What California’s Electric Car Mandate is Missing

California Gov. Brown Holds Press Conf. On Expansion Of Electric Vehicle Market
Though state incentives are generous, California’s electric vehicle mandate has loopholes automakers can exploit | Justin Sullivan/Getty Images

On the topic of the California Air Resources Board, which administers the state’s zero emissions vehicle (ZEV) program, Tesla CEO Elon Musk did not mince words. “CARB should damn well be ashamed of themselves,” Musk said during his company’s earnings report in August, citing the stuck-in-time nature of the ZEV credit distribution years after the program began.

“There is massive lobbying by the big car companies to prevent CARB from increasing the ZEV credit mandate, which they absolutely damn well should,” Musk continued. He added that the standards are “pathetically low.”

Considering CARB deserves a great deal of credit for the existing electric vehicle market — and Tesla was one of its biggest beneficiaries in ZEV credit sales — the statements struck many as overly harsh. Yet there needs to be an improvement to the current policy given automakers’ ability to avoid EV development as things stand. With some tweaking, California’s electric car mandate could be a real instrument of progress.

Falling short on goals

Gov. Jerry Brown speaking about California's ZEV program
Gov. Jerry Brown speaking about California’s ZEV program | Justin Sullivan/Getty Images

As California’s regulators look ahead to ZEV goals set for 2025, it is clear changes will be necessary to get sales volumes to the 15% plug-in concentration CARB planned for nine years from now. Estimates by the Natural Resources Defense Council (NRDC) project the state will only get to 6% at this rate. A look at the way credits are allocated reveals one issue. According to Reuters, hydrogen fuel cell vehicles currently earn automakers nine credits per sale, compared to four for a Tesla Model S.

In a nutshell, this credit system has allowed Toyota and Honda, two of the biggest automakers in the nation’s biggest auto market, to do business in 2016 without a single battery electric vehicle in California dealerships. No matter what benefit of the doubt you give to fuel cell vehicles, no one would confuse the environmental impact of over 90,000 Teslas compared to the hundreds of Mirais Toyota has sold.

California’s chance to change course

Scene from a Tesla store in California
With a better credit system in place for electric car makers, the ZEV program could meet its goals | Joe Raedle/Getty Images

In fact, a Toyota representative told Reuters the automaker expected it could take another 10 years to see any significant roll-out of fuel cell technology. As it stands, there are only a handful of hydrogen stations open, with most located in California. Yet many automakers won’t have to budge an inch on battery EV production for several years under the current rules.

Mary Nichols, head of CARB, has considered limiting the number of ZEV credits an automaker could use every year, which would force manufacturers to develop more quality EVs. Tesla, for its part, suggested increasing the number of credits required every year, which would force automakers to build EVs or buy more credits from segment leaders. (Tesla would profit significantly from this setup.)

Whatever proposal CARB ultimately decides to implement, the agency cannot continue allowing automakers to profit in California without becoming part of the solution for cleaner air. That should involve making attractive electric vehicles for sale on the mass market in the coming years. We’ve seen examples from Chevy and Tesla; if every automaker had a similar car coming at a reasonable price, California’s admirable goals would start looking feasible.

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