GM Jolts Electric Vehicle Market
General Motors Corp., which is suing in federal court to block California’s zero-emission vehicle mandate, has decided nevertheless to jump into the market with its own version of a low-speed neighborhood electric vehicle.
The giant auto maker’s tactics, however, are upsetting other auto makers, environmentalists and some regulators.
GM, which has publicly questioned the safety of the golf-cart- based neighborhood electric vehicles, plans to give away 5,000 NEVs. In doing so, it seeks to collect enough bonus credits from the state to satisfy its entire zero-emission vehicle requirement under the so-called ZEV Mandate that kicks in with the launch of the 2003 model year.
The California Air Resources Board says there are “some concerns” that GM’s program violates the spirit of the mandate and that the auto maker is seeking to gain undeserved credits. A ruling from the board on whether GM can earn full credit for a limited-use give-away program is expected as early as next week.
Whereas its Big Three rivals Ford Motor Co. and DaimlerChrysler are selling their NEV products to agencies, institutions and individuals, GM plans to give its two-passenger Pathways to businesses, schools, hospitals and other agencies and institutions that would use them only in closed-campus environments and not take them on most public roads.
And the company is giving the NEVs only for a year, after which the recipients could buy them at a steep discount or return them to GM and its partners, Georgia golf cart maker Club Car Corp. and Detroit-based ZEV Exchange, a company started last year to broker zero-emission vehicles and the credits that auto makers can earn for providing them.
“There is some question as to whether GM should receive full credit if it is only placing the vehicles for one year,” said Jerry Martin, a spokesman for the California air board.
Said David Modisette, executive director of the California Electric Transportation Coalition: “Our concern, not just with GM but with all the auto makers, is that when you start giving them away, then you are not trying to make a real business out of it but are using it purely as a way to satisfy regulatory issues. That’s not really a good-faith effort to create a real market.”
At the same time, GM is sponsoring a bill in the state Legislature that could give the California Highway Patrol unilateral authority to restrict NEVs to streets with speed limits of 25 mph or less.
The bill’s author, Assemblyman John Campbell (R-Irvine), said Wednesday that he was aware of concerns that the measure favors GM and would withdraw it if Ford and DaimlerChrysler would not endorse it as well.
Currently, the vehicles are permitted on streets with speed limits of up to 35 mph. DaimlerChrysler believes that a lower limit would effectively kill NEVs’ usefulness, said legislative affairs officer Reg Modlin, because people would be unable to take them out of their residential neighborhoods for trips, say, to the supermarket.
“We oppose [the bill] because it is basically a GM strategy to mess with their competitors,” said V. John White, Sacramento-based lobbyist for the Sierra Club.
The purpose of a NEV is to provide an alternative to pollution-causing gasoline-powered vehicles. Supporters say that many local trips now made in standard automobiles or trucks could be made in NEVs, reducing pollution while allowing individuals the freedom a personal vehicle offers.
There are only about 1,000 NEVs in use in California now--including scores of the Neighbor model from Ford-owned Think Mobility that were donated by Ford to the national parks in the state. But the ZEV Mandate is expected to foster their rapid growth if it survives the federal court challenge being pressed by GM and DaimlerChrysler.
That’s because the mandate requires major auto makers to provide a small number of zero- emission vehicles for “placement” with consumers in California each year. Cart-based NEVs are one such type of vehicle, and far more expensive full-function electric cars and trucks are another.
GM and other auto makers have said they cannot sell standard-size electric vehicles for even a small fraction of what they cost to build, and the mandate allows them for a time to offset the requirement for those vehicles with NEVs.
Because of a complex system of extra credits for early introduction, GM would get credit for 20,000 zero-emission vehicles if it placed just 5,000 NEVs in the state this year. That would enable the auto maker to satisfy its ZEV requirement without having to build or market larger vehicles.
GM has seized on the mandate’s use of the term “placement” to mean that it can give the carts away. Nowhere in the mandate is there a requirement that the vehicles be sold. Some credits are granted for providing vehicles that can be sold, and more credits are granted for placement.
Representatives for Ford and DaimlerChrysler said their companies would not criticize a competitor’s market tactics. But privately, the companies are furious, seeing GM’s move as hampering efforts to build a sustainable market in which motorists willingly buy alternative-fuel vehicles such as the battery-powered NEVs.
Modlin, who described the neighborhood vehicles sold by DaimlerChrysler subsidiary Global Electric Motorcars as larger, “with more features and more utility,” than the GM Club Car vehicles, said Chrysler executives “certainly hope the GM approach won’t have a negative affect on the market.”
Sara Tatchio, Ford’s environmental affairs spokeswoman, said each auto maker “has to take its own approach ... but we would like to have seen the market develop in a more natural manner” with competitive selling.
For its part, GM said there is no reason to criticize its plan.
“It’s a free market, and if we believe it is in the best interest of GM, then we will go ahead and do that,” spokesman Donn Walker said of the giveaway. “Our competitors are free to lower their prices. It’s no different than big incentives on sedans. Maybe this will help bring the cost to consumers down.”
Indeed, although DaimlerChrysler’s GEM vehicles list for $5,995, they are being sold through membership chain Costco for $3,995.
The benefits of the program to GM, Walker said, are that “we gain ZEV credits and meet compliance standards; it allows us to do some good by placing them mainly with nonprofit organizations; and it helps us gain insight and research into NEVs, the market for them and their use patterns because we are requiring those who get them to fill out occasional surveys.”
