Unplugged - California Air Resources Board regulation for zero-emissions vehicles - Brief Article - Editorial

Automotive Manufacturing & Production, June, 2001 by Gary S. Vasilash

One of the cars that I think is a blast, a car that I've not owned due to climactically imposed prohibition, is GM's EV1. I recently took a quick zip in one around GM's Desert Proving Ground in Mesa, AZ. Some of you are thinking that it had to be quick in the sense of brief, as the version with the lead-acid battery has a range of 55 to 95 miles and the nickel-metal-hydride battery boosts it to from 75 to 130 miles. But the EV1 is quick in the sense of peppy, with the electric drive propelling the plastic-clad aluminum structure from 0 to 60 mph in less than nine seconds. Step on the accelerator and it moves with a sound that is more akin to the Enterprise going into warp drive than the throbbing bass ordinarily associated with speed. Alas, the car of the future, which went on sale (actually, went on lease) in '97, became a car of history in '99, when production ceased. Fewer than 1,000 were built.

All told, GM has invested more than $1-billion in electric vehicle technology. While there is certainly valuable learning derived from that, as a business, the EV1 proved to be a costly flop. People--as in "the market"--just aren't interested in electric vehicles from GM or anyone else. And it isn't like GM didn't try to change minds by doing everything from creating clever ads to even trotting out a former "Baywatch" star to testify to the appeal of the vehicle.

A driver behind the EV1 was the California Air Resources Board (CARB--an ironic acronym if there ever was one). Briefly, CARB devised a mandate for our most-populous state which says that the six largest auto companies must sell 10% of their products in the form of zero-emissions vehicles (ZEVs) by 2003--and ZEV means electric vehicle. It is probably to CARB's credit that it forced auto companies to do work in developing electric vehicle technology; arguably, it is also having a positive effect by strongly encouraging fuel cell development.

But while CARB has modified the structure of its mandate so that there can be credits gained toward the 10% by the sales of things like neighborhood vehicles (as in the sense of vehicles being offered by Ford's Th!nk), it seems as though the board's ultimate focus is on forcing the car companies to create products for which there is no sustain able market.

Automotive companies--OEMs and sup pliers, alike--are not highly valued by Wall Street. Not only is this a result, I suspect, of their being "Old Economy" companies (and even with the bloom being withered on the valuation of "New Economy" companies, auto stocks still get smacked), but also because compared with many other industries, automotive is a capital-intensive industry. Capital is needed to build the plants to build the cars and trucks and all of the parts that constitute them. No company can long afford to have assets operating at far less than capacity, and when those assets are figured in the hundreds of millions, the length of the affordability goes down--fast.

But here we have a situation wherein a governmental agency--and let's think for a moment about how clever some politicos in California were when it came to that bizarre regulated-deregulation of the utility companies--is telling the carmakers that they must produce vehicles that no one really wants to buy. (And kudos to GM for filing suit against CARB in California Superior Court.)

I'm all for neighborhood vehicles. I'm all for clean air. As admitted, I'm even with the likes of Francis Ford Coppola and Ed Begley, Jr., in thinking that the EV1 is a gas--er, is a charge.

But I'm not for asinine politicos trying to mandate not only the development of technology, but the creation of a market. It just won't work.