State Offers Deal on Electric Cars
The Wilson administration on Thursday disclosed the details of a proposed deal to replace the state mandate that 20,000 electric cars be sold in California starting next year with voluntary contracts that let auto companies decide how many cars to produce.
The terms prompted vehement protests from environmental groups complaining that the state’s smog agency caved in to pressure from the auto industry. But Air Resources Board Chairman John Dunlap defended the compromise, saying it would better achieve the goal of putting high-quality electric cars on California’s roads.
Under the deal, the air board next month would repeal its requirement that 2% of the cars offered for sale here by major auto makers, beginning with 1998 models, be exhaust-free vehicles. Instead, General Motors, Ford, Chrysler, Nissan, Toyota, Honda and Mazda would sign confidential agreements that do not guarantee a quota of electric cars to be marketed.
The companies would be required to regularly report how many electric cars they have the capacity to produce, the size of their investment and features of the specific models. But the deal “does not obligate the manufacturer to produce, deliver or sell a specified number,” according to documents released Thursday. Instead, customer demand will determine how many cars are offered for sale, the state report said.
Companies would only be required to provide the data “to the extent available,” and all the information provided to state air officials would remain closed to the public.
The voluntary arrangement would become mandatory in 2003, when 10% of California cars offered for sale by the seven companies would have to be exhaust-free. The air board will decide March 28 whether to adopt the program, which was negotiated by Dunlap and the board’s staff with the blessing of Gov. Pete Wilson.
When the air board signaled its intent in December to abandon the electric car mandate, environmental groups were critical of the voluntary partnership concept. And after seeing the details Thursday they lambasted it as being far too lax.
“This is a dim shadow of what could have been and what should have been, and it certainly will delay you or I sitting behind the wheel of an electric car for several decades,” said Veronica Kun of the Natural Resources Defense Council, which favored the imposition of sales quotas.
After months of closed-door negotiation with the state, auto executives endorsed the voluntary agreements Thursday, calling them a good-faith effort to prove the industry is serious about electric cars. The original mandate for specified numbers of cars was unrealistic and financially risky, auto makers insisted.
“What these agreements represent in the whole is probably the best chance of making electric vehicles available,” said Eric Ridenour, Chrysler’s director of environmental and energy planning. “It gets the real vehicles out on the street.” Dunlap agreed, saying that a mandatory approach was destined for failure because it would force auto makers to manufacture large numbers of cars that might not sell because the batteries are not advanced enough to meet most consumers’ needs.
Selling an inferior product, he said, could poison the market for electric cars, so rather than dictate numbers, the state prefers to get the companies to voluntarily make a commitment to gear up for production and aggressively market them.
“We believe that we are going to have much more control over the successful launch of the zero-emission vehicle program than the way the rule was previously constructed,” Dunlap said.
Still, Dunlap conceded, “there are some areas where we are vulnerable. We’re talking about a partnership approach here and we’re also talking about reliance on the market to some extent. But we’re not talking about mortgaging the success of this program. . . . There is nobody who wants to see the [electric car] more successfully introduced than me.”
The seven auto companies have told the air board staff in private talks that they plan to collectively produce up to 15,000 electric cars in the 1998 model year, but only if they perceive that adequate consumer demand exists.
General Motors has already announced it will sell its two-seat, sporty EV 1 in Los Angeles and Arizona showrooms at the end of this year, and Ford is expected to begin selling some electric pickup trucks in 1997.
“We’re committed to making a business out of electric vehicles. . . . We will offer them a full seven years ahead of the [2003] mandate,” said William Noack of General Motors.
Auto executives said their commitment to a capacity of 15,000 in the 1998 model year is not a promise they make lightly because it means they already have had to invest millions of dollars in gearing up plants to manufacture specific models.
“The big money is already committed,” Ridenour said. “And absolutely we will [produce them] if the demand’s there. And if the market’s not there, why do we want to push them on people who don’t want them?”
The only enforceable commitment to volumes of cars requires the companies to collectively produce 3,750 demonstration cars between 1998 and 2000 equipped with highly advanced batteries that can run for more than 200 miles on a single charge.
Jamie Phillips, research director for the Planning and Conservation League, said the air board is putting “blind faith” in “car companies who have never earned our trust. They’ve never made a cleaner car voluntarily.”
Janet Hathaway, a Natural Resources Defense Council attorney, blasted the state for keeping the specifics secret. “The public has a right and a need to know what the auto companies are doing to meet their air quality obligations,” she said.
Dunlap vowed that air pollution in California would not be allowed to increase if electric vehicle sales prove disappointing compared with the mandate. The difference, he said, would be offset by a provision that requires the auto makers to sell cars in other states starting in 2001 that are 70% cleaner than ones sold there today.
Dunlap said that as people move into California with those vehicles, car emissions here will decline. The companies face $100,000 fines if they miss the deadline for those cars.
