Comment Log Display

Chairman Nichols:

I am once again appealing to you to reconsider the Board¡¯s
decision to reduce the minimum number of pure zero emissions
vehicles by 70%, from 25,000 to a mere 7,500 during Phase III
(2012 to 2015).

It is well documented that the Board was misguided into an
erroneous conclusion by a faulty fact finding process which led
the staff to conclude in their ISOR that no electric car will be
commercially available until 2012. Whereas the reality is Tesla
Motors is already delivering zero emission full performance
electric vehicles to customers. What¡¯s more, we are at an
advanced stage of establishing full manufacturing operations in
California for introduction in 2010, of the Model S, a
five-passenger affordable zero emission electric car which will be
produced in volumes of 20,000 cars per year.

Indeed Tesla is not alone. Major automobile makers including
Nissan, Daimler BMW, and Mitsubishi have already announced plans
for the introduction of zero emission electric vehicles to the
California market in 2010. By any measure, CARB¡¯s minimum quota
of 25,000 pure zero emission vehicles for 2012-2015 can be met
today. Whose interest will be served by easing the requirements to
a paltry 7,500 vehicles?

Eliminate the substitution of Pure ZEVs with Enhanced AT-PZEVs

If the Board was bent on incentivizing the introduction of plug-in
hybrids by providing manufacturers generous rights of substitutions
to pure ZEVs, it behooves the Board to review its decision. The
plain fact is since the public hearing in March, 2008, market
forces have done in a very short time what the Board has been
attempting to achieve over years. The quantum jump in the price of
oil, coupled with heightened awareness of carbon emissions, has
propelled consumers to seek cars that answer both problems and
give manufacturers a startling wake up call. Toyota, GM and Ford
have all announced high volume PHEV programs. In fact the enormity
of the demand for hybrids since CARB¡¯s last hearing only five
months ago should serve as a lighting rod for you to reconsider
whether in view of the new realities, it is necessary to award ZEV
credit at all to any type of hybrid; whether its PZEV, AT- PZEV or
Enhanced AT- PZEV. The paradigm has irrevocably shifted giving
CARB an opportunity to redeem its reputation and reassert its
leadership position in leading the charge toward early and wide
adaptation of true zero emission vehicles.

The Board has repeatedly declared that it is determined to
¡°maintain pressure on the commercialization of pure ZEV
technologies,¡± however the Board¡¯s actions do not comport with
its own pronouncements.

Set the minimum ZEV delivery requirement on an annual basis

The minimum ZEV requirements have been set to 3 year phases. The
practical effect of this rule has been to give the LVM¡¯s in
excess of a 2 year grace period during which they can defer
meeting their phase requirements until the very end of the final
year of any given phase. Consequently this extended grace
(¡°blackout¡±) period encourages LVMs to delay the introduction of
pure zero emission vehicles to the market. CARB should prorate the
minimum ZEV delivery requirements for Phase III and beyond to a
yearly basis. Such a rule would be consistent with the stated
goals of CARB and deliver the public policy benefit of a maximum
number of ZEV¡¯s on the road at the earliest possible date.

Change the carry forward provisions of gold credits earned by pure
ZEV manufacturers

Contrary to California¡¯s interest in encouraging the
establishment of manufacturing facilities for zero emission
vehicles in the State as repeatedly articulated by Governor
Schwarzenegger and enacted into law by the Legislature (AB118),
CARB continues to favor large automakers and in the process
needlessly undermines Tesla. The illogical consequence of the
proposed modification may be inadvertent and unintended but needs
to be remedied immediately. A case in point:

In a recent modification, the staff proposed, evidently in
deference to intermediate vehicle manufacturers (IVM), an
amendment allowing IVMs to accrue gold ZEV credits for use up to
three years after a transition to a large vehicles manufacturer
(LVM). Simply put, as long as a manufacturer has not become an LVM
the clock doesn¡¯t tick on the 3 years useful life of the ZEV
credit. Yet if a manufacturer other than an LVM chooses to trade
their gold credits, then the 3 years life span is deemed to have a
starting point in the MY in which the credits were earned.

Ironically, staff goes out of its way to safeguard the welfare and
commercial interests of the IVM including BMW, Mercedes, and VW. In
stark contrast, the proposed modification will unfairly and
severely discriminate against Tesla, the only car maker based in
California and the world¡¯s only car maker that actually develops
and is committed exclusively to zero emission vehicles. How? Since
Telsa makes only zero emission vehicles we sell our gold ZEV
credits to LVMs. The monies received defray in part some of the
large R &D costs incurred in pioneering the development of the
zero emission electric cars. If the 3-year clock starts ticking in
the MY during which we sell the car, and not the time in which we
sell the ZEV credit to an LVM, (unless we are able to sell the ZEV
credits immediately upon selling the car), we will be left with
highly perishable ZEV credits that expire sooner than 3 years and
consequently may be valued at a steep discount if not a zero value
altogether. Please note we are not speculating about the huge
reduction in value of the ZEV credit due to even the slightest
reduction in its validity period, we have experienced it already.

We respectfully request that Tesla be accorded the same
considerations given to much larger and more established IVMs and
that the proposed rules be modified so that for any company that
solely manufactures zero emission vehicles the 3 years period of
the ZEV credit starts only upon transfer of the ZEV credit to
another company.

In summary we urge the Board to:
1) Increase not decrease the minimum number of Pure ZEV required
in Phase III (2012-2015);

2) Eliminate the substitution of Pure ZEVs with Enhanced
AT-PZEVs;

3) Set the minimum ZEV requirements on a yearly basis rather than
for three years, thus preventing manufacturers from getting an
additional three year grace period and eliminating ¡°blackout¡±
years;

4) Change the carry forward provision of gold ZEV credits earned
by any manufacturer that exclusively manufactures pure ZEVs to
expire 3 years from the date of transfer to another manufacturer.

With these actions the Air Resources Board will once again be able
to recapture its credibility and assume the mantle of leadership in
advancing the goal of true zero emissions transportation in the
state of California and beyond.

Sincerely,

Ze¡¯ev Drori
President and CEO

cc: Governor Arnold Schwarzenegger
Senate President pro Tem Don Perata
Speaker of the Assembly Karen Bass
Members of the Air Resources Board
The Honorable Susan Kennedy
The Honorable James Goldstein, Executive Officer, Air Resources
Board