Copyright 2002 The New York Times Company  
The New York Times
July 22, 2002, Monday, Late Edition - Final
SECTION: Section A; Page 13; Column 1; National Desk 

LENGTH: 1571 words

HEADLINE: Auto Emission Rules in California Are Forcing Changes

BYLINE:  By DANNY HAKIM 

DATELINE: DETROIT, July 21

BODY:
While automakers rail against landmark California legislation that would force them to cut greenhouse gas emissions by the end of the decade, they face a much more immediate challenge from the state.

On Monday, Gov. Gray Davis of California will sign a bill requiring automakers to cut carbon dioxide emissions by the 2008 model year. The bill directs the California Air Resources Board to decide how much to reduce emissions over all and how to do it.

But of more immediate concern for automakers is one of California's last big initiatives on air pollution -- a decade-old mandate to create zero-emission vehicles that could soon force them to sell more than 100,000 electric cars and other fuel-efficient vehicles in the state each year.

Although the zero-emission standard, which was scheduled to take effect with the 2003 model year, has been delayed by a court injunction, it has prompted automakers to spend billions of dollars developing technologies to cut harmful tailpipe emissions and has led them to start promoting and selling electric vehicles. In addition, New York and Massachusetts plan versions of the Z.E.V. mandate, as it is known, meaning the zero-emissions requirement could cover almost one-fifth of the American auto market. Other states could follow suit.

The mandate, set in motion in 1990, aims to cut emissions of nitrogen oxide and hydrocarbons, large contributors to smog, and particulates, which lead to respiratory ailments. But the mandate has been delayed by a legal challenge from General Motors and DaimlerChrysler, which won an injunction in federal court last month.

State regulators have appealed and insist they will be able to tweak the regulation, if necessary, to mollify legal objections.

The rule requires large automakers to derive 10 percent of sales from vehicles that produce nearly zero emissions, including at least 2 percent from vehicles with no emissions. Auto executives say that 2 percent requirement has forced them to keep alive a technology they would just as soon give up on: the battery-powered automobile, the only pure zero-emission vehicle now made.

To comply, carmakers are already selling everything from armies of beefed-up golf carts to a few electric versions of sport utility vehicles to highly efficient versions of gas vehicles. Nissan is equipping most Sentra sedans sold in California with an extra catalytic converter. Toyota is advertising an electric version of its RAV4 sport utility vehicle on a billboard in Berkeley, at nearly double the normal price.

Some executives worry that they will have to take additional steps to meet the mandate, like subsidizing sales of costly electric vehicles and spending thousands of dollars a vehicle to convert gas cars to electrics.

"I remember I had a meeting in Tokyo where they showed me all the cost of this stuff. I said, 'Oh my God, the others have to do this too?' " Carlos Ghosn, the chief executive of Nissan, said.

"Nobody believes in it, but you have to do it," Mr. Ghosn said. "It's a huge cost, but it's part of the cost of doing business."

California regulators, as well as environmental groups, counter that the rule has forced automakers to accelerate the development of cleaner technologies with sound prospects. These include hybrid engines, which run on both gasoline and electricity, as well as hydrogen fuel cells, a zero-emission technology widely considered as the power source of the future.

"They wouldn't have been topics of discussion if not for Z.E.V.," said Jerry Martin, a spokesman for the California Air Resources Board, the regulatory body that established the mandate. "The standard fare for drivers around the world would be 8,500-pound S.U.V.'s, probably half of them powered by diesel." The air resources board has also modified the regulation several times to give automakers credit for cars with low emissions.

Many zero-emission vehicles in California are more golf cart than car and meant for gated communities, city-sponsored car sharing programs and corporate and government fleets. The Think division of Ford sells a beefed-up golf cart called the Neighbor for $6,500, which needs six to eight hours to recharge after traveling 30 miles. Ford is also considering bringing an electric subcompact sold in Europe, the Think City, to California.

For a Think Neighbor "we had a man trade in his Cadillac," said H. L. Fletcher, fleet manager of Fritts Ford in Riverside, Calif., who sells 40 to 50 Neighbors a month.

Mr. Fletcher said the man, in his mid-80s, was "too old to drive a big car and bought a Think to drive back and forth from the grocery store and get himself around."

But many car executives say the development of realistic technologies is being sacrificed for the money-losing, obsolete idea of electric cars.

California has shown some flexibility, though. Nissan, for instance, has a varied compliance plan. It makes an electric station wagon, the Altra, that can travel 100 miles between charges and is being leased to power companies like Southern California Edison. It also makes a big golf cart, the Hypermini, that is being used in Pasadena and Palm Springs for parking enforcement. And Nissan will get credits for its modified Sentra.

The most familiar vehicle is the electric version of Toyota's RAV4, which can go up to 78 miles an hour and travel up to 126 miles before it requires a recharge. The RAV4 EV sells for $42,510, versus a $17,000 starting price for a gasoline version, although it is eligible for $13,000 in state and federal rebates. Toyota has sold 120 since February. "We lose large amounts of money on every EV we sell," said Mike Love, Toyota's national regulatory affairs manager. "They cost us in excess of $100,000 apiece to build."

New York and Massachusetts have plans to adopt mandates that would give automakers until the 2006 model year before they have to produce any pure zero-emission vehicles. Until then, car companies could comply by selling hybrids, efficient gas cars or cars that use alternative fuels.

"The small neighborhood-type vehicles really aren't as marketable here in the Northeast," said Gina McCarthy, assistant secretary for the environment in the Massachusetts executive office of environmental affairs. "Residents in Massachusetts are really looking to get access to hybrids. They're buying them now, and they're on waiting lists. We want more hybrids."

Erin M. Crotty, the commissioner of the New York State Department of Environmental Conservation, said earlier this year that the state's Z.E.V. mandate will be a strong incentive for automakers.

For the moment, though, both states are awaiting the outcome of the legal challenge in California.

In 1990, when California's zero-emission mandate was formulated, there were hopes that the electric vehicle would be viable for the mass market by the end of the decade. But technology has still not solved the crucial drawbacks: short range and long charging time.

G.M., now the most outspoken opponent of the Z.E.V. mandate, was a pioneer in electric vehicle development in the 1990's with its EV-1 sedan, spending more than $1 billion before abandoning it.

G.M. plans to use credits from sales of the EV-1 to help meet the requirement, though it is not clear how it will comply if its legal challenge fails. Part of its plan, which has angered competitors, is to give away electric vehicles it has purchased from Club Car, a golf cart maker.

"You don't mandate markets," said Chris Preuss, a G.M. spokesman. The Z.E.V. mandate, he added, was "completely unworkable both in California and anywhere else."

The suit in federal court filed by G.M. and DaimlerChrysler, along with some state dealers, contends the mandate is superseded by federal fuel economy standards. Though reducing gas mileage is one way to cut harmful emissions, direct action on that is reserved for the federal government. A federal judge in Fresno granted the plaintiffs an injunction last month, saying the automakers had a strong case because of a 2001 amendment that gave credits for high-mileage vehicles.

The air quality board, which at first threatened to enforce an older version of the regulation, has since appealed and says it will rewrite the mandate if necessary.

Environmental groups say they have little choice but to turn California into a battleground. The auto industry has successfully lobbied since the 1980's to prevent significant increases in federal gas mileage standards, and the Bush administration rejected the Kyoto protocol, the international treaty to reduce global warming emissions.

Since California's air quality regulations predate the federal Clean Air Act, it has its own, tougher rules, and other states can choose whether to follow them. The Z.E.V. rule was set in motion before global warming was a hot-button issue and was aimed at pollutants that lead to smog and other environmental hazards. Whether carbon dioxide, linked to global climate change, is itself a pollutant is a matter of much debate, but the Z.E.V. mandate will have the practical effect of curbing such emissions as well.

"It forced the auto industry to evaluate and use technologies they never wanted to even look at," said Daniel Becker, director of global warming strategies at the Sierra Club, adding, "As a direct result of that, we have hybrid electric vehicles on sale today."
 

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GRAPHIC: Photos: A Neighbor, an enhanced golf cart, is built, above, at a Ford assembly plant in Detroit. Leo Sanders, below, of Detroit, installs a steering column on a Neighbor. The vehicle, which sells for $6,500, produces low emissions. (Photographs by Jeffery Sauger for The New York Times)

LOAD-DATE: July 22, 2002