Twenty years ago the California Air Resources Board established the zero emissions vehicle mandate requiring the largest automakers to build and sell electric vehicles. Twelve states adopted the same aggressive targets, creating what remains the strongest regulatory force driving the development of battery electric and hydrogen fuel cell vehicles.
With General Motors and Nissan delivering EVs by year’s end and Toyota, Honda and Volkswagen, among others, promising them within a few years, it looks like manufacturers will have no trouble meeting what they once considered an onerous requirement. This can only be considered a success for CARB because its goal of electrifying the fleet is being achieved.
But it has negative implications for electric vehicle startups — particularly Tesla Motors — who depend upon selling zero emission vehicle credits to subsidize their bottom lines.
The ZEV credit is the basic mechanism of the Zero Emissions Vehicle Program. The mandate required automakers selling more than 60,000 cars in California annually to build a certain number of zero emissions vehicles. Automakers who haven’t met the mandate have been allowed to purchase credits from manufacturers who produced more ZEVs than the mandate required.
The auto industry complained that the original mandate was impossible to achieve and over the years has successfully argued to have it weakened. Another change allowed automakers to meet the mandate in part by producing hybrids and ultra-efficient gasoline vehicles called partial zero-emissions vehicles. But even under the relaxed guidelines, as of 2008 several automakers found themselves needing credits.
