from the San Jose Mercury News:
State panel keeps rules on zero-emission cars
Mandate: Automakers required to deliver thousands of battery-powered vehicles to showrooms in two years to reduce state's smog.
BY PAUL ROGERS
Mercury News
SACRAMENTO -- California air officials on Friday voted to retain the most far-reaching electric car rules in the United States, requiring automakers to deliver thousands of battery-powered vehicles to showrooms in two years, even if substantial taxpayer subsidies will be necessary to attract buyers.
On an 11-0 vote, the California Air Resources Board approved keeping in place its ``zero-emission vehicle'' mandate, which it first adopted 10 years ago as a strategy to continue the state's progress in reducing smog.
``We must stay the course to reach our environmental and societal goals,'' said Alan Lloyd, chairman of the air board, an 11-member body appointed by Gov. Gray Davis.
``Leadership does not come without conflict or cost,'' Lloyd said. ``There are many challenges ahead, but the investment in this technology will stop without a regulatory signal.''
Environmental groups hailed the ruling as a milestone on the way to keep America's fledgling electric car industry on track and force new clean technologies such as fuel cell cars to the market in the coming decade.
``Every Californian can breathe easier,'' said Roland Hwang, a spokesman for the Union of Concerned Scientists, based in Oakland. ``Auto companies have to take these programs out of neutral and put them into gear.''
During a two-day hearing, however, automakers and car dealers painted the rules as a clumsy bureaucratic attempt to phase out the internal combustion engine that ignores market forces, and they questioned whether the public actually will buy the vehicles. They cited air board staff reports showing electric cars cost $35,000 or more and can go only about 100 miles before needing a six-hour recharge.
``We really don't want thousands of these cars sitting on our lots,'' said Peter Welch, director of government affairs for the California Motor Car Dealers Association, based in Sacramento. ``Somebody is going to get stuck holding a hot potato if they don't sell.''
The rules require that by 2003, up to 10 percent of new cars offered for sale in California by the six major auto manufacturers must emit no pollution. The only cars now certified as zero-emission vehicles are electric.
Of the 10 percent required, 4 percent must be pure zero-emission vehicles. The other 6 percent can be vehicles that emit nearly no pollution.
The practical impact? Ford, General Motors, Honda, Nissan, Toyota and Daimler-Chrysler must offer a combined total of 22,000 electric cars for sale every year in California.
That is a tenfold increase from the 2,300 electric cars now on the road statewide, according to air board figures. Most of those cars were sold with subsidies of up to $5,000 per vehicle that regional state air districts paid to carmakers.
On Friday, numerous owners of electric cars testified that they love their vehicles. They said the range limits are largely unimportant because most trips they take are less than 100 miles. They spoke of the benefits -- no need to buy gas or oil, a silent engine, no tailpipe pollution and a new state law that allows electric cars to ride in carpool lanes.
``Automakers are driving with the brakes on while the planet is being poisoned,'' said Jerry Pahorsky, a Sunnyvale engineer with Sun Microsystems who owns a 1997 General Motors EV-1. ``Be pro-choice. I want a choice in the dealer's showroom.''
Pahorsky and other owners said carmakers have made weak efforts to sell electric cars.
As part of pilot program three years ago, automakers agreed to sell about 2,000 electric cars in California. With those cars all sold or leased, they stopped marketing them and now sell almost exclusively to fleet operators such as the U.S. Postal Service. It is all but impossible for a regular motorist to find a new electric car for sale anywhere in California.
The auto industry has largely moved on to other alternative fuel technologies, such as hybrid cars, which run on a combination of batteries and gasoline -- recharging the engine as the wheels turn and brake -- or fuel cell cars, which emit no pollution and may be ready for market by 2005.
Honda is offering a hybrid car called the Insight for sale this year. The car delivers 70 miles to the gallon, emits less pollution than a new gasoline car and can drive 700 miles on a tank of gas. Similarly, the Toyota Prius, another hybrid car, is now for sale nationwide. Both cars retail for about $20,000 and do not require being plugged in for recharging.
As part of its order on Friday, the air board told its staff to return in January with some changes. They include: a study of new subsidies to help electric cars compete with gas cars; a proposed public education program; and suggestions on how to reduce battery costs. Every five years for example, the entire battery pack of most electric cars must be replaced, a $10,000 expense.
Friday's vote apparently was a fait acompli. Hours before the public had finished testifying, staff members already had printed the resolution, which the board passed virtually unchanged. ``It's mostly legalese anyway,'' said air board spokesman Jerry Martin. ``We always do it this way.''
Davis also supported keeping the rules unchanged.
Environmentalists say carmakers should be required to sell electric cars at a loss because they have made billions of dollars with gas-guzzling sport-utility vehicles. Having the electric car rule in place since 1990 has led to innovations such as cleaner burning gasoline cars, hybrid cars and fuel cell prototypes, they note.
Carmakers said the benefits of requiring electric cars -- a reduction of air pollution by only one to two tons a day by 2010, according to the air board staff -- are the most expensive air regulations the state has ever put in place, costing at least $500 million a year.
``Our stockholders are going to require we pass the costs on to buyers,'' said Dave Hermance, a spokesman for Toyota. ``And if costs go up, sales go down, and you don't get the air benefit anyway.''
Hermance said that because of high battery prices, it costs about $50,000 to manufacture each electric car, compared with less than $20,000 for gasoline cars. But electric car supporters and air board members predicted costs will fall as production increases, and that the health benefits of cleaner air are worth it.
``I certainly understand the automakers concern about losing money,'' said board member Joe Calhoun. ``But I think they'll be OK.''
My thoughts:
Fuel Cells will be economically viable many years into the future, not within the investment horizon of most investors and momo traders. The notion that Ford, GM, et alii are going to voluntarily spend billions or even millions of dollars on fuel cell products to use in their vehicles is a crock. They know their market, and that market is asking for SUVs even at $40 per barrel. And, if a favorable administration (read Republican) is elected, the auto makers will try to shelve programs like the one discussed above. It is doubtful that they will even have enough product to meet this state requirement. Anyone buying fuel cell stocks is a MOMO trader!
- thestockrider |
