ZEV Program Running Out of Gas?

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Author: Kish Rajan

With the clock ticking down to the end of this year’s legislative session, our leaders in Sacramento are debating initiatives that will put more clean cars on the road, boost air quality and innovation, and improve the health of our residents. We must take advantage of this brief window of opportunity to recalibrate the state’s primary mechanism for encouraging electric vehicle adoption – the Zero Emission Vehicle (ZEV) credit system.

California – led by Gov. Jerry Brown and the state air resources board — leads the world in the transition to zero tailpipe emissions, powered by ingenuity not only in the technological realm, but in the policy arena as well. The goal was to bolster the efforts of automotive entrepreneurs to accelerate the deployment of clean cars up and down the state, in an industry notoriously immune to change.

The ZEV credit program as it’s currently structured won’t get us to where we need to be – currently, fewer than four percent of cars sold each model year are electric.

To ignite and accelerate this shift, state policymakers introduced so-called “ZEV credits”, a program to incentivize car companies to devote significant resources toward developing and deploying electric vehicle models that excite drivers. This is the carrot for the automotive industry to move forward. The intent was to inject vehicles with zero tailpipe emissions into the marketplace; it was smart, creative regulation to bolster innovation and creativity that should be a national model.

These credits were designed to work with companies small and large, legacy and upstart, in order to push the clean car market forward.

Yet, despite the best intentions of state regulators, the ZEV credit program as it’s currently structured won’t get us to where we need to be – currently, fewer than 4 percent of cars sold each model year are electric.

Why? To begin with, the system has created an over-abundance of credits. One might assume that the credit system would be based upon a one car, one credit model. But it isn’t – under current rules, automakers can earn up to nine credits for every car they deliver to the state. This model allows automakers to stockpile credits and floods the marketplace with cheap credits that do little to incentivize change.

This sends the precisely wrong signals to automakers: instead of striving to build better EV vehicles for California drivers, they can accumulate cheap credits without making their cars more appealing to consumers.

How can we steer back toward the original spirit of the goal? How can we meet or beat Governor Brown’s vision of 1.5 million zero emission vehicles on the road by 2025 and every car sold in the state with zero tailpipe emissions by 2050? How can we recalibrate the program to achieve and exceed the goal of substantially increasing the number of EVs on the road in less than a decade’s time?

If we’re using regulatory actions to encourage economic innovation, let’s ensure that the incentives are aligned with the goals.

California must lead from the front and create a policy framework that can achieve these great goals. Let’s not allow legacy industries to take advantage of regulation designed to help us lead.

Let’s put in place enforceable regulations that require 15 percent (or more) of all cars sold in California be electric vehicles by 2025.

It’s time for California to realign and recalibrate the ZEV credit system. We must establish clear and achievable goals that will result in the electric vehicle future the Governor has laid out. Let’s use this opportunity to drive current and future creative automakers to imagine and build cars that excite consumers in both fuel efficiency, performance and style. Assembly member Autumn Burke has introduced legislation to do just that.

So, as the legislature finishes up its legislative activity for the year, we hope that it will seize the moment, recalibrate California’s ZEV program, and put the state back on the path to reaching our ambitious but achievable clean car goals.