It’s Not The Feds Who are Pushing the Plug-in Vehicle Agenda

Frequently reports allude to “regulations” compelling automakers to build plug-in electrified vehicles (PEVs), and while that’s generally true, it’s less so for regulations set by the U.S. government.

Despite a “54.5” mpg average demanded by federal 2025 Corporate Average Fuel Economy (CAFE) rules, the slim percentage of PEVs sold today would barely need to be raised over the next nine years for manufacturers to make the grade, but California may not make it so easy.

That is, California and nine other states signed onto the Euro-style vision embraced by California’s Air Resources Board for zero emission vehicles (ZEVs) won’t let them off easy, and by 2018 the clamp is set to get tighter. In short, automakers who may now be reluctant to market PEVs outside of ZEV states will be less able to as a loophole closes.

Also supported by the ZEV rules are hydrogen fuel cell vehicles, but given their lack of infrastructure, cost, and technical impediments, plus the head start by plug-in vehicles, California rules are effectively driving PEV development and sales as well.

For this, plug-in advocates can all say thanks to California, though it has not been all rosy. Up till now, an arcane system of overlapping rules that only a bureaucrat could love enabled automakers to sell what PEV/ZEV advocates have pejoratively called “compliance cars.”

Under California rules, automakers could receive partial credit from hybrid and low-emission conventional vehicle sales to meet ZEV quotas, but in 2018 they will need to sell more real live plug-in vehicles to meet these ZEV quotas.

According to what is known as Section 177 of California’s rules, other states have also piggybacked onto the mandates, making a bloc of 28 percent of the U.S. auto market.

3.3 Million ZEVs by 2025

The history of a confederacy of states in sympathy with California’s mandates for cleaner air and less petroleum dependence goes back several years, and in October 2013 a significant pact was made to force automakers’ hands.

At that time, eight states signed a memorandum of understanding (MOU) calling for 3.3 million ZEVs on these states’ roads by 2025.

Notable is fuel cell vehicles are heavily rewarded, ironically because they refuel faster. It's ironinc because infrastructure is next to nothing at the moment. The ZEV rules otherwise are forcing automakers to build plug-in cars.

Fuel cell vehicles have been heavily rewarded, some might say ironically because they refuel faster. It could be considered ironic because infrastructure is next to nothing at the moment. CARB rules favoring fast refueling are due to change in 2018, and automakers are in it for the long haul in a necessarily slow deployment. The ZEV rules otherwise are compelling automakers to build plug-in cars.

To date, the entire U.S. is nearing a half million cumulative total PEVs since they first went on sale last decade. In California alone, ZEV mandates call for 15 percent, or one-in-seven PEVs by 2025. Today PEVs comprise about 3 percent of California’s new light-duty vehicle market, much more than the roughly 0.75 percent for the U.S. as a whole, but California and company are not content with where things stand.

The MOU was signed by the governors of California, Connecticut, Maryland, Massachusetts, New York, Oregon, Rhode Island and Vermont.

“[A]cccelerating the ZEV market is a critical strategy for achieving our goals to reduce transportation-related air pollution, including criteria air pollutants, mobile source air toxics and greenhouse gas emissions (GHGs), enhance energy diversity, save consumers money, and promote economic growth,” said a memorandum of understanding (MOU) by the eight-state coalition, “and … our states are committed to reducing air pollution, including the emission of GHGs and other air pollutants from the mobile source sector.”

Provisions or the MOU call for consumer ZEV incentives including financial rebates, and permission of solo access to high-occupancy vehicle (HOV) lane access, as well as commitment to charging (and hydrogen) infrastructure.

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Also mandated is an attempt to give PEVs value-proposition parity with conventional cars, and the plan affecting public and private vehicle purchases calls for establishing vehicle recharging rates competitive with gasoline.

The word “hybrid” or “plug-in hybrid” was not mentioned in the MOU, but these are in other quarters considered part-time ZEVs, and talk of accountability toward the goal was made.

“On an annual basis, each Signatory State will report, within available capabilities, on the number of ZEVs registered in its jurisdiction, the number of electric/hydrogen fueling stations open to the public and available information regarding workplace fueling for ZEVs,” said the MOU.

Since this MOU was announced, while there have been developments to support it, there has not been a lot of news about it.

This week however Automotive News reported that despite the market outside California being “currently challenging” to the proliferation of PEVs/ZEVs, the handwriting is on the wall.

“As we are now closer to 2018, everyone is beginning to see that the mandate is not going away,” said Devin Lindsay, IHS Automotive’s principal analyst for North American powertrains to Automotive News speaking of California’s ZEV mandates.

An article outlines various measures in which automakers are engaging California, and they need to, because CAFE otherwise would never hold them to such account.

CAFE’s 1-3 Percent

In June 2013 the National Highway Traffic Safety Administration in charge of CAFE rule making for the U.S, Environmental Protection Agency said in so many words, it had engineered an escape valve for carmakers to avoid plug-in technologies.

The CAFE rules had been agreed upon the year prior and the disclosure by then-administrator for NHTSA David Strickland was at a Consumer Reports-sponsored panel in Yonkers, N.Y.

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“Our analysis at NHTSA projects that the automakers can meet these standards largely through advantages in internal combustion engines,” said Strickland, “We project that the automakers will only need to produce about 1 to 3 percent of electric vehicles from plug-ins to meet the 2025 standards.”

Other estimates have put the number at 0-2 percent PEVs by 2025.

Strickland alluded to numerous technologies to reduce gas and diesel engine fuel consumption and to clean up emissions. These include, aside from non-plug-in hybridization, gasoline direct injection, downsized turbo engines, automatic transmissions with 8,9,10 speeds, stop-start tech, cylinder deactivation, 48-volt “micro hybrids,” and much more.

All of it is to incrementally make the vehicles passable under regulatory limits as they get increasingly tougher.

In short, Strickland said conventional vehicles can be made to pass higher fuel economy and emission targets now through 2025 under federal rules which erroneously may be reported as “54.5” mpg.

This number is a composite estimated average, and may vary as fleet assortments vary. It is also a deviation from the multiple tests used to determine window sticker values on new vehicles. In essence, 54.5 mpg equals somewhere just over 40 mpg on the sticker.

Rules for trucks, by the way, are not as strict as for lighter, smaller vehicles, so the actually flexible “54.5” could vary by 2025, potentially dipping downward if America continues buying record numbers of SUVs and trucks.

Regulations Remain

Aside from CAFE, automakers must contend with rules in all markets in which they do business which supports the opening statement to this article that regulations are driving carmakers.

To their credit, they’ve gotten an early jump on things, and signs are they will be able to meet their U.S. targets.

As we speak, the feds are preparing to hear from automakers on a so-called mid-term review to assess viability of 2022-2025 CAFE rules and make any adjustments if deemed necessary.

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It’s been reported that automakers which have been known in the past to appeal rules calling for tougher standards are lobbying again as this next period is pending finalization, and it was enough to prompt Union of Concerned Scientists to write a blog post urging automakers to stay the course.

As it is, all automakers because of their global involvement, and as costs have come down faster than expected, and other factors on the supply and demand side besides, are making inroads to plug-in cars.

To be sure also, zero emission vehicles make a bigger dent in fleet fuel economy scores than 5 percent here, 10 percent there, 20 percent over there as is the case with conventional incremental tweaks.

The industry is increasing its plug-in electrification regardless, therefore, even if the U.S. government in 2012 said it did not really have to.