Monday, January 30, 2012

California ZEV Mandate Rolls On as ACC

Continuing with its previous nonsensical policy, California's ARB (Air Resource Board) has published new regulations which require automakers to sell a certain percentage of vehicles which are BEV, PHEV, hydrogen, or otherwise not just gasoline powered.

This is bad pollicy because the mandate tells the producers what they must sell, without forcing anyone to actually buy the cars.

This puts automakers in a difficult spot.  If they can't make the vehicles attractive enough for consumers to buy, they have to dump them into the marketplace somehow.  They would have to sell these ZEVs at a substantial loss, and make up for the financial damage by raising prices on traditional vehicles.  The result is the same as a tax on gasoline vehicles, but done through a back-door which causes consumers to be angry with the automakers and not the regulators.

A better policy for California would be to encourage consumers to buy ZEVs, through more direct measures.   For example, fuel taxes could be used to large fund tax rebates, so that gasoline consumers would subsidize ZEV purchases.  Currently, CA offers a $2,500 rebate for a BEV vehicle, but this does not come close to offsetting the cost.  

The previous ZEV mandate was watered down significantly because it wasn't a feasible goal.  I don't expect this one to be feasible either, based on people's sensitivity to higher up front purchase costs.

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