps up mass production of battery-powered cars, and as Toyota, Honda and Hyundai prepare to launch small demonstration fleets of fuel cell vehicles, beginning in Southern California.

But among major automakers, only Nissan has committed to build the hundreds of thousands of EVs annually required to reach the 3.3 million-vehicle target, a level dictated by state emissions requirements under the federal Clean Air Act. With the Leaf's U.S. sales since its late 2010 launch totaling about 50,000 units, Nissan Motor CEO and EV proponent Carlos Ghosn has called his electric car a disappointment but expressed patience for market acceptance.

For more than two decades, CARB has tried to compel the production and sales of ZEVs. Several iterations of the original ZEV mandate in the 1990s required the largest seven automakers to produce EVs amounting to 10 percent of their vehicle fleet in California -- with continually shifting deadlines. After years of industry resistance, that plan was scrapped in 2001, when CARB sharply diluted the requirement to just 8,137 pure electrics industrywide, of which only 4,670 needed to be freeway-legal.

As ZEV mandates spread, the plan from California and its coalition partners -- New York, Connecticut, Maryland, Massachusetts, Oregon, Rhode Island and Vermont -- signals a willingness among states to do more to stimulate demand.

Even so, some auto industry insiders regard the ZEVs in the works as little more than compliance cars, whose high price, limited range and infrastructure hurdles sharply limit their market prospects. Last month, Fiat Chrysler CEO Sergio Marchionne quipped that he hopes consumers won't buy the Fiat 500e EV because the automaker loses $14,000 on each one sold.

Nichols countered that Toyota once claimed it lost money on the Prius hybrid. Profits, she said, would come "through a sustained commitment."

"We're coming to this collaboration as a way of helping companies. They've done a great job of producing great cars," she said. "We want them to succeed and want them to make money on this."