2016/08/03

With Fuel Economy Rules In Play, Tesla Exec Says Automakers Aren't Trying To Sell Electric Vehicles


Tesla Motors’ Diarmuid O’Connell says automakers aren’t even trying to sell electric vehicles. (AP Photo/Paul Sancya, File)

Tesla Motors TSLA -1.15% is accustomed to being at odds with the rest of the U.S. auto industry. So it was again on Tuesday, at an industry conference in bucolic northern Michigan, where a Tesla executive took the industry to task for not trying hard enough to sell electricvehicles.

“The roadmap to sell EVs is apparent for everybody to see,” said Diarmuid O’Connell, Tesla’s vice president of business development, pointing to the 373,000 orders Tesla has received for its $35,000 Model 3. “The industry is not even trying,” he said.
Comparing most other electric vehicles on the market to “kitchen appliances,” O’Connell said those EVs lack sufficient battery range and carry hefty price premiums. Electric versions of the Kia Soul and the Chevrolet Spark, for instance, cost twice as much as their gasoline-powered counterparts. Nor do dealers have enough knowledge to properly sell them, O’Connell said. The result: consumers are naturally discouraged from buying electric vehicles.

O’Connell said the federal government and California’s Air Resources Board should put more teeth in their respective regulations if they want to get automakers to sell cars that pollute less and burn less fossil fuels.

Auto industry representatives argued, however, that consumer preferences, not regulations, should steer the market. “Fuel efficiency is important, but at a price people can afford,” said Wesley Lutz, a Michigan car dealer who handles regulatory affairs for the National Automobile Dealers Association.
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The two sides squared off during the Center for Automotive Research’s Management Briefing Seminars in Traverse City, Mich.
The debate came in the midst of a government review of existing laws that would dramatically hike gas mileage standards by 2025. A preliminary report released last month found that the industry can meet the mandates with existing technology like start-stop systems and 48-volt batteries, but the fleet-wide mileage improvement will not be as great as the Obama administration once forecast because buyers are switching to pickup trucks and SUVs.

Instead of 54.5 miles per gallon as originally forecast, the industry is likely to average a little more than 50 miles per gallon, according to the report by the U.S. Environmental Protection Agency, the National Highway Traffic Safety Administration and the California Air Resources Board. (The complex federal rules allow automakers to hit different targets for different sizes of vehicles — with larger trucks and SUVs allowed to achieve lower targets than small cars.)

Meanwhile, California is reviewing whether its zero-emission vehicle mandate, which requires up to 15 percent electric vehicles on the road, should be reconsidered. As it stands now, carmakers can earn ZEV credits for a variety of fuel-saving technologies without actually selling any electric vehicles.

O’Connell said with no change to law, EVs will account for just 2 percent of vehicles on the road in California by 2025, about the same as today. To achieve the equivalent of 15 percent ZEVs, he argues that California needs to dramatically adjust the system that allows carmakers to “bank” credits.
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