The California Air Resources Board on Thursday dramatically reduced the number of zero-emission vehicles it will require manufacturers to produce for sale in the state, a move that could shrink the market for electric and fuel-cell vehicles.

After listening to a full day of presentations from dozens of auto executives and environmentalists, the board voted to require vehicle manufacturers to produce 7,500 nonpolluting vehicles from 2012 through 2014.

The number is a significant drop from the 25,000 the board previously had proposed, but it is a step up from a staff proposal that would have cut the number to 2,500 (see California Considers Zero-Emission Vehicle Cutbacks).

Further complicating the matter, the board established a credit system that, depending on the mix of vehicles the automakers choose, effectively varies the number of zero-emission vehicles needed to meet the "7,500 vehicle" requirement.

For example, 5,357 fuel-cell vehicles capable of driving 300 miles on one tank of gas would meet the requirement. Conversely, it would take 12,500 electric vehicles capable of driving 100 miles on one charge to meet the same target.

The board decision also requires automakers to produce 58,000 plug-in hybrids. The previous proposal included no separate target for plug-in hybrids, and the staff proposal had suggested requiring 75,000 plug-in hybrids in place of 22,500 zero-emission vehicles. However, automakers are exempt from fulfilling the plug-in hybrid requirement if they instead produce 25,000 zero-emission vehicles.

The board raised its zero-emission requirement from the staff proposal after reassessing the advancements in battery and fuel-cell technology after the staff’s initial analysis about a year or two ago, said Daniel Sperling, a board member of the California Air Resources Board, during a conference call Thursday evening.
He also said other states are adopting versions of California’s zero-emission vehicle program, enhancing its overall impact.

"Whatever numbers we adopt in practice, that means they are roughly tripled when you take into account the other states," he said. 

California’s zero-emission vehicle program was created in 1990 in an effort to spur greener technological advancements in the auto industry.

But not everybody thinks the board’s latest decision lives up to the program’s intentions.

"We are disappointed," said Spencer Quong, senior vehicle analyst for the Union of Concerned Scientists.

Earlier this week, Quong had said battery manufacturers, fuel-cell stack assemblers and hydrogen-tank manufacturers could lose $68 million to $135 million in revenues if the board approved the staff proposal.

Because of the credit system the board adopted Thursday, Quong said he thinks vehicle manufacturers will end up producing only about 5,000 zero-emission vehicles, not 7,500. "They can easily produce that," he said, referring to either number.

Reducing the requirement sends the wrong message to suppliers and infrastructure providers and could keep some from investing in the technology, he said.

But Sperling said the board decision pushes automakers toward mass production of zero-emission vehicles.

"Clearly, advocates would like to have more of whatever they’re promoting," he said. "The idea is that this initial period is just for [automakers] to work with a smaller number of vehicles, to improve the technology [and] to gain a better understanding of what the market demand would be for these very different types of vehicles."