California Rules: Why the Electric Car Won't Die
Renault Nissan Alliance chief Carlos Ghosn announced during the opening press days of the North American International Auto Show in Detroit that the next generation LEAF electric car would not only have range comparable to GM's new Bolt concept car, but could even exceed its projected 200 miles range.
He subsequently added that between the combined French and Japanese car companies, the Alliance sold well above 200,000 electric vehicles globally in 2014.
Just looking at the U.S. market, plug-in electric car sales year-over-year have steadily increased now three years in a row. While still a relatively insignificant fraction of total car sales, the rate of growth is nothing short of dramatic with all-electric car sales up 58% in 2014 and most of that growth taking place in the second half of the year, seemingly despite slumping crude oil prices, now below $50 a barrel.
It's a fair question to ask what's going on here? Should lower gasoline prices at the pump hurt electric car sales? While some argue that it has, going so far as to predict, it again will "kill" the electric car, others observers argue it will have little, if any long-term impact on the development and adoption of electric drive vehicles.
One of those observers is Levi M. Tillermann who is a fellow at the New American Foundation. His opinion piece, "Why cheap gas can't kill the electric car,' appeared recently in the Washington Post, and perhaps even more significantly on the ArabNews.com website.
Tillermann's main thesis is that California, and the dozen or so other US states that emulate its air pollution rules, is such a dominate player in the automobile market that car makers simply have to build and sell product that qualifies for sale in the state. And those rules are increasingly being tilted in favor of zero emission vehicles: plug-in electric cars and hydrogen fuel cell-powered ones.
California not only incentivizes the manufacture of zero emission vehicles, but also their sale. Explains Tillermann:
In 2010, automakers began selling a new generation of truly mass-produced electric vehicles, starting with the Nissan Leaf. California's market for credits rewarded companies such as Tesla and Nissan that got out in front. These companies have reaped hundreds of millions of dollars from selling credits to laggards that did not fulfill their quotas. In the third quarter of 2014, Tesla Motors earned $76 million on ZEV credits alone.
California has also rewarded buyers of electric cars. It granted cash incentives to early adopters and gave them access to high-occupancy vehicle lanes so they could bypass the daily crush of rush hour. And California helped other states design their own incentive programs, which include perks such as rebates, free city parking and in some places free charging. The benefits make electric cars more attractive financially, particularly since the upfront costs of purchasing one might not be offset by fuel savings for years.
Tillermann notes that some 90% of all electric cars sold in America are to residents of states that follow California's rules, adding…
Electric-vehicle sales may sag for a month or a quarter, but will cheap oil kill the electric revolution? Don't bet on it. Electric cars are here to stay.
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