California is very much the home state of electric cars, and arguably the central hub for electric car development for the whole globe. But at the moment the job of getting people to drive EVs is a total mess, with years of planning showing little results and steady attack coming from Detroit and Washington against it all.
The big news of the day is that California’s electric car incentive program has not actually increased any rates of leasing new electric cars. These are unbelievably good incentives; leasing an electric car in California can cost zero dollars per month when incentives are factored in, as Automotive News pointed out today in an excellent report:
With state rebates, federal tax credits and manufacturer discounts, the effective monthly payments in California for zero-emission vehicles including the Nissan Motor Co. Leaf and Ford Motor Co. Focus Electric can add up to zero — or less — a month, the Alliance of Automobile Manufacturers said in written comments to the California Air Resources Board, which meets Thursday.
“Yet the ZEV market share has remained at the 3 to 3.5 percent level,” the alliance said in its 80-page submission, asking the agency known as CARB to ease up on plans to require more sales of the vehicles.
These are effectively free cars. Free cars! California’s incentive system functionally has the state giving away EVs and yet they haven’t made a new dent in the market. That is insane, particularly when you realize the scale of these incentives: $7,500 of federal incentives, $2,500 of a California state discount and another $1,500 from California for low-income buyers.
I personally struggle to believe that this is completely a sign of a broken system. I don’t lay all of the responsibility of electric car ownership on the thousands of dollars of incentives the state lays on electric cars themselves. I point to the cars themselves as part of the problem.
One of the state’s landmark electric cars was the Fiat 500e, with a range of 87 miles to a four-hour charge. It’s a nice car, sure, but it’s pretty obviously a niche vehicle. And that was probably the best weirdo Californian electric around. GM’s Spark EV had about as much promise of luring conventional car buyers away from gas-powered rides as free wheatgrass ice cream has a chance of luring people out of line for McBlizzards.
Still, this looks pretty bad for the incentive program, and it doesn’t help the state support its increasingly-tough requirements for carmakers to sell zero-emissions vehicles within California. California wants a 40 percent reduction of greenhouse gas emissions in 2030 compared to 1990 levels. Along with that, CARB has projected that 40 percent of the cars an automaker sells in California will have to be all-electric, hydrogen-powered or plug-in hybrids.
If you’re wondering how America’s carmakers feel about this, it’s, uh, well, you don’t have to wonder very much. The Alliance of Automobile Manufacturers, a lobbying group that works on behalf of carmakers, is not super pleased with it, arguing on its website that these government rules do not “align with affordable technology and market realities.” The Alliance has asked for the Trump administration to “help” with the ZEV mandate (lol) and wants them to be included in the federal midterm review of emissions standards, as Automotive News reported earlier this month. Days into the new presidency, the Auto Alliance was asking Trump to turn his anti-regulation eye on ZEVs, as The Detroit Bureau reported back in November:
The Alliance of Automobile Manufacturers, the industry’s main trade group, has asked Trump to consider their state ZEV costs when evaluating the feasibility of rules set under President Barack Obama to boost average fuel economy standards by 2025. Over the next eight years, the electric-vehicle demands will impose costs of up to $40 billion on companies that they’ll pass on to customers, according to the group. The miles-per-gallon standard, which is 35.3 for 2016, will under the rules go to 50.8 — a number the industry contends could make cars prohibitively expensive.
This is about as blatant as the car industry can go to saying it wants these rules struck from the books, saying that meeting them is a “substantial challenge.”
And meeting these standards in this time of cheap oil and big crossovers is not cheap. Fiat Chrysler CEO Sergio Marchionne claimed back in 2014 that he lost $14,000 on every Fiat 500e sold.
Certainly one could wonder if this is probably a problem with Fiat Chrysler itself doing a bad job of making a profit off of the cars it makes. For the record, Tesla doesn’t think these ZEV rules go far enough and it’s the only carmaker at the moment that’s building electric cars that people desperately want to buy. And that’s even in spite of sometimes egregious build quality issues.
Elon Musk personally cussed out CARB and argued that Tesla would be better off without the state’s ZEV credits program while on a company earnings call last August, as Business Insider reported at the time. While Tesla made 50 cents on the dollar from its ZEV credits, major manufacturers got double through the state’s system:
“The incentives either don’t scale or are disadvantageous,” he said Thursday. “If General Motors or Ford or somebody else makes electric vehicles, they get to monetize their ZEV credit at 100 cents on the dollar, so if there are two ZEV credits per vehicle, General Motors would have a $5,000 cost advantage over Tesla.”
“If people are concerned about Tesla incentives, they should be concerned with, ‘Well, how does Tesla overcome the disadvantage of EV incentives,’” Musk continued.
If Tesla can keep things going even at a disadvantage, the reasonable thought is that the product is the weak point for major manufacturer’s efforts.
You could conceivably wonder if the problem for major automakers is that their EVs are built primarily for California and not for the whole country. The Auto Alliance thought of this, and wondered if California could drop its special requirements and leave the rest of the country alone:
“The Administration should engage as appropriate to help address these ZEV issues — especially to help avoid the creation of a patchwork of requirements that will frustrate the overall intent of the ‘One National Program.”
California and its Governor Jerry Brown have been pretty clear, however, that the state has no plans on changing in the Trump years. “We’re pushing the boundaries” were the exact words coming out of Sacramento.
So war over electric cars can be expected to keep going in California. I wish things looked better for the state, but the poor record of these incentives, carmakers’ struggles to make money off of dinky EVs and Trump in the White House does not look good for the Golden State.