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Car makers clash over proposed California 'clean vehicle' incentives

Environmentalists on Monday welcomed the introduction of legislation aimed at ramping up the number of zero-emission vehicles in California over the coming decade, but detractors fear the plan will give electric car maker Tesla Motors an unfair advantage,

Assemblywoman Autumn Burke (D-Los Angeles) introduced the so-called “15 by 25” measure, which calls on the state’s clean-air agency to ensure that 15 percent of auto sales be zero-emission vehicles, or ZEVs, by 2025. In the current car market, that refers to sales of only all-electric and hydrogen-powered vehicles.

In a letter to California legislative leaders last week, the state government affairs director for the Global Automakers organization urged lawmakers to put the brakes on the idea, arguing that it would cut plug-in hybrid cars from the ZEV program and help Tesla to eliminate its competitors.

“As an initial matter, a last-minute amendment to an existing bill is not the proper vehicle for such a significant overhaul of California’s long-standing ZEV program,” Damon Porter said.

Asked about whether the bill would distort the car market in favor of Tesla, Burke’s capitol director, Allison Ruff, told AMI Newswire that it would actually stimulate more competition and technological innovation.

“Ms. Burke believes that all automakers should be building ZEVs and that the 15 by 2025 goal will spur more competition in the marketplace – it’s good for driving innovation, and it’s good for consumer choice,” Ruff said in an email.

Porter said the proposal ignores the role of public acceptance of ZEVs and the role the state must play in building an infrastructure, including charging stations, for zero-emission cars. In addition, the legislation descended on Sacramento at the home stretch of the legislative session, which ends on Aug. 31.

“Despite the tremendous advances in ZEV technology, sales of these vehicles are languishing, due in part to low gas prices and increased efficiency of internal combustion engine vehicles,” said Porter, whose organization includes Honda, Hyundai, Isuzu, Kia, Nissan and Toyota. “Any changes of the ZEV mandate must take into account consumer demand.”

Environmentalists agree that sales of ZEVs are not increasing enough to meet the policies set by Gov. Jerry Brown, who wants 1.5 million electric cars on the state’s roads by 2025. Brown has also called for all cars sold in the state to be zero-emission vehicles beginning in 2050.

The California Air Resources Board operates a complex taxpayer-funded rebate program aimed at encouraging the sale of ZEVs in the state. These rebates amount to thousands of dollars per auto purchase, and in turn the automakers earn valuable credits that can be traded among the manufacturers.

Since 2010, 25,120 people who purchased all-electric cars built by Tesla Motors have gained nearly $63 million in rebates, according to the California Clean Vehicle Rebate Project. Tesla , which is based in Palo Alto, Calif., sells only zero-emission cars, while other automakers have more diversified offerings.

The current system has churned out a surplus of credits, allowing car makers to stockpile them rather than working to advance technology to create more affordable ZEVs, according to Burke’s office. That’s a key reason that Burke wants the system modernized.

The assemblywoman’s office reported that the sales of zero-emission cars in the state made up only 1.7 percent of new car sales last year.

“The pollution from tailpipes claims hundreds of lives and contributes to tens of thousands of cases of asthma in our children every year,” Burke said in a prepared statement this week. “The number one thing we can do to address this urgent challenge is to put millions more clean cars on the road.”

But Porter said that rushing through 11th-hour legislation is not the answer and that the legislation would upend the Air Resources Board’s current mid-term review of the ZEV program.

And taking plug-in hybrid cars  – those equipped with internal combustion engines, electric motors and batteries that can be charged using electrical outlets – out of the ZEV program would be a mistake, Porter said. Such cars, known as PHEVs, allow buyers to drive an increasing number of carbon-free miles in electric mode for short trips, he said. “Automakers have invested in battery technology that significantly extends the electric-drive range of PHEVs, thus giving car buyers greater choice among green technology.” 

Currently, plug-in electric hybrids make up 40.1 percent of ZEV rebates, according to state figures.
A sales mandate alone is not enough to ramp up the number of ZEVs on the roads, Porter said. The state needs to invest in electric charging stations as well as hydrogen fueling stations and to ensure that drivers of such cars have access to car pool lanes, he said.

But Simon Mui of the Natural Resources Defense Council said that getting more all-electric cars into the marketplace hinges on an immediate tune-up of the ZEV program.

“More than eight out of 10 Californians live in communities affected by unhealthy air, breathing in pollution from over 30 million gasoline and diesel vehicles on the road,” he said in a prepared statement. “We can cut smog and carbon pollution by making plug-in electric vehicles more accessible and available to all Californians.”