California snubs free EVs, auto industry says in push back on new emissions mandate

The proportion of Californians making electric cars their new set of wheels has stayed flat for years even though incentives make some models basically free to lease, a trade group told state regulators that may toughen up already-stringent rules.

With state rebates, federal tax credits and manufacturer discounts, the effective monthly payments in California for zero-emission vehicles including the Nissan Motor Co. Leaf and Ford Motor Co. Focus Electric can add up to zero -- or less -- a month, the Alliance of Automobile Manufacturers said in written comments to the California Air Resources Board, which meets Thursday.

“Yet the ZEV market share has remained at the 3 to 3.5 percent level,” the alliance said in its 80-page submission, asking the agency known as CARB to ease up on plans to require more sales of the vehicles.

For nearly two decades, the biggest automakers have been required to sell some non-polluting vehicles in the state. Now CARB staff has recommended ratcheting up the mandates to require that as much as 40 percent of sales be either plug-in hybrids or cars powered by batteries or fuel cells. That target for 2030 may be unattainable, according to the industry and some economists and analysts.

California -- which has pledged by law to reduce greenhouse-gas emissions to 40 percent below below 1990 levels by 2030 -- is moving in the opposite direction of President Donald Trump. He’s pledged to roll back federal environmental regulations and last week reinstated a review of fuel-economy standards set under President Barack Obama.

Potential showdown

Trump told auto workers he would eliminate “industry-killing regulations” and protect jobs after a meeting with automaker CEOs on March 15. The Environmental Protection Agency and National Highway Traffic Safety Administration will spend a year evaluating the requirement that cars average more than 50 miles per gallon by 2025.

The Trump administration may also move to strip California of its authority under the 1970 Clean Air Act to make its own clean-air and carbon emissions rules. CARB staff in a report earlier this year said California state may stop coordinating with the U.S. in setting such rules.

As a potential showdown looms, CARB Chairman Mary Nichols has said the state wouldn’t back down. “The conclusion is inescapable: California’s vehicle future is electric,” she wrote in the staff report released in January.

The heavy discounts the auto alliance mentioned include a $7,500 federal tax credit and a $2,500 clean-vehicle discount from California, which also gives $1,500 per zero-emission car purchased to low-income residents. The industry has asked California regulators to wait at least two years before considering the higher zero-emission vehicle targets for 2030.

Matching states

GM’s “single most important concern” isn’t California but the nine states including New York and New Jersey that have pledged to adopt Golden State carbon-emissions rules, Robert Babik, the automaker’s executive director of global regulatory affairs, wrote in a March 20 letter.

Zero-emission vehicles were about 0.74 percent of sales in those nine states last year, according to IHS Markit. Automakers face penalties if they don’t make the zero-emissions sales grade.

A provision set to expire in October allows automakers to fulfill their obligations in New York and other matching states by selling cars in California. The Union of Concerned Scientists said in an Oct. 20 letter it supports both California’s mandates and the end of that loophole.

A coalition of California-based companies including Levi Strauss & Co. and EBay Inc. also submitted comments, saying upholding emissions standards would bolster the state economy.

“Money saved on gas is diverted to consumer spending,” wrote Anne Kelly, director of the group, Business for Innovative Climate and Energy Policy.