Tensions over U.S. electric vehicle mandates spill into the open

Reuters News
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Posted: Aug 04, 2015 8:44 PM

By Joseph White

TRAVERSE CITY, Mich. (Reuters) - A long-simmering dispute between automakers and U.S. regulators over policies to promote electric vehicles spilled into the open on Tuesday, in the high stakes struggle over the future of automotive technology.

The heads of two major lobby groups told hundreds of attendees at an industry conference in Traverse City, Michigan, that automakers are struggling to meet a California mandate to boost demand for electric cars to 15 percent of sales by 2025.

Nine other states have adopted the same target to comply with the Obama administration's efforts to curb greenhouse gas omissions from vehicles.

The rules should be made tougher, insisted Diarmuid O'Connell, vice president of business development at Tesla Motors Inc , the Silicon Valley electric carmaker which profits from selling clean air credits generated by its Model S sedans.

In the unusually open discussion, O'Connell said consumer demand for electric cars could be higher, but too many models from established car companies "are appliances in terms of the concept and the way that they look."     

A top official of California's clean air regulatory agency said state officials will stand firm, and got support from the head of the U.S. Environmental Protection Agency's Office of Transportation and Air Quality.

"I am a big believer in the idea of California as an incubator for technology," said Christopher Grundler of the EPA.

Under the federal rules, automakers and regulators are supposed to conduct a review of U.S. fuel economy standards that call for new vehicles to average 54.5 miles per gallon by 2025.

California and nine other states, however, have taken the additional step of setting quotas for sales of "zero emission vehicles," either battery electric or fuel-cell models, which account for less than 1 percent of U.S. car and light truck sales today.

The recent boom in sales of sport-utility vehicles and light trucks, fueled by cheap gasoline, has exacerbated industry concerns about the electric vehicle mandates, said Mitch Bainwol, president of the Alliance of Automobile Manufacturers, which represents the Detroit Three and several other large Asian and European automakers.

"The product mix is drifting away" from the targets of the federal greenhouse gas emissions rules and the California electric vehicle targets, Bainwol said.

Forrest McConnell, former chairman of the National Automobile Dealers Association, told attendees the mandates were comparable to offering broccoli to consumers who wanted low-calorie doughnuts.

But mainstream auto industry officials were unclear about how they would alter the California and federal regulatory systems.

John Bozzella, head of Global Automakers, a trade group that represents mostly non-U.S. automakers, suggested the answer could be an entirely new approach that gives automakers incentives to adopt advanced safety and connected vehicle technology, which allows cars to communicate with each other and help cut down greenhouse gas emissions, perhaps by reducing fuel burn sitting in traffic jams.

But the EPA's Grundler was skeptical. "We believe automakers will have a formidable task" to show that connected vehicle technologies will produce greenhouse gas benefits, he said.

(Reporting by Joseph White; Editing by Richard Chang)