GM’s Push For A U.S. Electric Car Program Could Be Dead On Arrival

GM’s Push For A U.S. Electric Car Program Could Be Dead On Arrival

2017 Chevrolet BoltSam Abuelsamid

Through the 1990s and early 2000s General Motors became both a grudging hero and avowed enemy of electric vehicle advocates. However, with its response to the Trump Administration’s proposal to freeze fuel economy standards and prevent California’s attempt to mandate EVs, the automaker seems to want to plant itself firmly on the electric side of the argument. Unlike its long-running efforts to kill 1990s-era zero-emission vehicle mandates, GM now wants the rules to be nationwide.

As the comment period for the administration’s notice of proposed rulemaking titled Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks draws to a close, GM is filing its response. In August 2018, the Department of Transportation and Environmental Protection Agency proposed freezing corporate average fuel economy (CAFE) and greenhouse gas (GHG) emissions standards at 2020 levels. The administration also wants to revoke the Clean Air Act waiver that enabled California to set its own GHG standards and mandate zero emissions vehicles (ZEVs).

The ZEV mandate which currently applies to California and nine other states that have opted to follow California regulations has been in large part responsible for the growth of the EV market in the U.S. Most of the EVs sold here are in those states with only a small proportion going to the rest of the country.  

GM is now proposing that the ZEV mandate be made national, applying to all 50 states. The automaker is also opposing the freezing of CAFE/GHG standards at 2020 levels. While GM wants those standards to continue increasing it does want some flexibility added in order to reflect the market realities of the consumer shift away from small cars to trucks and utility vehicles.

But the big news is the call for a national ZEV mandate that would require 25% of new vehicles sold to be zero emissions by 2030. Of course the devil is always in the details. The proposal would lock in annual increases in ZEV market share to 15% by 2025. Between 2025 and 2030, GM would like to build in a mechanism to adjust the annual increases based on the actual costs of battery cells and other market factors. The expectation is that cell costs will drop to about $70/kWh by the mid-2020s, however, if that is not achieved, the targets would be adjusted.

The proposal also calls for 7% of vehicles to be electric from 2021 and rising from there. However, in the first half of 2018, less than 1% of sales were EVs. The key is the wording of “establish ZEV requirements (by credits) each year.” In CAFE calculations, ZEVs already get weighing factors based on range and efficiency and credits are applied to manufacturers average.

GM wants additional credits to be applied for EVs deployed in automated vehicle and ride-hailing applications. The premise is that these vehicles will see greater utilization than typical individual customer owned vehicles. Each vehicle used in a mobility service application potentially offsets the use of multiple individually owned vehicles and thus has a greater impact on the end goal of reducing energy use and emissions. Thus GM wants each of these vehicles to be counted equivalent to multiple individual sales.

Promoting the use of EVs in mobility service applications should also aid in growing sales overall. The cost premium of EVs stills make it challenging for individual car buyers to justify on economic grounds based on operating cost savings. For someone driving 12,000-15,000 miles a year, the savings in fuel costs may take 10-20 years to recover. However, for fleets where vehicles may accumulate 100,000-150,000 miles per year or more, operating costs (including both energy and service costs) quickly become a bigger factor than purchase prices.

These fleets are more likely to be inclined to use EVs as long as they meet the functional needs of the business and that is rapidly becoming the case. If GM and other manufacturers can get those additional credits for vehicles sold into these use cases, they have more incentive to provide those vehicles and the overall environmental impact targets will be achieved.

Some commentators (notably Electrek) have claimed that the GM proposal doesn’t go far enough, still leaving the U.S. trailing other markets, especially China and Europe. While that is true, the U.S. is a very different market, both politically and economically. GM is clearly trying to strike a reasonable balance that reflects the political realities of a very divided country with an administration that is clearly hostile to any regulations, particular those that impact the environment while still trying to build up enough scale in electrification to make it commercially viable and keeping the U.S. from falling too far behind.

The GM NZEV proposal is by no means perfect. However, for a company that pushed back against CAFE and EV mandates so vociferously for decades to make even this proposal seems like a huge victory for those advocating for cleaner transportation. This is clearly a case of not letting the perfect be the enemy of the good.

Besides, given the way the current administration has utterly disregarded public sentiment on other policy changes such as net neutrality, this proposal is likely dead in the water anyway.

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