How California’s ZEV Mandates Impact Electric Car Rollout, Sales & More

JUL 21 2016 BY STEVEN LOVEDAY 28

2017 Ford Fusion Energi

2017 Ford Fusion Energi

California’s ZEV (zero-emission vehicle) mandates that a set amount of automaker’s total sales need to be zero emission. However, car makers have been able to credit hybrids and other low emission vehicles into the majority of the equation in the past.

That changes starting in 2018, as as the usable amount of partial credits gained from non ZEVs will be lessened and eventually go away.  The minimum ZEV credit threshold in 2018 is 2% of the total volume of sales in the region (.79% of net today), with most all-electrics in 2018 netting ~3 credits per sale.  This base percentage moves significantly thereafter, by 2% per year though 2025, when 16% of sales will require an offsetting ZEV credit.

Chevrolet Spark EV

Chevrolet Spark EV

These mandates in California have also been adopted by several other states (9) and have been a “thorn in the side” of automakers for some time.

The credit and sales quota system is a bit complicated to begin with, but now it will only get harder for automakers to comply. Mercedes Benz-USA made a statement due to the complexity of the system and the monumental paperwork burdens. The company reported:

“We support a strong and comprehensive national policy that could erase administrative and logistical burdens.”

On the positive side for EV enthusiasts and the environment, the ten states involved combined for 28% of all U.S. vehicle registrations in 2015.

2015 U.S. New Vehicle Registration Total: 17,188,971

2015 ZEV State Total: 4,886,090

California 2,052,785
New York 1,015,822
New Jersey 588,628
Massachusetts 377,227
Maryland 340,254
Connecticut 181,221
Oregon 170,335
Maine 64,020
Rhode Island 52,459
Vermont 43,339

Sergio Marchionne, CEO of Fiat-Chrysler, combating such mandates, said:

“Why don’t I make the iPhone of cars? Because if it looks and smells like Tesla, I don’t know how to make that economic model work. … I’m not even sure you can recover all of your costs — let alone generate a profit — through electrification.”

Fiat 500e

Fiat 500e EV

The commonly quoted CEO has gone so far as to beg buyers to steer clear of the Fiat 500e EV because the company loses $14,000 on the sale of each one.

Having dual regulations (California ZEV block mandates and the “other” states) has caused companies consistency issues. Recently, some Porsche North America vehicles were recently held in U.S. ports for many weeks waiting for certification by the California Air Resources Board (CARB).

Despite issues, there are automakers ready and willing to work alongside CARB for a more green friendly industry. Mike Levine of Ford communications said that CARB “is a partnership we value” to raise awareness and promote change. He explained:

“Our strategy includes steadily growing sales of electrified products across the country over the next several years.”

Some issues with the system have been noted by automakers. Currently, one provision counts any car maker’s EV sales in any of the 10 CARB states toward its overall quota. For this reason, some companies have focused primarily on California, which hasn’t actually helped the other 9 states specifically with emissions.

That travelling provision however will expire for all-electric cars at the end of 2017, while fuel cell vehicles are likely extended until 2025, meaning all CARB-participating states will benefit with actual BEVs being sold in their states from 2018 on.

The early focus on California seems to have been a smart one, due to its massive EV support system, complete with unparalleled charging infrastructure, commuter lanes, and financial incentives. Toyota Motor North America’s Michael Lord said that the Mirai was launched in California due to the state being one of the only areas with hydrogen fueling infrastructure.

Now we will see the effect of the program as it was originally intended when it kicked off in 2012.

Source: Autonews

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28 Comments on "How California’s ZEV Mandates Impact Electric Car Rollout, Sales & More"

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THANKS So, 2018 is the first year where each maker needs to reach 2% of sales in each, and every, of the 9 states listed?

It sounds like the ‘traveling provision’ is why cars like Spark EV are CA cars, and not sold in all CARB states. -learning something new.

Yes, 2% of annual sales in that particular CARB state has to have a ZEV credit offset. Then 4% in 2019, 6% in 2020, etc. up to 16% in 2025.

A credit is not equal to a single sale however, it is on a sliding scale…for example, the LEAF today nets 3 credits. Your looking at a max credit of 4 for a long range EV sold past 2017.

CARB PDF “maths” on the ZEV calculations for 2018 here:
http://www.arb.ca.gov/msprog/zevprog/zevregs/1962.2_clean.pdf

So how many credits do you get for a regular car sale I.e. How is the other 98% made up? is it one credit per regular ice car or do some of the dirtier ice vehicles get more credits? I’m just trying to work out what the actual % will be. As I understand it, if every petrol car gets 1 credit and a long range Bev gets 4 credits you only have to have 0.5% sales to meet the 2% target.

ZEV credits are only gained by zero emission vehicle sales. So if company A sells 1,000,000 cars in those 10 CARB states, then they need 20,000 ZEV credits in 2018, and 160,000 in 2025. If the average BEV they sell nets say 3 credits (see above link to do “how many credits does vehicle XYZ get), then they have to sell 6,667 BEVs in 2018/53,400 in 2025…in a perfect case scenario. Obviously, meeting the 2% threshold will be easier in California, over say New York, once the travelling provision ends in 2017 (which is why there is so many darn EVs offered/sold today in CA as opposed to elsewhere)…so in reality to hit the numbers, probably more like ~10,000+ would need to be sold (per 1 M)in 2018, or ~80,000 in 2025 (or pay the hefty fine per shortfall). — The wildcard is still fuel cells, which can today can net up to 9 credits and may have an extended travel provision to some degree past 2017…but clarity on if/how that will be renewed is still a bit murky. CARB has always been a big backer for hydrogen, but the economics/feasibility of the tech in the “real world” scenarios so… Read more »

Jay, Thanks, again, (for another micro-economic head explosion).

If you’re still coming back:

1 Won’t surplus holders of credits, like Tesla, be able to sell to laggards like MB? This would get MB out of fines.

2 Gulp. Are fuel cells headed to non-CARB states? I was hoping states away from CA would get to use their brain 😉

Jay, your link is to the 2014 data, it appears. The latest CARB data in May 2016.

Hey Tony, thanks didn’t even notice.

CARB site is (as always) quite a mess…that is the link they have under “Current ZEV Regulations” at the moment. Didn’t even cross my mind it was an older version. That said, who knows where the latest copy is, heeh. I don’t plan on hunting it down, we know what it says, (=

But here is the CARB section on the regs, if anyone cares to have a pass at locating a 2016 version:
http://www.arb.ca.gov/msprog/zevprog/zevregs/zevregs.htm

Hi Jay and Tony, thanks for the explanation around CARB. I feel it is something I should understand but can never motivate my self to learn more.

I find it fascinating how carb is designed to drive quality vs the eu regs that drive quantity. IMO it’s good to have both.

Jay, here’s the link:

2018 CARB-ZEV requirements (compiled May 2016):

http://www.arb.ca.gov/msprog/zevprog/zevtutorial/zev_tutorial_webcast.pdf

I seen the updated tutorial, but the reference data for all of it still links the 1962.2 (PDF), which is the original 2014 written document (all I could find and linked above)

I’m not sure I have ever seen a new regulation set (PDF) of the actual revised documentation. Does such a thing exist? Perhaps CARB just has not gotten around to releasing it yet? The program can be plenty confusing as it stands, but it sure would be nice to have a current/live reference to the actual regulations to reference in articles/comments. Nothing should be this hard, lol.

Sidenote: I knew when I saw Steven’s story it would get you out of the shadows Tony, and am glad for your input and help getting to the bottom of things, (=

Not sure, since I never looked for it. I preferred to let the dust settle a bit because as we know, when CARB makes new rules, the lobbyists all come out in force to change them.

…ok, I confess to guffawing a bit when I read your comment, (= Ain’t it the truth though? lol

Many probably wish the required start number in 2018 would be higher than 2%.

Also, why do they do % of revenue … to me it leaves too much room to play games. They should rather say that per X cars with ICE tech in it you need to sell Y cars as ZEV. Thus creating a direct connection between the two. Revenue can be run up by many things, especially by manufacturers with ton of options etc.

It’s calculated on % revenue? So a $80k car counts the same as 2 X $40k cars. Would this mean that the Porsches and i8 count more than a leaf?

No, not based on revenue, just moving average of vehicles delivered.

Here is verbage on the calculation. Word of warning, don’t have any sharp opjects nearby while reading as you may fall unconscious and wound yourself:

“For 2018 and subsequent model years, a manufacturer’s production volume for the given model year will be based on the three year average of the manufacturer’s volume of PCs and LDTs, produced and delivered for sale in California in the prior second, third, and fourth model year (for example, 2019 model year ZEV requirements will be based on California production volume average of PCs and LDTs for the 2015 to 2017 model years)”

I’m guessing…

PC = Passenger Car
LDT = Light Duty Truck

??

Yes

Can someone make a list of all plug-ins and how many ZEV credits they are worth?

That’s easy. Every EV on the market gets 3 credits (with the exceptions listed below), including the BMW i3 REx (gasoline hybrid… the only gasoline car to get Zero Emission Credit). The reason that they get 3 credits is because they can achieve “100 miles” of range under CARB testing. Please note that this is not EPA testing, which has substantially lower range. Tesla started out getting 7 credits per car because they were “battery swap capable”, but CARB stopped that two years ago, and now Tesla cars get 4 credits for being “200 mile” range cars or 5 credits for “300 mile” range. Hydrogen cars all get 9 credits. In the future, with a fairly difficult process to follow, credits will be only based on range, therefore: 50 miles = 1 ZEV credit 125 miles = 2 ZEV credits 200 miles = 3 ZEV credits 300 miles = 4 ZEV credits Please note that the ACTUAL mileage requirements are based on UDDS data, and unfortunately, there’s not a logical EPA conversion. That’s the best I can offer at the moment. I do want to respond to this comment, “though 2025, when 16% of sales will require an offsetting ZEV… Read more »

I nominate our Californian friends go lobby CARB not to renew its 9 credit allotment for hydrogen.

-May the odds be ever in your favor.

“Just remember that every time they give a percentage of sales, that doesn’t mean a dealer’s lot with 100 cars is likely to have 16 ZEV cars… no, it may have two hydrogen cars… even in 2025 (assuming hydrogen retains 9 credits, which currently is due to expire in 2018).”

Lobbying CARB with a disorganized campaign to stop benefits for hydrogen would be a total waste of time.

The hydrogen lobby is very well-funded and will likely remain so for the next decade at least. They are guaranteed by the state of California to receive minimum of $20 million every year with up to $200 million allocated.

I can also guarantee you that they will somehow find a way to get their hands on any other money from California Energy Commission, or CARB, or the Volkswagen settlement ($800 million for California, $200 every 30 months), or US government grants, or this new loan guarantee program that President Obama has announced for $4.5 billion.

Hydrogen cars are already exempt from sales outside California through 2025 !!! They already receive $5000 for every car sold. They earn 9 CARB-ZEV credits each, and even under the new 2018 rules, they will get 4 credits (while EVs get 1-3 credits).

Please stop quoting Sergio saying Fiat loses 14k on every EV they sell…
That statement was made so long ago that it no longer has value…
Knowing how Sergio bad mouths his own companies products and talks other BS that statment was probably never entirely true and was highly likely to be stretching some twisted accounting to fullfil his political objective…

With the current cost of batteries and electric motors it is more likely than not that every 30k EV is turning a profit…

Sergio Marchionne, CEO of Fiat-Chrysler, said:

“…if it looks and smells like Tesla, I don’t know how to make that economic model work.”

Yeah, and that’s why your company isn’t going to survive the EV revolution.

How do Plug-in Hybrids like the Volt fit into these credits?

I’ll try. I don’t think they do, at all. There may be other recognition, beyond getting state rebate, but “ZEV” is pretty strict. BMW eeks under the wire, with its 2.X gallon gas tank in the i3.

Tony Williams, above, seemed to me to say there is a 100 mile minimum. So, the Volt wouldn’t even qualify if its gas tank were 2 gallons. It does not get 100 miles of range (earlier i3’s may have qualified, but the minimum ZEV range schedule must slide up). Later i3 REx breaks above 100 miles.

We both probably agree Chevy made the more consumer friendly move, to lose the credit and sell a more practical car.

Hybrids like the Volt do get some credit, but they received zero credit for being a Zero Emission Vehicle, because they are not.

They singular fossil fuel burning vehicle to get to Zero Emission Vehicle credits is the BMW i3 REx, because it fits under the BEVx category.

1) 75 mile battery range
2) must deplete battery prior to engaging fossil fuel motor
3) cannot exceed battery range on gasoline

2018 CARB-ZEV requirements (compiled May 2016):

http://www.arb.ca.gov/msprog/zevprog/zevtutorial/zev_tutorial_webcast.pdf

50+ gains 2 ZEV credits (for now)…

Thanks for this illuminating comment thread, everyone!!