MEETING
BEFORE THE
CALIFORNIA AIR RESOURCES BOARD
LINCOLN PLAZA
AUDITORIUM
400 P STREET
SACRAMENTO, CALIFORNIA
THURSDAY, SEPTEMBER 7, 2000
8:30 A.M.
Vicki L. Ogelvie, C.S.R.
License No. 7871
James F. Peters, C.S.R.
License No. 10063
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MEMBERS PRESENT
Alan C. Lloyd, Ph.D., Chairman
Dr. William A. Burke
Joseph C. Calhoun
Dorene D'Adamo
Mark DeSaulnier
Dr. William Friedman
C. Hugh Friedman
Matthew R. McKinnon
Barbara Patrick
Barbara Riordan
Staff:
Michael Kenny, Executive Director
Tom Cackette, Chief Deputy Executive Officer
Mike Scheible, Deputy Executive Officer
Lynn Terry, Deputy Executive Officer
Kathleen Walsh, General Counsel
Marie Kavan, Board Clerk
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I N D E X
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Page
Proceedings 1
Call to Order 1
Pledge of Allegiance 1
Roll Call 1
Opening remarks by Chairman Lloyd 1
AGENDA ITEMS:
00-8-1 Public Meeting to Consider the
Support for the National Environmental
Respiratory Center
Introductory remarks by Chairman Lloyd 5
Staff Presentation:
Barbara Waller 5
00-8-3 Public Meeting for the Biennial
Review of the Zero Emission Vehicle
Regulation
Introductory remarks by Chairman Lloyd 7
Staff Presentation:
Mike Kenny 9
Chuck Shulock 11
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I N D E X (Continued)
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Page
Public Comment:
William Kleindeist 120
Jim Boyd 127
Dan Jacobsen 137
Eric Sletten 140
Larry Greene 147
David Harrison 151
Steven Douglas 178
Dave Hermance 195
Reginal Modlin 229
Kelly M. Brown 239
Lynn Edgerton 250
V. John White 256
Michael Field 267
Ellen Garvey 271
Henry Perea 277
Steve Larson 281
Ben Knight 288
Sam Leonard 300
Chris Noram 316
Bob Stempel 317
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INDEX CONTINUED
Page
Mr. Freeman 325
Ms. Bishop 330
Ms. Martin 331
Mr. Kirsch 338
Ms. Frank 343
Mr. Modisette 345
Mr. Hwang 350
Ms. Holmes-Gren 356
Ms. Hathaway 362
Mr. Swan 367
Ms. Hay 371
Mr. Zane 375
Mr. Moseley 379
Ms. Stephensen 385
Mr. Thompson 388
Mr. Scheidler 394
Mr. Finney 399
Mr. Doyle 403
Mr. Gage 412
Mr. Brooks 417
Mr. Hodge 427
Ms. Hastrup 435
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INDEX CONTINUED
Page
Mr. Hastrup 437
Mr. Oxford 441
Mr. Reynolds 444
Ms. James 448
Mr. Kjaer 452
Mr. Jackson 457
Ms. Tomic 465
Mr. Lipman 470
Mr. Kobb 472
Mr. Huestis 477
Mr. Turrentine 484
Reporter's Certificate 491
Reporter's Certificate 492
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1 P R O C E E D I N G S
2 --o0o--
3 CHAIRMAN LLOYD: Good morning. The September
4 7, 2000 meeting of the Air Resources Board will now
5 come to order.
6 Supervisor DeSaulnier will lead us in the
7 Pledge.
8 (Thereupon the Pledge of Allegiance was recited.)
9 CHAIRMAN LLOYD: Will the Clerk of the Board
10 please call the roll.
11 MS. KAVAN: William Burke.
12 BOARD MEMBER BURKE: Here.
13 MS. KAVAN: Joseph Calhoun.
14 BOARD MEMBER CALHOUN: Here.
15 MS. KAVAN: Dorene D'Adamo.
16 BOARD MEMBER D'ADAMO: Here.
17 MS. KAVAN: Marc DeSaulnier.
18 BOARD MEMBER DeSAULNIER: Here.
19 MS. KAVAN: Dr. Friedman.
20 Professor Friedman.
21 BOARD MEMBER C.H. FRIEDMAN: Here.
22 MS. KAVAN: Matthew McKinnon.
23 BOARD MEMBER McKINNON: Here.
24 MS. KAVAN: Barbara Patrick.
25 BOARD MEMBER PATRICK: Here.
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1 MS. KAVAN: Barbara Riordan.
2 BOARD MEMBER RIORDAN: Here.
3 MS. KAVAN: Chairman Lloyd.
4 CHAIRMAN LLOYD: Here.
5 Thank you very much.
6 Before we get started, I would like to tell
7 everyone in the audience how today's proceedings will
8 be organized.
9 The first item on the Agenda concerning the
10 support for the National Environmental Respiratory
11 Center should take us less than 10 minutes overall.
12 The rest of today's meeting and as much time
13 as we may need tomorrow will be devoted to our Biennial
14 Review of the Zero Emission Vehicle Program.
15 We do not have a final count of witnesses yet
16 since people are still signing in. I would like to
17 remind people that allow they might have called ahead
18 to be put on the witness list, they still need to fill
19 out a card to make sure they get on that list.
20 Please, do that. Do not assume that because
21 you called ahead that you are automatically on that
22 list. You may find that tomorrow afternoon that you
23 are still waiting.
24 I think it is clear that we have many
25 speakers, however. Therefore, in general I will be
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1 imposing a five-minute limit on each speaker to ensure
2 that everybody can be heard.
3 If necessary, and if it gets repetitive, I
4 will reduce that to three minutes. You can help the
5 Board by making your points succinctly as you can by
6 avoiding repetition of other witnesses.
7 As you know, a few parties have requested
8 slightly more time to each their testimony. For
9 example, each auto manufacturer asked for approximately
10 15 to 20 minutes to present their individual
11 experiences in developing, producing and marketing
12 ZEVs.
13 I intend to give them that opportunity since
14 their first-hand perspective is invaluable to the
15 Board's review.
16 As far as other speakers are concerned, I will
17 exercise the perogative of the Chair to extend the
18 five-minute time limit where I believe it is clear that
19 important information is being conveyed.
20 Please, I can't emphasize this enough, for my
21 colleagues and myself here, avoid repetition and be as
22 clear and concise as possible.
23 Now, a couple of housekeeping details. This
24 facility has an excellent cafeteria, and I encourage
25 you to use it throughout the day. We will not be
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1 taking a formal lunch hour, but we will instead
2 continue through. We may take a short break for lunch,
3 but we will decide that as time goes on.
4 We will be stopping for short breaks
5 throughout the day. Although, we do have an additional
6 court reporter so that we should be able to go as much
7 as possible.
8 I suspect we will go into the evening hours.
9 We have made arrangements for the Board to eat dinner
10 here. The expectation that I have at this stage is to
11 go to 9:00 or 10:00, earlier if necessary. That will
12 depend on how many witnesses we have signed up and how
13 fast we can go today.
14 Our goal is to get through the bulk of the
15 witnesses today so that we do not go late tomorrow.
16 The ideal goal is to finish early tomorrow afternoon.
17 I will keep you informed as to the number of witnesses
18 signed up.
19 With that, I would like to move on to the
20 first Agenda Item, 00-8-1, and remind anyone in the
21 audience who wishes to testify on today's Agenda Items
22 to sign up with the staff outside of the auditorium,
23 and please give 30 copies of your written statement, if
24 you can, to the staff.
25 The first item is a Research Proposal. Mr.
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1 Croes, does the Research Division staff have anything
2 they wish to say about this proposal?
3 MR. CROES: Dr. Barbara Waller will give a
4 brief statement the item.
5 DR. WALLER: Good morning, Chairman Lloyd and
6 Members of the Board.
7 We are recommending to the Board a sole source
8 co-sponsorship for the National Environmental
9 Respiratory Center, a program located at the Lovelace
10 Respiratory Research Institute.
11 This program is a six-year examination of
12 animals and cells exposed to a series of complex
13 atmospheres. Cardiorespiratory health effects from
14 mixture exposures will be studied using a consistent
15 set of health assays.
16 The center is staffed at Lovelace, with Dr.
17 Joe Motterly, as the Director, and Dr. Rojane Hendersen
18 as the Principal Investigator.
19 The center is directed by independent external
20 scientific advisory committee. The atmospheres to be
21 studied include diesel exhaust, gasoline exhaust, road
22 dust, wood smoke, tobacco smoke, cooking fumes and coal
23 power plant emissions.
24 The health end points will include irritation,
25 and inflammation, asthma and allergies, defenses
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1 against infection, heart and lung function and cancer.
2 We propose to support this program at $25,000
3 per year for two years. The contribution from the Air
4 Resources Board will be leveraged into the total
5 $24-million project.
6 This level of funding entitles the ARB to
7 center affiliate status and gives us access to
8 pre-publication results, attendance at workshops and
9 meetings.
10 Thank you. I will be glad to answer any
11 questions.
12 CHAIRMAN LLOYD: Thank you very much.
13 Any questions from the Board?
14 Yes, Supervisor Patrick.
15 BOARD MEMBER PATRICK: Mr. Chairman, I would
16 just say that, since there are no questions, I will
17 move Resolution 00-2A.
18 BOARD MEMBER RIORDAN: Second the motion.
19 CHAIRMAN LLOYD: All in favor, say aye.
20 So moved.
21 Thank you very much. Indeed, we look forward
22 to the results of that program emerging over a period
23 of time.
24 Clearly on the health effects basis, I think
25 it is very interesting to be involved with that.
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1 The next item is obviously the main item of
2 the day, 00-8-3, Public Meeting for the Biennial Review
3 of the Zero Emission Vehicle Program.
4 Almost exactly ten years ago, in September
5 1990, this Board approved far-reaching low emission
6 vehicle and clean fuel regulations.
7 One key feature of the regulations was a
8 requirement that 10 percent of all new light-duty
9 vehicles in model years 2003 and beyond have zero
10 emissions.
11 In the intervening ten years, we have seen
12 tremendous progress in ZEV technology. Now, for the
13 first time, we have extensive, real-world driving
14 experience with production electric vehicles.
15 My fellow Board Members and I have had the
16 pleasure of driving today's EVs, and we know first-hand
17 how well they perform. Many other drivers are in the
18 audience today.
19 When given the flexibility to meet some
20 portion of their obligation with near-zero vehicles,
21 the automobile manufacturers made remarkable progress
22 and advances on that front as well.
23 We have welcomed the recent introduction of a
24 partial zero emission conventional vehicle, and we look
25 forward to further developments.
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1 We also applaud the recent launch of hybrid
2 electric vehicles that offer high efficiency and use
3 advanced electric drives. Again, I can't over
4 emphasize the improvements we have seen in these
5 conventional vehicles as well, and I think those of you
6 who have not seen that, if you look at the September
7 issue of Popular Science, highlights some of the
8 achievement there and also some of the challenges
9 remaining.
10 Talking about challenges, we have got a major
11 one ahead of us. In 1990, California's population was
12 just under 30 million, and the light-duty vehicle fleet
13 traveled about 479-million miles every day.
14 Today, ten years later, the population has
15 grown to more than 34 million, and vehicle miles
16 traveled have increased accordingly.
17 Just the growth in driving over these ten
18 years, nearly 50-million miles per day, is enough to
19 drive from here to Los Angeles 125,000 times a day.
20 That's a staggering number.
21 These trends show no signs of slowing, so we
22 can't afford to stand still.
23 I look forward to hearing from all the
24 interested parties as to the path we should take to
25 bring ZEVs into the mainstream, and I appreciate all of
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1 you appearing before us today.
2 This will be an intense two days of
3 information exchange. So, without further ado, I will
4 ask Mr. Kenny to please begin the presentation of this
5 Item to the Board.
6 MR. KENNY: Thank you, Mr. Chairman and
7 Members of the Board.
8 When the ZEV requirement was first adopted,
9 zero emission vehicle technology was in a very early
10 stage of development. Consequently, the Board directed
11 staff to provide an update on the ZEV program on a
12 biennial basis. Today's review is the fifth such
13 review.
14 Today's meeting is informational rather than
15 regulatory. That is, there are no regulatory changes
16 that we are proposing for your consideration.
17 Today you will hear the results of an
18 intensive effort by staff over the past year to assess
19 the status of ZEV development.
20 As part of its investigation, staff has made
21 site visits to manufacturing facilities in Japan and
22 Detroit and has had ongoing conversations with EV
23 drivers, automakers, representatives of the
24 environmental community and other interested parties.
25 We have held workshops, over four lengthy
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1 days, at which extensive public testimony was provided.
2 Staff also has received numerous written comments.
3 I might add that the Board and the Governor
4 have also received an unprecedented number of letters
5 on this issue. At last count, we have received more
6 than 75,000 letters in support of the ARB regulation.
7 The vast majority of the letters are before
8 you today.
9 Before the staff makes a detailed
10 presentation, I would just like to hit a few of the
11 high points regarding the things that we have found.
12 ZEVs continue to be the gold standard in our
13 fight against motor vehicle air pollution. As you will
14 hear, ZEVs are significantly cleaner than the
15 alternatives, even taking into account power plant
16 emissions.
17 To provide a comparison, on a per vehicle
18 basis, ZEVs are 15 times cleaner over the life of the
19 vehicle than the cleanest possible gasoline-powered
20 vehicle.
21 Cost, however, does remain an issue. At least
22 in the near term, ZEVs will be more expensive than
23 their conventional counterparts. This is why we need
24 to take a long-term perspective and keep in mind, as
25 the Chairman mentioned, the Board's overall strategy of
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1 pushing towards zero and near-zero technologies for
2 California's future.
3 Finally, you will hear significant
4 disagreement over the marketability of today's EVs.
5 Those who have driven the vehicles like them, and think
6 they meet their needs, but cost, range and recharge
7 time remain concerns as we attempt to move into a
8 broader market.
9 Mr. Chuck Shulock of the Mobile Source Control
10 Division will now make the staff presentation.
11 MR. SHULOCK: Thank you, Mr. Kenny.
12 Good morning, Mr. Chairman and Members.
13 We will get things rolling this morning with
14 an overview of the work that the staff has done to
15 support your consideration of the Zero Emission Vehicle
16 program.
17 We have a lot of information to cover, so I
18 will try to follow the admonition by being succinct and
19 to the point.
20 Next slide.
21 I will set the stage with a brief
22 introduction, describe for you the process that we have
23 followed during the course of the review and then
24 provide some background on the ZEV program and current
25 requirements.
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1 The main focus of my presentation will be on
2 the issues that we investigated and the results of that
3 inquiry.
4 At two points during the discussion of issues,
5 we will call upon contractors to directly present to
6 you the results of work that they did in support of
7 this review.
8 Other contractors will make presentations as
9 part of today's public testimony.
10 Finally, I will wrap things up with a brief
11 summary of the "state of the world" as we see it.
12 Next slide.
13 In 1990, the California Air Resources Board
14 embarked on an ambitious strategy to reduce vehicle
15 emissions to zero. This objective was to be achieved
16 through the gradual introduction of electric vehicles
17 into the California fleet.
18 The Zero Emission Vehicle requirement for
19 passenger cars has been adjusted twice since then, in
20 1996 and 1998. The underlying goal, however, has not
21 changed.
22 California remains committed to achieving zero
23 emissions performance wherever feasible in the vehicle
24 fleet. The challenge is determining how to achieve
25 sustainable success in the field.
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1 One key thing to keep in mind is that the
2 focus of the ZEV program, throughout its history, has
3 been on long-term benefits. This is not just another
4 control program that makes incremental improvements to
5 some small segment of the inventory.
6 Rather, the ZEV program involves a
7 transformation of our vehicle pollution control
8 strategy, towards vehicles with lifetime durability.
9 This has implications not just for ozone but for air
10 toxics, global warming, water pollution, hazardous
11 waste generation, energy supply and other issues.
12 The ZEV program also is technology forcing.
13 We are already beginning to see its spin-off results in
14 the form of ongoing advances in vehicle and clean
15 energy technologies.
16 These issues will be covered in more detail
17 later on in the presentation.
18 For now, however, I would like to walk through
19 the process that we have followed during the course of
20 our review.
21 I will touch on our goals as staff supporting
22 this review, our activities and some highlights of the
23 extensive public participation in this process to date.
24 Our primary goal throughout the Biennial
25 Review process has been to develop an accurate
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1 portrayal of the status of ZEV technology and the
2 various related issues.
3 To ensure that we address all of the relevant
4 topics, and do so in a fair and evenhanded manner, we
5 wanted to be sure to provide ample opportunity for
6 public review and comment.
7 All of this work has been aimed towards
8 providing a solid factual foundation for the Board's
9 consideration of this complex and controversial issue.
10 Our work began more than one year ago, when we
11 first met with the automakers to discuss what we
12 expected to see covered in their 1999 product plan
13 submittals.
14 At that time, we met with other interested
15 parties to let them know how we planned to approach
16 this effort, how they could fit in and our major
17 milestones.
18 We then embarked on a lengthy period of staff
19 investigation, which included site visits to the
20 manufacturers' research and development facilities in
21 Japan and in Detroit.
22 To provide additional expertise on
23 particularly important issues, we contracted with
24 outside experts to assist us.
25 First of all, we established a new Battery
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1 Technology Advisory Panel, to review battery cost and
2 availability. Dr. Kalhammer and Dr. Anderman, from the
3 Battery Panel, are here with us today and will
4 summarize their findings in a few minutes.
5 We also undertook several other contract
6 efforts. These included, first of all, an analysis of
7 full fuel cycle emissions, by Arthur D. Little, and an
8 analysis of full fuel cycle energy efficiency,
9 co-funded by the California Energy Commission, and also
10 performed by Arthur D. Little.
11 This work formed the basis of the indirect, or
12 upstream, vehicle emission results and the energy
13 efficiency slide that I will present later on.
14 We also funded a review of the secondary
15 economic benefits by the ZEV regulation, by the
16 Institute of Transportation Studies, at UC Davis. They
17 will present their results later on as well.
18 In addition, the ARB has co-funded and
19 participated in an EPRI comparison study of various
20 hybrid electric vehicles. There has been a very active
21 working group directing that effort, and you will hear
22 from them during the public comment portion of the
23 meeting.
24 Finally, ARB is co-funding a review of the
25 possible use of EV battery packs to provide distributed
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1 energy services, which could reduce the effective cost
2 of a battery pack.
3 This study is being prepared by the Institute
4 of Transportation Studies and by AC Propulsion, and
5 they will speak in the public comment period as well.
6 In March of this year, we wrote up a
7 preliminary assessment of our findings at that time and
8 held a workshop to receive public comment.
9 We then revised and expanded the document,
10 released it for review and held a two-day workshop in
11 late May.
12 We received significant public comment at that
13 workshops and later on in writing. We then reviewed
14 all comments, modified the document as appropriate and
15 released it a month ago as the Staff Report for this
16 Board meeting.
17 Throughout this process, there has been a
18 great deal of public interest. I would just like to
19 touch on two aspects, letters from the public and
20 participation of today's EV drivers.
21 There have been some new deliveries, and as
22 you see before you, and as Mr. Kenny mentioned, we have
23 received around 75,000 letters expressing a view on
24 this program. The vast majority have been supportive
25 of the ARB's efforts.
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1 I'd like to share with you one observation on
2 the content of these letters.
3 I mentioned earlier that the ZEV program is a
4 long-term and forward-looking strategy. This seems to
5 have captured the imagination of many citizens.
6 If you open one of those boxes of letters and
7 grab a handful, you soon will run across references to
8 our future here in California, phrases such as: We owe
9 it to our children and future generations, I want the
10 air to be clean enough for my kids' kids to breathe,
11 and it is essential for the health and growth of our
12 children.
13 It is clear that the long-term nature of the
14 program is one key area of emphasis in these letters
15 that we have received.
16 One other noteworthy aspect of the review has
17 been the interest and participation of EV drivers.
18 Unlike during past reviews, when it was just a concept,
19 today there are real vehicles on the road and many
20 people using them on an everyday basis.
21 These drivers are enthusiastic about the
22 vehicles and have used a great deal of their personal
23 time to follow our efforts and sit through the
24 workshops waiting for a chance to speak.
25 The photo on the screen was taken at our March
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1 workshop, where we had some 40 drivers who lined up to
2 give us a rapid fire summary of their experience.
3 That is a row of drivers waiting to speak in
4 the March workshop.
5 The next photo is from the May workshop, where
6 again a large contingent of drivers attended to voice
7 their support for the program. You will no doubt hear
8 from several of the drivers today.
9 Now that we've touched on the process, I will
10 start on the substantive discussion, beginning with
11 some brief background on the program.
12 I will mention the need for air quality
13 improvements, the environmental advantages of ZEVs and
14 the current status of the ZEV program.
15 Why are we looking for ZEVs in the first
16 place?
17 Because health-based State and Federal air
18 quality standards continue to be exceeded. Areas
19 exceeding the Federal one-hour ozone standard include
20 the South Coast Air Basin, San Diego County, the San
21 Joaquin Valley, the Southeast Desert, the broader
22 Sacramento area and Ventura County.
23 With promulgation of the new Federal
24 eight-hour ozone standard, more areas of the State are
25 likely to be designated as non-attainment.
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1 Meanwhile, we can't afford to stand still.
2 Population and economic growth exert continued upward
3 pressure on emissions.
4 That is why the environmental benefits of ZEVs
5 have such appeal. I will speak more specifically about
6 these benefits later on.
7 For now, I will just note that ZEVs have no
8 tailpipe, evaporative or fuel marketing emissions, they
9 have reduced emissions of toxic and greenhouse gases,
10 they have no emission control equipment that can
11 deteriorate or fail, the indirect emissions from power
12 plants are extremely low in California, and ZEVs bring
13 with them benefits to other media as well as clean air.
14 I noted on the previous slide that ZEVs have
15 no emission control equipment that can deteriorate or
16 fail. This graph looks more closely at that point and
17 compares the emissions of a ZEV with those of a LEV II
18 gross emitter.
19 As you can see, the conventional vehicle in
20 failure mode puts out more emissions in two weeks than
21 the ZEV will in 100,000 miles.
22 Next I will touch on the current status of the
23 ZEV program.
24 In 1996, when the program was modified to
25 remove the early deadlines, the ARB entered into a
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1 Memorandum of Agreement with the major automakers. The
2 MOAs set out obligations for the manufacturers and for
3 the ARB.
4 In those agreements, the manufacturers
5 committed, for example, to offset the emission benefits
6 that were lost due to the elimination of the early
7 years of the program, to place 1,800 advanced battery
8 vehicles and to prepare annual product plans outlining
9 how they will comply with the 2003 regulation.
10 Examples of the ARB commitments include
11 marketing EVs to public fleets, making sure that
12 various implementation issues, such as financing,
13 insurance and emergency response, are dealt with prior
14 to the large scale production of ZEVs and also ARB
15 working on infrastructure issues.
16 ARB staff has concluded that the manufacturers
17 and the ARB have met their MOA commitments.
18 The MOAs have not, however, resulted in the
19 anticipated production ramp-up as we approach 2003. In
20 fact, what we are seeing is a ramp-down as
21 manufacturers have curtailed production upon the
22 completion of their MOA requirements.
23 During the 1996 modifications, the ten percent
24 requirement for 2003 was retained. Specifically, for
25 six major manufacturers, ten percent of the passenger
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1 cars and light-duty trucks offered for sale in
2 California must be ZEVs.
3 At least 40 percent of this requirement must
4 be met by ZEVs or full ZEV allowance vehicles. The
5 remaining requirement may be met by other near-zero
6 technologies earning PZEV allowances.
7 For intermediate manufacturers, the entire
8 requirement may be met by partial ZEV allowance
9 vehicles. There is no ZEV obligation for small
10 manufacturers.
11 To provide some sense of what ten percent
12 requirement means, staff has prepared base-case
13 estimates of the number of ZEVs needed for 2003 and
14 subsequent years.
15 There are a lot of assumptions that go into
16 these types of estimates. Our estimates assume that
17 1998 production levels and manufacturer market share
18 still hold to 2003.
19 They also assume that the vehicles produced in
20 2003 have the same range as the vehicles today. This
21 is relevant, because the longer range vehicles would
22 get extra credit and the manufacturers have to build
23 fewer of them.
24 Finally, you need to keep in mind that these
25 are just estimates. The actual numbers will change
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1 depending on how many PZEVs are built, how many
2 vehicles are introduced prior to 2003 and a number of
3 other factors.
4 I want to add a caveat to that. In 2003, to
5 reach four percent, that is about 22,000 vehicles. To
6 reach ten percent, that is 56,000.
7 The requirement is ongoing and increases over
8 time as the range multipliers phase out. The bottom
9 there, in 2008, when the multipliers go away
10 completely, the numbers increase to 38,000 for four
11 percent, and 97,000 to get to the ten percent.
12 Our thumbnail description of the current
13 status of the manufacturers is that they have the
14 technical capability to produce the needed number of
15 ZEVs. They know how to built the vehicles, and they
16 could build more.
17 On the PZEV side, however, some manufacturers
18 will be unable to take full advantage of the PZEV
19 flexibility in the early years.
20 Meanwhile, manufacturers have expressed
21 significant concern regarding EV battery cost, vehicle
22 range and customer demand.
23 You will have a chance to hear from the
24 manufacturers in the hearing.
25 Next, I will go through the major areas that
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1 we investigated during the course of our review.
2 These areas include vehicle technology,
3 battery technology, infrastructure, the EV market, cost
4 and the environmental, energy and economic benefits of
5 ZEVs.
6 Turning first to vehicle technology, we
7 focused the bulk of our effort on those technologies
8 that we expect to be available during the initial years
9 of the ZEV requirement.
10 Thus, we took a detailed look at full function
11 battery electric vehicles, vehicles that go on the
12 highway, from a performance standpoint, as a
13 replacement vehicle, and we looked closely at the
14 partial ZEV, the city and neighborhood electric
15 vehicles.
16 We devoted less attention to fuel cell
17 vehicles because they are not expected to be available
18 in significant quantities until beyond 2003.
19 Battery electric vehicles are the leading
20 near-term candidate to satisfy the ZEV requirement.
21 From a technical standpoint, they clearly are
22 feasible. The vehicles are here today and performing
23 well.
24 For instance, last month the Air Resources
25 Board and the State Department of General Services held
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1 the ZEVent, showcasing various technologies and
2 highlighting the success of the EV-Sacramento program
3 that is placing EVs in public fleets in the Sacramento
4 area.
5 This slide shows the Chairman waving the green
6 flag to start a road rally of EVs that went from
7 downtown Sacramento, past the State Capitol and out to
8 Mather Field and back.
9 Seven models of battery vehicles are on the
10 road and in use today. We had more than 100 vehicles
11 assembled for this event. They are successfully being
12 used in a variety of applications.
13 For most of these vehicles, the real world
14 range is around 70 miles. The GM EV1, which is
15 lightweight and very efficient, achieves ranges in
16 excess of 100 miles, and with the nickel-metal hydride
17 battery, even more.
18 The efficiency of the drivetrain and the
19 complete vehicle continue to improve. Battery cost,
20 however, clearly remains an issue. Dr. Kalhammer and
21 Dr. Anderman will talk about that in a minute.
22 We also looked at fuel cell vehicles. Major
23 development efforts are underway at the auto
24 manufacturers and at many other companies.
25 They are investing significant resources as
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1 they work to commercialize the technology. As I
2 mentioned, however, large volume production of fuel
3 cell powered passenger vehicles is not expected until
4 beyond 2003.
5 The major challenges for fuel cell vehicles
6 include the system cost and the refueling
7 infrastructure.
8 The California Fuel Cell Partnership has been
9 formed to demonstrate fuel cell powered vehicles under
10 real day-to-day driving conditions and address fuel
11 cell commercialization issues.
12 Fuel cell vehicles will be an important piece
13 of the long-term ZEV compliance pathway, and the work
14 of the California Fuel Cell Partnership is intended to
15 hasten their widespread introduction.
16 Turning next to partial zero emission
17 vehicles, the Nissan Sentra CA has been certified by
18 the Air Resources Board as a PZEV. This is the first
19 vehicle to achieve this status.
20 Just what is a PZEV?
21 It is a vehicle that meets several challenging
22 but feasible criteria that collectively result in
23 near-zero emissions.
24 The manufacturer must certify the vehicle to
25 meet the 150,000 mile SULEV exhaust emission standards,
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1 the zero evaporative emission standards and the OBD II
2 requirements for SULEVs.
3 The manufacturer also must extend the
4 performance and defects warranty to 15 years or 150,000
5 miles.
6 A vehicle that meets these criteria earns a
7 partial ZEV allowance of 0.2. Higher allowances are
8 possible for vehicles with other desirable
9 characteristics, such as all electric range, low fuel
10 cycle emissions or the use of advanced components.
11 As was mentioned before, according to
12 manufacturers' testimony at the workshops, some
13 manufacturers will be unable to take full advantage of
14 the PZEV option in 2003.
15 In addition to the Nissan Sentra shown
16 earlier, there are several other vehicles in production
17 that have some PZEV characteristics. They do not meet
18 all of the requirements as marketed today, but they do
19 have some characteristics.
20 The Toyota Prius, for example, has been
21 certified to meet the SULEV standard, and because it is
22 a hybrid, it potentially could earn extra credit for
23 its use of electric drive.
24 Honda, meanwhile, offers the Insight hybrid,
25 as well as an Accord that meets the SULEV standards,
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1 and the Honda Civic GX natural gas vehicle that meets
2 the SULEV standard and also offers low fuel cycle
3 emissions.
4 We expect to see other vehicles offered in the
5 future that also use advanced components. Ford, for
6 example, has announced that its new Escape SUV will be
7 offered as a hybrid in future years.
8 We have also investigated some new categories
9 of vehicles, known as City and Neighborhood EVs. These
10 vehicle types are of increasing interest to the
11 manufacturers.
12 They have a smaller battery pack, which
13 reduces cost. They also have the potential to create a
14 new market niche, so this would be a new vehicle being
15 sold rather than just a replacement for a conventional
16 vehicle.
17 Under the current ARB regulation, all such
18 vehicles are eligible for ZEV credit. They would not,
19 however, be able to earn multiple credits, because
20 their range is not great enough to qualify.
21 You should also note that the various types of
22 vehicles differ in how they would be used and the
23 resulting air quality impact.
24 Of the two new types of vehicles, City EVs are
25 the larger and the more car-like. If you had a chance
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1 in the earlier Board meeting, we had several in the
2 parking lot to look at.
3 They need to meet all Federal crash protection
4 and safety standards. They typically have a top speed
5 of about 60 miles per hour and a test cycle range of 40
6 to 80 miles. Real world range is less.
7 Such vehicles use a battery pack about
8 one-third the size of that used in the larger EVs.
9 Examples of such vehicles include the Toyota e-Com, the
10 Nissan HyperMini, shown here, the Think City and the
11 Honda City Pal.
12 Think has announced plans to market the Think
13 City in the United States beginning in 2002.
14 As you can see, neighborhood electric
15 vehicles, also known as low speed vehicles, are very
16 different and have different characteristics.
17 They fit into a new DOT classification with
18 its own set of safety standards. So, for Federal
19 purposes, these are not considered passenger cars.
20 They are called low speed vehicles, another
21 thing entirely. They have a 25 mile per hour top
22 speed. They can only be driven legally on roads with a
23 speed limit of 35 miles an hour or less.
24 Possible market applications for such vehicles
25 include gated communities, business and college
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1 campuses and similar settings. Examples include the
2 GEM, the Think Neighbor, shown here, and the
3 Bombardier.
4 The next area of staff investigation was
5 battery technology.
6 Batteries make up most of the cost of EVs, and
7 thus, affordable battery packs are crucial for a
8 sustainable market. Because of the importance of this
9 issue, ARB staff contracted with experts to form a new
10 Battery Technology Advisory Panel, and asked the panel
11 to prepare an in-depth review.
12 The objectives of the Panel were to determine
13 the status of advanced battery technology and
14 development programs and assess the prospects for EV
15 batteries for 2003 and beyond.
16 The Panel looked at battery technology, cost
17 and prospects for availability.
18 The scope of the Panel was advanced batteries
19 with EV potential and likely availability in the near
20 term. The review included leading battery developers
21 in North America, Japan and Europe.
22 The Panel also visited domestic and Japanese
23 automakers to gain their perspective.
24 The ARB asked the Panel to concentrate on
25 advanced batteries. The Panel did, however, provide at
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1 our request some comments and perspectives on recent
2 developments in lead acid batteries.
3 Dr. Fritz Kalhammer and Dr. Menahim Anderman,
4 from the Battery Panel, are with us today.
5 I now would like to introduce to Dr. Kalhammer
6 and ask him to brief the Board on the Panel's efforts.
7 DR. KALHAMMER: Good morning, Mr. Chairman and
8 Members of the Board.
9 It is a privilege to report to you briefly the
10 key findings and conclusions of the Battery Technical
11 Advisory Panel that completed its report in June of
12 this year.
13 The Panel has been introduced by Mr. Shulock,
14 so I do not have to belabor this. I do want to show
15 you by way of acknowledgment the members of the panel
16 and others who were critical to the success of our
17 mission.
18 Between three of us, Menahim Anderman, myself
19 and Don MacArthur and also our technical support, Dr.
20 James George, you are looking at more than a hundred
21 years of experience in battery R and D, engineering and
22 also costing and economic evaluation.
23 I do want to acknowledge the Air Resources
24 Board staff from bottom to top for being very open
25 minded and preserving the independence of the Panel,
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1 and last but not least, we all owe a great debt of
2 gratitude, and I think that includes everybody in this
3 room, to the battery developers and car manufacturers
4 that we visited and went back to with many more
5 questions, and they spent a very large amount of their
6 time and they were very patient with us.
7 The batteries that we reviewed are on this
8 slide, and there are no surprises here.
9 The focus of our investigation was on the
10 nickel-metal hydride system, because of its potential
11 for near-term application. It is already being proved
12 in over a thousand cars under the MOA in California.
13 We also looked pretty hard at lithium-ion
14 because of possible advances in performance, and of
15 course, the prospect that these batteries might be less
16 expensive.
17 Lithium polymer was a long shot, but there are
18 some aggressive developments underway in two
19 organizations, so we at least took a quick look at
20 that, also thinking about the future.
21 Of course, lead serves as the baseline,
22 although, as Chuck Shulock was saying, our scope really
23 was to look for advances over lead acid in terms of
24 performance.
25 One thing that you all can note from this
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1 slide is that of all of the organizations on here, and
2 these are truly the leading battery developers in the
3 world, only a single company is from the United States.
4 That is somewhat sad.
5 The next four slides, I do not intend to go
6 into very long. They contain a lot of detail on our
7 technical findings, and they are also in the report.
8 I would just very briefly make one or two
9 comments on each system, and then turn to the four
10 summary graphs that I believe tell the story.
11 First, on lead acid battery, a key point, of
12 course, is that low specific energy, there is no real
13 advance on that, and that is a limitation.
14 Another limitation that is being improved on
15 is the limited life. I will return to that.
16 Advances in lead acid apply mostly to the
17 power, which is now adequate for EV propulsion, and of
18 course, reliability is improving as well, another
19 important factor.
20 Cost is the attraction of lead acid battery.
21 Lead acid, of course, promises to be considerably less
22 expensive than all of the advance batteries.
23 Unfortunately, if you have shorter life, some
24 of the advantage is being offset.
25 Availability, the type of lead acid batteries
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1 that are now in the vehicles in California are being
2 produced in limited quantities, but as I say on the
3 slide, within probably two years these batteries could
4 be produced in the required quantities.
5 Looking next at nickel-metal hydride, the
6 focus of our investigation, the first point to focus on
7 is the much better specific energy performance these
8 batteries are going to have twice as much energy per
9 unit weight as lead acid, a very important
10 consideration, also the long-life potential of
11 nickel-metal hydride is superior to that of lead acid.
12 The batteries have shown very high reliability
13 and safety, very attractive. The problem, of course,
14 is cost. They are very expensive now.
15 A thousand dollars per kilowatt hour
16 translates into is $30,000 for a 30-kilowatt battery,
17 in low production volumes.
18 We looked very hard at the larger production
19 volumes for the kind of 10,000 to 20,000 levels that
20 would be required in 2003 and the years beyond, and you
21 see the costs there, $300 to $350 per kilowatt hour.
22 In the longer term, these costs are going to
23 drop somewhat, but even at 100,000 packs per year,
24 costs are not likely going to drop below these prices
25 here, and these tend to be on the optimistic side.
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1 Whenever we made assumptions, our attitude was
2 let's give the benefit of the doubt and let's make it
3 cautiously optimistic assumption on cost and also on
4 performance.
5 The availability story is quite positive. The
6 technology is essentially ready, but of course, there
7 are no plants right now and there are no commitments
8 for plants to produce these batteries in the numbers
9 that would be required in 2003.
10 We ought to look at lithium-ion batteries, and
11 of course, the attractive point here it the very high
12 specific energy, that means the batteries are going to
13 be light, power is more than adequate.
14 The issue with lithium-ion at this point is
15 still how along they are going to live. Three to five
16 years is probably the best now.
17 Improvements are expected, but what the
18 ultimate potential is, is not too clear. They are
19 rather reliable in the vehicles in California that are
20 now operating on these batteries, in the Nissan
21 vehicles.
22 Safety requires a much tighter electronic and
23 electric control of these systems, but so far the
24 safety has been excellent.
25 The problem again, cost. Right now, these
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1 batteries cost several thousand dollars per kilowatt
2 hour in smaller numbers, that is not the pertinent
3 number, of course, but what is pertinent, what these
4 batteries are going to cost in perhaps 20,000 packs per
5 year, and here you see a pretty wide range.
6 Some manufacturers are fairly optimistic.
7 Others not so. This is probably the range, and the
8 bottomline is, they are not going to be less expensive
9 in these quantities than nickel-metal hydride, which
10 had been one of the hopes when we began this study.
11 There may be materials breakthroughs with
12 these systems, but they're not going to come over the
13 next three to four years in time to make inexpensive or
14 less expensive lithium-ion batteries available by 2003.
15 The technology is really still at the
16 pre-pilot or pilot production stage, and commercial
17 availability is probably four or five years away.
18 Lithium polymer batteries is kind of the dark
19 horse. These systems have gotten a lot of development
20 funding from the US Advanced Battery Consortium, and
21 Canada, actually, and the French group is having an
22 independent effort that is quite aggressive.
23 Of course, the hope is, again, high specific
24 energy. Power should be adequate.
25 Life is a big question right now. There are
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1 just not good answers whether these batteries have
2 enough life.
3 That has to do with the fact that there is
4 metallic lithium in these batteries that needs to
5 cycle. We don't know anything about reliability,
6 because these batteries have not yet been in vehicles.
7 Costs are projected to be, again, about the
8 same as nickel-metal hydride and lithium-ion in the
9 20,000 packs or 30,000 packs per year volume. The goal
10 is less, but we have not seen any supporting basis for
11 these more optimistic assumptions.
12 This technology is probably seven to eight
13 years away, given where it is right now in the
14 development cycle.
15 Now, let me go to four slides to graphically
16 summarize our key findings. The first one will be on
17 performance, the second one on life, the third one on
18 cost and the fourth one on availability.
19 This one, this slide speaks to performance.
20 It is a calculated, by the Panel, a calculated weight
21 of a 30 kilowatt hour battery for a four to five
22 passenger electric vehicle, and there are two legends
23 or keys to these bars.
24 The green bars is the battery weight. If you
25 want 90 to 100 mile range approximately in real life.
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1 The yellow and red bar is for a 50 to 60 mile battery.
2 If you look at this graph, you can see that
3 the lead acid battery suffers from that high -- low
4 specific energy, high weight, and even without
5 accounting for reinforcement of the vehicle for such a
6 heavy battery, such a battery would almost weigh as
7 much as the rest of the vehicle, if you wanted to have
8 90 to 100 mile range.
9 Now, look at the next graph and the next bar
10 set and compare these two bars here, yellow of lead
11 acid, green of nickel-metal hydride, what that says for
12 the same weight, the nickel-metal hydride battery will
13 give you 90 to 100 miles, when lead acid is giving you
14 50 to 60.
15 You can continue this comparison between
16 nickel-metal hydride and lithium-ion and basically say
17 that a nickel-metal hydride battery of say 350
18 kilograms will give your 50 to 60 miles, and
19 lithium-ion will give you 90 to 100.
20 That's the most important performance
21 parameter, particularly after, as I said, that all of
22 these batteries have adequate power for electric
23 vehicles of today.
24 That was a question still several years ago.
25 It is not now.
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1 Battery life, again, this is a calculated
2 number in order to illustrate what the cycle life
3 capabilities of these batteries mean for lifetime
4 electric vehicle miles.
5 Lead acid demonstrated in vehicle now is
6 probably 25,000 to 30,000 miles of life for a single
7 set of batteries. Nickel-metal hydride is more,
8 probably around 40,0000.
9 Lithium-ion is just starting, probably around
10 15,000. Lithium polymer, of course, doesn't have any
11 vehicle batteries yet on test.
12 The interesting questions is, the next area,
13 the battery bench test data, which are the yellow and
14 red bar sections, in lead acid, it indicates that there
15 may be hope for perhaps as much as 40,000 --
16 Excuse me. There is data of as much as 35,000
17 to 40,000 miles on test stands. On nickel-metal
18 hydride, this reaches almost 100,000 miles, calculated
19 from the bench test data.
20 Lithium-ion perhaps 50,000, and over and above
21 that, and it's hard to see in this graph, you see the
22 diagonally yellow stripe bar sections on top, which are
23 hopes, if you will, from module and cell tests that
24 show even greater mileage, or I should say, greater
25 cycle life that could translate into greater mileage,
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1 if these advances can be captured in real-life battery
2 performance.
3 The bottomline from all of this is that the
4 nickel-metal hydride looks awfully good, although it is
5 also fair to say that 100,000 miles has not yet been
6 demonstrated in vehicles, and it is one of the points
7 of controversy, as you are probably going to hear
8 today.
9 Next, cost. That, of course, is a
10 particularly critical issue. The primary findings of
11 the Battery Panel were module costs.
12 This is where we got very good data,
13 particularly on nickel-metal hydride, which were in the
14 focus of our investigation.
15 What you can see is a so-called learning
16 curve. The price in dollars per kilowatt hour per
17 module, which is the right scale, you see from 200 to
18 500, drops, of course, from low volumes of a few
19 thousand packs per year, to high volumes, 100,000 or
20 200,000 packs per year, this are obviously projected
21 data, because no such plant exists, not even a plant
22 for 10,000 packs exists, but we are quite confident in
23 these data, because we spent a lot of time, and there
24 is a lot of consistency between different manufacturers
25 of these batteries.
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1 Now, as you can see, nearly $350 to $400 in
2 the range of 10,000 to 20,000 packs per year is the
3 price for the modules. If you now add the balance of
4 plant, and you calculate for 30 kilowatt hours, what
5 this means for the cost of the battery, you get to the
6 left axis here, and you can see at 10,000 packs per
7 year, around $12,000, for the 30 kilowatt hour battery,
8 at 20,000 packs per year, about $10,000 for the pack.
9 This cost is going to drop when you get to
10 100,000 packs per year. You look at perhaps $8,000,
11 give or take, for a single battery pack.
12 That is pretty much the bottomline, because
13 you would have to get to extremely high numbers, and
14 even then it is a question whether the pack costs will
15 still drop, because at some point you will simply
16 replicate a plant.
17 You are not going to build a bigger plant yet.
18 My final slide is availability, which was an
19 important question, and what you see in front of you
20 here, is a graph that the first Battery Technical
21 Advisory Panel developed in 1995 to understand how long
22 it takes to develop a battery, from where it comes out
23 of the laboratory to the point where it comes out of
24 factory.
25 It is about a ten-year period. If anything,
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1 experience shows that that time is longer.
2 Here you see all the activities that have to
3 be gone through. I will not belabor the points.
4 If we now place the battery systems that we
5 have investigated on that time scale, then we see that
6 this nickel-metal hydride and also the advanced lead
7 acid battery systems are at this point where that front
8 blue bar is, about two to three years away from the
9 availability of such batteries from a plant.
10 The two to three years is mostly the time to
11 decide on the plant, to build a plant, to shake it down
12 and to have mature production from it.
13 Lithium-ion is about four to five years away,
14 assuming that all the other steps can be gone through
15 promptly and there are no delays or no technical
16 hang-ups.
17 Any technical problems with these systems, the
18 lithium systems, are going to increase these times.
19 The lithium polymer battery is clearly seven
20 to eight years away, so not a candidate until, at best,
21 near the end of this decade.
22 That is eventually the bottomline, together
23 with the cost.
24 That completes my report. I will be available
25 all day for questions.
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1 Let me point to Menahim Anderman, who is also
2 a tremendous resource, particularly in battery costing,
3 so we are prepared to answer questions in just about
4 any depths.
5 Thank you.
6 CHAIRMAN LLOYD: Dr. Kalhammer, thank you very
7 much, and thank you and your colleagues for an
8 excellent report.
9 I would like to ask you one question. You
10 made the comment there that the battery manufacturers
11 are not gearing up.
12 DR. KALHAMMER: I'm just trying to reclaim my
13 seat here.
14 I didn't hear the complete question.
15 CHAIRMAN LLOYD: I didn't complete the
16 question.
17 The question was, you indicated that there are
18 no plans for the battery manufacturers at this time to
19 gear up.
20 What is the major impediment to that?
21 DR. KALHAMMER: Cost.
22 CHAIRMAN LLOYD: So, if there are plenty of
23 orders --
24 DR. KALHAMMER: Obviously, cost translates
25 into a perception of lack of market.
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1 I cannot really speak to the market question,
2 since we did not investigate it, but we do know that
3 the cost is the major concern of both the battery
4 developers/manufacturers as well as the car makers.
5 CHAIRMAN LLOYD: Yes, Dr. Burke.
6 BOARD MEMBER BURKE: Thank you.
7 You mentioned in your testimony that the
8 nickel-metal hydride batteries looked good, and then
9 you flipped the page or changed the page to the cost.
10 I was kind of confused on what looked good,
11 what looked good meant, ability to perform, ability to
12 perform versus cost, ability to perform versus
13 durability, I was not quite sure what it meant by
14 looking good.
15 DR. KALHAMMER: If you would like me to
16 answer, today they look good with respect to everything
17 expect cost, I would say.
18 This is not a statement that could've been
19 made with the same confidence five years ago, of
20 course.
21 We now have more than a thousand vehicles in
22 California that have these batteries in them. They
23 have been generally very reliable, which is not
24 trivial, and they have been performing quite well.
25 We did not do an extensive investigation of
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1 the life of these batteries in the current vehicle,
2 because this is still an ongoing investigation, and it
3 actually wasn't too easy to get data on that.
4 Fundamentally, the potential of this system to
5 get large cycle life is very good, because there is
6 very little that can go wrong in these batteries.
7 BOARD MEMBER BURKE: I drove one from the
8 airport to come here.
9 What would it take in your view, other than
10 volume, and volume is always the answer to everything
11 from the business perspective, but if you do not create
12 instant volume, is there another method by which you
13 can reduce the price of these batteries?
14 DR. KALHAMMER: In the volumes that we are
15 looking at for say 2003, as required, 20,000 packs per
16 year, materials cost already dominate the cost of the
17 battery, so you would have to reduce materials.
18 We looked at the prospects of reducing the
19 cost of the materials, and I do not want to go into
20 detail here, but there is very little that can be done
21 in the cost of these materials.
22 It is also true that the materials that are in
23 these batteries are also in consumer market
24 nickel-metal hydride batteries, which use a far larger
25 amount of material than would be needed in 2003.
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1 So, the electric vehicle market or electric
2 vehicle battery market is not going to be a driver of
3 cost for these materials.
4 When you get to very large volumes, 100,000,
5 200,000 packs per year, then the materials needed for
6 these batteries become comparable to the consumer
7 market, and you can hope that you can get some cost
8 driving from the electric vehicle battery market, and
9 that is in large part the explanation why the cost is
10 still dropping from the 20,000 to 100,000 packs per
11 year level.
12 BOARD MEMBER BURKE: Thank you.
13 CHAIRMAN LLOYD: Yes, Ms. D'Adamo.
14 BOARD MEMBER D'ADAMO: One of the slides that
15 you had, and first of all, do we have a copy of your
16 presentation for the individual Board Members?
17 It would be nice to go back and look at some
18 of these things that you presented.
19 On the issue of range, what was the kilowatt,
20 or watt hour that you were utilizing in the slide that
21 looked at range?
22 DR. KALHAMMER: We were using essentially the
23 best, highest efficiency of the current crop of cars.
24 This is the correct slide, of course, that is
25 on there now, and the number that we were using was
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1 approximately 300 watt hours, 300 to 330 watt hours per
2 mile.
3 CHAIRMAN LLOYD: I'm sorry.
4 BOARD MEMBER D'ADAMO: Perhaps the Chairman
5 can help me out here.
6 What I am getting to is perhaps a different
7 comparison, and maybe the Chairman can help me out
8 because he has a technical background and I don't, but
9 I understand that some of the batteries that are
10 currently being used are 70 watt hour, and there are
11 certain battery manufacturers that have a watt hour
12 that is much greater, and the range would be increased.
13 CHAIRMAN LLOYD: I think, Dr. Kalhammer, Ms.
14 D'Adamo characterized correctly, what we are looking at
15 here, is it possible that some of the nickel-metal
16 hydride batteries that are maybe just about out there
17 could actually push the, say the RAV-4, or the Honda
18 EV, up to the 100 mile range, that's the bottomline on
19 some of those?
20 DR. KALHAMMER: When you want to determine
21 what range you get from a battery, of course, you need
22 to know two things, the capacity of the battery, we
23 assume 30 kilowatt hours, and secondly, you need to
24 know the efficiency of the vehicle, how many kilowatt
25 hours does it use per mile, usually one talks about
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1 watt hours, but you could call it kilowatt hours, and
2 you could say it is about say .33 kilowatt hours per
3 mile.
4 If you want to have 100 miles, you need about
5 30 kilowatt hours.
6 Now, the other characteristic that you alluded
7 to was the specific energy, I believe, that simply
8 tells you how heavy the battery is once you've decided
9 how much capacity you want.
10 In this case, the capacity of 30 kilowatt
11 hours, at the specific energy that the batteries have,
12 about 60 watt hours per kilogram, gives you a 500
13 kilogram battery.
14 So, battery capacity and vehicle efficiency is
15 what you need for range. For the battery weight, you
16 need the specific energy.
17 BOARD MEMBER D'ADAMO: What was your range of
18 watt hour that you were utilizing for this chart?
19 DR. KALHAMMER: As I told you, about 330 watt
20 hours per mile, which is pretty much the best that you
21 get in the current testing.
22 Actually, I would propose, this is going off a
23 little bit, but it would help all us if we use, instead
24 of watt hours per mile, the miles per kilowatt hours,
25 just like we use miles per gallon.
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1 That would be a whole lot easier to
2 understand, and the number that corresponds to what I
3 just told you, is about three miles per kilowatt hour.
4 This is a much easier thing to understand,
5 because now you know that with 30 kilowatt hours I have
6 on the battery, I get three miles per kilowatt hour, I
7 get 90 miles.
8 BOARD MEMBER D'ADAMO: Just to clarify,
9 though, the batteries that you were considering are
10 batteries that are currently in use, not batteries that
11 the battery manufacturers have available to them, but
12 the one's that are currently being used on the
13 vehicles?
14 DR. KALHAMMER: Yes.
15 But you have to remember, even if you now have
16 a much more advanced battery with higher specific
17 energy, it does not pertain to this calculation. If
18 you have 30 kilowatt hours and you have a vehicle of a
19 certain efficiency, that's what gives you range.
20 Even if the battery becomes much better,
21 weighs less, then you're going to get the same miles
22 for a battery that weighs less, which is some help, but
23 you have to remember that you pay for the kilowatt
24 hours.
25 Right now, at the time of high cost, if you
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1 want a greater range, you also will have greater cost.
2 If you want to put in a 40 kilowatt battery and get 120
3 miles, for example, then your cost of your battery
4 going up from say $12,000 in 2003, to $16,000.
5 So, in many ways, it is the cost that limits
6 how much battery you can put on the vehicle with the
7 advanced.
8 With lead acid, I think it is basically the
9 weight that limits you, whereby the cost, of course, is
10 significant, too, because you are certainly going to
11 replace your electric vehicle battery, lead acid, at
12 least once over the life of the vehicle, and probably
13 more than once.
14 CHAIRMAN LLOYD: Yes. Mr. Calhoun.
15 BOARD MEMBER CALHOUN: Dr. Kalhammer, staff
16 cited the fact that the changes were made in the
17 program in 1996, and the fact that a Battery Panel had
18 been appointed, and, as I recall, you chaired that
19 particular Panel, and today we're hearing from you
20 again, and I guess my question to you is, were you
21 surprised at your findings in your recent
22 investigation, or were you disappointed?
23 DR. KALHAMMER: The focus five years ago was
24 more on performance and life than on cost.
25 This time we focused primarily on cost,
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1 because the performance and the reliability of the
2 batteries clearly is now pretty well established, and
3 the issue is cost.
4 I was surprised, frankly, that the lithium-ion
5 batteries did not come in at lower cost.
6 I was a little bit disappointed that there was
7 still a significant issue with the lithium-ion
8 batteries on life.
9 So, the focus now is much more clearly on
10 nickel-metal hydride today than it was five years ago.
11 That was somewhat of a disappointment.
12 I was positively, I shouldn't say surprised,
13 but it was confirmed, the expectation that the
14 nickel-metal hydride is a very rugged battery and has
15 good reliability.
16 So, overall, I would say somewhat
17 disappointing not totally surprising.
18 CHAIRMAN LLOYD: Mr. McKinnon.
19 BOARD MEMBER McKINNON: I want to ask you a
20 question, and this may be outside of what you studied,
21 and if it was, let me know that, and we will leave it.
22 I'm sure there are other folks today.
23 It seems like part of what we are evaluating
24 or moving on or looking at today, is whether or not the
25 mandate is moving technology in the direction of a zero
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1 emission vehicle, whether it be electric or fuel cell
2 or whatever, and it occurs to me when you are talking
3 about nickel-metal hydride batteries, that I have often
4 heard that there is some possibility that that
5 technology has led to something that may be used in
6 fuel cell for hydrogen storage.
7 Do you have any other observations in terms of
8 battery development, or if you want to comment on that
9 subject -- are we moving other things forward in this
10 development?
11 DR. KALHAMMER: I think I can provide a
12 partial answer, which I think is still based on the
13 information collected by the Panel.
14 Your first question was, has the mandate moved
15 technology in the direction of viable ZEV technology,
16 and as long as you say in the direction, I would say
17 absolutely, yes.
18 I think you asked the Advanced Battery
19 Consortium and this effort of the manufacturer and the
20 government to develop advanced batteries for the
21 electric vehicles, in my own humble opinion, I don't
22 think it would not have happened as aggressively as it
23 did without the mandate.
24 A lot of the progress particularly in the U.S.
25 comes from there, and if you saw, only one U.S.
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1 company, and do not forget that some of the foreign
2 companies were also funded by the US Advanced Battery
3 Consortium.
4 Every one of the organizations worldwide,
5 including the Japanese developers are very aware of the
6 mandate, and certainly give it credit for having
7 spawned a lot of development.
8 That is one answer.
9 Your other point is a rather specific
10 technical point. Does the nickel-metal hydride battery
11 development help you with hydrogen storage metal
12 hydrides in general?
13 I would say, they are certainly some help, but
14 you must not forget that metal hydride alloys have been
15 investigated for hydrogen storage a long time actually
16 before nickel-metal hydride batteries were developed,
17 so, it is almost the other way around, at least in the
18 beginning, that there may be some fallout still, and it
19 may well happen.
20 The problem, of course, again, is that these
21 alloys are not cheap. So, hydride, hydrogen storage in
22 hydrides, is not cheap, and also tends to be on the
23 heavy side per unit of hydrogen stored.
24 CHAIRMAN LLOYD: Professor Friedman.
25 BOARD MEMBER C.H. FRIEDMAN: You addressed the
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1 materials cost, and if I heard you correctly, you
2 indicated that other than some continued reductions for
3 volume, that would not be vast, but I did not hear you
4 comment on whether we might reasonably anticipate a
5 reduction in the manufacturing process cost by volume
6 streamlining.
7 I gather that the manufacturing process of
8 these batteries is still relatively in its infancy, and
9 with greater experience and perhaps mechanization, or
10 that sort of thing, there might be automation, there
11 might be ways to further reduce the cost to the
12 consumer.
13 Do you think that is a reasonable expectation?
14 DR. KALHAMMER: Yes.
15 I could say this, of course, underlies much of
16 the cost reduction from the $1,000 per kilowatt hour
17 that we have now, to say the $300 to $400 per kilowatt
18 hour for the 20,000 packs per year volume, that is
19 manufacturing cost reduction in good measure.
20 If you want to discuss this more specifically,
21 Dr. Anderman, of course, is an expert in this area, and
22 he covered much of that.
23 Yes, even at 20,000 or certainly 10,000 packs
24 per year, there still is some manual operation, because
25 complete automation does not yet pay-off at that level.
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1 That is why you're gong to get some reductions
2 to the 100,000 packs per year level where you will need
3 a totally automated plant.
4 But it is not realistic to believe that you
5 are going to cut say the $350 to $400 per kilowatt hour
6 in half through automation. That is not realistic, in
7 our view.
8 CHAIRMAN LLOYD: Supervisor DeSaulnier.
9 BOARD MEMBER DeSAULNIER: Dr. Kalhammer, two
10 questions, particularly based on what Matt asked, I
11 anticipate that the auto manufacturers will get up here
12 and say that we have reached diminishing returns in
13 terms of further advances in batteries, and in terms of
14 what Matt asked, if the Board were to remove the
15 mandate, what would happen to the push for further
16 technology improvements for batteries?
17 DR. KALHAMMER: Again, I want to preface my
18 comment here with a caveat that we really did not
19 investigate this question systematically, but we
20 certainly heard a fair number of comments that say that
21 if the mandate were abandoned, and this is the battery
22 manufacturers talking, of course, not the car makers,
23 that would be considered a considerable blow, because
24 they all feel that maybe at the costs that are now
25 projected, there might be some kind of market in the
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1 future, not that they really know, of course, but they
2 definitely would feel that purely psychologically that
3 this abandonment of the electric vehicle would be
4 negative.
5 On the other hand, it is also fair to say that
6 the emerging hybrid vehicle market for nickel-metal
7 hydride batteries in particular, of course, is going to
8 sustain some of that technology development for the
9 specific technology that is needed for hybrids, which
10 is not the same as EVs, although from a materials point
11 of view, it is largely the same.
12 CHAIRMAN LLOYD: Dr. Burke.
13 BOARD MEMBER BURKE: In the battery companies
14 that you discussed this with, was there any attempt to
15 discern whether they were owned or constructively
16 controlled by auto manufacturers?
17 DR. KALHAMMER: I'm not sure how to answer
18 this.
19 They have obviously close ties to the car
20 makers in one way or the other, and to a varying
21 degree, ranging from essentially partial ownership by
22 car makers to complete independence by car makers.
23 So, there is not a single pattern here.
24 Yet, they were all responding to us in a very
25 similar way. So, I would not think that car maker
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1 ownership put any particular bias on any of these,
2 certainly not from what we've seen, which is obviously
3 a very small sliver.
4 BOARD MEMBER BURKE: There are only like four
5 or five, and two we know for sure, one is partially
6 owned by an auto manufacturer, and another one has got
7 one client who is an auto manufacturer, so that is
8 constructive control in the reduction, because, I think
9 that kind of skews the information that you get.
10 If there are only four and two know what the
11 other two are saying, it is not hard to give you what
12 the other two are giving you.
13 I'm not the great conspiracy theory here, but
14 it's obvious to that there are half of the battery
15 manufacturers who are either owned or constructively
16 controlled by the auto manufacturers, that is obvious.
17 DR. KALHAMMER: Well, when you say that it
18 influences the information, of course, I can't --
19 BOARD MEMBER BURKE: I said it could.
20 I did not say it did, but I said it could.
21 DR. KALHAMMER: I think the key point is what
22 information, and since cost is such a central theme
23 here, it is a question of whether the cost information
24 is in any way influenced, and I think we did enough
25 independent work on costing and acquiring materials
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1 cost estimates from other sources, that we feel quite
2 confident that the costs are not affected by any kind
3 of bias.
4 BOARD MEMBER BURKE: So, when my colleague
5 asked you if the automation, the manufacturing process
6 would reduce the cost, you said, yes, which is the
7 logical answer, but then by the time that you got
8 through, you said, yes, it was a modified yes, it would
9 be not a small percentage, because you said earlier
10 that the bulk of the cost of the batteries are the
11 material cost themselves.
12 So, you said it won't not drive it in half,
13 probably just drive it some marginal percentage; is
14 that true?
15 DR. KALHAMMER: Well, let me answer it just
16 quickly, and then ask my colleague, Dr. Anderman, who
17 is really an expert in this area, to add a comment.
18 But you have to be somewhat precise. When you
19 look at the beginning of the learning curve from where
20 we are now to let's say 20,000 packs per year, a lot of
21 that steep decline of costs from 1,000 to maybe 300 or
22 400, is manufacturing, because the materials can
23 already be purchased, because of the consumer market,
24 at consumer market type prices, so there is not going
25 to be that much to that.
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1 Further reductions, eventually at very large
2 volumes might happen due to materials cost reduction,
3 which we have not taken into account in our estimates
4 at really large numbers, that is when the electric
5 vehicle battery market might start driving the costs.
6 I will let Menahim Anderman add his comments
7 here.
8 Thank you for the opportunity.
9 DR. ANDERMAN: I have a couple of comments on
10 the last issue.
11 One, regarding the cost code, the cost code
12 assumes considerable investment in manufacturing that
13 will reduce the cost beyond the materials. We have
14 done independent studies, and we got the number of $240
15 per kilowatt hour for nickel-metal hydride, independent
16 study of the car manufacturer or other battery
17 manufacturers, which happen to be right in the middle
18 of the band of the data that we have got from the
19 supplier, and in that cost assumption, we have material
20 at 75 percent of manufacturing cost, which is way
21 beyond the standard in the battery industry, and we
22 have gross margin of 23 percent, 77 percent,
23 manufacturing cost of 77 percent of sales price.
24 That is with everything, all of the company
25 overhead, the shipment, the warranty, everything else
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1 is 33 percent of price, which is beyond the effort for
2 high volume manufacturing.
3 So, we assume some very aggressive assumptions
4 on the cost of materials, and if you look at the
5 material alone, the three material drivers are the
6 electrodes themselves, the positive and the negative
7 electrodes in the battery, and those all are produced
8 at very, very high volume for the consumer market, and
9 the material used in the EV batteries is essentially
10 the same, bought from the same high volume supplier
11 that are competing in the free market.
12 So, the three main drivers of the material of
13 nickel-metal hydride will go farther down, there really
14 is not base to it. Plus the study done in 1999 was
15 low.
16 I will discourage all optimism for the next
17 six to ten years for numbers below the cost that you
18 have seen are likely to happen.
19 There have been a lot of positive optimistic
20 assumptions to get to that cost, which are reasonable,
21 but still optimistic.
22 That is the first answer.
23 The answer to, what I would like to add on the
24 next question, turn it around and don't forget that the
25 reason the car companies are involved with the battery
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1 developer for producing EV batteries is that it is
2 existent in industrial battery and automotive community
3 refuse to invent and EV battery on their own because
4 they felt it was too risky, and it took the car
5 companies to get involved to get those companies to
6 even start producing EV batteries.
7 So, now it is somehow turned around to say the
8 car companies are controlling those companies, because
9 of the information that we are getting is correct.
10 The one battery company in Germany that some
11 years ago was the largest battery company in the world
12 and is still a very significant battery company has
13 actually dropped out of the race, and it was controlled
14 by a car company, because of lack of belief for viable
15 markets available for full EV.
16 The car companies had to invest to get the
17 battery companies going to develop those pilot lines.
18 CHAIRMAN LLOYD: Dr. Friedman.
19 BOARD MEMBER FRIEDMAN: Dr. Kalhammer, I just
20 need a little quick instruction about battery life.
21 The slide slows the determinate being miles.
22 Is time an independent variable?
23 Does time also by itself also determine
24 battery life?
25 DR. KALHAMMER: That is a very good question.
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1 Of course, the answer is different for each
2 battery system. Time is definitely a factor.
3 There is very little information available,
4 whether batteries really are going to have calendar
5 life of ten years.
6 After all, it would take a ten-year test to
7 verify that. We are not there yet.
8 For some systems, there is reason to believe
9 that calendar life is likely to be very long.
10 Nickel-metal hydride is one.
11 On the other hand, at least up to now, there
12 are some questions on calendar life on lithium-ion.
13 There are also some questions on calendar life
14 of lead acid, by the way.
15 CHAIRMAN LLOYD: So, the crisp answer in that
16 case is?
17 What is the crisp answer?
18 DR. KALHAMMER: The crisp answer to that, for
19 nickel-metal hydride, you probably are not going to
20 compromise the life in miles by limited calendar life.
21 For the other systems, we really do not know
22 yet, but there is concern.
23 CHAIRMAN LLOYD: Even lead acid?
24 DR. KALHAMMER: Even lead acid.
25 CHAIRMAN LLOYD: Yes, Mr. McKinnon and
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1 Professor Friedman.
2 BOARD MEMBER McKINNON: I hate throwing a
3 hypothetical, but I kind of what to sort something out.
4 So, if, for example, I went through a battery
5 plant, and to me it was very close to a prototype
6 plant, in terms of, the place could make a lot of
7 different things, the equipment was specialized but not
8 specialized for mass production.
9 So, if we were to assume for a minute that we
10 were able to have the available machinery, machine
11 tools and manufacturing processes, that cut the
12 material cost to a minimum, and the other costs to a
13 minimum, with that assumed, what would the cost of
14 nickel-metal hydride and some of the materials, what is
15 the maximum that we could gain out of everything other
16 than changes in the materials with nickel-metal
17 hydride, what is the maximum percentage reduction?
18 DR. KALHAMMER: The answer is in the cost
19 curve that I showed you.
20 The blue curve on the one graph, it was making
21 all the assumptions that you are talking about.
22 It was assuming, as Menahim Anderman was
23 pointing out a moment ago, that the materials costs
24 procured for such a plant would be essentially volume
25 production costs, because these materials are traded in
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1 large volumes to the large volume of consumer type
2 nickel-metal hydride batteries.
3 So, there is no other magic in other words.
4 CHAIRMAN LLOYD: Professor Friedman.
5 BOARD MEMBER C.H. FRIEDMAN: I think Dr.
6 Anderman answered my question indirectly.
7 I was struck by the fact that there was only
8 one U.S. battery manufacturer of consequence that you
9 studied, and I think I heard the answer.
10 Thank you.
11 CHAIRMAN LLOYD: I don't know if you saw this,
12 Doctor, the quote in here from the Electric Vehicle
13 Progress, an electric car with a 300 mile range, fully
14 capable, capable of fully recharging in one hour, could
15 be available by 2005, according to Robert Lutz, known
16 to us as a former Chairman at Chrysler, and now of
17 Exide Corporation, which is not in there, and they say,
18 okay, this could be demonstrated by October and in
19 production in five years.
20 Could you comment on that?
21 There may be some people still looking at this
22 market as maybe having a --
23 DR. KALHAMMER: First of all, of course, you
24 have to be very careful as to what the 300 miles means.
25 We are all aware of the fact that you can
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1 drive both conventional and electric vehicles in ways
2 that give you astounding efficiencies.
3 I am reminded that there is this annual
4 mileage contest, or at least there was in the past
5 there was, of conventional cars with a normal gas tank,
6 and they would get a thousand miles.
7 I'm not sure how many people here get a
8 thousand miles.
9 There are these electric vehicle distance
10 competitions where consistently some vehicles get more
11 than 200 miles, but if you take the same vehicle and
12 put on it a representative urban cycle, representative
13 of the types that your own staff is using to evaluate
14 the vehicles, they probably would get 100, in other
15 words, half of it.
16 So, I do not know what the 300 miles means.
17 CHAIRMAN LLOYD: I was not worried about the
18 interpretation but whether the technology that Exide
19 might be developing, are you aware of that?
20 DR. KALHAMMER: The answer to that is, no.
21 I would also submit if that is a technology
22 that is truly novel on the battery side, and no one
23 knows anything about it, then I would say it is at the
24 very earliest ten years away, because it takes that
25 long to take a battery from the beginnings of
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1 technology to a finished product.
2 I have to tell you from my experience, I can't
3 even imagine what kind of battery that should be. I
4 have looked at longer term systems under a different
5 study for ARB, and the kind of systems that offer
6 themselves like lithium sulfur, they are in very, very
7 early stages with far more questions than answers, and
8 certainly a long time away from practical realization,
9 if ever.
10 CHAIRMAN LLOYD: Thank you very much, Dr.
11 Kalhammer and Dr. Anderman.
12 Back to you.
13 MR. SHULOCK: Thank you very much.
14 Once again, thank you, Dr. Kalhammer.
15 The work of the Panel and the cost numbers and
16 cost curves that you saw, that formed the basis for the
17 battery cost information that we used in our cost
18 analysis that I will be talking about in a couple of
19 minutes.
20 They did the investigation to come up with the
21 numbers. We then plugged them in and came up with some
22 vehicle-type numbers.
23 We also looked at infrastructure issues. The
24 public infrastructure continues to expand. Currently
25 there are about 400 public charging stations statewide,
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1 with about 700 chargers and -- thank you very much --
2 she is great.
3 The photo shows a charging installation at the
4 Arden Fair Shopping Mall in Sacramento.
5 Unfortunately, there are still two major
6 competing charging standards and no convergence on a
7 single standard is in sight.
8 Finally, fast charging has been demonstrated
9 and is effective for fleet applications. There is a
10 Daimler-Chrysler EPIC minivan which uses fast charging,
11 and that has been demonstrated for a range of greater
12 than 300 miles per day.
13 Charging equipment for fast charging, however,
14 is expensive.
15 Our fundamental conclusion with respect to
16 infrastructure is that it does not appear to pose a
17 significant barrier to the expansion of the ZEV fleet.
18 Next we turn to what is certainly the most
19 contentious issue, the EV market.
20 There is significant disagreement amongst the
21 various stakeholders regarding the true nature of the
22 EV market. It has proven very difficult for staff to
23 develop reliable estimates.
24 In particular, because at the moment vehicle
25 ability is limited, there is no easy way to assess
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1 existing demand as we speak today, so this greatly
2 complicates the projection of future demand.
3 Nonetheless, the ability to successfully place
4 the number of vehicles required in the regulation is
5 one of the key issues facing you today.
6 I will briefly summarize some of the main
7 points, but rest assured, you will hear a great deal of
8 discussion on EV marketing from other witnesses over
9 the course of this Board meeting.
10 From the manufacturers' standpoint, the
11 limited response to EVs when they were available
12 initially is powerful evidence of limited customer
13 demand.
14 The manufacturers contend that cost, range and
15 recharge time are significant barriers to customer
16 acceptance and that when faced with a choice, customers
17 will choose other more attractive options.
18 EV advocated in our workshops and other public
19 comment presented markedly different views. They argue
20 that the initial demand for EVs during those early
21 years was constrained by a difficult leasing process as
22 well as by lack of advertising and manufacturer
23 emphasis.
24 They believe that the market needs time to
25 build. In particular, in the public fleet sector,
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1 which as you all know moves slowly when you talk about
2 requests and budgets and then finally having money
3 available to do something, so in the public fleet
4 sector, we are only beginning to see the results of
5 earlier efforts.
6 Then finally, EV advocates point to current
7 waiting lists as examples of evidence of demand that
8 there is no product available to keep the momentum
9 going.
10 From staff's standpoint, we have concluded
11 that, first of all, there are many potential
12 applications that could be well served by EVs given
13 competitive pricing.
14 We recognize, however, that placement of the
15 vehicles in these applications will be challenging
16 given the competing choices available to consumers.
17 This is one area where cooperative efforts
18 among the automakers, State government, EV supporters
19 and other interested parties could prove fruitful in
20 trying to move the placement of these vehicles.
21 Several things are needed in order to take
22 full advantage of the available market applications.
23 First of all, EVs must be available at prices that are
24 competitive on a life cycle basis with those of similar
25 conventional vehicles.
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1 In addition, there needs to be continuity, a
2 smooth orderly build-up from current levels to
3 increased market penetration. This sort of boom and
4 bust cycle doesn't increase consumer confidence, so
5 what we are looking for and what we think is necessary
6 is just a smooth penetration.
7 Several vehicle platforms must be available in
8 order to meet customer preferences and satisfy
9 different needs.
10 Public education is important to inform
11 consumers as to the vehicles that are available and
12 what they can and can't do.
13 Finally, having vehicles available to retail
14 customers as well as to fleets would expand the sales
15 base.
16 Market demand is closely related to our next
17 issue, cost.
18 I mentioned that in looking at the market, we
19 are saying that the vehicles need to be available at a
20 competitive cost, so obviously cost is relevant as to
21 what it means to do that.
22 We have developed a simplified methodology
23 that is intended to show the relative cost over the
24 entire vehicle type life of various vehicle types. So,
25 this is a way to try and compare cost in the various
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1 vehicles.
2 In order to do that, many assumptions must be
3 made. For example, you need to take into account the
4 cost of the initial battery, the cost of the
5 replacement battery, how much it costs to put in a
6 replacement battery, the cost of the vehicle itself,
7 price of gasoline and electricity, vehicle efficiency,
8 maintenance cost, all of these things will affect the
9 final cost of the vehicle.
10 In our work, we drew upon, to get these
11 assumptions, we drew upon information from other
12 published reports wherever possible. We also drew upon
13 information from manufacturers.
14 So, we took a very careful look and tried to
15 generate the best assumptions that we could based upon
16 the information that is out there.
17 Overall, in trying to characterize our
18 assumptions, I would say that we were fairly
19 conservative looking at 2003 and the early years, that
20 we didn't assume a lot of progress beyond what is
21 currently known.
22 We feel that those numbers are fairly
23 conservative. Looking at volume production in future
24 years, we were a little more optimistic, I think
25 similar to what Dr. Kalhammer described in their part
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1 of the discussion, we used what we could consider
2 optimistic but plausible assumptions for volume future
3 productions.
4 So, the 2003 we think is pretty conservative.
5 Volume is a little more optimistic but still
6 reasonable.
7 The details of our methodology and our results
8 are given in the staff report. This morning, I'll
9 provide just an overview of our findings and a few
10 examples to illustrate the points.
11 One basic message is that in the near-term
12 ZEVs will be more expensive than other comparable
13 vehicles.
14 This is due to the cost of the battery, plus
15 the added cost of the vehicle, due to the low
16 production volume. Just as you were discussing on
17 batteries, the way that volume leads to reduction, the
18 same thing is true for the rest of the vehicle.
19 ZEVs are expected to be cheaper to operate
20 than conventional vehicles due to lower fuel costs and
21 lower maintenance costs.
22 These operating cost saving do not, however,
23 fully offset the higher initial cost in the near-term.
24 Because vehicle prices are set in a
25 competitive market, staff does not expect that
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1 manufacturers will be able to recover the full cost of
2 the vehicle through the prices charged to consumers.
3 In high volume production, the picture
4 changes. Under the optimistic but plausible
5 assumptions that I mentioned, high efficiency battery
6 EVs could become cost competitive with comparable
7 conventional vehicles in high production volumes.
8 This slide provides some examples of near-term
9 incremental costs, with a lot of information that I
10 will just hit on a couple of things.
11 By incremental cost, we mean the extra cost of
12 a specific vehicle as compared to a SULEV of similar
13 size. So, these numbers deal only with the upfront
14 cost of the vehicle.
15 They don't take into account any operating
16 cost savings over time.
17 The main thing that we wanted to illustrate
18 here is that the total incremental cost for the
19 vehicle, so the right-hand column, ranges from about
20 $7,000, $7500, for a lead acid CEV to more than
21 $20,000, down at the bottom, for a freeway capable,
22 long-range nickel-metal hydride vehicle.
23 This slide presents similar information but
24 for future vehicles in volume production. By volume
25 production, similar to what Dr. Kalhammer used, we mean
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1 100,000 vehicles per year or more.
2 First thing to notice is that the numbers here
3 are quite a bit smaller, over on the right-hand column.
4 Volume production certainly makes a difference.
5 Another point to bear in mind is that the
6 efficiency of the vehicle and the range of the vehicle
7 also are very important when you're looking at cost.
8 The reason is that higher efficiency and lower
9 range allow for smaller battery packs, which decrease
10 the cost.
11 So, for example, the highest cost over here,
12 $9,980 for an MOA-type four-passenger vehicle, that is
13 for a vehicle with efficiency of today's MOA vehicles.
14 If you compare that to the high efficiency
15 vehicles that are shown above, in the middle of the
16 chart, you can see that a hundred mile range high
17 efficiency vehicle is less expensive, and the 60-mile
18 range vehicles are considerably less expensive.
19 Again, making the vehicles more efficient and
20 lowering the range, reduces the cost.
21 Once again, these numbers are for initial
22 costs only and do not take into account any operating
23 cost savings.
24 The next slide says that when you do include
25 operating cost, the relative cost of electric vehicles
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1 improves.
2 This slide shows that for volume production,
3 this is not 2003, this is volume production in future
4 years, shows the comparative life cycle cost per mile
5 over the entire life of the vehicle.
6 So, if you look, for example, at the 60-mile
7 range, high efficiency vehicle, there is a lead acid
8 and nickel-metal hydride version, you see that the cost
9 per mile is 7.9 cents and 8.2 cents, that compares
10 favorably to the PZEV, up at the top, at 7.8 cents.
11 So, what this is saying, this is illustrating
12 my point that with some of our assumptions, these
13 vehicles can become competitive in future years.
14 One other point to notice here is the relative
15 cost of the lead acid and the nickel-metal hydride
16 60-mile vehicles. During our staff work and workshops,
17 there was considerable discussion of the relative cost
18 of lead acid and nickel-metal hydride.
19 Lead acid has a lower first cost but also a
20 shorter life, so, therefore, you need to replace the
21 battery pack more often.
22 In our cost analysis, using our basic
23 assumptions, it turns out that for vehicles with the
24 same range, so what you are looking at there, the life
25 cycle cost for lead acid and nickel-metal hydride
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1 vehicles is pretty much the same.
2 Lead acid starts out with an advantage due to
3 its lower initial cost, but that advantage is used up
4 by the need to replace the battery pack more often.
5 One note, the life cycle cost numbers for the
6 PZEV and hybrid vehicles, so the gasoline vehicles,
7 have been revised slightly since the publication of the
8 staff report.
9 There was a minor calculation error in the
10 staff report. We have an errata sheet out on the table
11 and it has been distributed on the Web that explains
12 this.
13 It is a very, very minor difference. So, we
14 have not bothered to revise the graphs that we have in
15 the staff report, because if you are looking at a
16 graph, you can't see it, but these numbers are slightly
17 updated.
18 So, to summarize, battery electric vehicles
19 will be significantly more expensive in the near-term
20 but could be cost competitive in volume production.
21 Next, I will speak to the environmental,
22 energy and economic benefits of ZEVs.
23 ZEVs provide a range of benefits. First of
24 all, there are the gold standard for vehicular air
25 pollution control.
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1 They reduce both criteria and toxic pollutant
2 emissions to the maximum extent feasible.
3 High efficiency ZEVs and hybrids also cut
4 emissions of carbon dioxide and other greenhouse gases.
5 I will discuss these points in more detail in
6 a moment, but they are not the only benefits.
7 ZEVs also have the potential to reduce
8 community level impacts. Research in the South Coast
9 Air Basin has shown that mobile sources are the
10 greatest contributor to carcinogenic risk from air
11 pollution in the Basin.
12 Mobile source pollution from highway traffic
13 has the greatest effect on nearby neighborhoods. Thus,
14 reduction in toxic emissions from motor vehicles can
15 help address community and neighborhood level public
16 health concerns.
17 ZEVs minimize the multi-media impacts of
18 vehicle operation, eliminating the need for upstream
19 petroleum refinery, storage, delivery, so there's
20 various multi-media benefits.
21 ZEVs also provide energy diversity and reduce
22 energy demand, and they also have secondary economic
23 benefits.
24 Our emission benefit analysis relied on two
25 primary sources, the EMFAC2000 model and contract work
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1 performed on our behalf by Arthur D. Little.
2 This next slide presents the bottomline. On a
3 per vehicle basis, ZEV emission reductions are
4 significant.
5 ZEVs are much cleaner than even the cleanest
6 conventional vehicle. This is true even when you take
7 into account the upstream emissions, what we call
8 indirect emissions, from the power plants that generate
9 the electricity used by the EV.
10 On a fleetwide basis, looking at the impact in
11 tons on the entire fleet, ZEV emission reductions are
12 modest in the near-term but grow over time.
13 This next slide shows the vehicle reduction in
14 NMOG emissions. Direct emission, those on the
15 right-hand part, are those from the vehicle itself,
16 both tailpipe and evaporative.
17 For battery electric vehicles, direct
18 emissions are zero.
19 Indirect emission are those that result from
20 vehicle fueling, electricity generation for the battery
21 vehicle or the gasoline production and transport for
22 other vehicles.
23 As you can see, if you total direct and
24 indirect emissions, battery vehicle emissions of NMOG
25 are far below those of any of the other vehicles.
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1 These calculations, by the way, are for the
2 South Coast Air Basin, but since it's on a per vehicle
3 basis, I guess it doesn't matter, so, never mind.
4 The next slide presents similar information
5 but for NOx emissions. I will note that these numbers
6 have been revised slightly from those shown in the
7 staff report, again, as discussed on the errata sheet.
8 As can been seen from th is graph, NOx
9 emission are much lower for the battery vehicles.
10 The next slide shows air toxics. Let me -- I
11 guess I haven't shown or talked about the vehicles that
12 we're considering here. Let me touch on that for a
13 second.
14 At the top is the battery vehicle. Next is a
15 PZEV SULEV. Next is a PZEV hybrid, non grid. That
16 means something like an Insight or Prius, that doesn't
17 plug into an electricity grid, but all of its energy
18 comes from the gasoline tank.
19 Next is a SULEV. Next is a SULEV with LEV II
20 deterioration rate. What that means is let's assume
21 that the vehicle deteriorates a little more rapidly
22 than we think. What happens if we are wrong,
23 essentially.
24 That says if we assume a higher deterioration
25 rate, similar to what we see for older vehicles, what
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1 would the emissions be?
2 Finally, at the bottom, is the model year 2002
3 vehicle. So, for all of the pollutants, those are the
4 vehicles that we looked at.
5 Once again, as you can see here, as was the
6 case for the other pollutants, the battery vehicle
7 emissions are substantially below those of all of the
8 other vehicles.
9 Finally, this slide shows CO2 emissions.
10 These are presented in a slightly different format,
11 because this information comes from an energy
12 efficiency analysis performed by Arthur D. Little.
13 I will let you note right away that these
14 results have been refined from the results presented in
15 the staff report.
16 They show a further reduction in the electric
17 vehicle emissions of about 20 percent as compared to
18 the graph that was in the report.
19 What this is due to is a change in the assumed
20 mix of power plants. Essentially the contractor felt
21 that there were some better assumptions that could be
22 made.
23 At our workshop, the contractor mentioned
24 this, and this has been shared with the working group,
25 but I would like to emphasize that this is actually the
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1 first time that these numbers have been publicly shown.
2 So, others in the audience would not have had
3 a chance to digest them or respond to them. So, there
4 is a minor difference, but it is a difference of about
5 20 percent.
6 What this shows is that the graph of total CO2
7 emissions over the entire fuel cycle. By fuel cycle, I
8 am referring to the emission impact from fuel
9 extraction, production, distribution and then use in
10 the vehicle.
11 This is, you start way at the well-head and go
12 all the way to the vehicle going down the road, what is
13 the CO2 impact over that entire cycle.
14 These estimates represent marginal emissions
15 in the South Coast Air Basin in 2010.
16 Finally, the light green portion of the bar,
17 up on the right, represents uncertainty due to varying
18 projections for fuel economy. Obviously the fuel
19 economy that you assume makes a difference here.
20 Is there a question?
21 BOARD MEMBER BURKE: Does that take into
22 account the downstream CO2 emissions caused by when you
23 get rid of the battery?
24 MR. NASH: I'm with Arthur D. Little.
25 The battery recycling energy impacts aren't
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1 considered, nor are the energy impacts from production
2 facilities, tanker ships or building the vehicles.
3 Those have been looked at in other studies and
4 do not vary greatly amongst the fuel choices.
5 BOARD MEMBER BURKE: I think the Board would
6 be interested in the impact of that figure on electric
7 cars.
8 If it makes the number go up significantly, it
9 changes the picture.
10 MR. NASH: Certainly.
11 That number also is subject to a lot of
12 assumptions on the lifetime, of recycling, whether lead
13 or nickel-metal or lithium is used.
14 BOARD MEMBER BURKE: But that is information
15 that they would need in order to make an informed
16 decision.
17 If you look at this chart, and I will not say
18 anything about the South Coast chart, because Mr. Chung
19 is sitting here, and he'll beat me to go home, but if
20 you have a significant -- and I don't know if it is or
21 isn't, but it is a question, everyone keeps telling me
22 that the downstream effect of the destroying of these
23 batteries is significant.
24 Nobody has told me so far how significant.
25 MR. NASH: There was a study done about four
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1 years ago on the toxics and criteria pollutant impacts
2 from recycling all of the batteries, but that didn't
3 include CO2.
4 BOARD MEMBER BURKE: Thank you.
5 MR. SHULOCK: As I was saying, the light green
6 portion has to do with varying assumptions for fuel
7 economy.
8 As you change the fuel economy on the vehicle,
9 certainly the related CO2 emissions will change, so
10 that showed a couple different set of assumptions.
11 As shown, electric vehicle CO2 emissions are
12 less than the other technologies evaluated, using the
13 assumptions that we've talked about.
14 Next, I would like to turn to fleetwide
15 emissions.
16 This slide shows the emission reductions in
17 tons per day in the South Coast Air Basin for various
18 scenarios.
19 The details of the scenarios are in the staff
20 report. I won't belabor them here. They are just
21 variations on 10 percent.
22 The point to be made here is the 2010
23 reductions are modest. They range from about 1.2 to
24 1.9 tons per day, as compared to the baseline, for
25 various versions of a ten percent ZEV regulation.
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1 If you look at the 2020, the emission
2 reductions grow. For scenarios one, two and three,
3 which represent the ten percent requirement variations,
4 the reductions range from about 2.9 up to 3.5 tons per
5 day.
6 We also did another scenario, which is
7 scenario four up here, which models an aggressive
8 ramp-up, such that in 2020, 50 percent of the vehicle
9 fleet are ZEVs.
10 Under those assumptions, the reduction is
11 almost of 12 tons per day, and this is a decrease of
12 more than 30 percent from baseline level.
13 So, this is really driven by vehicle
14 penetration. When you have small numbers of vehicles,
15 the tonnage results are modest. As you get more
16 vehicles out there, the tonnage results pump up.
17 Now that we have discussed cost and emission
18 reductions, the next question to be touched on is
19 cost-effectiveness.
20 For near-term vehicles, the cost per ton of
21 criteria pollutants reduced will be high relative to
22 other ARB programs.
23 As vehicle costs decrease, so if you look out
24 into the future, or as gasoline prices increase, which
25 certainly has an effect, cost-effectiveness improves.
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1 In volume production, the cost of ZEVs can be
2 similar to that of conventional vehicles on a life
3 cycle basis, and in that instance, the emission
4 reductions, if the vehicles are cost-competitive, the
5 emission reductions from the ZEV is in essence free,
6 and cost-effectiveness is not an issue.
7 So, short term, you have one picture, and
8 long-term, the picture could change.
9 Next I would like to discuss the energy
10 benefits of ZEVs. Vehicles powered by grid electricity
11 increase the diversity of California's transportation
12 energy system.
13 This reduces the State's dependence on foreign
14 oil and contributes to greater stability in the overall
15 transportation fuels market.
16 ZEVs have the potential to be powered by
17 renewable sources of energy, such as wind, hydropower
18 or solar energy.
19 Finally, advanced battery ZEVs and hybrid
20 electric near-ZEVs are also highly efficient, reducing
21 absolute energy demand per mile of vehicle operation.
22 This next graph illustrates the point. This
23 is looking at fossil fuel energy consumption, per
24 vehicle, once again, fossil fuel per vehicle.
25 As you can see, total energy consumption of
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1 fossil fuel resources on a per mile basis by electric
2 vehicles is lower than all other technologies and fuel
3 options.
4 Once again, the green portion at the end of
5 the bar represents the range of energy consumption
6 based on different assumed fuel economies.
7 Given recent shortfalls in electricity supply,
8 you may questions regarding the impact of electric
9 vehicles on electricity demand.
10 In short, there would be no observable effect.
11 First of all, the amount of energy needed for
12 EVs is trivial compared to the statewide total supply.
13 Just some calculations here, 20,000 EVs would
14 use only four/ten-thousandths of one percent of 1999
15 annual demand, and six/one-hundred-thousandths of one
16 percent of available capacity. So, these numbers are
17 quite small in the context of the overall grid.
18 Moreover, and perhaps more importantly, most
19 EV charging is off-peak, and therefore, would not
20 contribute to peak demand shortfalls.
21 In fact, EV demand can really would work in
22 the other direction. If you have EVs charging off-peak
23 and using that off-peak power, they can help pay for
24 additional needed peak capacity.
25 So, from an energy use standpoint, off-peak EV
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1 demand is really not an issue.
2 Next we will cover economic benefits. The ZEV
3 requirements have lead to advances in technology.
4 Because of their high technology leadership, California
5 companies have the technical and scientific capability
6 to play significant roles in the design, development
7 and production of advanced technology vehicles.
8 To take a more rigorous look at this issue,
9 ARB contracted with the Institute of Transportation
10 Studies, at UC Davis, to study what we call, they call,
11 the secondary benefits of the ZEV mandate.
12 Dr. Ken Kurani, of ITS, is here to briefly
13 present their findings.
14 We are on the home stretch. He will present
15 his findings, and when he completes his work, I have
16 just a few wrap-up comments, and then we will be
17 finished with the staff presentation.
18 Dr. Kurani.
19 DR. KURANI: Good morning. My name is Ken
20 Kurani. I'm a Research Engineer at the Institute of
21 Transportation Studies, at UC Davis.
22 I would like to thank you, Mr. Chair, and the
23 Members of the Board, for the opportunity this morning
24 to quickly summarize the results of our study.
25 This was done under the direction of Dr.
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1 Andrew Burke, at ITS, Davis, and with the assistance of
2 Erin Kenney, at Westart-CALSTART.
3 I suppose we need to first of all identify
4 what we mean by secondary benefits. We can talk about
5 what the primary benefits are, which, of course, are
6 the placement of zero emission vehicles on the roads,
7 streets and highways of California and the attendant
8 air quality and energy benefits that Chuck has just
9 described.
10 Secondary benefits are then almost anything
11 else. Since that carries a wide variety of things, let
12 me list just a few of the specific types of secondary
13 benefits that we addressed.
14 These include government and industry programs
15 and consortia related to EVs but that also have other
16 research and policy components to them, new economic
17 activity related to production zero emission vehicles,
18 advances in non-electric vehicles that come out of
19 advances in zero emission vehicles, new emissions
20 programs outside of California, given constitutional
21 arrangements between Federal and State governments on
22 what types of emission programs are permitted in other
23 states depend on what happens in California with its
24 zero emission vehicle program, development of electric
25 low speed travel modes, a number of applications in
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1 electric utilities, and non-EV applications of advanced
2 battery, electric motors and electronics.
3 And finally, I will summarize these impacts by
4 taking an overall invented activity and innovation.
5 Let's go down the list and give you a few
6 examples. Of course, one set of consortium programs
7 started specifically for zero emission vehicles was the
8 U.S. Advanced Battery Consortium, the Advanced Lead
9 Acid Battery Consortium, EVAA and the Japanese Electric
10 Vehicle Association.
11 In the time period of 1991 to 2002, we
12 estimate that the USABC and ALABC will have spent over
13 $500-million on developing advanced batteries.
14 Another set of consortium programs not
15 initiated primarily for ZEVs but have a strong electric
16 vehicle component to them include all of the DARPA,
17 PNGV, focused primarily on fuel, efficiency, and of
18 course, the California Fuel Cell Project, all of these
19 programs have significant electric vehicle, hybrid
20 electric vehicle or fuel cell electric vehicle
21 programs.
22 Westar-CALSTAR performed a survey of companies
23 in California with ZEV-related economic activity, and
24 this is just one of their results.
25 From 22 such companies doing business in
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1 California, the total sales in California, from 1990 to
2 1999, were on the order $188-million. They estimated
3 their sales to be $65-million in the year 2000, and
4 another $250-million in the next coming three years.
5 Turing your attention to low emission vehicle
6 programs in other states. The National Low Emission
7 Vehicle Program was initiated in response to requests
8 for the California ZEV program to be put into place in
9 states in the Ozone Transport Region.
10 The Ozone Transport Region is the northeastern
11 states, stretching from the Washington, DC,
12 metropolitan area, up through Maine.
13 States there requested that they be allowed to
14 adopt California's Low Emission Vehicle Program,
15 including the ZEV mandate.
16 The National Low Emission Vehicle Program was
17 a negotiated settlement between the Federal EPA, the
18 car companies, the states and environmental interests.
19 It does not include zero emission vehicles, but it does
20 allow the Federal EPA to require cleaner conventional
21 vehicles sooner than it would have otherwise been able
22 to.
23 The benefits for the Ozone Transport Region
24 have been estimated by one EPA study on the order of
25 496 tons per day in NOx reductions, and 311 ton per day
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1 in non-methane organic gas reductions.
2 In California, what this means is that
3 vehicles brought into the state by residents of the 49
4 states moving to California with vehicles they bought
5 outside of California would be bringing in cars that
6 are cleaner than they otherwise would have been.
7 The four states in the Ozone Transport Region
8 that still wish to adopt California's program rather
9 than the National program, are New York, Maine, Vermont
10 and Massachusetts.
11 The decision, of course, that you make today
12 are being watched with great interest by
13 representatives of those states.
14 If they can sustain ZEV requirements in their
15 own states, this will nearly double nationally the
16 number of zero emission vehicles required.
17 Historically, California has represented about
18 ten percent of light-duty vehicle sales. Combined,
19 these four states represent about seven to eight
20 percent.
21 One way to get to large scale production is
22 to, of course, require more ZEVs in California.
23 Another way is require ZEVs in other states, and these
24 states have said they desire to have California's
25 program, complete with ZEVs.
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1 Another development since 1990 and 1991 has
2 been that of low speed electric vehicles. These
3 include bicycles and conversion kits for bicycles,
4 scooters and motorcycles, neighborhood electric
5 vehicles, city electric vehicles and three-wheeled
6 motorcycles.
7 The neighborhood electric vehicles in
8 particular have been codified now in the National set
9 of vehicle definitions. They are what are known now as
10 low speed vehicles.
11 One example of the growth in market for these
12 types of vehicles is the chart shown here for electric
13 bikes and scooters. This is worldwide sales.
14 The source for this is a report done by Frank
15 Jameson of the Electric Battery Bicycle Company.
16 The first two years are just aggregate sales
17 for the entire world. The later years we have broken
18 it down by regions.
19 The bottom, light purple, is China, and next
20 is Japan, and Taiwan, and here the U.S.
21 That shows since 1996, growth in electric
22 bikes and scooters has increased from about 160,000
23 units to over 600,000d units, and the sales are also
24 increasing in the U.S.
25 These modes plus low speed vehicles, city EVs,
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1 have all benefitted by advances in traction batteries,
2 electronics and motors that were intended primarily for
3 the fully freeway capable zero emission vehicles.
4 In addition, these other vehicles incorporate
5 materials advances. All of the city electric vehicles
6 use aluminum space frames and plastic body parts to
7 achieve light weight, and therefore, longer range, with
8 smaller batteries.
9 Industrial consumer applications of advanced
10 batteries, ultracapacitors and pulse power batteries
11 are used to meet peak power demand.
12 One example is in the hybrid electric vehicles
13 where these devices are used for peak power for
14 acceleration, and equally importantly, peak power
15 devices are required to get the maximum efficiency out
16 of regenerative braking.
17 That is, braking is also a high power, high
18 energy per time activity, and in order to capture all
19 of the possible energy out of regenerative braking, you
20 need a high power device.
21 Zinc-air batteries. We see these, of course,
22 real popular in camcorders, laptop batteries, laptop
23 computers, cellular phones.
24 As a class of things specifically still used
25 in zero emission vehicles, we have the large prismatic
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1 nickel-metal hydride batteries and the lithium
2 batteries.
3 An early contender for use in EVs that we
4 don't see too much any more because of the toxicity of
5 bromine is the zinc bromine battery.
6 The next slide I list a few of applications of
7 these in particular, the nickel-metal hydride, the
8 lithium and the zinc-bromine.
9 Battery electronics aid in utility
10 applications for load leveling, power quality and clean
11 energy.
12 In particular, many of the clean energy
13 technologies, such as wind and solar, have a very
14 strong daily pattern. You only generate solar when the
15 sun is shining, and of course, you may need some
16 storage capacity to get you through your nighttime
17 energy needs.
18 Perhaps the largest potential market for these
19 advanced batteries outside of zero emission vehicles
20 lies in automotive SLI batteries. This is the starter
21 battery in the cars that we drive today.
22 This is a very large market. Annual new and
23 used SLI battery market is estimated to be valued at
24 about $5-billion.
25 The ratio of replacement batteries to new
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1 batteries is about five to one, which means that
2 batteries in the fleet of vehicles, starter vehicles,
3 turns over much faster than the fleet itself does.
4 There are several things making these advanced
5 batteries attractive for the standard SLI application.
6 One is the movement by the automobile
7 manufacturers who would very much like to move to
8 higher power systems on board conventional vehicles.
9 Right now we have 12-volt systems in our cars.
10 The preferred option out there I think is to move to a
11 42-volt system. A 42-volt lead acid battery is a big
12 chunk of lead, and a lighter battery, which we could
13 get with the nickel-metal hydride or any of the others,
14 because they have higher power density and higher
15 energy density, would be a smaller, lighter battery and
16 still a higher voltage application.
17 In addition to the SLI market, there are also
18 industrial markets. The two big pieces of that are
19 communications and uninterruptable power supplies for
20 hospitals and computer systems like what have become so
21 prevalent with the growth of the Internet.
22 Non-EV applications, but still vehicle
23 applications, as opposed to the consumer and industrial
24 applications that I just talked about, include things
25 like the replacement of all sorts of auxiliary systems
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1 in conventional cars.
2 These include things like power steering,
3 power brake systems, things that are run by belts and
4 hoses and pumps. All those belts, hoses and pumps that
5 wear out and break can be replaced by electric motors.
6 This is already happening in some vehicles.
7 The Honda S2000 uses an electrically operated power
8 steering system.
9 And in hybrid electric vehicles, which have
10 the option of either operating off electric or
11 conventional motor, most of those systems will run
12 their auxiliaries with electric, demonstrating that
13 there is a belief that these electrically actuated
14 systems, rather than mechanical actuated systems, will
15 be more reliable over the longer term and probably will
16 even cost less.
17 To summarize, overall inventive and innovative
18 activity around electric vehicles, we took a look at
19 patent activity.
20 The chart shows you the results of a search of
21 the United States Patent and Trademark Office database
22 for electric vehicles.
23 The yellow line is the number of patents that
24 have the phrase electric vehicle or electric vehicles
25 in their abstract.
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1 The light blue bars are the total number of
2 patents in which that phrase appears anywhere.
3 Clearly something happened in and around 1990
4 and 1991, given the length of time it takes to file
5 patents.
6 Throughout the 1980s, there had been a
7 Federally-funded program for electric and hybrid
8 vehicles. Many of the auto manufacturers had their own
9 programs outside that Federal program.
10 But overall patent activity remained low. We
11 got to 1991, and what I cannot show you on the chart is
12 not only the tremendous growth in the numbers of
13 patents, but also who was filing.
14 The patent numbers were low throughout the
15 80s. We can identify the Federal Government, Federal
16 DOE were the prime recipients of patents.
17 In 1990, we start to see all kinds of other
18 companies coming into the patent activity. In fact, to
19 highlight the degree of change, let me give you two
20 things.
21 One is the comment up there, looking only
22 since 1980, 81 percent of all EV related patents issued
23 since 1980 have been issued since 1991, as it took us
24 11 years to get the first 19 percent and only 9 years
25 to get the next 81 percent of patents.
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1 Also throughout the 80s we can actually fit
2 lines to this, patents declined on average by minus one
3 per year. One per year from 1980 to 1991.
4 Since 1991, there have been more than 20 more
5 patents per year for EVs.
6 Prior the 1990, EVs were borrowing from other
7 applications. Marine batteries, jet engine starter
8 motors, all kinds of misfits and attempts by home
9 mechanics and home converters to build vehicles.
10 The auto companies did have advanced research
11 programs. The General Motors EMPAC was announced prior
12 to the ZEV mandate.
13 Prior to even that, Ford delivered to
14 ECO-Stars to the USDOE. GM had one EMPAC, Ford had
15 delivered two ECO-Stars, and if you were a consumer
16 hoping to buy an EV, you were buying a mismatched set
17 of parts from other applications.
18 Today, following ten years of development in
19 the ZEV field, advances in ZEV research are now leading
20 to reliability, cost and operational improvements in
21 other fields.
22 Finally, the Zero Emission Vehicle mandate
23 through the development of low emission vehicles to the
24 facilitation of LEV programs in other states is leading
25 to improve emissions throughout the U.S. and
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1 California.
2 Thank you.
3 Any questions or comments?
4 CHAIRMAN LLOYD: Thank you very much, Dr.
5 Kurani.
6 Any questions from the Board?
7 I know it is not germane to the study you have
8 done, that you have just done there, but I think you
9 have been involved in a lot of the work, again, UC
10 Davis which has been helpful to staff in providing the
11 data that we need in this program.
12 Were you involved in some of the market
13 research?
14 DR. KURANI: Yes.
15 CHAIRMAN LLOYD: Can you give us any guidance
16 how we might help to work with the auto manufacturers
17 here in translating a large number of letters here in
18 support of EVs to actually getting vehicles into the
19 market place?
20 Do you have any insights into that?
21 DR. KURANI: I have a recent proposal I would
22 like to share with you.
23 We will be coming to see you next week.
24 CHAIRMAN LLOYD: We will be delighted to hear
25 your response.
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1 DR. KURANI: Yes, I do.
2 It has to do, I think, with creating increased
3 opportunities for direct experience with electric
4 vehicles, and with the initiation of, for now I call
5 social processes about information, information spread
6 around electric vehicles.
7 EVs are different. There is a different
8 tactile feel to driving one that many people find to be
9 beneficial. Those types of tactile physical sensations
10 can't be conveyed very well through information.
11 Getting people out there just to drive an EV,
12 and certainly there have been lots of programs I would
13 like to give credit to, to everyone in government and
14 industry and advocates, who would have been promoting
15 opportunities and creating opportunities for people to
16 drive EVs.
17 This is very important. I think the
18 information about the relevance of our personal choices
19 to air quality, local air quality, global CO2, is
20 important.
21 In discussions with people outside of the
22 Institute, friends and neighbors, I'm often struck by
23 the fact that people aren't as aware as I would hope
24 that they would be as to the possible impact of their
25 choices, that they really can make a difference.
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1 That an EV is qualitatively and quantitatively
2 a different vehicle when it comes to emissions and
3 energy consumption.
4 There are a variety of things we need to do to
5 move electric vehicles into people's, what is called,
6 choice set. That is with the limited set of vehicles
7 that they're willing to consider when it actually comes
8 time to purchase a vehicle.
9 These have to do with, frankly, what we are
10 developing as an approach around what is called social
11 marketing, which is the marketing of ideas, primarily,
12 that are not right now driven by private choice.
13 That is, a lot of private choices are driven
14 by things that makes a big difference to us, how many
15 seats do I need in a car to carry my kids and me
16 around, what is my budget like for buying a car, will I
17 buy a new or used car.
18 Social marketing tries to introduce these
19 other ideas of things like air quality, which is hard
20 for people to imagine that their choice, as a private
21 citizen, makes a difference.
22 Efficiency is another one. It is hard for an
23 individual to imagine their choices make a difference,
24 but collectively they do, and it's social in that it
25 requires lots of us to start to make these choices, and
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1 it requires the support of social institutions as part
2 of our discussion about what is important to us.
3 One of the things we like to do is to promote
4 that dialogue.
5 So, there is the direct experience with
6 vehicles. There is the marketing of the private
7 advantages and then there is promotion of dialogue
8 around how it is that our personal choices do matter.
9 CHAIRMAN LLOYD: Thank you very much, Dr.
10 Kurani.
11 MR. SHULOCK: Thank you from us as well.
12 I mentioned at the outset that this ZEV
13 requirement has been technology forcing, and this work
14 has certainly supported that assertion.
15 Mr. Chairman and Members, you have heard a
16 comprehensive overview of the staff's efforts. I will
17 sum things up as follows.
18 The technology is ready. Market applications
19 exist given competitive pricing.
20 ZEVs provide a full range of environmental and
21 energy benefits. Cost clearly remains an issue.
22 Then one final thought. If you think back to
23 1990, there has been tremendous progress in the
24 development of these vehicles over the course of these
25 ten years.
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1 Up until now, that is what is really different
2 about this review, up until now, pretty much people
3 were talking about concepts of hypotheticals and all
4 that sort of stuff.
5 Today we have real vehicles out there in the
6 world, meeting needs and being used. You just heard
7 about all of the technical progress that there has been
8 related to this requirement, and directly in the
9 vehicle area and in other areas.
10 I would just like to leave you with the
11 thought, I suppose, that over the course that we have
12 discovered in the course of our review is over the
13 course of these years, there really has been tremendous
14 technical progress.
15 Thank you very much.
16 CHAIRMAN LLOYD: Thank you very much indeed.
17 Does the Board have any questions of staff at
18 this time, before we move on?
19 Dr. Burke.
20 BOARD MEMBER BURKE: First of all, I would
21 like to say thank you for the staff report.
22 I thought it was excellent. I just thought it
23 was particularly articulate on how complex and compound
24 this problem is.
25 I think it was fairly balanced. Some people
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1 would like to argue some points one way or the other,
2 but I think we were out there and did a good job in
3 laying the case out to listen to the testimony today.
4 One of the things that has been ruminating
5 through my mind in the last couple of days, in 1980
6 when this ZEV mandate was introduced -- I'm sorry 1990.
7 The South coast District had approximately 51,
8 52 percent of the cars in the State of California
9 operating.
10 Currently the number is over 60 percent of the
11 cars in the State of California.
12 So, to say that a ZEV mandate is important to
13 the South Coast District is the understatement of the
14 year.
15 How it is implemented, one of things that I
16 would like to ask, Mr. Chairman, if we could request
17 the staff, to put together a number for us so that we
18 can share with our colleagues this afternoon, if we
19 could find out the current percentage of autos,
20 vehicles in the South Coast District, times the
21 percentage of cars per person in the rest of the state.
22 Do you understand what I'm saying?
23 You are shaking your head, yes. You got it,
24 because when my colleagues see this, and with three
25 Members on this Board who live in the South Coast, we
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1 may almost be in a crisis position.
2 In the implementation of the ZEV, you know, we
3 may need, as I discussed with you the other day, some
4 kind of increased activity or pilot project in the
5 South Coast.
6 Because when you talk about environmental
7 justice, this is environmental justice not for black
8 people or brown people or white people, this is
9 everybody who is there, because I think these numbers,
10 and I do not have a clue, I haven't run the numbers
11 ahead of you, so don't think I'm cheating here, but I
12 think that we will find that the impact on the people
13 in those four counties is so dramatically more than the
14 rest of the state, that we may want to consider some
15 kind of additional action in that area.
16 If the staff can do that for us, I would
17 appreciate it very much.
18 CHAIRMAN LLOYD: I think there are two issues
19 there.
20 I think the later comment is something that we
21 will have to talk about, and I would like to talk later
22 about that one.
23 The first part seems to be just a simple
24 exercise.
25 BOARD MEMBER BURKE: I did not mean to make it
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1 now. I was just throwing it out there.
2 CHAIRMAN LLOYD: Our staff, in conjunction
3 with Dr. Lui, that should be a simple exercise, but it
4 may be in a period of time the problem down there may
5 revert back to you, because if there are so many
6 people, then the mobile will turn into stationary
7 sources, so we'll solve it that way.
8 BOARD MEMBER BURKE: They said the other day
9 that it's decreasing our freeway fatalities, so, you
10 know, when it gets to gridlock, we're going to go to
11 zero.
12 CHAIRMAN LLOYD: Good point.
13 We will get the number.
14 Ms. D'Adamo, and the Supervisor DeSaulnier.
15 BOARD MEMBER D'ADAMO: I had a question
16 regarding the charging stations.
17 You indicated that there are approximately
18 400, and that would be public charging stations, or
19 does that include stations that are operated by fleets?
20 MR. SHULOCK: I believe that the 400 refers to
21 public stations, publicly accessible.
22 If I am wrong --
23 BOARD MEMBER BURKE: It is actually 390,
24 because I drove to the airport, and 10 of the 11
25 charging stations there were not operating.
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1 BOARD MEMBER D'ADAMO: Beyond the 390, does
2 staff have information about the number of charging
3 stations that have been installed for fleets?
4 MR. SHULOCK: I do not have that at this
5 moment.
6 I'm sure we can get that for you.
7 There are probably people in the audience that
8 have a good feel for that.
9 BOARD MEMBER D'ADAMO: That would be great.
10 The point that I would like to make on that
11 issue in particular is that we have received quite a
12 few letters from municipalities that have invested in
13 the infrastructure, so, if you could also provide
14 information as to where they are located, what the
15 breakdown would be of larger cities versus smaller
16 communities.
17 Thank you.
18 CHAIRMAN LLOYD: I certainly think as we move
19 ahead with all of the information systems on board, I
20 think there are already places now where, in fact, you
21 can get vehicles and you can actually dial in where
22 these recharging stations are.
23 I think associated with that also is a
24 disturbing trend that we cannot come up with a uniform
25 recharging system.
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1 I guess, I don't know whether staff would like
2 to comment on that.
3 Is there any progress in that, or is this
4 still an area of concern?
5 The more we talk about cost, the idea of
6 having to put duplicate recharging systems out there is
7 a concern.
8 MR. CACKETTE: So far, the staff has taken the
9 position that the market will sort this out.
10 It is not clear over the past year if and when
11 that's going to happen. Some manufacturers have
12 switched from one to the other. There seems to be
13 healthy competition.
14 At the volumes of charging stations that we
15 have right now, the duplication I don't think adds
16 great amount of extra cost.
17 If the number of public charging stations were
18 to increase greatly to match the increased demand in
19 these vehicles, I think that is an issue that needs to
20 be addressed.
21 CHAIRMAN LLOYD: That is something that we may
22 want to come back tomorrow as we deliberate further
23 actions.
24 Supervisor DeSaulnier.
25 BOARD MEMBER DeSAULNIER: Chuck, considering
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1 the PUC is meeting today in San Francisco, I appreciate
2 your comments about the grid system.
3 So, I am going to assume that we are in
4 constant contact with our sister agency about what we
5 are doing here, the PUC and the Energy Commission?
6 MR. SHULOCK: Yes.
7 BOARD MEMBER DeSAULNIER: Good answer.
8 You had one graph about how the use of fossil
9 fuels in the different vehicles are, and have we
10 quantified in any degree, and what I am getting at
11 here, there has been a lot of pressure in the
12 Legislature, and there is a lot of price sensitivity to
13 the amount of CARB certified fuel to supply, can we
14 quantify or project how EVs and also how hybrids might
15 help to take the pressure off that?
16 There's, I think, the Batton bill that came
17 out of legislation this year to look at studying giving
18 more credits for variances to make it easier to bring
19 dirty fuel in, and I would be interested in finding out
20 if we can quantify whether this is significant at all
21 as we project the number of EVs in the market.
22 MR. SHULOCK: We have not done that directly
23 so far, but I think the information exists to do that
24 in the model runs and in the other work that's been
25 done.
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1 BOARD MEMBER DeSAULNIER: Last question,
2 regarding the marketability, given that California, we
3 Californians always think we are at the head of
4 everything, have we looked at, either in Japan or in
5 Europe, where there have been more successful
6 applications, particularly of the neighborhood cars and
7 the city cars?
8 When we were in Torrance, we saw a video where
9 they are doing a successful car sharing with the
10 neighborhood cars around transit in Japan.
11 I wonder if we have started looking at that
12 kind of use?
13 MR. SHULOCK: There are applications like that
14 that have been tested in California.
15 There was one in the Bay Area, and I believe
16 some other tests of that type are actively being
17 complicated -- contemplated.
18 The Energy Commission, I think, is supporting
19 some studies of that type.
20 BOARD MEMBER DeSAULNIER: Are you referring to
21 the Bay Area to the ridesharing at Lawrence Livermore?
22 MR. SHULOCK: No, I believe it was a BART --
23 BOARD MEMBER DeSAULNIER: At the Dublin BART
24 station, that's with Lawrence Livermore.
25 Okay.
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1 CHAIRMAN LLOYD: Just a comment, Mr. Jim Boyd,
2 from The Resources Agency and Steve Larson, Executive
3 Director with CEC, will be appearing before us, so you
4 will have a chance to follow up on your question with
5 them.
6 MR. CROSS: Just quickly in response to the
7 question about fuel use, it's connected to market
8 volume, and that's still quite small for both HEVs and
9 EVs.
10 So, I think that the long-term answer is that
11 they can be a tremendous contributor for using less
12 fossil fuel, but the near-term, as I said, they
13 wouldn't make much difference or any difference in a
14 crisis which would occur in the next few years, for
15 example.
16 BOARD MEMBER DeSAULNIER: Well, it will be
17 interesting, at least for me, having four refineries in
18 my county, to look at that both in the near-term and in
19 the long-term -- not that I want them to produce more.
20 CHAIRMAN LLOYD: Professor Friedman.
21 BOARD MEMBER C.H. FRIEDMAN: You were
22 discussing cost, and you had several charts, near-term
23 incremental cost and long-term incremental initial
24 cost, which is sort of, I guess, a premium above the
25 equivalent internal combustion vehicle?
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1 MR. SHULOCK: That is correct.
2 BOARD MEMBER C.H. FRIEDMAN: Those costs which
3 range from 500 for a PZEV, at least the near-term, up
4 to 24,000, I guess it's not up there, but do you know
5 which charts I am referring to?
6 MR. SHULOCK: Yes.
7 BOARD MEMBER C.H. FRIEDMAN: Those do not take
8 into account any transitional subsidies, local
9 government or tax credits, Federal subsidies or State
10 other subsidies?
11 MR. SHULOCK: That is correct.
12 This is prior to any attempt to buy down that
13 difference.
14 BOARD MEMBER C.H. FRIEDMAN: That is, from
15 your point of view, arguably, a worst-case scenario?
16 MR. SHULOCK: True costs, if you will.
17 CHAIRMAN LLOYD: Mr. Calhoun.
18 BOARD MEMBER CALHOUN: Just zeroing in on
19 market penetration, can you very briefly tell us what
20 the primary hinderance has been to market penetration?
21 I think the staff report alludes to it, in
22 terms of -- I will just let you answer the question.
23 MR. CROSS: I'm sorry, I couldn't hear part of
24 your question.
25 BOARD MEMBER CALHOUN: What are the primary
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1 reasons for lack of market penetration?
2 MR. CROSS: I think, I'm not going to give you
3 much of an answer, because I think that you are going
4 to hear that from the witnesses today.
5 It is a combination of availability, cost,
6 public perception, and I think that you need to listen
7 to the witnesses today.
8 BOARD MEMBER C.H. FRIEDMAN: Doesn't the staff
9 have a current view on that?
10 MR. CROSS: That was it.
11 MR. KENNY: If I could add something, Mr.
12 Calhoun, Professor Friedman, I think the primary
13 concern that we have with regard to the lack of market
14 penetration ties directly to the lack of vehicle
15 availability.
16 We do not see very many vehicles being offered
17 for sale.
18 BOARD MEMBER CALHOUN: Let me pursue that.
19 Did the market penetration, when the vehicles
20 were available, did they come up to you expectations?
21 MR. KENNY: I think the answer to that is,
22 yes.
23 We have had roughly a little over 2,000
24 vehicles being offered for lease, and we have roughly a
25 little over 2,000 vehicles that have been placed.
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1 So, we are in a situation today, and this has
2 been essentially the result of that penetration in
3 which 100 percent of the vehicles that were offered for
4 lease are being leased.
5 BOARD MEMBER CALHOUN: I'm sure we will hear
6 an adequate discussion of that later on today.
7 CHAIRMAN LLOYD: Dr. Burke.
8 BOARD MEMBER BURKE: Since we know that there
9 are 75,000 letters, the assumption is that somebody
10 counted them.
11 Since we know the vast majority of them are in
12 support, I assume that somebody read them.
13 Those assumptions are not evidence, but we
14 assume that.
15 Did we, if we read them, did we do any
16 charting as to the origination points as it relates to
17 geography?
18 Now, I have another question while you
19 figure --
20 MR. SHULOCK: The answer to the first question
21 is, no, sir, we did not do that.
22 MR. CROSS: But I ended up responding to the
23 first wave of them --
24 BOARD MEMBER BURKE: The first 18,000?
25 MR. CROSS: No, but the first several hundred
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1 that could make it through the Governor's Office
2 processing system to be responded to, but they were
3 handwritten and typed, not form letters, and
4 geographically distributed all over the place.
5 BOARD MEMBER BURKE: I'm obviously looking for
6 South Coast.
7 They did to support this. I want to know if
8 in fact they did, the people of the South Coast didn't
9 need to depend on the people in the rest of the state
10 to carry their water on this issue.
11 MR. CROSS: Absolutely, it was both.
12 They were distributed throughout the state.
13 BOARD MEMBER BURKE: When I look at your
14 summary of the California State Legislators who sent
15 letters of support, I am just astounded that there is a
16 lack of South Coast Legislators on both sides of the
17 aisles who are non-existent in this, and I wonder if
18 there was a reason for that?
19 BOARD MEMBER C.H. FRIEDMAN: They are all
20 addressed to Santa Claus, aren't they?
21 BOARD MEMBER BURKE: I know that our people
22 had to talk to them.
23 And so, why -- you know, if I was from San
24 Francisco -- I don't know where Wesley is, Chesbro, or
25 Martin, but I know they're not from -- where --
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1 CHAIRMAN LLOYD: I don't think, Dr. Burke,
2 that we can control the Legislature.
3 BOARD MEMBER BURKE: I understand that.
4 But John Burton didn't sit down and decide to
5 write you a letter. Somebody asked him to write you a
6 letter.
7 MR. KENNY: Actually, Dr. Burke, we didn't
8 solicit the letters.
9 To the extent that letters did come in or did
10 not come in, they came in generally because the writers
11 wanted to send them.
12 CHAIRMAN LLOYD: Their may be somebody behind
13 that, Dr. Burke, but again, I agree with Mr. Kenny, as
14 far as, no, we did not go out actively and solicit
15 this.
16 We had interaction with people in the
17 Legislature on the issue, but those were the one's that
18 were interested.
19 Some, of course, wanted to find out what we
20 are doing here, and they were concerned about the extra
21 time, but there were --
22 BOARD MEMBER BURKE: But there were no people,
23 no Legislators, Assembly or Senate, from the South
24 Coast area who were interested that we talked to?
25 CHAIRMAN LLOYD: That is a different question.
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1 They didn't send a letter.
2 BOARD MEMBER BURKE: Then I will change the
3 question.
4 Were there Members from the South Coast area
5 that were talked to, and if so, who?
6 CHAIRMAN LLOYD: I think our Leg Director is
7 here.
8 MR. KENNY: I just talked to our Leg Director,
9 and he says none.
10 BOARD MEMBER DeSAULNIER: Does this mean, Mr.
11 Chairman, that we can restrict the mandate to the Bay
12 Area?
13 BOARD MEMBER C.H. FRIEDMAN: We have an
14 electric problem in San Diego, so I am not going to
15 raise any questions.
16 CHAIRMAN LLOYD: Mr. McKinnon.
17 BOARD MEMBER McKINNON: I want to address one
18 thing with staff before we dealing with this in the wee
19 hours of the night in what may be a very, very long
20 hearing.
21 I had the pleasure of watching the process
22 this time sitting in the back of the room in workshops.
23 For the tone the last few minutes, I want to
24 make sure that we are clear, I think you all did a
25 tremendous job in making sure that the public had an
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1 opportunity to have input in all different parts of
2 this State at all different hours of the day.
3 Certainly working people had the opportunity
4 to show up in the evening and testify at the workshops,
5 and I'm really, really proud in the way that you
6 represent our Board and making sure that the process
7 opens up to the California people.
8 Thank you.
9 CHAIRMAN LLOYD: I would certainly echo those
10 comments, Mr. McKinnon, and as I think staff knows, we
11 really appreciate all their efforts and also the way,
12 and I second that, I wasn't all the time at those
13 hearings, but I would also second the attitude of the
14 staff and the way that they were willing to listen
15 attentively and take the information there.
16 BOARD MEMBER BURKE: I did not want to
17 represent that I was being disparaging of the staff,
18 but I do find it unusual that a Legislative Department
19 doesn't go to the highest impacted area of the State to
20 discuss it with the Legislators in that part of the
21 State.
22 That to me just doesn't portend to build the
23 kind of support that this organization needs.
24 MR. KENNY: If I could just add one thing, Dr.
25 Burke, we actually have not gone out of our way to
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1 lobby any Legislators.
2 Generally, what we do, is we do respond to
3 essentially questions. Actually, if there are
4 questions, we do generally inform them, but essentially
5 one of the things that we tried not to do is engage in
6 a process in which it became a lobbying effort on our
7 part.
8 BOARD MEMBER BURKE: I'm not saying lobbying.
9 Just informing them of what we are talking
10 about and what we are about to do.
11 I think it is a courtesy. I don't think it's
12 a necessity.
13 I don't think it's germane to the issue that
14 we are reviewing today anyway. It is just something
15 that I think we should be doing.
16 CHAIRMAN LLOYD: I think we have a break now,
17 if there are no more questions from the Board, before
18 we get into public testimony.
19 The court reporter would like a ten-minute
20 break. So, we will break for ten minutes, at 11:30, we
21 will restart.
22 The first witness we have here is Mayor of
23 Palm Springs, William Kleindeist. Then we have some
24 other members, Dan Jacobson, Eric Sletten.
25 (Thereupon a brief recess was taken.)
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1 CHAIRMAN LLOYD: We have nearly 60 witnesses
2 so far and that number is climbing rapidly.
3 We have decided that the Board will not take a
4 lunch, and we will take turns to go back and eat, and
5 we will listen to the proceedings as we have lunch, and
6 I will turn it over to Professor Friedman here in my
7 absence and continue on that basis.
8 I would like to wrap up some of the discussion
9 that we had at the end of the first session in terms of
10 communicating with the Legislature.
11 We did in fact send letters over to the
12 Speaker, Speaker Burton and Speaker Hertzberg, inviting
13 them -- informing them of this hearing and inviting
14 them to participate.
15 That was delivered to all of the Members of
16 the Senate and the Assembly. We did not show any bias
17 in that case. Our Leg Director obviously distributed,
18 just for clarification there.
19 Our first witness is, in fact, a public
20 member, and the only public member that I have signed
21 up so far, and I delighted to say he is from Southern
22 California, from the South Coast Basin, and of course,
23 they have shown a lot of leadership there.
24 This Mayor William Kleindeist, from Palm
25 Springs.
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1 We are delighted to have you, sir.
2 MAYOR KLEINDEIST: Good morning, Mr. Chairman,
3 Members of the Board.
4 I am indeed Mayor Will Kleindeist, from the
5 City of Palm Springs, and I am here representing today
6 the MSRC, which is the Mobile Source Air Pollution
7 Reduction Review Committee.
8 I can't help but to recall a story I heard
9 years ago that Senator Kennedy told when he was the
10 upteenth speaker at a Democratic Convention.
11 He recalled feeling much like Zha-Zha Gabor's
12 fifth husband on wedding night, he said, I know what
13 I'm supposed to do, I just hope I can make it
14 interesting.
15 With that charge, I will try to give you sort
16 of an overview of what we do in the MSRC working in
17 conjunction with the AQMD Board in the South Coast.
18 As you know, the MSRC was created by the State
19 Legislature in 1990 to implement programs that reduce
20 mobile source air pollution within the jurisdiction of
21 the South Coast Air Quality Management District.
22 Our funding source is motor vehicle
23 registration fees collected under AB 2766,
24 Discretionary Fund Program.
25 Since 1995, the MSRC has made significant
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1 funding investments in electric vehicle programs
2 preparing our region for the introduction of large
3 number of EVs once the Zero Emission Vehicle mandate
4 takes effect in 2003.
5 Although I would like to describe in detail
6 all the good work that the MSRC has put forth in
7 support of the ZEV mandate, in consideration of time, I
8 will keep my remarks brief and will focus on three
9 points.
10 First, I'll recap the funding investments made
11 by the MSRC that are removing the barriers to the
12 introduction and use of the EV in the South Coast
13 region.
14 Second, I will discuss what investments the
15 MSRC has committed to make in the near-term to sustain
16 the momentum, although, as you are aware, this is
17 providing somewhat of a challenge given the current
18 scarcity of available vehicles.
19 And finally, I shall share MSRC's perspective
20 in continuing the ZEV mandate, including a few closing
21 comments related to the proposed eligibility of smaller
22 city electric vehicles.
23 Since 1995, the MSRC has undertaken several
24 initiatives aimed at removing barriers to the
25 introduction of electric vehicles into the South Coast
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1 District.
2 To date, the MSRC has committed in excess of
3 $14-million in discretionary funds to prepare Southern
4 California for the ZEV mandate.
5 To briefly summarize, the MSRC has committed
6 over $7-million towards electric vehicle buy-down
7 incentives. The automobile manufacturers participating
8 in our incentive programs have been reimbursed over
9 $5-million, corresponding to over 1,000 EVs either sold
10 or leased in the South Coast.
11 I can assure you this number would have been
12 considerably higher had more EVs been made available to
13 our region.
14 To help alleviate EV drivers concerns related
15 to vehicle range and to increase the overall utility if
16 EVs, the MSRC has invested over $4-million in electric
17 vehicle charging infrastructure, the vast majority of
18 which is publicly accessible and supports both
19 inductive and conductive charging modes.
20 The MSRC's infrastructure contribution was
21 matched in many cases, dollar for dollar, by using both
22 public and private funding, resulting in an EV charging
23 network in the South Coast consisting of over 250
24 charging locations, hosting almost 700 individual
25 charging units.
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1 Without question, the South Coast Air Quality
2 Region is prepared to accommodate significantly greater
3 numbers of battery electric vehicles.
4 If you happen to operate an EV in the South
5 Coast, you will probably notice freeway and roadway
6 signs directing you to your nearest public accessible
7 charging station, courtesy, again, of MSRC's EV signage
8 program.
9 Other noteworthy investments include MSRC's
10 recent award of $2.3-million to the U.S. Post Office to
11 help offset the incremental purchase of over 400
12 electric post office vehicles, including charging
13 infrastructure.
14 The MSRC has recently partnered with the CEC
15 to jointly fund a demonstration and comprehensive
16 evaluation of smaller city and neighborhood electric
17 vehicles.
18 The purpose of this demonstration program is
19 to evaluate the utility and air quality improvement
20 potential of these smaller EVs.
21 A decision by MSRC to extend incentives to the
22 city and neighborhood class of batteries will be made
23 once the results of our joint MSRC-CEC demonstration
24 program has been reviewed and analyzed.
25 However, let me state that the MSRC views the
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1 city and neighborhood class of battery vehicle,
2 electric vehicles, to be an augmentation and not a
3 replacement for the benefits that will be realized by
4 significant deployment of full-sized vehicles.
5 In closing, the MSRC has continuously
6 supported the efforts of the California Air Resources
7 Board over the past five years in preparing for ZEV
8 mandates.
9 We ask that you maintain the mandate in its
10 current form. The MSRC will continue to do its part
11 for successful completion.
12 Thank you, sir.
13 CHAIRMAN LLOYD: Thank you very much.
14 Yes, Dr. Burke.
15 BOARD MEMBER BURKE: As you know, you are one
16 of my favorite mayors, and a leader in the South Coast,
17 and we always look forward to you testifying.
18 We usually prefer you to bring Susan Anton
19 with you, which you normally have, but since you are
20 here by yourself today, we'll take it.
21 THE WITNESS: Suzanne Summers was not able to
22 attend, so I came in her stead.
23 BOARD MEMBER BURKE: You mentioned that the
24 MSRC had helped facilitate the acquisition of 1,000
25 electric vehicles.
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1 Is that only -- is that all in the South
2 Coast, I would assume?
3 MAYOR KLEINDEIST: Yes, sir.
4 Our conditions under MSRC is whatever we fund
5 remains in the District.
6 BOARD MEMBER BURKE: But that is not the total
7 number of electric vehicles in the South Coast?
8 MAYOR KLEINDEIST: No, sir.
9 BOARD MEMBER BURKE: Right.
10 So, what you are saying is, of the 2200 cars
11 in the State of California, well over half are in the
12 South Coast?
13 MAYOR KLEINDEIST: Yes, sir.
14 And we believe that the infrastructure is
15 clearly in place in the South Coast.
16 What we need, sir, are more vehicles.
17 CHAIRMAN LLOYD: Any other questions from the
18 Board?
19 BOARD MEMBER RIORDAN: Mr. Chairman, just a
20 follow-on question.
21 I was interested in what you had done with the
22 U.S. Post Office.
23 Are there any plans to do more?
24 Was their reception good?
25 Are there more opportunities there?
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1 MAYOR KLEINDEIST: Again, I will reiterate, we
2 have assisted them in acquiring 400 vehicles and
3 establishing their infrastructure.
4 The program is under way at this time. We
5 will review it and analyze it, and if there is a need
6 to grow it and expand it, I'm sure that MSRC, as we
7 have done in the past, will support it financially.
8 BOARD MEMBER BURKE: But I must tell you that
9 the Post Office is opposed to moving more electric
10 vehicles to California.
11 CHAIRMAN LLOYD: Of the thousand vehicles,
12 does that include the 400 postal vehicles?
13 MAYOR KLEINDEIST: I would have to turn to
14 staff on that question.
15 I'm not sure.
16 CHAIRMAN LLOYD: Any other questions from the
17 Board?
18 Thank you very much for taking the time to
19 come up.
20 We now have Jim Boyd, with The Resources
21 Agency, and after that we have Dan Jacobson.
22 Many of you will recognize the Executive
23 Officer at the time in which these regulations were
24 passed in 1990.
25 It is a great pleasure to have you here, Jim.
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1 I don't know whether this is the first time
2 you have testified before the Board, but it certainly
3 couldn't be at a better time.
4 MR. BOYD: Thank you, Mr. Chairman.
5 It is an extreme pleasure, let me say, to be
6 here and to address you today, although my first urge
7 was to go sit at one of the seats to speak to you,
8 unaccustomed as I am to standing at this podium, having
9 sat down there for 15 years, but nonetheless, Mr.
10 Chairman, Members of the Board, some of whom, a few of
11 you left who were my employers, and a few more who are
12 friends for a long time, it is my pleasure to be here
13 represent the Secretary for Resources.
14 A bit of irony, a bit of maybe fate involved
15 in this appearance, but nonetheless, the Secretary
16 regrets being unable to be here today, the demand of
17 our office being such, that she had to be elsewhere,
18 but frankly, I was ready, willing and anxious to step
19 forward and take this opportunity.
20 She's asked me to read a letter, that I know
21 was just distributed to you, in the record for her, and
22 then perhaps as her Energy Advisor, and in the capacity
23 sitting on the California Energy Commission for the
24 past year and a half, I could make a few comments about
25 the staff's energy analysis or answer any questions in
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1 that vein, then finally, if I haven't blown all the
2 time, speaking just personally for a moment or two, I
3 would like to share a thought or two with you,
4 particularly in reference to Mr. Calhoun's questions
5 about public response.
6 But let me read the letter.
7 Dear Chairman Lloyd, as Chairwoman of the Air
8 Resources Board under Governor Jerry Brown, as well as
9 USEPA Assistant Administrator for Air and Radiation
10 under President Clinton, I consistently fought for the
11 cleanest, most efficient and most technologically
12 advanced motor vehicle standards possible.
13 Now, as Secretary of the California Resources
14 Agency, the wisdom of those strategies and of the
15 California Motor Vehicle Control Program are even more
16 apparent.
17 I urge you to maintain California's Zero
18 Emission Vehicle mandate. California's environment and
19 environmental and energy challenges are full entwined.
20 The pollution that impairs our air, water and land, its
21 adverse impacts on all living species, and the
22 increasingly certain threat of global climate change
23 are all driven by the choices we make in producing,
24 applying and consuming energy.
25 California's prosperous economy and continuing
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1 population growth make these choices all the more
2 pressing.
3 I am convinced that our State needs every
4 energy-efficient, fuel diversity strategy at its
5 disposal.
6 A sound energy policy is the heart of
7 sustainable environmental programs. Your Zero Emission
8 Vehicle mandate has stimulated the introduction of not
9 just battery electric cars but also hybrid electric
10 technologies, near-zero alternative fuel vehicles, and
11 superior internal combustion engines.
12 This mandate has also accelerated the
13 development of the next major generation of automotive
14 technology, the fuel cell vehicle.
15 We need the entire portfolio as we move
16 towards our common future. California has led the
17 world with its vision for advanced vehicles and zero
18 emitting technology.
19 It is crucial that the Board maintain that
20 vision and the drive towards zero.
21 I stand ready to help you in any way that I
22 can.
23 Yours sincerely, Mary D. Nichols, Secretary
24 for Resources.
25 CHAIRMAN LLOYD: Thank you very much, Jim.
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1 Would you convey our personal thanks to the
2 Secretary for that letter.
3 MR. BOYD: Thank you.
4 A comment or two.
5 We find ourselves in the throws of an energy
6 crisis or sorts, electricity, gasoline, diesel, natural
7 gas on any given day. So, there is a lot of concern,
8 of course, in this State, and a lot of action being
9 taken to address that, particularly in the electricity
10 arena.
11 Some people may have concerns, electric cars,
12 they use electricity, it's a scarce resource, I would
13 concur with the staff's presentation about
14 infinitesimal amount of electricity associated with
15 electric vehicles, vis-a-vis the other components of
16 our growing economy.
17 I assure you that the Administration, as many
18 of us were with the Governor yesterday when he signed
19 two pieces of Legislation in electrical energy, and we
20 are taking all steps to address the current crisis.
21 I think the steps you take with this program,
22 though, can address it in the long haul and help us
23 address our energy situation.
24 In that capacity, I concur this is a positive
25 step and urge your selection and retention of the Zero
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1 Emission Vehicle program.
2 Just a quick personal observation from having
3 participated in this program for many, many years. I
4 remember well in 1986 when we started to look at what
5 are we going to do to meet the air quality standards
6 that California had a SIP that said it wouldn't make
7 air quality standards by the Federal deadline of 1987.
8 It was the only honest SIP in the nation, as
9 far as I'm concerned. We said we couldn't do it.
10 We had done more than anyone in the world had
11 done, and we had an honest SIP as compared to others.
12 We began to look at what we could do. Some
13 people had said in the automotive industry, I won't
14 look at Mr. Calhoun when I say this, that we had driven
15 the industry to practically zero. There is nothing you
16 could do in the auto industry.
17 Your fine technical staff didn't buy that and
18 didn't believe that that was true, and also found that
19 with the burgeoning population growth and the
20 continuing growth of vehicles, that some part of the
21 vehicle population had to be zero emitting if we were
22 ever to see clean air in this State.
23 Well, I think that is even more true today
24 than it was in 1986. When we made that finding in
25 1990, when the Board concurred with that and passed the
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1 Zero Emission Vehicle mandate, and all I can say in my
2 many, many, many years, more than half of my working
3 career was at the ARB, but in a lot of years, there may
4 have been question about pushing technology and the
5 wisdom of the ZEV mandate or the ZEV regulation -- I
6 think every regulation is a mandate of sorts -- but
7 this has become infamous as the mandate -- that it
8 would drive technology and that it was a big risk.
9 There is no question in my mind looking at
10 this and having been fortunate enough to have traveled
11 the world the last few years consulting to others on
12 the subject that the wisdom of that decision, as
13 Secretary Nichols said, is just underscored on almost a
14 daily basis.
15 The technology that has evolved, I know folks
16 will say it was coming anyway, I personally don't
17 believe that.
18 The technology that evolved as a result of
19 that push has proven itself.
20 Secondly and lastly, a quick sum up, on the
21 issue of public response and where's the market, supply
22 and demand.
23 There are not many of them. It costs a lot to
24 make. The price is high. It is difficult to sell.
25 If we can increase the supply, we will
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1 diminish the price, and if we drive technology, we can
2 cut the price, and you can get a greater attraction.
3 I would suggest, don't let the auto industry
4 hide behind the fact that the big push is to get
5 private vehicle owners, families, to be the sole
6 customers for these vehicles.
7 I have had one or two pangs of guilt when I
8 think of General Motors saying, well, we did it without
9 you, the air Board.
10 Well, yes, the electric Corvette was a fun
11 car. I loved it. There were a few people who would
12 have bought it, i.e., the EMPAC, but nonetheless, the
13 wisdom of the total mandate and what it has brought in
14 technology and the application of that technology to
15 other sectors besides just the family homeowner, I
16 don't see enough of a push in the commercial sector.
17 I don't see enough of a push into medium and
18 light-duty delivery vehicles.
19 The promise of the Olympic experience in Los
20 Angeles many years ago showed what people can do if
21 they get behind an issue.
22 I don't know why we don't push harder, why the
23 industry doesn't seek the light-duty delivery fleet
24 vehicles, why every intercity and around the city
25 delivery vehicle isn't an electric vehicle, why many
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1 medium-duty vehicles and all campus-type manufacturing
2 and industrial and commercial facilities that need
3 transportation can't have electric vehicles, that is a
4 huge market.
5 I think there is a huge potential out there,
6 and I see no reason why they can't meet that need.
7 My personal opinion. Thank you very much for
8 the opportunity.
9 I will be glad to answer any questions.
10 CHAIRMAN LLOYD: Thank you very much, Jim. It
11 means a lot that you're here.
12 Any questions from the Board?
13 BOARD MEMBER CALHOUN: One observation.
14 Mr. Boyd, had your testimony been different
15 from what you gave, I would have been shocked.
16 MR. BOYD: We know each other well, Mr.
17 Calhoun.
18 BOARD MEMBER CALHOUN: Very well, very well.
19 The two prime hinderance to market
20 penetration, based on the staff report, are the miles,
21 lack of range and cost.
22 I think that until such time as we improve the
23 technology and get the cost down and get the range up,
24 and cost down, it is going to be difficult to get the
25 kind of desirable market penetration, at least that's
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1 my view of it.
2 MR. BOYD: Well, Mr. Calhoun, as I said, I
3 think demand, volume will start driving the cost down.
4 Technological advancement will continue to
5 drive the cost down. But range, for the kinds of
6 applications that I have mentioned, as well as what we
7 know about the average commute length, I think the
8 range is there and can be satisfied and satisfactory to
9 a large segment of the consuming population of the
10 State of California.
11 CHAIRMAN LLOYD: A comment, Mr. Boyd, and
12 thank you for addressing the issue of energy, because
13 that is important, but in that context, it is important
14 for people to recognize the very close working
15 relationship between Secretary Hickox and Secretary
16 Nichols, and I think the issues you are talking about,
17 we are talking about those issues, thank you.
18 MR. BOYD: Thank you, Chairman Lloyd.
19 My earliest mission at The Resources Agency
20 was to cement the marriage between the Energy and Air
21 folks and to keep that going.
22 I appreciate you bringing that up.
23 CHAIRMAN LLOYD: Excellent.
24 Thank you very much.
25 Dr. Burke.
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1 BOARD MEMBER BURKE: I really appreciate your
2 comments on fleets.
3 Because we at South Coast believe that public
4 fleets initially and private fleets eventually are a
5 key component in the reduction of our problem there.
6 We were hailing the delivery of 400 Post
7 Office vehicles to the South Coast District.
8 I've got to tell you, the Post Office fought
9 us tooth and nail. It was an 18-month fight.
10 One of my best friends in the world was the
11 Vice Chairman of the Post Office Committee of the
12 United States Congress, and he was on the phone daily
13 for a year trying to make that.
14 So, you know, we don't seem to be getting
15 cooperation from the Federal government, and then when
16 we pass the 1190 series, the ARB had some concerns
17 about it itself, which would have mandated the fleets
18 of public vehicles into cleaner burning vehicles.
19 So, I think that the attitude is absolutely
20 right, but the proof is in the pudding, as you know,
21 when you support these things, and in all agencies,
22 including the Federal government, State government and
23 local governments to get involved.
24 MR. BOYD: Dr. Burke, I think it's deja vu all
25 over again in the energy arena.
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1 It reminds me of 25 years ago when the Energy
2 Commission was first created. There seemed an
3 insatiable demand in this State for energy.
4 The Energy Commission was created to deal with
5 not only electricity but all forms of energy, energy
6 conservation, energy efficiency, not just supplying new
7 forms of energy.
8 We seem to be back there again, and there is a
9 revitalization of interest in that, and I think that
10 subject and alternative fuels and the electric vehicle
11 go hand in glove.
12 I am quite familiar with the Post Office
13 project. One of the Energy Commissioners got
14 intimately involved with that and shared your concerns.
15 I think that we may be turning a corner on
16 interest and enthusiasm for those kinds of projects.
17 Thank you.
18 CHAIRMAN LLOYD: Thank you very much, Mr.
19 Boyd.
20 We appreciate it.
21 MR. BOYD: Thank you.
22 CHAIRMAN LLOYD: Next is Dan Jacobson, Cal
23 PIRG, and then Dr. Sletten and then Larry Greene.
24 MR. JACOBSEN: Thank you very much, Mr.
25 Chairman and Members of the Board.
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1 My name is Dan Jacobsen, and I'm with the
2 California Public Interest Research Group, Cal PIRG.
3 We are a statewide consumer and environmental
4 and good government organization, and we have been
5 working on public health and environmental issues for
6 25 years.
7 Just three months ago, Cal PIRG launched The
8 Clean Air Clean Cars campaign. It was during this
9 campaign that we knocked on over 500,000 doors
10 throughout the whole State of California and spoke to
11 literally hundreds of thousands of people about air
12 pollution.
13 I'm sure that what we discovered is no
14 surprise to people on this Board, and it's that people
15 are very concerned about air pollution and about their
16 health.
17 Almost every conversation that we had, the
18 reaction was the same. People were telling us the same
19 thing.
20 We need to take serious steps to clean up our
21 air quality here and protect our health here in the
22 State of California.
23 These were not just empty gestures that people
24 were making. They were saying things like, I'm going
25 to start to carpool more. I'll start to ride my bike
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1 more. I'll take public transportation more.
2 But one of the things that they really wanted
3 to make sure was an option to them was that they had
4 the opportunity in which to participate within the ZEV
5 program.
6 We collected a lot of the 75,000 signatures
7 and petitions that you see here were actually collected
8 by Cal PIRG staff at the door, to answer the question,
9 all up and down the State.
10 I've heard some reference from staff that it
11 was a very heavy burden to lug these from the
12 Governor's Office over to here. I would just say that
13 would be the weight of public opinion in saying that
14 they support the ZEV program, and they are incredibly
15 strong in support of it.
16 But aside from all of the signatures and all
17 of the letters that you have here, the other
18 interesting part about the ZEV program is the amount of
19 support that it enjoys in the State, certainly the
20 largest environmental groups here in the State,
21 including the Sierra Club, the NRDC and the Planning
22 and Conservation League and the Coalition for Clean Air
23 are in strong support of it, but the support goes
24 beyond that.
25 It goes to labor unions. It goes to
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1 environmental justice groups. It goes to the two
2 Senators in the State, and 14 members of Congressional
3 delegation and several Members of the State Assembly
4 and State Senate.
5 The list goes on and on, and it really is as
6 diverse as the State of California is. The people, I
7 think, clearly hear have said that they are in support
8 of it, and so have a lot of the top organizations here
9 in the State.
10 We would urge you to do the right thing to
11 help protect the air in the State of California and to
12 make it cleaner by supporting a strong ZEV program.
13 Thank you very much for your time.
14 CHAIRMAN LLOYD: Thank you very much for your
15 time. Thank you very much for your efforts.
16 Any questions from the Board?
17 Thank you very much.
18 Dr. Sletten.
19 DR. SLETTEN: My name is Eric Sletten.
20 I am not a politician. I'm not a public
21 speaker. I'm not an actor. I'm a physician.
22 I care a lot about the air that we breathe.
23 Thank you for considering my thoughts on the subject.
24 I come to you representing and on behalf of
25 the American lung Association and its Medical Section,
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1 which is called the California Thoracic Society.
2 I would like to urge the Board to maintain a
3 strong Zero Emission Vehicle program that doesn't
4 change or weaken this program to reduce the ZEV
5 production requirements.
6 A little bit about me. I'm a sports medicine
7 physician. I'm the key physician for Cal State
8 University, Northridge.
9 There I take care of 500 intercollegiate
10 athletes in the San Fernando Valley. I also practice
11 Emergency Medicine at three hospitals, both in Los
12 Angeles and Ventura Counties.
13 As a clinician, I can tell you that when the
14 smog gets bad, our ER visits go up, when the smog gets
15 bad, my intercollegiate athletes have to curtail their
16 work outs, including track and swimming, especially the
17 outdoor sports.
18 This is an issue that is near and dear to my
19 heart. I grew up in the San Fernando Valley.
20 I remember the days of smog alerts, when we
21 had to stop playing at recess, when we would be playing
22 in the summertime, and I'd take a deep breathe, and I
23 would stop because of the ozone pneumonitis that you
24 can experience.
25 So, now I work with the American Lung
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1 Association to help them with what is called the Breath
2 Games. This is at Cal State, Northridge.
3 We encourage asthmatic little kids to come and
4 participate in an Olympic-type of venue, and if there
5 is too much smog, these kids can't do it. We are
6 trying to get asthmatic kids to exercise more.
7 Because of my deep concern about vehicle
8 pollution, I too am committed to public transportation.
9 I take what is called the Metrolink train from
10 Ventura County into my office at Cal State Northridge.
11 I actually take my bicycle on the train and ride it
12 over to the campus, so I get a little bit of exercise,
13 too.
14 I believe in public transportation, but that
15 doesn't mean that I am anti-car. I actually still own
16 my '63 Chevy from high school, and I'm not going to get
17 rid of it, and I drive it recreationally.
18 I have great memories of working on the car
19 with my dad, handing him tools, him telling me what to
20 do.
21 So, we have this love affair with the cars,
22 but we also have a problem with air.
23 Smog certainly is a major public health
24 problem. Over 90 percent of Californians are still
25 exposed to poor air quality because they live in areas
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1 that do not meet health-based Federal or State air
2 quality standards.
3 It's a major cause of lung-searing ozone,
4 nitrogen oxides, carbon monoxide, as well as some
5 particulates and toxic air pollution.
6 These things can cause transient and permanent
7 lung damage, as you know, and it makes it difficult to
8 breathe.
9 Air pollution decreases lung function,
10 decreases -- effects the lung tissue. It can
11 exacerbate lung diseases such as emphysema and asthma,
12 lung cancer can be increased in risk because of the
13 pollution.
14 It certainly can cause premature death. The
15 third leading cause of death in our country is from
16 lung disease.
17 It especially hurts the lungs of those who
18 suffer from asthma and emphysema, as I mentioned the
19 young children with asthma, chronic lung disease, heart
20 disease and the elderly, infants and children.
21 For some reason asthma is children is on the
22 rise. It has increased about 75 percent from 1980 to
23 1993.
24 We know that asthma is exacerbated by poor air
25 quality. There are 2.5 million people in California
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1 who have asthma, and 500,000 of those are children.
2 A study examining the link between ozone
3 pollution and childhood asthma in the Sacramento area
4 found persistently high levels of ozone, and that was
5 in direct relation to a 14 percent increase in the
6 number of asthma-related hospital admissions and ER
7 admissions.
8 I can attest to that from a clinical
9 standpoint from my own practice. This especially
10 effects low-income children in high pollution dense
11 areas and teenagers.
12 We have seen an 83 percent in school
13 absenteeism in some studies from children living in
14 high ozone areas in Southern California as well.
15 Vehicles not only produce smog forming
16 emissions but they also emit toxic air contaminants.
17 Three of the most toxic air contaminants are benzene,
18 formaldehyde and butadiene.
19 Benzene has been associated with the formation
20 of some leukemias. Formaldehyde has also been
21 associated with some cancers forming in lab animals,
22 and butadiene has been associated with numerous cancers
23 in multiple organs, including lung, ovary and breast.
24 So, we have a conflict here. We are in love
25 with our cars, but in fact, we have an addiction to the
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1 cars, I think.
2 More than anywhere in the world, we have
3 become addicted to this internal combustion engine, and
4 the vast majority of our transportation needs, freeways
5 are now covering areas that had a vast network of
6 street cars in Los Angeles.
7 My mother used to tell me that she could take
8 the street car from Long Beach into Los Angeles back in
9 the early 50s. Those days are gone. My hope is that
10 they will come back.
11 Pollution emissions are generated throughout
12 the entire cycle of gasoline production, transportation
13 and use, from drilling, refining to filling up at the
14 gas stations, our addiction to pollution gasoline
15 engines is reaping a legacy of polluted skies and
16 communities suffering from lung disease.
17 Some of us have been able to wean out of our
18 cars and get into public transportation and into zero
19 emission vehicles, but not very many.
20 ZEVs are critically needed to improve air
21 quality and public health. The strides in air
22 pollution control made during the last three decades to
23 reduce emissions have greatly improved the air we
24 breathe, but much more remains to be done.
25 California is still far behind in meeting the
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1 State and Federal health-based standards for air
2 quality.
3 Cars and trucks in California represent 60
4 percent of air pollutants that are produced.
5 Increasing the rate of the population in vehicles means
6 that the air pollution problem is only going to worsen.
7 If we do not pursue this zero pollution
8 transportation, I am convinced that we will never
9 really appreciate and be able to attain healthy air,
10 especially in a dense populated area, like the Los
11 Angeles basis.
12 We cannot rely on our existing vehicle
13 standards or smog checks to deliver enough smog
14 reduction.
15 In order to make clean air progress, the State
16 must achieve advanced technology zero pollution
17 vehicles.
18 So in conclusion, one of the motto of the
19 American Lung Association is, when you can't breathe,
20 nothing else matters.
21 I think if California is the leader in our
22 nation, especially with the help of the American Lung
23 Association and other organizations, to get cigarettes
24 out of the public buildings, now it is time to get
25 clean air outside the buildings fixed as well.
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1 Again, California is a leader in this country,
2 and I expect us to go forward with that as well. So, I
3 urge the Board and all Californians to continue this
4 leadership role in the country to go through this sort
5 of withdrawal moving from our autos that emit smog to
6 those that do not, and to wean ourselves on to ZEVs and
7 other cleaner sources of transportation.
8 Thank you very much.
9 Any questions?
10 CHAIRMAN LLOYD: Thank you very much.
11 Any questions for Dr. Sletten?
12 Thank you very much.
13 We have Larry Greene, Jim Lyons and Steve
14 Douglas.
15 MR GREENE: Good morning, Chairman Lloyd, and
16 Members of the Air Resources Board.
17 My name is Larry Greene. I'm here to testify
18 on behalf of the California Air Pollution Control
19 Officers Association this morning, and I'm also the Air
20 Pollution Control Officer at the Yolo-Solano Air
21 Quality District.
22 In 1990, your Board displayed remarkable
23 courage and vision by adopting a mandate that
24 automobile manufacturers produce zero emission vehicles
25 in the California market.
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1 This mandate was adopted over the strenuous
2 objections of the auto and petroleum industries who
3 declared that ZEVs were impossible to create, would
4 increase pollution from battery manufacturing and
5 electrical power production.
6 These objections have been repeated during
7 each review of the mandate, but have been unequivocally
8 proven to be false.
9 Instead the mandate has resulted in tremendous
10 advancement of automotive -- of electric drivetrains,
11 battery chemistry, ZEV components and other clean
12 technologies.
13 For the first time, California consumers are
14 beginning to have potential choices to the dominate
15 automobile paradigm of the last century, the inherently
16 polluting internal combustion engine.
17 Our surveys of ZEV drivers fortunate enough to
18 have acquired a vehicle have shared their satisfaction
19 of these vehicles in our districts.
20 Regretfully, the manufacturers have made it
21 very difficult to drive a ZEV, to inadequate marketing,
22 inappropriate pricing and simply not making product
23 available.
24 We continue to hear from significant numbers
25 of would-be ZEV drivers who are currently being turned
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1 away from the automobile companies without being able
2 to lease or purchase a vehicle.
3 Without the mandate, California consumers will
4 be denied the clean transportation choices that they
5 deserve.
6 The air benefits and the long-term air quality
7 implications of the mandate are extremely significant.
8 Practically all our member air districts are struggling
9 to meet health-based air quality standards.
10 Statewide, by far the greatest share of our
11 pervasive air quality problems comes from motor vehicle
12 emissions.
13 Emission reductions from the ZEV mandate for
14 an integral part of our plans to provide clean healthy
15 air demanded by both the State and Federal law, even
16 while California's population continues to climb.
17 We believe the Air Resources Board staff has
18 conducted an exemplary, thorough and unbiased
19 evaluation of the mandate.
20 We believe this review clearly shows the
21 mandate, which has already been modified to provide a
22 variety of compliance options to automobile
23 manufacturers should be upheld.
24 ZEVs address nearly every air quality problem
25 associated with conventionally fueled vehicles as well
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1 as many other environmental concerns.
2 These include air emissions of all types,
3 leaking underground tanks, fuel transport issues,
4 gasoline formulation problems, including MTBE, and the
5 list goes on.
6 We urge you to hold the course, continue the
7 mandate and do not be swayed by the clamor from the
8 special interest opposing the ZEV mandate.
9 As an Air Pollution Control Officer myself of
10 what is considered to be a medium size district in
11 California, I can tell you that I consistently hear
12 people who want to buy ZEVs and are not able to.
13 You will receive testimony later today from a
14 representative from Vacaville, which has a very strong
15 electric vehicle program.
16 They have 75-plus people signed up in that
17 city who want to purchase a vehicle and would if they
18 could purchase one now.
19 If you take 75 and multiply it by that size
20 city across California, I think would pretty well take
21 care of the mandate that we are talking about today.
22 So, we believe that, the Air Pollution
23 Officers, that the demand is out there, the people will
24 purchase these vehicles if they are given the
25 opportunity, and we ask you to do that.
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1 Thank you.
2 CHAIRMAN LLOYD: Thank you very much, Larry,
3 for taking the time out here.
4 How many of your individual members will also
5 be testifying, do you know?
6 MR. GREENE: I don't know.
7 I know that Ellen is here, but I do not know
8 if she is going to testify.
9 CHAIRMAN LLOYD: Thank you.
10 Any questions?
11 Thank you very much, Larry.
12 We have Jim Lyons and Dr. Harrison from NERA,
13 and Steve Douglas, then Dave Hermance.
14 DR. HARRISON: Thank you very much, Mr.
15 Chairman, Members of the Board.
16 My name is David Harrison. I'm the Senior
17 Vice President of National Economic Research
18 Associates, or NERA. Before joining NERA, I was a
19 professor at Harvard's Kennedy School of Government,
20 and earlier was at the President's Council of Economic
21 Advisors.
22 I'm joined by Mr. James Lyons, of Sierra
23 Research. As you probably note, Sierra has done
24 extensive work modeling emissions from various air
25 quality regulations.
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1 The purpose of our presentation is to provide
2 the results of our recent study on the effect of the
3 ZEV mandate on in-use fleet emissions.
4 I think we have inundated you with paper. You
5 will probably see that we have given you a copy of our
6 report. We have also given you a copy of a briefing
7 book and a copy of the presentation.
8 We refer to our study as comprehensive,
9 because it deals with two issues that are typically not
10 included in other analyses, including the analysis that
11 you have been provided by the staff.
12 The first issue is how will the mandate effect
13 the scrappage of existing vehicles?
14 The mandate is a mandate on new vehicles, for
15 new purchased vehicles, and the question is what effect
16 will that mandate have on the existing fleet.
17 The second issue is, to what extent will the
18 battery electric vehicles replace conventional vehicles
19 in ordinary in-use driving?
20 The first issue, if we think about the
21 scrappage effects, what I mean by scrappage effects is
22 that as a result of the higher emission standards, new
23 car prices will rise.
24 That rise in new car prices will encourage
25 owners to keep the existing cars in service longer.
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1 Now, why is that a problem for air quality
2 regulations? Well, the problem is that existing cars
3 pollute more, and if you have regulations that increase
4 new vehicle prices, that can have the unintended effect
5 of increasing emissions from the existing fleet,
6 because you're keeping the older vehicles on the road
7 longer.
8 Now, you have seen many, many regulations, and
9 most of them do not include the scrappage effects.
10 That is probably the case, because they are relatively
11 small effects on new car prices.
12 In contrast, these regulations, the ZEV
13 mandate regulations, will have a major effect on new
14 car prices, and so that is why we have concluded that
15 it is critical to include this effects in a full
16 evaluation.
17 What we have done is used the existing
18 literature which has actually looked at these issues
19 for many years. The studies that we have based our
20 results on are about 20 to 30 years old, and we have
21 updated those studies because of major changes in the
22 markets recently and have developed a statistical model
23 relating new car prices to existing, to scrappage.
24 The literature that I mentioned points out
25 that in the case of rising car prices, reducing
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1 scrappage of existing vehicles, that those effects can
2 be substantial and can, in fact, overwhelm the effects
3 that come from having more new, cleaner new cars in the
4 fleet.
5 The second issue that we deal that makes our
6 study different from the one's that you have seen and
7 everybody else has seen so far, is the issue of
8 electric vehicle range.
9 I think it is well regarded and this is work
10 that has been done by Sierra, and they have looked at
11 existing information and concluded that there are many
12 trips that gasoline vehicles (sic) won't and can't be
13 used for.
14 And what that means is, that's due to a
15 variety of factors. They are mentioned here, limited
16 range, the charging infrastructure may not be
17 available, and the time to charge may be greater.
18 The advantage that we have now, these issues
19 have been recognized for some time, the advantage is
20 that Sierra was able to use some data that provides
21 information on what effects these changes will have on
22 the trips that EVs can perform and what, therefore, the
23 effects on other vehicle fleet will be.
24 Well, I mentioned that we have a big thick
25 report. Let me summarize the results briefly.
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1 This chart shows two figures for 2010 and
2 2020. The red figure is the emission reductions that
3 is based on the staff methodology of looking at the
4 in-use fleet.
5 This is looking at the new vehicles. So, this
6 shows the emission reductions, which are on the order
7 of about two tons per day, for example, for the South
8 Coast, in 2010. That is the number that has been
9 presented to you.
10 The equivalent number in 2020 is a little over
11 five tons per day. So, that is the direct benefit from
12 just looking at the effect on new cars.
13 What if you look at entire effect on the
14 entire fleet, taking into account the scrappage effects
15 and taking into account the increased VMT as a result
16 of the characteristics of electric vehicles.
17 Well, the results change dramatically. Rather
18 than a benefit, the net result is an increase in
19 emissions.
20 This obviously is an unintended effect, but it
21 is an effect resulting from the market transactions
22 that take place and the characteristics of electric
23 vehicles.
24 The next slide shows the alternative cases.
25 The data that we used to analyze the various cases used
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1 the information from the ARB staff report in terms of
2 the cost.
3 So, all of the cost that we've used are from
4 ARB staff report.
5 These costs include the learning curve effects
6 that were described earlier. So that the cost in 2010
7 to 2020, take into account the fact that over time the
8 costs will be lower, and therefore, the price increases
9 for new vehicles will be smaller.
10 This slide shows the results of various cases
11 that we have looked at, and the cases involving
12 different assumptions about the EV, the electric
13 vehicle, fleet will be, and different assumptions about
14 the demand for electric vehicles, and different
15 assumptions about the availability of PZEVs to be
16 substitutes for electric vehicles.
17 Without going into the details, the bottomline
18 is that under all of these plausible assumptions, all
19 of which use the cost assumptions in the ARB staff
20 report, there is a negative effect of the mandate on
21 emissions, that is emission will go up, not down, as a
22 result of the mandate.
23 So, the final slide shows our conclusions,
24 which are brief.
25 The ZEV mandate would result in increases in
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1 in-use vehicle emissions if you look at the entire
2 fleet, not just what happens with new vehicles, and
3 secondly that the unintended effect is largely the
4 result of the scrappage effect, that is the effect of
5 higher new car prices on individuals retaining their
6 existing vehicles longer, and because those vehicles
7 are higher emitting, the net result is to increase
8 overall fleet emissions.
9 Thank you very much for your consideration. I
10 mentioned that we've inundated you with paper. We are
11 also proposing to inundate you with computer models.
12 So, we would be very pleased to give you and
13 your staff the detailed statistical and other models
14 that are applied behind our analysis.
15 Thank you very much.
16 CHAIRMAN LLOYD: Thank you.
17 Questions?
18 Two questions.
19 Ms. D'Adamo and Mr. McKinnon.
20 BOARD MEMBER D'ADAMO: Can you tell me a
21 little bit about your association or your organization?
22 I'm not familiar with it.
23 DR. HARRISON: Yes.
24 NERA, National Economic Research Associates,
25 is a firm of about 350 consulting economists operating
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1 in nine offices in the U.S., three offices abroad.
2 The group does a large number of, what are
3 called in the trade, micro economics, so that people
4 work on issues related to antitrust, trade regulations,
5 telecommunications, economics of telecommunications,
6 and there is a group that deals with environmental
7 regulation, and I head that group.
8 BOARD MEMBER D'ADAMO: And how are you funded?
9 DR. HARRISON: This study was funded by the
10 industry, the car industry, the automobile industry.
11 BOARD MEMBER D'ADAMO: Could you name the --
12 is it the Alliance or is it the individual --
13 DR. HARRISON: The sponsors were individual
14 companies.
15 I will say that they sponsored the research,
16 but the cost information that we developed was, as I
17 want to emphasize, is the cost information, that has
18 not been prepared by the automobile companies but has
19 been prepared by the staff.
20 BOARD MEMBER D'ADAMO: Okay. Thank you.
21 CHAIRMAN LLOYD: Yes, Mr. McKinnon.
22 BOARD MEMBER McKINNON: The proposition that
23 you propose that cars would remain in the fleet longer
24 because of this, because of cost, I find that
25 incredible.
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1 I really -- I'm clear that there are lots of
2 other factors that cause the fleet, cars to stay in the
3 fleet longer or shorter or things like people working
4 and income growing or not growing, that kind of thing,
5 but the other thing that I really would like you to
6 take a shot at addressing, because it seems to me that
7 this State and this nation and certainly other nations,
8 have developed air rules of all sorts over a course of
9 history.
10 Every time that happens, your proposition
11 should be in play. By now, no one should be buying new
12 cars.
13 And, I'm kidding, you know I'm kidding, and
14 I'm exaggerating your point, but I really have
15 difficulty following that one.
16 DR. HARRISON: Well, actually, the proposition
17 is really, as I said, is based on decades of research.
18 The idea is that if you increase, that people
19 are making choices, that when the price of a new car
20 goes up, they are thinking to themselves, well, maybe
21 it makes sense for me to keep that existing car another
22 year instead of scrapping it, or selling it and
23 eventually it gets scrapped.
24 So, the statistical -- that is the basic
25 intuition, and in fact I think that one of the earlier
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1 presenters made the, or maybe it was staff, was talking
2 about choices and talked about the choices -- I think
3 it was the UC Davis researcher -- I don't remember his
4 name -- talked about the choices between new cars and
5 used cars.
6 So, it simply reflects the fact that when you
7 make that choice, one of the issues is the price. So,
8 what that means is -- of course, this is not the only
9 issue, as you said, that there are many other
10 determinates of whether you keep that used car going or
11 not or whether you buy a new car.
12 So, it is just one of the issues, and it's a
13 relatively small issue.
14 The point is that that relatively small issue
15 can have an effect on the overall fleet. So, as I
16 said, we would be glad to present the statistical
17 analysis to the staff.
18 I will say that the results we got were
19 consistent with the literature, which had no particular
20 axe to grind, that the statistical analysis was
21 essentially the same as a researcher got 20 years ago.
22 CHAIRMAN LLOYD: You are implying that your
23 study had an axe to grind?
24 DR. HARRISON: I'm not.
25 The point is that it was not funded, the
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1 previous study was not funded by the automotive
2 industry.
3 I think that the point is that these are
4 unintended effects. No one expects these to have an
5 effect on the existing fleet, but they are the effects
6 that can occur nonetheless.
7 BOARD MEMBER McKINNON: I guess, you know,
8 maybe in kiddingly over dramatized it, but what I am
9 really getting at is that the way that you discussed
10 that effect is as if it's open-ended and long lasting.
11 My guess is that it is kind of a blip, that
12 what you are talking about is a fair proposition, and
13 that it happens in the economy when we do things that
14 changes things, but that it is more like a blip.
15 Now, the way that you've represented it, it's
16 like a phenomenon that carries on infinitum.
17 So, what is it?
18 How do you quantify it, or can you take a stab
19 at, is it a blip that lasts a few months or a year or
20 what --
21 DR. HARRISON: Well, the effect lasts for as
22 long as the price increase lasts.
23 So, if you look at the model, essentially what
24 we -- in the beginning years, the price increase for
25 new cars is relatively high, and that goes down over
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1 time.
2 So, in that sense, the effect changes.
3 But every year, let's take the case of 2007,
4 four years after the 2003 beginning, there still will
5 some increase in the new car price in that year, so
6 people that are deciding in 2007 whether to buy a new
7 car or keep the exiting one in operation, would still
8 have that same choice.
9 Again, it is not the only thing that effects
10 the choice. It's just one of the elements.
11 That's why we needed to do a statistical
12 analysis to correct for all those other things. In
13 fact, the other things that you mentioned that
14 influence car choice, are in this statistical model.
15 We are just trying to parse out the effect of
16 the new car price increase.
17 CHAIRMAN LLOYD: Professor Friedman.
18 BOARD MEMBER C.H. FRIEDMAN: Do I understand
19 that the underlying premise of this reasoning is that
20 the auto manufacturers will increase the price of new
21 cars, internal combustion cars, the standard cars,
22 because they have to absorb the underwriting, if you
23 will, of cars produced under the mandate and made
24 available at some loss; is that the underlying
25 assumption?
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1 DR. HARRISON: More or less.
2 BOARD MEMBER C.H. FRIEDMAN: Well, what
3 accounts for the price increase?
4 DR. HARRISON: The price increase is the
5 result of two things.
6 Primarily the cost difference, that is, as I
7 mentioned, we used the staff number, so, you are right.
8 The major point is that in order to -- every
9 electric vehicle that is sold generates a loss, and
10 because of the sales mandate, because every time you
11 sell a conventional car, you have to sell a certain
12 percentage of an electric vehicle, that sale of each
13 one of the cars you sell or a manufacturer sells,
14 carries with it a price penalty.
15 So, it's that price penalty that results --
16 BOARD MEMBER C.H. FRIEDMAN: I've got the
17 price penalty. I understand that.
18 How does that reflect, or how does that
19 translate into higher price to the consumer for the
20 non-price penalty cars?
21 It can only happen by an unintended, by an
22 intended consequence of management and a board of
23 directors saying, we are going to make the same profit,
24 no matter what.
25 DR. HARRISON: Well, it's based on cost.
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1 So, the basic idea is that the prices of the
2 vehicles reflect their costs.
3 So, when the costs go -- it is sort of like a
4 tax. If there is a tax, manufacturers are going to
5 pass that tax on in the form of higher prices.
6 BOARD MEMBER C.H. FRIEDMAN: If we can sell an
7 SUV for 20 percent profit above cost, just using
8 numbers, and I don't know what's real here, but we're
9 having a discussion.
10 I could say if I am in charge of the world, I
11 could say, well, I will only make a 15 percent profit
12 on that. I will take the 20 percent that I can get
13 from the market, but five of it I will lay off over
14 here, being socially responsible, or whatever, to
15 justify it, because I am innovating, and I've got a
16 loss.
17 Now, that's an intended consequence not an
18 unintended consequence.
19 DR. HARRISON: You're saying that it's
20 possible that instead of passing the tax on, that car
21 makers may decide to absorb part of that tax in lower
22 profits?
23 BOARD MEMBER C.H. FRIEDMAN: I think I'm
24 trying to get your underlying assumptions.
25 I think you are starting with a basic
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1 assumption that profits have to remain the same, and
2 therefore, the cost has to be absorbed or the figure
3 recovered fully, the cost, in certain models and
4 products has to be carried by increasing the price on
5 other products.
6 I think that is what I heard. I'm questioning
7 that.
8 DR. HARRISON: I think that's right.
9 What I'm saying is that for every car that's
10 sold because of the ZEV mandate, so for example, the
11 mandate were 10 percent and the cost penalty for a ZEV
12 were $10,000, that would be a $1,000- cost penalty or
13 tax.
14 So, the idea is that tax would be passed
15 through on the assumption that it's like any other tax
16 or cost increase that we've passed on in the form of
17 higher prices, that is sort of the economics behind it.
18 BOARD MEMBER C.H. FRIEDMAN: It is purely an
19 economic approach?
20 DR. HARRISON: That's right.
21 CHAIRMAN LLOYD: Mr. Calhoun.
22 BOARD MEMBER CALHOUN: Dr. Harrison, the
23 statement that you're making is more of a general
24 statement, assuming that's it true, that applies to all
25 new vehicles that are sold, there is a price increase,
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1 the turn-over rate will be lower, so, is that to expect
2 the increase for the ZEV must be much higher than the
3 conventional vehicle, then it really wouldn't have much
4 of a difference, would it not?
5 In that generalized statement that you're
6 making that the price increase of the vehicle effects
7 the turn-over rate, and as such, people are going to
8 keep them longer and the air would not benefit from the
9 new equipment, the new technology.
10 Isn't that what you said?
11 DR. HARRISON: Well, the effect I'm looking at
12 is relative to no ZEV mandate.
13 So, yes, the prices of vehicles go up.
14 So, I'm only looking at the price increase due
15 to the ZEV mandate, see?
16 So, it's the price and cost increase due to
17 the mandate that is being estimated, and it's that
18 extra effect.
19 So, you are getting these increases in
20 emissions from the existing fleet are in addition to
21 what is happening.
22 If we had been able to show estimates of the
23 fleet with and without the ZEV mandate, I think it
24 would be easier to see.
25 What you would see is that the ZEV mandate has
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1 the effect of reducing the population of relatively
2 young vehicles, increasing the population of relatively
3 older vehicles.
4 So, it's that effect that we are estimating in
5 this study, and it is only the added.
6 So, what I would add to your statement, it's
7 the incremental new car prices that we are modeling.
8 CHAIRMAN LLOYD: Dr. Burke.
9 BOARD MEMBER BURKE: I am with Mr. McKinnon on
10 this one.
11 You went off the chart with me. You lost me
12 about 20 minutes ago. Because cars are not built with
13 an infinite life.
14 That is why we have collector cars. Okay?
15 Cars, to the credit of this Board, the cars
16 that are currently being manufactured are polluting
17 less than any cars in the history of the world and
18 maybe even polluting to making us have to review this
19 ZEV mandate.
20 So, we've got good cars coming on the road
21 right now, and auto sales are at record numbers.
22 Ford Motor Company has this terrible problem
23 with the Firestone tires, and the SUVs this month, not
24 this month, last month, in California, after the
25 problem, were at record numbers.
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1 People didn't care that the tires were falling
2 off of them. They still went out there and bought
3 them.
4 CHAIRMAN LLOYD: Maybe the auto manufacturers
5 are addressing the scrappage issue by getting more off
6 the road.
7 BOARD MEMBER BURKE: Professor Friedman, I
8 think he was going to the heart of it, you know, when,
9 what he was saying was, you know, it is a conscious
10 decision to add the price on it, so, you know, that is
11 a terrible thing, because that gets to be a double-edge
12 sword, because you upset him, and he's going to go home
13 and think about, well, maybe we should contemplate some
14 kind of penalty if they raise the price over a certain,
15 because we are not in a luxury tax situation here, and
16 there is luxury tax on certain vehicles in California.
17 So, you know, there would have to be an air
18 tax. So, you know, it's a double-edge sword.
19 If you try to gouge the consumer on one side,
20 government might have to take an action to offset that
21 to allow the market place to find its own --
22 DR. HARRISON: Just to be clear, there is no
23 assumption here -- we are assuming that they will treat
24 these increased costs as they would any other costs, no
25 differently, or any tax.
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1 So, it is just -- this is sort of economics,
2 standard economics, that when your cost of producing go
3 up, prices eventually do go up.
4 CHAIRMAN LLOYD: Professor Friedman.
5 BOARD MEMBER C.H. FRIEDMAN: Just one
6 follow-on question.
7 Did you take into account that, to the extent
8 that the ZEV mandate is providing healthier air, people
9 will live longer, or there will be more around to buy
10 more cars and the volume will go up, there will be
11 increased volume?
12 DR. HARRISON: We will have to add that to our
13 statistical model.
14 CHAIRMAN LLOYD: Ms. D'Adamo.
15 BOARD MEMBER D'ADAMO: On a more serious note,
16 did you account for the public subsidies, State and
17 Federal, when you did your analysis?
18 DR. HARRISON: No, we didn't.
19 We assumed that the available subsidy amounts
20 would not be sufficient.
21 However, one of our cases assumes that there
22 is no subsidy, that people would view the electric
23 vehicles as equivalent to conventional vehicles.
24 BOARD MEMBER D'ADAMO: Wait a second.
25 You said that first of all you did not
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1 consider the subsidy programs, and you assumed that
2 they would no longer exist, but that you also
3 considered that they would not be sufficient.
4 Sufficient for what?
5 DR. HARRISON: Assume that they would not be
6 sufficient to meet the entire mandate.
7 So, in other words, if there is a $5,000
8 vehicle buy-down, that that would not apply to the
9 large, relatively large volumes that would be required
10 to meet either the four or ten percent mandate.
11 BOARD MEMBER D'ADAMO: I would be concerned
12 about the way that you even prepared your analysis if
13 you did not account for a program that has been in
14 existence for quite some time and there is a great deal
15 of public support for the extension of these programs.
16 I would question, without having read through
17 your report, I would question the methodology that you
18 used elsewhere in the report if you did not consider an
19 existing program.
20 DR. HARRISON: Let me see if I understand.
21 Maybe I misinterpreted your question.
22 What we did is we looked at the difference in
23 the cost and assumed that those would be reflected in
24 the higher prices, and then we asked, well, from the
25 consumer standpoint, would the consumer require a
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1 subsidy, some sort of subsidy, a demand, something, you
2 know, dollars paid, and I think that one of the cases
3 that we looked at did include implicitly a $5,000
4 subsidy payment on behalf, in order to purchase an
5 electric vehicle.
6 So, in that sense, our study did include the
7 subsidy program.
8 A number of the cases looked at a requirement
9 that you would -- the $5,000 to make a electric vehicle
10 and a conventional vehicle equivalent.
11 So, I think I misunderstood your question.
12 I guess, to the extent that we took into what
13 we understand to be the subsidy program, we did take
14 that into account in our analysis.
15 BOARD MEMBER D'ADAMO: But you are saying that
16 in one of the cases you made a determination that or
17 your study showed that a $5,000 program would result in
18 a cost equivalence between a conventional vehicle and a
19 ZEV?
20 DR. HARRISON: Not a cost equivalence, but
21 from a consumer standpoint, they would view that as
22 equivalent, that the various potential disadvantages
23 that people have discussed, in terms of range and
24 flexibility and so forth, would be overcome with the
25 subsidy.
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1 Not the cost penalty. I want to emphasize
2 that the cost penalties were the one's that were
3 described, and I think very well, in the staff's
4 analysis.
5 The staff pointed out that there are now and
6 we took into account in the long-term, cost differences
7 between electric vehicles and conventional vehicles,
8 and it's those that we included in our analysis.
9 CHAIRMAN LLOYD: I think we will bring this to
10 a close here.
11 I will just say that I have high respect for
12 Dr. Harrison and Jim for your technical abilities.
13 I know Jim and Dr. Harrison by reputation, but
14 in all honesty, knowing a little bit about models, I
15 think in a court of public opinion for you to say that
16 more -- that less is more, is very difficult to
17 understand, and you would have to exercise a lot of
18 data gymnastics with the model in order to come to that
19 conclusion.
20 I just don't understand. I know it's complex.
21 But that is a tough sell.
22 DR. HARRISON: I appreciate that.
23 I know it is in the category of unintended
24 effects, and unintended effects that may not be
25 intuitive.
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1 We welcome the chance the present our results
2 of the analysis to you.
3 CHAIRMAN LLOYD: The problem is that there is
4 so much soft data, and when you're dealing with models,
5 that is exactly what they are, and I think that you can
6 contrive a lot of conclusions here, and I don't think
7 that the data support it.
8 In this case, I just go from intuition. If
9 you do not have pollution there, I don't understand how
10 in fact it can be worse for you.
11 DR. HARRISON: It certainly isn't worse unless
12 you take into account the potential effects on the
13 existing fleet.
14 CHAIRMAN LLOYD: I think Mr. McKinnon has
15 something further.
16 BOARD MEMBER McKINNON: I will tell you,
17 number one, I do not think that you ever answered my
18 question about the duration of this effect.
19 Number two, it seems to me that there would be
20 historical data on this proposition of increases when
21 there is air quality improvements that the auto
22 industry has to capitalize, right?
23 It's happened before, several times.
24 So, it seems to me it shouldn't be real
25 difficult to see that or hear that, and how long that
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1 lasts and how long that effect lasts.
2 I don't doubt that there is some effect.
3 How long does it last and how deep is it?
4 It is not enough to have a political argument
5 saying this terrible thing is going to happen if we
6 can't quantify that it's going to happen for only two
7 weeks.
8 You know, there is history. I would be
9 interested in that, and that may be able to teach us
10 how this will effect over, how looking at the past may
11 be able to teach us how this will be affected in the
12 future.
13 DR. HARRISON: I thought I did answer your
14 question, and I apologize if I wasn't clear.
15 The effect that I was talking about really
16 exists as long as there are new car price increases.
17 BOARD MEMBER McKINNON: When haven't there
18 been new car price increases?
19 DR. HARRISON: Due to the ZEV mandate, I
20 should say.
21 This effect had been looked at 20 years ago,
22 Howard Bruinsbeck, an economist, looked at this effect
23 and he looked at the effect of the national program,
24 and he found the same, exactly the same effect for a
25 certain number of years.
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1 Eventually, as the cleaner fleet takes over,
2 eventually this effect will, in fact, go away. What we
3 found is that up until 2020, these negative effects
4 overwhelm the positive effects of the replacing the
5 cleaner new cars.
6 So, eventually, you are quite right,
7 eventually, all of the fleet will be clean cars. There
8 will be no effect of this effect.
9 It's a transition effect. But what our
10 analysis shows is that it extends through 2020 with the
11 analysis that we did.
12 Jim, would you like to --
13 CHAIRMAN LLOYD: Jim, you asked us for 20
14 minutes, and you have now had over 30.
15 I realize we have taken the time, too.
16 BOARD MEMBER McKINNON: I'm certainly not
17 helping it, I'm sure.
18 But I have to tell you, I am not going to put
19 off buying another car for 20 years. I still do not
20 understand.
21 MR. LYONS: Let me try, just real briefly, try
22 to address two questions.
23 I will start with yours, Dr. Lloyd, of how it
24 is replacement of a zero emission vehicle for a
25 gasoline vehicle can lead to a net increase in
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1 emissions.
2 The staff slide that the staff showed earlier
3 presents ULEV II or SULEV numbers, where you are
4 looking at the difference between zero and maybe a
5 couple of hundredths of a gram per mile for
6 hydrocarbons, maybe a tenth of a gram per mile for NOx.
7 Even if you have been in this business for a
8 while, and you look at the malperforming LEV II
9 vehicles, you are still below what used to be very
10 stringent emission standards in the late 1980s, early
11 1990s.
12 What is happening here is if you look for the
13 benefit of the ZEV is between zero and this low
14 emitting vehicle, and when you look for the impact of
15 using older vehicles, more the deltas between the zero
16 or small number, and a very much larger number
17 associated with the emissions of a very old vehicle
18 that is still being used instead of being replaced with
19 a new vehicle, and that is exactly the source of the
20 emissions disbenefit.
21 It's not because an electric is somehow in and
22 of itself is causing pollution.
23 It's the fact that that vehicle or a
24 gasoline-powered SULEV or LEV II vehicle wasn't
25 purchased and somebody kept the older, higher emitting
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1 vehicle longer.
2 And if I could just have our slides back up
3 for a second.
4 CHAIRMAN LLOYD: Could you identify yourself
5 for the court reporter?
6 MR. LYONS: Jim Lyons, Sierra Research.
7 I apologize.
8 BOARD MEMBER BURKE: You're probably not old
9 enough to remember all of the controversy caused in the
10 State of California when catalytic converters were
11 required on cars.
12 I remember, I was just a child myself.
13 I remember reading in the Metro section, it
14 was like it was going to this apocalypse, and there was
15 not going to be another car sold in California.
16 They went ahead. And as my colleagues here
17 remind me, General Motors got in line, and they had 60
18 percent of the market, so the refineries got in line,
19 and it just marched on down the road.
20 CHAIRMAN LLOYD: I think we're going to have
21 to move on, Jim, because we are running too long here.
22 Let's move on here.
23 Thank you very much.
24
25
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1 CHAIRPERSON LLOYD: Let's move on here. Thank
2 you very much. I just want to say we're going to start
3 now with the presentation from the auto manufacturers
4 starting off with Steven Douglas from the Alliance, but
5 just let me walk through this. This is my understanding
6 from staff, with the agreements we've had with the
7 companies. Steve, you've got ten minutes, Dave Hermance,
8 from Toyota, fifteen, Reginal Modlin from Daimler Chrysler
9 15, Kelly Brown 15, Ben Knight 15, Sam Leonard 20.
10 Again, I hope that's consistent with your
11 understanding with what we've got. I'm going to turn the
12 microphone over to Professor Friedman while I get a bite
13 in the back. There are speakers back there so we can
14 hear.
15 BOARD MEMBER HUGH FRIEDMAN: Mr. Douglas, ten
16 minutes.
17 MR. DOUGLAS: Okay, thank you. Good morning,
18 Members of the Board. I'm Steven Douglas. I'm the
19 Director of Environmental Affairs for the Alliance of
20 Automobile Manufacturers. The Alliance is an association
21 of 13 car and light truck manufacturers representing over
22 90 percent of the new vehicle market in California.
23 Our member companies are BMW, Daimler Chrysler,
24 Fiat, Ford, General Motors, Isuzu, Mazda, Mitsubishi,
25 Nissan, Porsche, Toyota, Volkswagen, and Volvo.
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1 A decade ago California launched an innovative
2 air pollution control program when the Air Resources Board
3 adopted the Low Emission Vehicle program. As part of this
4 program, the Board ordered automobile manufacturers to
5 produce and sell electric vehicles. We've now come to
6 call this requirement the ZEV mandate. The ZEV mandate
7 truly was, as your staff indicated, not a typical stepwise
8 adjustment, but a transformative leap forward.
9 In adopting the original LEV program, ARB staff
10 recognized that the technology be forced in nature and
11 recommended reporting to the Board biannually on the
12 implementation of the regulations. The staff recognized
13 in 1990 that the goal wasn't simply to require electric
14 vehicles sales, but rather to clean the air.
15 They agreed to work closely with the automobile
16 industry to identify course changes that might be
17 necessary based upon new information. Since that hearing
18 ten years ago, ARB has made numerous changes to the LEV
19 program. On some occasions the Board relaxed the
20 requirements such as in 1996 with the ZEV mandate. On
21 other occasions the Board significantly increased the
22 stringent standards such as in 1998 with the adoption of
23 the LEV 2 program.
24 The goal is still clean air. The good news is
25 that we're much closer to the goal. The advanced control
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1 systems being developed to meet the LEV 2 requirements
2 will result in internal combustion engines cleaner than
3 ever imagined back in 1990.
4 Unfortunately, the ZEV mandate is not on track.
5 When ARB established the LEV program in 1990, the price,
6 the price of electric vehicles was expected to be about
7 $1,350 more than gasoline vehicles. In fact, considering
8 the price of electricity and the price of gasoline,
9 electric vehicles were expected to be cheaper than
10 gasoline vehicles.
11 Today the staff projects the cost, and this is
12 the cost of electric vehicles, will be about $22,000 more
13 than gasoline vehicles. And that doesn't include the cost
14 to design, develop, test, certify the new electric
15 vehicles.
16 Looking at the benefits, during the 1996 review
17 the benefits were expected to be about 14 tons per day.
18 Today the benefits are closer to one ton per day, one to
19 two tons per day. And just to clarify for the purposes of
20 this presentation today, I rely almost exclusively on
21 reports of the staff and the findings of experts employed
22 by them.
23 Before making our recommendations though I want
24 to put the ZEV mandate into perspective in terms of the
25 historical vehicle emission standards, the projected
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1 pollution from vehicles and other sources and then,
2 finally, turning the attention to the cost and the
3 benefits of ZEVs.
4 This chart, based on current regulations, shows
5 the extraordinary progress that's been made and will
6 continue to be made in the automobile technology between
7 1960 and 2010. Today's vehicles are already 97 percent
8 cleaner than the earlier vehicles.
9 However, as I've mentioned the LEV 2 regulations
10 bring even more and greater pollution reductions. So
11 about 2010 the vehicles will be a full 99.7 percent
12 cleaner than precontrolled vehicles.
13 So how do these advances in conventional vehicles
14 affect the ZEV mandate? As the conventional vehicles have
15 become cleaner and cleaner, the benefit of ZEVs or the
16 difference in pollution between a ZEV and conventional
17 vehicles becomes smaller and smaller.
18 When we look at the total pollution from cars and
19 light trucks in the south coast, the ZEV mandate has no
20 appreciable impact. This chart shows the total passenger
21 car and light truck emissions in the LA area with and
22 without ZEVs. Emissions drop from about 660 tons per day
23 in year 2000 to only about 120 tons per day in 2020.
24 The drop after 2010 occurs because new cleaner
25 vehicles meeting the most stringent standards in the
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1 previous chart replace older, higher polluting vehicles.
2 Note that the end result is the same regardless of the ZEV
3 mandate.
4 With pollution from vehicles dropping as
5 dramatically as it is, it's fair to ask a couple of
6 questions. First, exactly what are the reductions, what
7 are the benefits associated with the ZEV mandate? And
8 second, how do vehicles compare with other pollution
9 sources or more appropriately how much of a problem will
10 vehicles be in the future?
11 If a full ten percent of cars and light trucks
12 sold in California between 2003 and 2010 are electric, the
13 total direct benefit of the ZEV mandate would be about 1.5
14 tons per day in the south coast. Again, this is taken
15 from the staff report.
16 But let me qualify this value a little bit.
17 First, this assumes that manufacturers do not accept
18 multiple ZEV credits, which are part of the current
19 regulations. It assumes that no manufacturer takes
20 advantage of any partial ZEV allowances. It assumes that
21 100,000 electric vehicles are produced, sold and used year
22 in and year out in an identical fashion to gasoline
23 vehicles. And finally, it assumes that the ZEV mandate
24 doesn't adversely impact the sale of new clean gasoline
25 vehicles that replace older vehicles.
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1 Looking at the indirect benefits of the ZEV
2 mandate, if they're included, the total benefit is 2.07
3 tons per day. Again, according to the staff report and
4 again including all of the assumptions. By 2010 the 1.5
5 tons per day benefit grows to 3.5 tons. And this is
6 compared to a total inventory of about 1,585 tons. What
7 we're discussing is a small reduction in inventory, less
8 than three-tenths of one percent.
9 As you can see from these pie charts, cars and
10 trucks produce about 30 percent of the pollution in the
11 south coast today. However, as cleaner vehicles hit the
12 roads and older cars are retired, the vehicles will make
13 up only about ten percent -- only about eight percent
14 actually, of the total pollution in 2020.
15 In short, by 2020 cars and light trucks will be a
16 minor source of pollution. Again, these are not only our
17 conclusions but supported by ARB staff in their report.
18 The staff investigated the benefits of electric
19 vehicles on a per vehicle basis. This is really
20 worthwhile just to determine the cost effectiveness of
21 electric vehicles in reducing emissions. Based on the
22 staff report an electric vehicle reduces emissions by
23 about 24 pounds over its life.
24 While we're disappointed that the staff didn't
25 complete the calculations in determining cost
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1 effectiveness, taking into account the expected cost
2 premium of electric vehicles of 22,000 and the benefit of
3 23.8 pounds, the cost benefit of the ZEV mandate is $1.8
4 million per ton. Most of the emission control measures
5 adopted by the Board are less than $10,000 per ton.
6 In fact, the ZEV mandate would be over a hundred
7 times more expensive than any other regulation that the
8 ARB has adopted. In fact, just to reference, here are
9 some recent measures adopted by the Board along with the
10 cost benefit value.
11 The ZEV mandate has become, in fact, the most
12 cost ineffective regulation ever considered by the Air
13 Resources Board. Even the PZEV alternative isn't cost
14 effective. The most attractive PZEV option would be about
15 $300,000 per ton.
16 As I've mentioned, the ZEV mandate was adopted in
17 1990 because the Board believed that the price of electric
18 vehicles would be $1,350 more than gasoline vehicles.
19 Today, the cost premium to the manufacturer, not including
20 any research, not including any development, is estimated
21 by the staff to be $21,817. This is for a full function
22 electric vehicle.
23 And just to clarify one point that the staff
24 report -- in the staff report that seems to have been
25 missed by some, the staff expects city electric vehicles
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1 to cost about $7,500 more than similar city gasoline
2 vehicles. And city vehicles are not full function.
3 They're not freeway capable vehicles. So the $7,500 is
4 not the low end for the price premium of a freeway capable
5 vehicle.
6 Looking at the benefits, again. Before the Board
7 adopted LEV 2 the benefits of the ZEV mandate were
8 expected to be about 14 tons per day. Because of the
9 progress on the LEV 2, the benefit of the mandate is
10 expected to be about two tons per day.
11 And, finally, before concluding the presentation
12 and making some recommendations, I'd like to briefly
13 discuss Partial ZEVs. Partial ZEVs were recommended by
14 ARB staff and adopted by the Board as part of the LEV 2
15 program in 1998. Partial ZEVs or PZEVs as they're called,
16 can be used to obtain ZEV credits. Normally, it takes
17 five Partial ZEVs to equal one pure ZEV. Thus the
18 manufacturer choosing to make six percent of the mandate
19 using Partial ZEVs, which is the maximum amount that a
20 large volume manufacturer can leave, would have to certify
21 30 percent of their new vehicles to the PZEV requirement.
22 This translates into about 300,000 Partial ZEV vehicles in
23 2003.
24 PZEVs will be available in limited numbers in
25 2003. However, as the staff report acknowledges, Partial
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1 ZEVs are extraordinarily challenging and their production
2 requires pulling ahead exhaust standards five years. The
3 zero standard, which is also part of the PZEV requirements
4 will likely be an even greater challenge than is exhaust
5 standards.
6 BOARD MEMBER HUGH FRIEDMAN: Your time has
7 expired. Are you near conclusion?
8 MR. DOUGLAS: Yes. One more slide.
9 Manufacturers will not be able to use the PZEV
10 option to help meet the early years of the ZEV mandate in
11 any kind of a meaningful way. As a result, the staff's
12 estimate that 22,000 electric vehicles will be required in
13 2003, is a gross underestimate, because it assumes that
14 all manufacturers will take full advantage of PZEV option,
15 an assumption even the staff report concludes isn't
16 viable.
17 Finally, the costs of the ZEV mandate have
18 reached astronomical proportions, when the benefits have
19 all but evaporated. Clearly the ZEV mandate is not on
20 course. Regardless of the intentions or the expectations
21 when it was originally adopted, the technology hasn't
22 progressed sufficiently and it isn't expected to within
23 the near future. This, again, according to the staff
24 report.
25 Consequently, it's time to make a course
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1 correction. The Alliance, as well as our member
2 companies, have cited on numerous occasions our support of
3 and our commitment to California's clean air goals. Thus,
4 we recommend that the Board direct staff to determine more
5 cost effective alternatives to the ZEV mandate that
6 achieve identical emission reductions and then either
7 eliminate or substantially modify or delay the ZEV
8 mandate.
9 BOARD MEMBER HUGH FRIEDMAN: Thank you, Mr.
10 Douglas. Are there questions?
11 I have one question. You quantified the
12 benefits, the cost benefits. I assume that you're using
13 that number of ZEV sales that are mandated?
14 MR. DOUGLAS: Well, actually --
15 BOARD MEMBER HUGH FRIEDMAN: Ten percent or in
16 some cases four percent ramping up?
17 MR. DOUGLAS: Actually, it's on a per vehicle
18 basis. What I've done is taken the amount of pollution
19 reduction per electric, so it's independent of the volume,
20 and then just divided that by the per vehicle price
21 premium from the staff report.
22 BOARD MEMBER HUGH FRIEDMAN: Well, where you
23 pointed out that, is what is reasonably obvious, that the
24 electric vehicle is not that much cleaner than the SULEV.
25 MR DOUGLAS: Right. And the cost is --
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1 BOARD MEMBER HUGH FRIEDMAN: But if we were to
2 assume, just for a moment, that out five, ten years from
3 now the electric vehicle is popular and it's available and
4 people are buying a lot of it, that is more than the
5 quotas or the amounts mandated, that would increase
6 overall cleaner air, wouldn't it?
7 MR. DOUGLAS: Well, I mean certainly. I mean
8 it's a simple equation. It's just the cost over the
9 benefit. So if you make costs very small, then obviously
10 the number goes down.
11 BOARD MEMBER HUGH FRIEDMAN: And also were the
12 estimates back -- I wasn't around. Were the estimates of
13 costs and benefits for '90 and '96, that was based on then
14 the economy in 1990, and that was an estimate, for what,
15 in 1996, would be the differential?
16 MR. DOUGLAS: No, sir. That was taken directly
17 from the staff report. In 1990, the staff report
18 projected, as they normally do, what would be the cost of
19 this technology or that technology. And they expected
20 that an electric vehicle, the price of an electric
21 vehicle, would be about $1,350 more than the price of a
22 gasoline -- a similar sized gasoline vehicle.
23 BOARD MEMBER HUGH FRIEDMAN: And that would have
24 yielded certain tons per dollar?
25 MR. DOUGLAS: Right. And also the benefits were
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1 much higher then, so -- can we go back a couple?
2 BOARD MEMBER HUGH FRIEDMAN: Yeah, I think you
3 had it, didn't you?
4 MR. DOUGLAS: There it is. So, yes, in this case
5 back in 1990, the benefits or the number of pounds would
6 have been much higher and the cost, right here, would have
7 been much lower, because, again, this was the staff report
8 in 1990 and then again in 1996.
9 BOARD MEMBER HUGH FRIEDMAN: Okay.
10 Matt.
11 BOARD MEMBER McKINNON: This is kind of a
12 follow-up to Member Friedman's question where you were
13 tracking the savings to the air between say an SUV and the
14 ZEV. And I think earlier today there was a presentation
15 by the staff that talked about -- and I think certainly
16 the speaker before wanted to talk about old cars and new
17 cars. I have old cars. That's kind of -- I've come up
18 with old cars.
19 And the one thing that happens with old cars is
20 things don't work after a while. And certainly in terms
21 of what happens with gasoline driven vehicles is they
22 pollute more over time. And I think there was a
23 comparison today that said that two weeks of a LEV 2 with
24 some real plausible failures that happened with a lot of
25 mileage would wipe out the equivalent of the ZEV benefit
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1 for a whole lifetime of the ZEV.
2 So it seems to me, and I don't know if your
3 figures calculated the old cars and failures of gasoline
4 cars, but it seems to me that the electric car at 100,000
5 miles doesn't have the chance at the same kinds of
6 failures as a gasoline car. And how do we quantify that
7 and is that quantifiable in your data?
8 MR. DOUGLAS: Absolutely. Let me address that
9 and the staff will probably do the same as well. The way
10 that's addressed and the way the duration in cars and
11 gasoline vehicles are addressed is through the on-board
12 diagnostic system. The on-board diagnostic system is a
13 continuous monitor of the vehicle's emission control
14 system, and it monitors -- the threshold is about 1.5
15 times the standard. So if the vehicle exceeds -- if the
16 emissions from the vehicle exceed 1.5 times the standard,
17 that's when you get your check engine light and that's
18 certainly something that's been adopted by the Board and
19 something that manufacturers are doing today.
20 And in addition, in the 1998 LEV 2 program, they
21 extended the durability of all vehicles out to 120,000
22 miles. So, too, again to keep that deterioration right
23 down.
24 If you're saying if you deliberately tamper with
25 the vehicle or if you go out and dump ten gallons of
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1 gasoline on the road, there's certainly emissions from
2 that. But that's kind of the way I see it.
3 BOARD MEMBER McKINNON: Well, I drive on the same
4 roads you do and I see old cars smoking down the road,
5 okay, and leaking and dripping. And I think your last
6 speaker was sort of making that argument. And so I'm
7 really -- I mean, it really is a fact they deteriorate and
8 it grows beyond what we want to have happen. People don't
9 take care of them. The light goes on. They continue to
10 drive them.
11 And it seems to me that if we're honestly
12 assessing the value of one thing or the other, part of
13 that honest assessment -- I mean if you want to talk about
14 old cars, which the previous speaker did, then part of
15 that honest assessment is taking the old cars into
16 account. And I think that goes beyond the light going on
17 and somebody taking it right to the shop. We know that
18 doesn't happen in a lot of cases.
19 So I don't know if you have a number for it.
20 Maybe it's not fair to ask you for one for it. But you
21 can't have your cake and eat it too. You can't come and
22 say I want to talk about old cars but then not talk about
23 old cars. You've got to --
24 MR. DOUGLAS: No. And let me address that. If
25 you could put up slide four.
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1 When we're talking about old cars, if you'll look
2 up here, you can see that the 19 -- I think someone had
3 said that they drove a 1963 car. These are the emission
4 values. This is not deterioration. This is emission
5 values of the cars. As cars have gone down, as the
6 emission standards have improved, this is what you've
7 seen.
8 It wasn't until 1996 that we fully phased in the
9 on-board diagnostic requirement with the check engine
10 light. Furthermore, of course, there are inspection
11 stations to address that when their vehicle is out of
12 warranty or issues such as that.
13 So I think we have gone a long way. And I think
14 with manufacturers as well as with the Air Resources Board
15 they reduce the amount of deterioration in vehicles.
16 BOARD MEMBER HUGH FRIEDMAN: Well, Mr. Douglas,
17 you're talking about individual models, not fleets or
18 what's out on the road. You're talking -- aren't you
19 comparing SULEVs to the active cars?
20 MR. DOUGLAS: When you're calculating the cars.
21 BOARD MEMBER HUGH FRIEDMAN: Yeah. What you're
22 doing here on your charge. You don't have your other
23 cars, your SUVs, your --
24 MR. DOUGLAS: No, sir. As a matter of fact, in
25 the 1998 LEV 2 regulations as part of those regulations,
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1 the Board required these vehicles meet the same standards
2 as passenger cars.
3 BOARD MEMBER HUGH FRIEDMAN: So you're saying
4 that all cars on the road that will be new vehicles are
5 being taken into account?
6 MR. DOUGLAS: Yes. And, again, I'm taking these
7 numbers directly from the staff. These are not numbers
8 that I've calculated or made up on my own.
9 BOARD MEMBER D'ADAMO: It seems the me that you
10 didn't answer Mr. McKinnon's question, though, because I
11 thought that he was referencing a slide that staff had
12 shown earlier that indicated, I think, it was a SULEV or a
13 LEV 2 that fails. You're talking about -- this is at
14 introduction.
15 MR. DOUGLAS: Well, at introduction or at 120,000
16 miles whatever the standard is, or at 50,000 miles. So
17 that's what this -- that's what these values are. The
18 slide that I think you're referencing was for a gross
19 polluter and I'm not sure what that is, how that's defined
20 or how much it emits.
21 BOARD MEMBER D'ADAMO: Well, perhaps staff could
22 respond. I thought it just meant that it fails the
23 standard.
24 MR. CROSS: The model that produced the one and a
25 half ton per day benefit does include some assumptions
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1 about gross emitters and how many of them are out there.
2 I'm going to jump up to the comparisons in the staff
3 report, and I'll come back. The comparisons in the staff
4 report were comparing an electric vehicle to one of the
5 vehicles in the model that is broken with respect to
6 emissions. It's a clean vehicle SULEV, that is broken
7 down with respect to emissions.
8 And it's showing that the emissions of the SULEV
9 are a whole lot higher than an electric vehicle, broken
10 SULEV are a whole lot higher than the electric vehicle.
11 The properly operating SULEV is obviously closer to the
12 electric vehicle.
13 I think the real question that Matt is asking is
14 how many vehicles, gasoline vehicles, break down in the
15 future. And the model, as it exists right now, speculates
16 relatively few. The experience that we've had over the
17 long term is that we're usually -- staff is usually pretty
18 optimistic about how its control strategies are going to
19 work. And we usually underestimate what can go wrong with
20 the cars.
21 So the numbers that we put up there are the best
22 ones that we have. I think that what you all are getting
23 at is, and what we've been getting at all along, is that
24 the ZEV program takes the uncertainty out of that. And we
25 don't have to worry about whether or not we estimated
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1 right anymore, because the car doesn't have this problem.
2 BOARD MEMBER HUGH FRIEDMAN: Thank you. All
3 right. Our next speaker is Mr. Dave Hermance from Toyota.
4 Fifteen minutes.
5 MR. HERMANCE: I'll try to do that.
6 Good afternoon. Thanks for having me. I met
7 with a couple of you before and several members of the
8 staff several times. I'll try to be relatively brief.
9 I'm going to do something a little bit different than what
10 has been done by the other speakers. I'm going to try to
11 put this in the perspective of an R&D program.
12 Now, this is not an actual chart of all the R&D
13 programs Toyota has under way. This is an image chart
14 because most of the R&D programs we have running are what
15 are referred to as black programs. We don't tell the
16 outside world about all the R&D efforts that we begin at
17 any point in time. And we begin literally dozens of
18 projects each year. As part of the overall process of
19 that, there's a fairly intensive review goes on.
20 At critical points during the process of the
21 development of new technologies, management will get
22 together and review the progress and the prospects for the
23 new technology. The grim reality is of all the projects
24 we start very few reach commercialization, because
25 somewhere during the process it will be determined that
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1 they are no longer cost effective or that they failed to
2 meet their performance objectives or that there's market
3 changes and there's no market for the vehicle, and you
4 don't take noncommercial product to market, if you want to
5 stay in business.
6 Now, this review is a key part of any technology
7 development program. Ordinarily, it's done within the
8 organizations. In this particular case, though, the Air
9 Resources Board is driving the development effort of
10 battery electric vehicles to comply with ZEV mandate.
11 Therefore, I need to ask the Board to climb in
12 the role of management of an organization and partake in
13 this critical review at this key juncture of the process
14 to determine whether this process ought to go forward or
15 not.
16 Now, in doing that, I'm not going to create a
17 bunch of new data to give to you. I'm going to rely
18 mostly on the staff's report. I am, however, going to
19 make a couple of other observations. A couple of the
20 criteria -- this is not an exhaustive list of all the
21 things that management would look at, but it's certainly
22 some things that would be looked at.
23 You'd want to make sure that you have developed a
24 high quality and fully functional product for this before
25 you launched a commercial situation. You'd also want to
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1 make sure there was sufficient market for the plant
2 allocation you had made for how many vehicles you were
3 going to build. Building them and being able to sell them
4 can be a bad thing. We do it occasionally but we try not
5 to do it very often.
6 And then you also want to look at the financials.
7 You want to see if you can build the product at a cost
8 and/or return on investment that will keep you in the
9 businesses on a long-term basis when you sell the required
10 volume of vehicles.
11 So going to the staff report we have many, many,
12 many points of agreement with the staff report in the
13 detail of the document. And this is just a few of them.
14 There has been significant progress in the passenger car
15 plus truck one segment.
16 One point I would clarify, the staff report a
17 couple times refers to the mobile source sector and a
18 couple times refers to the passenger car plus truck one.
19 For the purposes of discussion of the ZEV mandate, it is
20 relevant to talk about the passenger car plus truck one
21 population, because that is the population of the vehicles
22 affected by the mandate.
23 So despite the fact that the mobile source sector
24 may have other problems, the problems being addressed by
25 the ZEV mandate are those in the passenger car plus truck
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1 one sector. They will be less -- those vehicles,
2 passenger cars plus truck one, will be less than ten
3 percent -- actually eight percent of the inventory in 2020
4 based on staff's modeling.
5 Industry made their commitments during the MOA.
6 EVs without batteries will be more expensive than similar
7 sized vehicles in 2003. Fuel cells won't be ready in
8 2003. PZEVs will not be available in sufficient volume to
9 use all the flexibility that that piece of the regulation
10 allows. And we, too, share a concern about what is the
11 function of low speed or neighborhood vehicles, since they
12 don't -- they're a new commodity. We don't really know
13 what they do.
14 One other point from the staff report that we
15 agree with is customers in the purchase decision don't
16 really value life cycle costs. I agree with the staff's
17 assessment that that's irrational. It is, however, a
18 recognized buyer behavior, so the initial cost is very
19 important in the purchase decision. Also, there are many
20 additional costs required to market an EV that are not
21 captured in the premium costs that are relayed in the
22 staff report. They're called out individually as
23 advertising expenses and familiarization and public
24 education and things like that.
25 And then there's one that's relatively near and
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1 dear to the auto industry, it's called recovery of
2 engineering and development time. But those are not
3 included, but we can go forward even without that.
4 Even in the absence of those premium costs that
5 the manufacturers will incur, in 2003 a highway capable
6 battery electric vehicle will be more than $20,000 more
7 than the same size gasoline vehicle. This is the staff's
8 estimation, even in the high volume, the life cycle cost
9 of the most probable of the vehicles in the staff report.
10 The staff report has some optimistic vehicles in it. I
11 went to the MOA base case vehicle, which has, what is
12 alluded to as a modest efficiency improvement of only 20
13 percent.
14 That's not modest in engineering terms. But in
15 any event, even that vehicle is still going to be, on a
16 life cycle cost basis, more than 60 percent more expensive
17 than a gas vehicle. The fleet benefit of the ZEV mandate
18 is modest. I didn't make up the word. It's staff's word.
19 I might have chosen a different one, but the fleet benefit
20 of the ZEV mandate is small.
21 On a per vehicle basis, the benefit is
22 significant. If you compare very nearly zero to maybe 24
23 pounds, that's zero compared to anything, can be a
24 significant number. But the impact that has on air
25 quality is quite small and that's just the way life is.
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1 Now, there are, however, some things in the staff
2 report -- I would somewhat disagree with Mr. Shulock's
3 characterization of the staff report as conservative with
4 regard to the 2003 model year.
5 The staff report is, in my estimation, an
6 optimistic estimate of what the reality could be in 2003.
7 And I'll share with you some of the reasons I believe that
8 to be the case. And these are all enumerated in the staff
9 report. The staff wasn't hiding anything, but when you
10 compound multiple optimistic assumptions, you may get to a
11 case that may not be quite as really, and certainly I
12 wouldn't characterize as conservative.
13 The staff's assumption is that we will -- that
14 the industry will build the lowest number of EVs possible
15 by use of the same vehicles that are available in the MOA.
16 Now, staff has the detailed data that would have allowed
17 them to calculate how many vehicles we actually intended
18 to produce, but they didn't use that data, so they
19 calculated a lower number of EVs, which tends to be
20 favorable from a cost standpoint. They assumed that PZEVs
21 were fully available, and then later in their report said
22 that that wasn't likely to be the case.
23 Potential applications don't necessarily
24 translate the market, so from a marketing standpoint,
25 there may be a little optimism there. They did the
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1 evaluation on the basis of a ten year life cycle. Now,
2 they did it for good reason, because it avoids a future
3 battery replacement and it doesn't make the cost so
4 horrific for an EV, but nonetheless ten years is not how
5 long vehicles stay on the road in California. Even in the
6 newest rule making, we're up to 15 years -- or under -- 15
7 years requirement under the PZEV categories, so ten years
8 maybe is optimistic.
9 There's no value allowance for the reduced
10 performance of a battery electric vehicle. And, in fact,
11 these vehicles mostly have reduced performance relative to
12 the gasoline vehicle that you're asking a customer to
13 replace with them. They use the lowest battery cost from
14 the battery technology report, which I would also note, as
15 did Dr. Kalhammer this morning, is an optimistic estimate
16 of battery availability, and they only used a 15 percent
17 markup for OEM costs. And the unfortunate reality is that
18 there's more than that. The dealers want to make money
19 along the way and so does everybody else that touches the
20 product.
21 They also included an estimation or an assumption
22 of salvage value, which the battery panel rejected as
23 speculative. They reused the battery replacement costs
24 much like the EO costs, which wasn't fully burdened for
25 all the extra steps in the process, all the extra handling
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1 that are required for service parts. As you're aware
2 service parts are significantly more expensive than
3 original production.
4 The 2003 vehicle incremental cost was the lowest
5 estimate from the suppliers they had. They used the low
6 edge band of the estimate from the Delukey Report. They
7 used electric price, assuming 90 percent off-peak
8 charging. You've heard testimony -- staff has heard
9 testimony during the workshop process that customers
10 regularly use convenience charging, which is not off-peak
11 charging. And they assume some pretty significant
12 efficiency improvements.
13 Now, we also have some points of disagreement
14 with the staff. I don't think we've ever read a staff
15 report that we agreed with perfectly, but we've addressed
16 those in written comments, which you received a copy of,
17 hopefully, yesterday and there's no sense going through
18 those here.
19 Let's see, commercialization criteria. Remember
20 I said you had to have a high quality functional product.
21 That's the one point where I think almost everybody
22 agrees. We have had extraordinary initial product quality
23 in our vehicles. We've had a battery failure rate much
24 less than one percent, which no one would have predicted
25 given the new technology that's embodied.
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1 We marketed a four-door, five-passenger utility
2 vehicle that wasn't the sedan, because there's a comment
3 in the report that there were no sedan's out there. And
4 it's a sport utility, but it has five passenger
5 functionality. It has a 70 to 90 mile real-world range,
6 recharges in something less than five hours because it
7 uses a slightly higher energy charging system. And we've
8 received very positive customer feedback.
9 And you will, no doubt, hear over the next two
10 days lots of very positive feedback from those who have
11 experienced electric vehicles, not only ours but others.
12 There's really no argument that the quality of the
13 vehicles placed under the MOA was quite good.
14 Realistically, though, the utility is less than the
15 equivalent size gasoline vehicle, because of range and
16 recharge and acceleration performance issues in most
17 cases.
18 So we got the first of three criteria taken care
19 of. We'll move to the next one. You have to have
20 sufficient market for the intended volume. And as staff
21 alludes to in the report this is the grayest piece of the
22 entire puzzle. I'll tell you straight out, Toyota didn't
23 test the market potential of our product. We satisfied
24 the requirements of the MOA. We're stair placing some
25 vehicles for early credit, but we did not do a retail
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1 launch and we did it purely for economics. We knew the
2 vehicles were going to be frightfully expensive and
3 there's a limit to how much loss any manufacturer is
4 willing to take.
5 That having been said, General Motors and Honda
6 have had fairly significant retail experience and they
7 have stories to tell that I'm sure they will tell about
8 the limited success they had in the early years, the first
9 two years of placement of those vehicles.
10 Their real world experience is consistent with
11 our market research, which suggests that there's going to
12 be a small market at the same price as the equivalent
13 vehicle, ignoring the fact that it's going to cost us a
14 lot more to build them, that the four percent mandate
15 volumes will require pricing below that of an equivalent
16 sized ICE vehicle and that all the marketing expenses are
17 going to be higher.
18 Even having said that, that's the status of the
19 market, but let me move on to the key critical issue that
20 you need to address. And that's you have to have a viable
21 cost and/or cost benefit relationship to go forward with
22 the technology development program.
23 There will be a huge premium cost associated with
24 2003 highway capable vehicles. Based on the relatively
25 optimistic staff assessment for cost and for minimal
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1 volume you're talking about half a billion dollars in plus
2 costs. Now we can argue about where the costs are going
3 to go, but somebody is going to have to absorb that half a
4 billion dollars. The reality in a commercial market
5 segment is those costs are going to get passed on.
6 So somebody is going to have to be able to absorb
7 half a billion dollars a year through the 2005 time frame
8 and more than that in six and later as the premium credits
9 go away. Now, some of that will come down with learning
10 of the vehicles, but not all of it.
11 Well, let's talk about, you know, cost
12 effectiveness maybe. On a per vehicle basis the EV is
13 clean. You do the math in the staff report, it's 23.7.
14 I've got a tenth of a pound of smog difference between my
15 numbers and Steve's. We'll have to go back and find that
16 somewhere, but you're still talking about fairly small
17 amounts of smog precursors saved in the staff's model ten
18 years 117,000 mile life of the vehicle.
19 On a per vehicle basis, the PZEV alternative
20 generates even less benefit, only about three and a half
21 pounds. Fortunately it costs less also, but you get about
22 three and a half pounds of benefit on the PZEV, about 24
23 pounds on the full function EV. At 2003 staff projections
24 of freeway capable vehicles, you're talking about $1.8
25 million. That's the same number that Steve had.
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1 A different number that addresses one of the
2 questions asked by the Board, is if you could somehow jump
3 to volume production, 100,000 vehicles a year instead of
4 the 22,000 forecast by staff, and you use what I regard as
5 the best or what staff used as the base case assumptions
6 for vehicle efficiency and the other things in the report,
7 that's a vehicle with a premium price of just less than
8 $10,000, premium cost, just less than $10,000 more than a
9 conventional vehicle. That's $840,000 per ton and that's
10 at relatively mature high volume production.
11 Then if you do the same calculation on the PZEV
12 side, it's $285,000 a ton. These are the highest cost
13 benefits ever seen by this Board. The most expense
14 regulation you have previously put in place is a cost
15 benefit of $11,040 per ton. So we're going from $11,000 a
16 ton to hundreds of thousands, in some cases millions of
17 dollars per ton.
18 Okay. I'm going to help you with some of these
19 conclusions, because you're new to this job of doing this
20 technology review. Passenger car plus truck one emissions
21 are steadily declining, even with the increased population
22 and vehicle miles traveled. There is the same curve you
23 saw a few minutes ago. The curve shows dramatic
24 improvement, even in the presence of all of that increased
25 travel in vehicle population. The passenger car plus
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1 truck one segment is a continuously declining portion of
2 the problem going forward.
3 The share of the inventory is also declining.
4 This is a chart you saw before, 29 percent of the problem
5 today going to 15 percent in 2010 and eight percent in
6 2020. And that footnote suggests, I ignored the marketing
7 affects that were the subject of some controversy in a
8 previous presentation.
9 Cost benefit of the EV component is 166 times
10 higher than any other rule. The cost benefit of the PZEV
11 component is 25 times higher. There's a graphic that you
12 almost can't read, because it's dominated by the scaling
13 that's driven by accommodating $1.8 million. You can't
14 even see the rest of it.
15 California can't afford the ZEV mandate. And
16 it's not your fault. It's not staff's fault. And it's
17 not our fault. It's a technology development program that
18 didn't deliver as expected when adopted. When adopted, it
19 was expected to cost only a thousand dollars, it cost more
20 than 20. When adopted it was going to save 14 tons per
21 day in air quality, it saves less than two. It's a
22 technology that didn't come home. This is a technology
23 that should not be commercialized, because it's not cost
24 effective.
25 But you get good news here. Because of the
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1 declining contribution of passenger car plus truck one,
2 you can easily declare victory in this sector, move on to
3 more cost effective measures in some other sector and
4 let's get on down the road. We'd be glad to work with
5 staff to develop measures to offset the modest air quality
6 loss through the suspension of the mandate.
7 And then this last is kind of a suggestion.
8 Creative technology, not forcing, but enabling
9 partnerships are perhaps a better solution, because
10 technology doesn't always come through like you'd like it
11 to.
12 CHAIRPERSON LLOYD: Dave, is Toyota a member of
13 the California Fuel South Partnership?
14 MR. HERMANCE: No, sir.
15 CHAIRPERSON LLOYD: Any other questions from the
16 Board?
17 BOARD MEMBER RIORDAN: Mr. Chairman, just a
18 comment. One of your products, RAV4, obviously had some
19 acceptance, because my information is there were people
20 who would have liked them but couldn't get them.
21 MR. HERMANCE: You're correct.
22 BOARD MEMBER RIORDAN: So how does that square
23 with, you know, those ideas of sitting in the board room
24 and making some decisions, when obviously there was a
25 demand that was there that -- and I personally don't
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1 recall the numbers that you would have made of that
2 particular model, but that people really were interested
3 in them. And some of them, because I've had the luxury of
4 reading some of the information that's before us, were
5 some substantial good buyers. I'm looking at Warner
6 Brothers as one.
7 MR. HERMANCE: Certainly. We could have placed
8 more vehicles. There is no question about that. We were
9 leasing that vehicle, if you back calculate from the lease
10 price, to the equivalent MSRP, at the equivalent of about
11 $22,000 The vehicle cost us over a hundred thousand
12 dollars. I think that might explain why we didn't hurry
13 to find additional market niches for the vehicle.
14 Cost is the overriding issue. Now, the cost will
15 come down as the volume goes up, but the cost will, in
16 everything that staff has put together and everything the
17 manufacturers have put together, the cost will always be
18 substantially higher than equivalent sized gasoline
19 vehicles.
20 CHAIRPERSON LLOYD: Supervisor DeSaulnier.
21 BOARD MEMBER DeSAULNIER: Thank you. On the
22 Prius, that's successful right now, correct?
23 MR. HERMANCE: Well, it's early to say that, but
24 yes, we think so.
25 BOARD MEMBER DeSAULNIER: So you're going to put
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1 more investment into the Prius, most likely. And when you
2 put more investment in terms of improving the technology
3 around the electric engine, the battery?
4 MR. HERMANCE: Yes, sir, that's correct. There
5 is already internally a third generation vehicle. The
6 vehicle that went on sale a month ago is what we refer to
7 internally as the second generation vehicle. Third
8 generation vehicle will be on market sometime in the 2003
9 calendar year if history is a guide.
10 That vehicle will get better fuel economy and
11 cost us less to manufacturer. It will probably be sold at
12 the same MSRP, because right now we're just breaking even
13 on the car.
14 BOARD MEMBER DeSAULNIER: What are your marketing
15 people telling you what's the primary reason for the
16 initial success, is it the fuel economy, the stylish
17 looks?
18 MR. HERMANCE: This market doesn't really value
19 fuel economy very much. It's the techno innovativeness of
20 it and the fact that they can be technology leaders
21 without compromise in what their utility requirement is.
22 BOARD MEMBER DeSAULNIER: Is this from surveys or
23 focus groups?
24 MR. HERMANCE: Yes. And we've done some
25 clinicing early. We need to get a few more vehicles in
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1 hands to talk to those who bought them to actually
2 determine why they bought them. I've been monitoring a
3 web site that -- an independent web site that came up in
4 late June about the vehicle. And clearly the folks that
5 are on that web site are technology innovators and are
6 very keen on the fact that they've got a car that has very
7 low exhaust emissions and very good fuel economy and they
8 believe to be something that they can do going forward to
9 preserve like for their kids is the way a couple of them
10 have put it on the Internet.
11 BOARD MEMBER DeSAULNIER: If you offer just a
12 little bit more, they could be really cool and have a
13 really high tech car.
14 MR. HERMANCE: That's true. It depends on how
15 you define just a little bit.
16 BOARD MEMBER DeSAULNIER: I was just being cute.
17 Since Matt left, I felt the need.
18 (Laughter.)
19 MR. HERMANCE: Oh, okay. I appreciate that.
20 CHAIRPERSON LLOYD: Ms. D'Adamo.
21 BOARD MEMBER D'ADAMO: Dave, first of all, I
22 appreciate the clarification or the points that you made
23 in clarification on the staff report, particularly on the
24 mobile source emissions inventory. And I was wondering if
25 you could comment -- well, first of all, what is the real
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1 world driving range for the RAV4?
2 MR. HERMANCE: It's on the order of 70 to 90
3 miles depending upon how hot it is outside and how cold
4 you want to be inside and what terrain and traffic you are
5 driving in.
6 BOARD MEMBER D'ADAMO: In light of that, since
7 it's so close to the hundred miles, which, as I understand
8 it, you'd be eligible for multiple or some type of a
9 multiple credit once you get beyond a certain amount,
10 could you comment on the type of battery technology that
11 you're using. I understand that it's currently a 60-watt
12 hour battery and that perhaps some other technology may
13 exist currently, which would get that range far beyond
14 that which you have right now. And that technology I'm
15 referring to is an 80-watt hour battery.
16 MR. HERMANCE: I heard at least two questions.
17 I'll try to answer those, and then if I missed some,
18 please help me out.
19 The range of the vehicle is 70 to 90 real world.
20 On the chassis dynamometer test, which is the basis for
21 the multiple credits, it's 146 miles, so the vehicle
22 already qualifies for multiple credits. Actually, it
23 qualifies for more multiple credits than anything except
24 the EV one, the nickel-metal hydride battery. It's a very
25 efficient vehicle. The reality is though that when you
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1 move off the chassis dyno out into the real world, you
2 lose a lot of the range.
3 So to increase the real world range or for that
4 matter the test range, if you could find a battery with
5 higher specific energy and still carry the same mass, the
6 same weight of batteries, you're right you would have
7 longer range. The battery technology report, which there
8 are folks a lot better qualified to review the available
9 battery technology than I am, have suggested that there
10 are only modest increases in specific energy possible with
11 the nickel-metal hydride chemistries.
12 They evaluated one higher energy nickel-metal
13 chemistry and it dismissed it as speculative because it
14 was forecast five years ago and still is forecast today
15 and hasn't really made any progress further.
16 To get at the higher energy densities than are
17 today available in the nickel-metal hydride products,
18 you've got to go to a different battery chemistry, either
19 the lithium technologies or something that we haven't even
20 seen yet. And they clearly will not be ready by 2003.
21 Did I miss other elements?
22 BOARD MEMBER D'ADAMO: No, no. That's fine.
23 Just a comment. It's my understanding and maybe staff
24 could comment or any of the battery manufacturers that are
25 here preparing to testify today. It's my understanding
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1 that the technology does exist to get that range increased
2 by about an additional 30 percent. And I might be wrong
3 in the information that I have, but I just wanted to use
4 this as an opportunity to really compliment your company
5 on a great product. I really like that vehicle. I've
6 driven it personally along with others and am real happy
7 with its performance and it sure would be nice if that
8 range could be increased.
9 MR. HERMANCE: I agree. The range is a limiting
10 factor for the market.
11 BOARD MEMBER D'ADAMO: Thank you.
12 CHAIRPERSON LLOYD: Yes, Mr. Calhoun.
13 BOARD MEMBER CALHOUN: Dave, let me be certain
14 that I understand. I think what I thought I heard you say
15 when in response to the question as to why there was a
16 lack of penetration in Toyota vehicles, I thought I heard
17 you say that the principal reason was the amount of money
18 that Toyota was losing on each vehicle.
19 MR. HERMANCE: That's what I said.
20 BOARD MEMBER CALHOUN: The more you sold --
21 MR. HERMANCE: The more you lose.
22 BOARD MEMBER CALHOUN: -- the more you lose.
23 MR. HERMANCE: Yes, sir, that's it. It's not one
24 of those deals where you can make it a back on volume.
25 BOARD MEMBER BURKE: So what's the number you're
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1 losing.
2 MR. HERMANACE: Pardon? The vehicle production
3 costs today are slightly in excess of $100,000 per
4 vehicle. We're selling them for -- or leasing them at the
5 equivalent of $22,000 MSRP.
6 BOARD MEMBER BURKE: So you're losing $78,000.
7 MR. HERMANCE: It's actually worse than that,
8 because the lease assumes a residual value and the
9 vehicles probably don't have the residual value.
10 Now, as staff pointed out in the staff report --
11 BOARD MEMBER BURKE: Wait, wait, wait. No
12 residual value. So what you're going to do is junk that
13 battery where everybody says that there's a hot market for
14 it, and that has no sales value, right? We're not talking
15 about the CO and the rest of it. You know, when you're
16 talking about no residual value, that's not true. So you
17 know, you can say limited residual value. You can say not
18 the same as a used car residual value, but when you say no
19 residual value, we both know that's not true.
20 MR. HERMANCE: It doesn't have the residual value
21 that you would use in the lease rate calculation at which
22 we leased the vehicle, which is an assumption of 50
23 percent residual at three years.
24 BOARD MEMBER BURKE: It may be higher. If you're
25 paying $100,000 for a battery and you can sell it for 50
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1 after the life of the battery, it may be higher than the
2 blue book.
3 MR. HERMANCE: Well, anything is possible, sir.
4 BOARD MEMBER BURKE: Just a second ago, you were
5 trying to add no residual value. It's just not true.
6 MR. HERMANCE: In the context --
7 BOARD MEMBER BURKE: It's just not true.
8 MR. HERMANCE: In the context of the lease rate
9 that we lease them at, it doesn't have sufficient residual
10 value to make that a practical lease as a business
11 proposition.
12 BOARD MEMBER BURKE: I understand that, but what
13 I was really trying to get at before you took me off on to
14 the no residual value, was if there is, in fact, residual
15 value, if you took the smallest possible number, say if
16 you used it as scrap, you used the battery as scrap, you
17 used the entire vehicle as scrap, whatever that number is
18 added to the lease value, then the number between that and
19 the loss is smaller. And so, you know, it might give us
20 an opportunity to evaluate different ways to mitigate that
21 loss.
22 Now, I know you don't want us to mitigate it,
23 because you don't want to build them, but --
24 MR. HERMANCE: In fact, if I could sell them at a
25 profit, we'd be the first in line to build them.
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1 BOARD MEMBER BURKE: Well, in order to sell them
2 at a profit you've got to kind of help the ball along
3 here.
4 MR. HERMANCE: And I would and we are with Prius.
5 We underwrote the price of Prius in the first model
6 release. We're selling them at breakeven today. We will
7 be profitable in three. But on a long-term basis, beyond
8 the one full model cycle, no manufacturer will price the
9 vehicles below their cost unless they're getting some
10 benefit for it someplace else. It's just not an effective
11 strategy to stay in business.
12 BOARD MEMBER BURKE: Because here's the numbers
13 I'm looking at. You know, somebody was throwing around a
14 number recently of, you know, giving -- just pick a
15 number, $50 million to supplement the price. Now, if the
16 residual value after you got the vehicle back, after you
17 took whatever you capped it at and the number was, say,
18 you lost 50,000 a car. Fifty thousand into 50 million, my
19 math is not that good, is that 10,000 or -- it can't be,
20 1,000 would be five million.
21 You're right.
22 MR. HERMANCE: That's not enough volume for the
23 mandate.
24 BOARD MEMBER BURKE: But that's just a number,
25 because, you know, if the number gets bigger, you know, or
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1 the loss gets smaller, at least that's an alternative.
2 MR. HERMANCE: Oh, I agree. The number, based
3 upon staff's estimate of the volume and staff's estimate
4 of cost, is $500 million. If you can find $500 million,
5 and -- although I think it would be probably fairly
6 politically unpopular to feed that to the auto industry to
7 have us make these vehicles, we could build the vehicles.
8 BOARD MEMBER BURKE: Well, I don't see --
9 MR. HERMANCE: It's only a matter of money.
10 BOARD MEMBER BURKE: I don't think it's worth
11 that. You guys would just raise the price of the cost of
12 building new vehicles, and eat it all up and we'd still be
13 paying the money, but at least it was a passing thought.
14 CHAIRPERSON LLOYD: Ms. D'Adamo and then
15 Professor Friedman.
16 BOARD MEMBER D'ADAMO: Yes, I could use some
17 clarification from staff on the costs that are being
18 presented. There is a gap, an $80,000 gap. And I thought
19 that I had read somewhere in the staff report that the
20 incremental cost is not that large.
21 MR. CROSS: Well, when you say -- I'm not sure.
22 MR. HERMANCE: I think I understood. You can
23 accept the answer from me and then Chuck can verify if I
24 got it right. What I said was the cost of the MOA
25 vehicles was $100,000, not the cost of the vehicles that
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1 would be produced in 2003. In 2003 we used staff's number
2 of a $22,000 premium for the vehicle in 2003.
3 BOARD MEMBER D'ADAMO: All right.
4 BOARD MEMBER BURKE: Now, in 2003 it's going to
5 cost 20,000 more?
6 BOARD MEMBER D'ADAMO: Which is quite a bit less
7 than the $80,000 figure.
8 MR. HERMNACE: Absolutely. Costs are going down.
9 They're just not going down far enough fast enough.
10 CHAIRPERSON LLOYD: Professor Friedman.
11 BOARD MEMBER HUGH FRIEDMAN: As I understand it,
12 staff's 20,000, give or take, differential or premium cost
13 was based on the mandate; is that correct, does that
14 mandate volume?
15 MR. SHULOCK: That is correct.
16 BOARD MEMBER HUGH FRIEDMAN: So if more than
17 mandated volume were actually salable, produced and sold,
18 not only in California, which I think this was limited to,
19 but in other states, you didn't take into account sales in
20 other states, did you?
21 MR. SHULOCK: We did not, but what we did, we
22 really balanced two factors. That 20,000, an individual
23 manufacturer won't be building 20,000. They'd be building
24 some smaller numbers. So unless there were some sort of
25 combination order, the economy of scale would be a little
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1 less than 20,000.
2 On the other hand, there are these things going
3 on in other states. And our judgment was if you look at
4 both of those things together, that 20,000 was a pretty
5 good rule of thumb.
6 BOARD MEMBER HUGH FRIEDMAN: Well, obviously some
7 models will sell better than others, some makes market or
8 may not market better. There are different applications
9 that are being thought about. But I think it may be just
10 as reasonable, at this point, for us to make an
11 assumption, not necessarily the only assumption -- we can
12 go the other way -- it seems to me we could also assume
13 that there may be enough demand and interest to buy more,
14 especially if the price is less for some models and not
15 only in California but in other states who intend to
16 follow California. I understand why nobody has addressed
17 that because that's somewhat speculating.
18 MR. HERMANCE: Well, I would only point out that
19 even if we built 100,000 of them, again, using staff's
20 numbers, it's still a $10,000 per vehicle premium. It
21 doesn't ever go to zero.
22 MR. SHULOCK: To provide staff's perspective on
23 that point, it depends on what vehicle you look at. I
24 think he's looking at the MOA type vehicle, well --
25 BOARD MEMBER HUGH FRIEDMAN: I'm a Board of
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1 Director's Member now of Toyota and I'm being given a
2 report, and we've already gone through the MOA. And I'm
3 trying to figure out whether he makes a business case on
4 any basis that's realistic on any set of assumptions that
5 are within the realm of reality to make these vehicles.
6 And I don't hear the information coming to me to make that
7 decision.
8 I hear all the downside. I hear all the
9 problems. And I know that the staff is trying to be
10 balanced and is giving us a balanced scenario, but I'm
11 going to ask the question, can't we sell these things in
12 New England, in Massachusetts in other states that are
13 equally concerned? Can't we make this so that we can
14 bring it down to zero and why not?
15 MR. HERMANACE: Because the battery will never
16 get that cheap. The battery technology report --
17 actually, there's some data that the battery folks have
18 that shows that at 360,000 vehicle packs per year, the
19 battery cost is still $225 a kilowatt hour and that price
20 is all plus cost on the vehicle.
21 If there was a scenario which gets the vehicle to
22 a profitable point some time in my lifetime, then we could
23 pursue it. The problem is it doesn't get there, not only
24 in the near term, it doesn't get there in the longer term.
25 CHAIRPERSON LLOYD: But, Dave, you're also, I
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1 think, focusing your comments on, maybe I'm wrong, but
2 just on battery electric vehicles. And clearly as we
3 talked earlier we've got other technologies which are
4 going to feed in as time goes on.
5 MR. HERMANCE: The only other zero technology is
6 a hydrogen fed fuel cell, but, again, it's a ways away.
7 That's correct. You're right, I was talking exclusively
8 about battery electric vehicles. And I was talking
9 exclusively about my perspective, because I can't speak
10 for the rest of the industry. But as a member of the
11 Board of Directors at Toyota Motor Corporation, if I could
12 find a market for 100,000 units, it would still not be a
13 cost effective decision for the corporation.
14 BOARD MEMBER HUGH FRIEDMAN: Well, it may be a
15 socially responsible decision considering we and others
16 like us have been putting out vehicles that have been,
17 whether unintended consequences or not, polluting the air
18 for many, many years. And as long as we can do that
19 without sacrificing too much ultimately to our
20 shareholders, stakeholders, I'd like to take a real close
21 look at this. I don't have enough information on that.
22 MR. HERMANCE: Let's see 100,000 vehicles at
23 $10,000 plus cost per vehicle is a Trillion dollars. Did
24 I do the math right? That can't be right. It's a
25 billion. A hundred thousand vehicles at $10,000 each,
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1 it's a billion dollars. That's a lot of social
2 responsibility.
3 BOARD MEMBER BURKE: In following with his
4 concept of being a board member, I deal with much smaller
5 numbers in my company, but I've got to tell you, if I had
6 a product that was $10,000 -- losing $10,000 of profit,
7 I'd raise the price to $12,000 and I know it would be a
8 profitable item. Now, it might not sell as many, but
9 every item I sold, I know I'd be making $2,000.
10 What I can't figure out is why the industry has
11 just designated whatever price they have on these
12 vehicles, that this price they lose 10,000, 20,000,
13 80,000. If the car manufacturer is going to be 32,000 and
14 it shows -- all the marketing studies I've seen on this
15 vehicle shows that the initial purchasers of this vehicle
16 are the innovators in society, and $10,000 to those people
17 is not an insurmountable about of money.
18 Then you're not losing money. You know, I don't
19 understand this. You know, we've got to lose money on it,
20 it's going to be a trillion dollars and all that kind of
21 stuff. I just don't understand it.
22 CHAIRPERSON LLOYD: Supervisor DeSaulnier.
23 BOARD MEMBER DeSAULNIER: Yeah. David, I want to
24 ask you a question that was somewhat off the line of
25 questioning, you've had. And you may be relieved to hear
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1 that and maybe not.
2 And I want to ask this because you live here in
3 California and you work for a company that's very
4 successful in another culture. And I'm thinking about
5 this from a perspective of somebody who deals with land
6 use and transportation dollars in the Bay Area. Now, in
7 the Bay Area we're projected to add a million and a half
8 people in the next 20 years, and a million more jobs.
9 But we're spending most of our new expenditures
10 on transportation improvements on transit, which is
11 different in California, and the Governor has done that
12 recently.
13 So wouldn't it -- you're sort of suggesting that
14 we stay the status quo. And it seems to me that there is
15 a market that will develop just like -- even though, I
16 admit the culture in California is very different from
17 Japan, that there will be a market that will continue to
18 grow as we become more urbanized for different types of
19 vehicles other than SUVs, given that congestion Dr. Burke
20 was talking about earlier in the south coast, is going to
21 continue to happen in urbanized areas of California.
22 And that leads me to the following conclusion is
23 wouldn't that open up a market for vehicles like the
24 neighborhood vehicles?
25 MR. HERMANCE: The neighborhood vehicle, that
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1 market vehicle is so unique that I have difficulty even
2 anticipating. That vehicle, pardon me here, is a golf
3 cart.
4 CHAIRPERSON LLOYD: Hold on, Dave, I think maybe
5 Mark is including city cars.
6 BOARD MEMBER DeSAULNIER: City cars.
7 MR. HERMANCE: Oh, I'm sorry, city cars. You're
8 right, over time there may develop an opportunity for
9 marketing of city cars. Right now we don't even market
10 the electric city car in Japan. We do sell -- well,
11 actually Toyota doesn't sell many cars. One of our
12 subsidiary companies does, Daihatsu.
13 But you're right, the mini car market in Japan is
14 big. Will it ever get to be that big here? I'd be
15 surprised. We would have to have a lot more gridlock than
16 we have today.
17 BOARD MEMBER DeSAULNIER: Well, we're going to.
18 MR. HERMANCE: And I agree with that. I may need
19 to think about where I'm living. In any event, as market
20 niches develop, wherein you can place a vehicle that you
21 build and return -- get a return on your investment,
22 absolutely we'll follow those markets. In fact, that's
23 why we brought Prius to the US. The US doesn't value fuel
24 economy and that's principally a fuel economy vehicle.
25 But we added to it the attributes of being low
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1 tailpipe emissions and fuel economy and some unique
2 styling and features and we think we can sell the car. It
3 carries a less premium per vehicle than does the electric
4 vehicles. And so it represents a lot less risk.
5 BOARD MEMBER DeSAULNIER: Thanks.
6 CHAIRPERSON LLOYD: Yeah. Recognize fellow board
7 members here, we've got about a hundred more witnesses to
8 go and we're now at 2:00 o'clock and two. I'm going to
9 stay here. I'm paid to stay here all the time.
10 BOARD MEMBER D'ADAMO: I apologize. I just have
11 to jump in one more time on this issue of cost. And I
12 took a look at some notes that I took from a briefing from
13 staff. And as I understand it, that $20,000 is for a four
14 passenger vehicle, and that that cost drops down quite a
15 bit if we're looking at a city car type of a model.
16 MR. HERMANCE: Yes.
17 BOARD MEMBER D'ADAMO: And Professor Friedman
18 referred to the social benefits. I think there are also
19 perhaps some economic benefits that are not accounted for
20 in that price differential, the economic benefits being
21 reduction in maintenance and not having purchased
22 gasoline, correct?
23 MR. HERMANCE: Those are operating costs
24 benefits. But on a life cycle cost basis, when you add
25 those benefits to the disadvantage of having to replace
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1 the battery, life cycle cost is much higher than gasoline
2 vehicles.
3 MR. SHULOCK: From our standpoint, the question
4 of in volume production can the vehicle ever be
5 competitive to a conventional vehicle, what Mr. Hermance
6 is saying, I think, is for the vehicle that looks much the
7 same as the vehicles we have today.
8 What we have said is if there's some efficiency
9 improvement and you have a lower range vehicle, a 60-mile
10 vehicle, that's highly efficient and you take into account
11 the operating cost savings, that's where you get to the
12 point where they're really in the same ball park. So it
13 sort of depends on what vehicle you're looking at, but in
14 volume production, our assessment is, that that operating
15 cost savings is enough for some of the vehicles, not all
16 of the vehicles.
17 You know, I don't disagree with what he's saying
18 about the vehicle that he's talking about. But for some
19 of the vehicles, those operating costs savings do get you
20 to a comparative.
21 BOARD MEMBER D'ADAMO: Okay. And then as far --
22 getting back to the societal benefits, there are a variety
23 of subsidy programs that are currently in place that cost
24 differential does not account for those subsidy programs.
25 MR. SHULOCK: That is correct.
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1 BOARD MEMBER D'ADAMO: Thank you.
2 CHAIRPERSON LLOYD: Thank you very much, Dave.
3 Next is Reginal Modlin, Daimler Chrysler.
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1 CHAIRMAN LLOYD: Next is Reginal Modlin,
2 Daimler Chrysler, and then we have Kelly Brown, from
3 Ford, Ben Knight, Honda, and Sam Leonard, to complete
4 the auto companies.
5 MR. MODLIN: Mr. Chairman, Members of the
6 Board, I'm Reg Modlin.
7 I'm director of Environmental and Energy
8 Affairs, at Daimler Chrysler.
9 I'm pleased to be here today to address this
10 very important issue. My comments are based on our
11 experience under the MOA and also a decade of
12 attempting to build, manufacture and sell advanced
13 technology vehicles.
14 As you might know, Daimler Chrysler was the
15 first manufacturer to certify a ZEV for sale in
16 California, so our experience does go back a few years.
17 We find, as has been mentioned several times
18 today, that people who drive the products that are
19 being offered by the manufacturers, such as Daimler
20 Chrysler, others who have talked here today, that
21 people who drive those vehicles like them.
22 The people in the market place who have had a
23 chance to experience these vehicles one on one enjoy
24 them.
25 We are not here to talk about whether or not
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1 people enjoy driving vehicles. We here to talk about
2 today whether the mandate can be a success.
3 For the mandate to be a success, I think
4 everyone agrees that the battery car electric vehicles
5 must be viable for a mandate, in its current form, to
6 be a success.
7 The Battery Panel concluded that battery costs
8 are high and will not meet cost-competitive targets for
9 some time.
10 The staff concluded that the incremental cost
11 of electric vehicles is $20,000. We agree with the
12 magnitude of those suggestions, and I won't go beyond
13 that, but the battery-powered vehicle in the time that
14 we are looking at does not appear to be viable with the
15 report from the Battery Panel and the staff.
16 PZEV was given as an option that must be
17 feasible to be taken advantage of in a 2003 model year
18 time frame.
19 The staff concluded that the industry would
20 not be able to fully use the PZEV option. I agree with
21 that conclusion.
22 So, the PZEV option is not feasible in the
23 2003 time frame. The air quality benefits must be
24 significant for this program to be a success.
25 The staff concluded that the emission
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1 reductions would be in the neighborhood of one and a
2 half tons per day. That's about one-tenth of a percent
3 of the inventory in 2010. One-tenth of a percent of
4 the inventory.
5 That can hardly be called significant.
6 Let's look at the commercial viability of the
7 electric vehicle, just to delve into these three points
8 just a little bit.
9 The estimated cost of the batteries is
10 $13,000. I will just throw in my two cents, that at
11 $13,000, that is a pretty darned good price or cost
12 that we see, and we also do not see that cost coming
13 down significantly.
14 That is driven by materials. It is not driven
15 by volume. Also, the way that the volumes have been
16 thrown around today, if we only increase volume to
17 100,000, the price will surely come down.
18 Remember how many manufacturers will have to
19 engage in this process. Each one of us probably has a
20 fairly unique battery, and there will only be a chance
21 for economy of scale on some of us to move into partner
22 agreements on battery configuration.
23 So volume, the economy of scale will not be
24 reached at any time in the near future.
25 Again, the estimate on cost of EV at $21,000
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1 is in the right ball park.
2 Further, the staff made a very accurate
3 statement that in their view, and we agree, that a
4 reasonable interpretation of consumer demand implies
5 that demand exists when vehicles are priced at or near
6 cost.
7 Several times today the Board has engaged in
8 this discussion. We agree that we have to come
9 somewhere in the neighborhood of covering costs as we
10 price product, whether it is individually or throughout
11 our fleet.
12 In our experience through the MOA, we spent
13 more than two years placing 168 individual vehicles.
14 Daimler Chrysler did this under the auspices of our
15 fleet sales department, but I know that many of you had
16 the opportunity to talk with our folks in that
17 department and have come to understand that each one of
18 those was a very personal experience.
19 We priced those vehicles at $15,000, comparing
20 that to a comparable vehicle, comparable conventional
21 vehicle of about $21,000 to $22,000.
22 So, 168 vehicles priced at $15,000, and we
23 were just able to place those vehicles.
24 Our conclusion is that there is no sustainable
25 customer demand at this time.
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1 Usefulness of the PZEV option, the PZEV option
2 really offers the industry no mandate relief, or I will
3 speak specifically to Daimler Chrysler.
4 PZEVs will only be available in limited
5 numbers in 2003. The PZEV requires pulling ahead of
6 exhaust control technologies that were projected by the
7 staff to be available beginning, starting about 2008.
8 So, it requires pulling that technology ahead
9 by five years and to add on an equally experimental
10 evaporative emissions technology.
11 For us, that means to put 32,000 vehicles into
12 California to make use of that technology or to make
13 use of that option.
14 That is about 30 percent of our sales and
15 would require virtually all four cylinders and many of
16 the six cylinder vehicles to be changed over. That is
17 several engine families.
18 Staff agreed that industry would not be able
19 to take full advantage of the PZEV option. Let me show
20 you why.
21 The timing on its own just didn't allow us to
22 take advantage of this. What we have here is an
23 illustration that shows that the first time that we
24 engaged in a LEV I compliance, a vehicle compliant with
25 the LEV I program, was basically in 1996.
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1 By six years later, we are tasked with
2 reducing emissions by 55 percent to the first time we
3 started introducing ULEV II technology. That's the
4 task of the LEV II program.
5 Then in that same program, we are tasked to
6 continue on, continue on in another four years between
7 an 89 percent reduction, using Super ULEV technology.
8 That's by 2007 or 2008 time frame.
9 Those are very aggressive goals, and we did
10 work with staff closely in the development of that
11 program.
12 Then it is suggested that we back-up that
13 technology by five years and make it available starting
14 in 2002 as an offset. This is technology that we all
15 agreed that would not be substantially available until
16 2007 calendar, and on top of that add zero evap and
17 guarantee the function of the vehicle for 150,000
18 miles.
19 The problem started when the LEV II was
20 adopted and incorporated the PZEV option in December of
21 1998. It appeared to allow almost three years of lead
22 time.
23 The issue that we have is that to make or
24 start producing vehicles in 2002 calendar year, our
25 production designs have to be complete now.
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1 That really only gave us one and a half years
2 to complete those designs, design, develop and release
3 them for production.
4 There are two points to this slide that I
5 think are pretty critical.
6 One is that the time was limited to develop
7 this hardware. We are going to be there just as good
8 as anybody else, but to do it across the total model
9 lines becomes extremely difficult.
10 It also shows that we have run out of time to
11 add or change product direction for the 2003 model
12 year. We have run out of time.
13 You have seen this in a couple of variations,
14 so I will just mention my take on it that in 1990, when
15 the Board decided to pursue the electric vehicle
16 mandate, in the Board's opinion, the cost would be
17 acceptable and the benefits would be appreciable.
18 That information has just simply changed. The
19 staff, we agree with the magnitude of what they are
20 looking at, $20,000, and with the benefit as was
21 explained earlier, the cost benefit of $1,800,000 per
22 ton, I just have to leave the question, that if that
23 was the information that the Board had before them in
24 1990, would you have made the same decision?
25 In our opinion, we have here for discussion
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1 that the Board is left with three choices regarding the
2 mandate in its current form.
3 One is to eliminate it. Another one is to
4 postpone it. Another one is to leave it stand as it
5 is.
6 To offer just some comment on these three
7 elements, if we were to pursue elimination, we respect
8 that this is a difficult issue, but the staff report
9 does call to attention reasonable interpretation that
10 consumer demand says that the demand will exist when
11 manufacturers recover cost, we agree with that, that
12 the MOA experience confirmed that there is no
13 sustainable market for battery-powered electric
14 vehicles at or near the manufacturers' cost is the
15 point to be made.
16 So, elimination would allow the concentration
17 on more cost-effective means of achieving emission
18 reductions and advancing technologies that you are all
19 very much aware of.
20 Competition in our mind will force the
21 continuation of the invention process.
22 Comments on to postpone, the technology is
23 just simply not ready, but some, some in the audience
24 today, do feel that pressure should not be entirely
25 removed.
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1 Maybe those same some feel that time will
2 allow hardware to develop, and maybe the same some
3 would feel that the market will eventually develop for
4 battery-powered electric vehicles.
5 I do claim that manufacturers are competing in
6 pursuit of technology to lower emissions, and
7 postponement would provide time to further develop the
8 hardware, and I underline, explore market potential in
9 a retail market, and pursue more cost-effective means
10 of achieving emission reductions.
11 Another difficult choice then out of the three
12 then is to leave it stand. We do believe strongly that
13 it is too late to alter the mandate for 2003 in a way
14 that would require manufacturers to change hardware or
15 product.
16 We would not have enough time to make those
17 changes. The lead time has run out. We have no
18 further lead time.
19 Some outside of industry would believe in
20 letting the mandate stand would force the market to
21 test the available technologies.
22 We have to have a plan to meet the
23 requirements of the California requirement, and I will
24 stand by our statements to the Board and to members of
25 the staff that we plan, I have that plan.
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1 Our only concern, our only concern is that the
2 market place will not respond in kind. With that
3 observed, leaving it stand threatens manufacturers with
4 noncompliance and undesirable choices.
5 One choice that we do have that is very clear
6 is we could just limit sales and force extended use of
7 older cars.
8 Another choice is to buy, and I put that in
9 quotes, because I do not know really know where we
10 would buy credits, I don't know of anybody here that is
11 anticipating that we would be able to create excess
12 credits to sell.
13 This is really moving all by itself, folks.
14 In any sense, the noncompliance and
15 undesirable choices are what we are left with.
16 In the spirit of discussion, those are our
17 views, and we do feel, going to the last slide, that
18 the ARB is left with three choices, only three choices.
19 That is, one, to discuss whether to eliminate
20 the mandate in its current form, to postpone it or to
21 leave it stand in its current form.
22 Thank you for your attention. I sincerely ask
23 that the Board take into consideration that there is an
24 awful lot of information that is being delivered today.
25 Some of it, I am sure you are aware of, and
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1 some of it, I believe much of it, from what I have
2 heard today, maybe you haven't. I know I haven't.
3 I just ask that the Board take the time, take
4 any time that is necessary to fully understand the
5 meaning of the information and how it mixes and come up
6 with the best decision for the State of California.
7 You should take that time.
8 Thank you for your attention, again.
9 CHAIRMAN LLOYD: And I think you will find
10 that we will take that time, Reg.
11 I appreciate your comment there.
12 Any questions?
13 Dr. Burke.
14 BOARD MEMBER BURKE: Just one question.
15 CHAIRMAN LLOYD: You did sign the memo?
16 BOARD MEMBER BURKE: I'm sorry.
17 I'm a man of my word.
18 CHAIRMAN LLOYD: Thank you very much.
19 We have Kelly Brown.
20 MR. BROWN: I didn't do that. I haven't done
21 anything yet.
22 CHAIRMAN LLOYD: My colleagues wanted to
23 welcome you, Kelly, and wondered whether you preferred
24 to be here or in DC?
25 MR. BROWN: I got the long straw.
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1 BOARD MEMBER RIORDAN: Smart man.
2 CHAIRMAN LLOYD: That was good, from the
3 Supervisor on the end.
4 MR. BROWN: Now I know how to get information
5 to the Board.
6 CHAIRMAN LLOYD: Are you able to talk without
7 visual aids?
8 MR. BROWN: Are you able to listen without
9 them?
10 CHAIRMAN LLOYD: Yes.
11 MR. BROWN: Could I ask the field judge to
12 give me my 13 seconds back on the clock here.
13 Thank you.
14 I'm Kelly Brown. I'm with Ford Motor Company,
15 and I'm Director of Vehicle Environmental Engineering.
16 What I want to do, if we find my slides, is
17 tell you a little bit about what we're doing, what we
18 think we can do and what we think may go a little too
19 far, or maybe even be counterproductive.
20 CHAIRMAN LLOYD: Is there any pun intended?
21 MR. BROWN: Any pun intended at?
22 CHAIRMAN LLOYD: What you think you can do?
23 MR. BROWN: You're getting ahead there.
24 This is starting to be cued up a little bit as
25 either you're with 'em or agin' 'em, you're either for
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1 EVs or not.
2 I don't that's the issue that's on the table.
3 We are not at all opposed to EVs.
4 We are going backwards. I'm not with Nick.
5 We are not at all opposed to EVs.
6 We think there is a niche market for EVs. We
7 have developed a brand that we announced this year, the
8 Think brand, for electric vehicles.
9 It's a brand of Ford Motor Company, just like
10 Ford Division is a brand of Ford Motor Company, or
11 Lincoln Mercury, or Jaguar, Austin Martin, Volvo, or
12 any of the others.
13 We also have a host of other alternative fuel
14 vehicles, and we put those out without any mandate, and
15 that has given us a lot of marketing experience.
16 I really kind of need those slides now. Can
17 we take a time out here for a minute?
18 It is really at a disadvantage without the
19 slides. I'm going to be describing product without --
20 CHAIRMAN LLOYD: Lisa, how long is it going to
21 be?
22 BOARD MEMBER DeSAULNIER: Dr. Burke would like
23 to fill the time.
24 BOARD MEMBER BURKE: Zip is the word.
25 BOARD MEMBER RIORDAN: He's really sensitive
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1 about that.
2 MR. BROWN: It goes to show you can have
3 implementation problems even with technology.
4 CHAIRMAN LLOYD: Speak for yourself.
5 MR. BROWN: This is our all new Escape compact
6 SUV that comes out next year, and it will be available
7 as a hybrid electric vehicle in 2003.
8 The hybrid is targeted at PZEV emissions and
9 40 miles per gallon fuel economy.
10 This is the Think Battery EV, the core of our
11 new brand. Think is a small two passenger hatch-back
12 that is available now in Europe.
13 It debuts globally in 2002 and will be sold
14 across the United States.
15 The Think Neighbor is a low speed vehicle.
16 It's capable of up to 25 miles per hour and a 30 mile
17 driving range.
18 The Neighbor begins production this model
19 year, the 2001 model year, and will be available on a
20 Website. That's street legal in most states.
21 If that's not enough, we even have bikes. You
22 can order these on line, and it will be delivered right
23 to your home.
24 This is our fuel cell program. Ford is
25 involved in fuel cell development, both internally and
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1 also through the Partnership for a New Generation of
2 Vehicle, and in alliance with several other partners.
3 We're also involved as a founding partner of
4 the California Fuel Cell Partnership.
5 The lower right-hand corner shows our latest
6 Focus fuel cell demonstration vehicle that will be
7 available for the inauguration of the headquarters just
8 a few miles from here in a few months.
9 This is our Ranger EV. The Ranger itself is
10 the best selling compact pickup in the United States.
11 It's consistently one of the top ten selling vehicles,
12 car or truck.
13 It's US sales are 350,000, that's for
14 gasoline. If it was EVs, I wouldn't be here.
15 Since 1998, we have sold over 1,000 of these
16 in 23 states, and we now have a derivative for the
17 Postal Service to use for delivery.
18 Our marketing efforts, we pursued most of our
19 1,000 buyers by face-to-face sales. Our focus has been
20 fleets, because we learned through the rest of our AFP
21 involvement, that they are more ready to take some risk
22 on new technology.
23 But that aside, about 10 percent of our
24 customers were still retail customers. In all, we
25 spent about six and a half times that spent on gasoline
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1 Ranger marketing for each battery electric vehicle
2 Ranger, and in the end, the revenue didn't quite cover
3 our marketing costs.
4 We also marketed to many other states. I
5 guess a couple of success stories that are Michigan,
6 with 97, without a mandate, New York, even though they
7 didn't want to, they don't have a mandate, but they
8 still worked with us, and we sold 75.
9 If you look down in the Southeast, Georgia,
10 worked with us very well, a very cooperative program,
11 without a mandate, and we sold 142 there.
12 How did we do it?
13 The top line, the $34,000 price was a lead
14 acid battery vehicle. We leased those for $339 a month
15 across the US, and we managed to sell, including
16 California, we sold 335.
17 The next line, the $48,000 is nickel-metal
18 hydride, and we started off at $614 a month, and it
19 wasn't going very well, so we dropped it to $450.
20 Then our competitors started dropping prices,
21 too. So, the combined of those two, we sold about 42.
22 Then we dropped the price to $199, and we
23 actually sold a little more than 160 at that price.
24 Since I know you are not in our business every
25 day, but to put that into perspective, this is a Jaguar
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1 S-type, with about the same MSRP, we lease those for
2 $860 a month, and we sold so far in the State of
3 California alone about 6,000 of them.
4 In the last ten years, we have come about the
5 pretty remarkable agreement with the staff on what the
6 facts are.
7 So, if we can get past are you for ZEVs or
8 against ZEVs, and look at the facts, I don't think that
9 the path is that difficult.
10 We agree that manufacturers are not able to
11 produce a competitively-priced electric vehicle without
12 incurring significant losses.
13 We agree that the costs are too high, and we
14 don't argue with the staff's characterization of the
15 price loss.
16 We're trying to change that model a little bit
17 with the Think, and how -- what you do with the
18 mandate, I think has a lot to do with whether or not
19 the Think brand will be successful.
20 The mandate, if it forces other manufacturers
21 to compete in that same fragile market, could actually
22 damage our brand.
23 We also agree that the UC Davis study that was
24 contracted, they picked one of our vehicles, and again
25 puts into perspective what you've heard all day, it's
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1 cost and range, and the more range you put in, the more
2 cost there is.
3 We also agree with the staff finding that both
4 the initial and life-cycle cost will significantly
5 exceed those of comparable conventional vehicles in the
6 2003 time frame.
7 We agree with the finding of the Battery Panel
8 that concluded that the battery costs are high and will
9 not meet cost-competitive targets for some time, a
10 breakthrough is needed for truly affordable
11 nickel-metal hydride packs. We agree with that.
12 Finally, we agree with the staff that major
13 technology advances or breakthroughs required to reduce
14 advanced battery costs substantially below current
15 productions are unlikely for the next six to eight
16 years -- actually, that was the Battery Panel.
17 So, it's not that we can't do it. We can
18 build vehicles, and the people who drive our electric
19 vehicles, we don't really get that many complaints
20 about the.
21 We have had some minor problems. They love
22 them. It's just that there are not enough people that
23 love them, and we cannot make a business out of it yet.
24 As you heard from not only from my industry
25 colleagues but others, it is cost and range are the two
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1 issues, and it is the battery.
2 Switching to PZEVs, we agree with the staff
3 that PZEVs are extremely challenging for the 2003 time
4 frame, and we not only agree with them, we think that
5 is an understatement.
6 That said, just to put it into
7 characterization, a PZEV requirement in addition to
8 increasing the durability requirement to 150,000 miles
9 plus the zero evaporative requirement, it requires
10 significant improvement over today's extremely low and
11 extremely clean vehicles.
12 That said, we do, unlike in the battery
13 electric vehicle case, we do see a long-term path to
14 success, and what we need here really is time.
15 It is also not an argument over benefits. As
16 an industry, those of us who are subject to the
17 mandate, we agreed that any modification to the
18 mandate, including total elimination, we would make up
19 whatever the calculated benefits were, assuming the 10
20 percent mandate had gone through.
21 We also agree that the 2003 mandate represents
22 a 10-fold increase of the actual number of EVs on the
23 road.
24 In fact, we think it might be a little higher
25 than that. There was a report done by Sierra Research
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1 that got individual manufacturers confidential plans
2 and put them together, and they came up with about
3 52,000 EVs required in 2003, and I think the big
4 difference can be characterized that the staff seems to
5 think that more manufacturers will go above the hundred
6 mile range and get premium credits for it, but in a
7 case, especially like in our case, that conflicts with
8 our product strategy.
9 We are trying to make it cost-effective, and
10 range is cost. Every time you say increased range, you
11 just think increased cost.
12 If we jack-up the cost of our vehicles, I wish
13 it were that simple to just say, whatever we charge for
14 them, people are going to flock to buy them. That is
15 not the case.
16 It is very price sensitive, and I think that
17 is what Dr. Kalhammer said in response to questions, it
18 is really range and cost.
19 In summary, battery electric vehicle cost and
20 functionality are not yet fully competitive. Battery
21 technology is not where it needs to be and it's not
22 projected to get there any time soon.
23 2003 is too early for mass introduction of
24 PZEVs. I did mention that we would have PZEVs
25 available in 2003 but not enough to meet the
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1 requirements.
2 The air quality benefits are small or minimal,
3 whatever term you want to use.
4 There are far too few customers. If there are
5 any deposit checks in those mail bags, I will gladly
6 take them. We would like to sell the vehicles to them.
7 The mandate is not achievable at the level and
8 in the time frame required by CARB.
9 Again, it's not that we can't do it or that we
10 don't want to do or we won't do it, we just don't think
11 that -- it's not that you like ZEVs or you don't like
12 ZEVs, but it is that you can meet the requirement or
13 you can't, and right now we have to say we can't.
14 In conclusion, the mandate must be postponed
15 or modified or eliminated or whatever terms you want to
16 use consistent with the realistic expectations for
17 electric vehicles and PZEV development and
18 commercialization.
19 Mr. Chairman, I yield back the rest of my
20 time.
21 CHAIRMAN LLOYD: Well --
22 MR. BROWN: I learned that in Washington.
23 CHAIRMAN LLOYD: Thank you very much, Kelly.
24 I appreciate your efforts, and I also appreciate the
25 Think vehicle and the staff coming out to California.
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1 I think that's great.
2 Questions from the Board?
3 No.
4 Well, I will say thank you very much.
5 We are going to make a slight change here,
6 because we are running into some time constraints. We
7 are going to hold on to Ben Knight, of Honda, and Sam
8 Leonard, and we are going to have to skip there and
9 come back, because some of the people there, and I'm
10 going to ask Lynn Edgerton and John White and Michael
11 Field, in that order, and Ellen Garvey, Henry Perea and
12 Steve Larson.
13 It gives me great pleasure to welcome an
14 ex-colleague, former Board Member, when much of this
15 was put together, Lynn Edgerton.
16 Lynn, welcome. It's great to see you.
17 MS. EDGERTON: Thank you. It's a pleasure to
18 be here.
19 Chairman Lloyd, Honorable Members of the
20 California Air Resources Board, honorable members of
21 the staff and distinguished members of the audience, I
22 respectfully request the opportunity to make four brief
23 observations.
24 Each is grounded in my lengthy experience in
25 air and atmospheric quality policy. My testimony today
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1 reflects my own personal and professional opinion. I
2 have not received any compensation or reimbursement
3 from any party connected with this issue since I left
4 the Board in August 1999, nor have I or will I receive
5 any payments or personal benefit from my appearance
6 today before this respect Board.
7 First, in my view, the 1996 and 1998 Air
8 Resources Board's trust in the auto manufacturers
9 representation that relaxation of the ZEV rules would
10 accelerate the introduction of ZEVs was misplaced.
11 Our trust was misplaced.
12 To the contrary, one by one, the auto
13 manufacturers completed production of a limited number
14 of ZEVs required by the Memorandum of Agreement and
15 then stopped producing ZEVs altogether.
16 Some manufacturers, such as Honda, publicly
17 admitted that they were stopping production as soon as
18 they met their MOA quotas.
19 Others, such as GM, continued to publicly
20 advertise their ZEV, the EV-1, while simultaneously
21 stopping new deliveries of the vehicles.
22 Yet the MOA signatories had argued publicly
23 and privately, directly to me in private meetings I
24 might add, that this MOA would just help them ramp up
25 to meet the 10 percent level in 2003.
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1 The lesson which the ARB should learn from
2 this experience with voluntary production of ZEVs in my
3 view, respectfully, is that it will not work.
4 The statutory requirement including penalties
5 reflecting at least the incremental asserted increased
6 cost is needed to spur ZEV production and introduction
7 at a mass marketing level.
8 My second point is that the California ZEV
9 program is more valuable today, more likely to succeed
10 today, and more needed now in 2000, than it was in 1990
11 when it was adopted.
12 The California Zero Emission Vehicle program
13 is the environmental gold standard by which all
14 transportation systems are judged.
15 It also promises, in my view, to be the most
16 economically efficient program once the cost of
17 transitioning from our existing system to a ZEV system
18 is absorbed.
19 The ARB's Low Emission Vehicle programs, I and
20 II, including your technology forcing zero emission
21 vehicle component, not only represents the world's most
22 effective smog busting program on earth, but is also
23 the single most important program on earth to slow the
24 rising tide of global warming.
25 Dr. James Hanson's recent analysis of the
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1 causes of climate warming seen in recent decades
2 indicates that global warming seen in recent decades
3 has been caused mainly by methane, chlorofluorocarbons
4 and black particles of diesel and coal soot and, I
5 quote, compounds that create ozone and soot.
6 As you well know, it is, and I quote,
7 compounds that create ozone and soot, that the ZEV rule
8 seeks to reduce and eliminate.
9 Ladies and Gentlemen of the Board, members of
10 the staff, distinguished audience, Dr. Hanson's
11 National Academy of Sciences report strongly suggests
12 that the most effective way to keep our climate to
13 heating up to temperatures intolerable to the human
14 species is to, quote, control black particles of diesel
15 and coal soot and compounds that create ozone and soot.
16 Of course, the international phase-out of
17 stratospheric ozone depleters must continue as well.
18 Therefore, I state for the record that the
19 ARB's LEV II program adopted in November 1998 -- I mean
20 November 1999, not only leads to restraining air
21 pollution but also leads to restraining global climate
22 change.
23 Here, here.
24 Third, I comment on the staff report. It is
25 excellent in every respect. However, my perspective
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1 differs in one significant respect.
2 The staff report indicates that cost is the
3 biggest problem, single problem facing successful
4 introduction of ZEVs to the mass market.
5 However, I respectfully disagree. I believe
6 regulatory uncertainty is the single biggest block to
7 auto manufacturer commitment.
8 It is regulatory uncertainty that in fact
9 makes auto manufacturers and fuel producers hesitant to
10 make necessary capital investments to bring down the
11 costs.
12 This is the issue where we must, your fellow
13 Californians, including me, must look to you for your
14 leadership, for your continued leadership, in which I
15 have great confidence.
16 In closing, I will tell you how I would vote
17 if I were in your seats today.
18 I've always been somewhat of a Kamikaze pilot.
19 First, I would keep the ZEV program as it, no
20 change in the 10 percent ZEV program with four percent
21 pure ZEVs by 2003.
22 Second, I would ask staff to prepare a public
23 report for the Board indicating how much the fines
24 would be for each manufacturer when and if they do not
25 comply with the ZEV mandate.
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1 I would suggest that you look at the fines to
2 see if they are adequate to motivate a reasonable
3 automobile company to deliver the required ZEVs.
4 If they are not, I would suggest the Board
5 consider raising the penalties, after all, it is a
6 matter of money.
7 Thirdly, I would eliminate the two-tiered
8 scheduling for large and medium-sized auto
9 manufacturers. Let's face it, they are all large, and
10 they all have access to the technology.
11 Furthermore, with globalization of the auto
12 industry, it is silly to have, for example, one rule
13 for Ford and another for Volvo, when Ford owns Volvo.
14 Thank you very much for your kind attention.
15 Please know that empathize with the tremendous
16 difficulty you have in your decision and know that I
17 will support you whatever you do.
18 CHAIRMAN LLOYD: Thank you very much, Lynn.
19 Also, I think you were too modest. The date
20 you referred to was in fact 1998, and you were a Member
21 of that Board, and a very, very important one, so, in
22 passing those regulations.
23 Any questions from the Board or comments?
24 Thank you very much.
25 Now we have John White.
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1 Mr. Stempel, I am well aware that you are
2 here, and I understand that you don't have an immediate
3 time constraint, but we value your time as well.
4 So, let me know. You will come up here in the
5 next 10 witnesses, but if you have a time -- my
6 understanding is that you -- thank you very much.
7 MR. WHITE: Good morning, or good afternoon
8 rather.
9 Mr. Chairman, Board Members, my name is John
10 White. I'm the Executive Director of the Center for
11 Energy Efficiency and Renewable Technologies.
12 I'm going to talk today about a couple of
13 things that I think are important to put context in the
14 debate.
15 There is going to be further discussion later
16 on by a number of my environmental colleagues who we
17 have been working with on this issue, but I'm going to
18 try to touch on a couple of issues that I think deserve
19 some singling out.
20 At the last workshop in May, I observed there
21 were some things that were missing from the discussion.
22 So, one of the things that we set out to do was to
23 create some new information that could be made
24 available to the Board.
25 The first piece of that new information is
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1 some testimony that I'm going to present today on
2 behalf of Dr. Jane Hall, at the California State
3 University of Fullerton.
4 Dr. Hall is a former employee of this Board
5 and a distinguished economist, well regarded and peer
6 reviewed.
7 She has done a study which has been submitted
8 for the record summarizing the economic costs and
9 benefits of the ZEV mandate, and more importantly, not
10 doing a mandate.
11 I would like to just highlight some of her
12 testimony.
13 More than 95 percent of California's citizens
14 breathe air that is so poor that it causes illness,
15 contributes to shortening of lives.
16 Unless passenger vehicles become inherently
17 clean, zero direct emissions from the vehicles, what we
18 mean by inherently clean, this will continue to be the
19 case for Californians well into the Twenty-first
20 century.
21 Transportation and agriculture in the state
22 are almost wholly dependent on gasoline and diesel
23 fuel.
24 As it appears from price volatility, these
25 sectors struggle economically, and this Board is
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1 certainly aware of what happens when price spikes,
2 volatility enters the fuel market place, because the
3 pressure comes back on you.
4 With international demand growing for
5 petroleum based fuels and supplies not keeping pace,
6 price volatility is likely to become a fixture of
7 economic reality.
8 There will be a transition period between the
9 2003 model year and the ZEV requirement and production
10 on a scale that will reduce cost substantially.
11 So, the economic issue at hand is the
12 following: What impacts could the State's Zero
13 Emission Vehicle program have on the economy, jobs and
14 income in the short-term between now and 2010?
15 Essentially, how much will jobs and income be
16 effected by higher prices for light-duty cars and
17 trucks?
18 This question arises because typically the
19 cost to make a new product is higher when production
20 begins, and we've heard that today, and efficiency
21 gains of large scale operations do not reduce costs
22 until the market can sufficiently support production at
23 more efficient levels.
24 The ZEV technology faces exactly this
25 short-term quandary.
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1 Income in California is more than $988-billion
2 annually, exceeding that of China and Canada and is
3 expected to climb to almost a trillion and a half by
4 2010.
5 In the analysis of how the ZEV program could
6 impact the economy needs to be considered in this
7 context.
8 At the International Institute for Economic
9 and Environmental Studies at Cal State Fullerton, we
10 have just completed a study that addresses the basic
11 question, and I'm quoting Dr. Hall, what is the worst
12 that could plausibly happen if the ZEV program is
13 implemented as now structured?
14 The secondary question is, what does
15 California do if the ZEV program is abandoned?
16 What other sector would be further controlled?
17 How much growth must be regulated to achieve
18 the same results?
19 What price would be exacted from poorer
20 health?
21 This issue is beyond the scope of the
22 research, but it is generally believed that most, if
23 not all, identified and cost-effective controls are
24 already credited in the State Implementation Plan and
25 are therefore not replacements for the ZEVs.
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1 Clearly failure to implement the ZEV program
2 or equivalent emission reductions pose continuing risk
3 to public health, which is an unacceptable alternative.
4 The conclusion of the study is that any
5 possible economic consequence in implementing the
6 California ZEV program as it is now structured are
7 small.
8 When viewed in the context of expected
9 economic growth here, they are trivial.
10 Even in absolute terms for a cost differential
11 of $7,000 per ZEV, after incentives, and continuing to
12 2010, and if California bears the entire burden of this
13 cost, the difference in economic output for each
14 California citizen would reach approximately $5 a year,
15 around the price of a bargain movie ticket, and far
16 less than the $115 that the oil price increase of the
17 past year has cost each of us.
18 The testimony goes on, and I just wanted to
19 read some of the highlights and not burden you with the
20 full amount, but this chart really illustrates the
21 effect that Dr. Hall and her colleagues have forecast
22 and essentially should give you some confidence that
23 the overall health of the economy is not going to be
24 impaired.
25 The second issue that we felt needed some
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1 illumination from your last workshop was the petroleum
2 fuel cycle and its environmental consequences.
3 You had received testimony from Accurex that
4 attempted to lay out comparisons between the different
5 fuels and different technologies and their overall life
6 cycle, cost and impacts.
7 We have done a report that's been submitted,
8 called, Crude Recogning, that summarizes the
9 environmental impacts in California of the petroleum
10 fuel cycle, and to put it in context, you will hear
11 from Jack Doyle, who has written a very fascinating
12 book, called, Taken for a Ride, and in that book he
13 discusses global context in which your decisions are
14 occurring.
15 We now have 600 million motor vehicles on the
16 road today worldwide. In 20 years, that will double to
17 more than a billion.
18 More than a hundred new IC-powered vehicles
19 are produced every minute. That's 6900 every hour, 1.2
20 million every week, 60 million a year, and we still
21 have the markets of China, India and Latin America
22 opening up.
23 The consumption that these vehicles provide is
24 not just limited to -- the environmental impacts are
25 not just limited to air emissions, tailpipe, toxics,
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1 which you know something about, but also we have
2 impacts from the production of the fuel, all the way
3 through to its disposal.
4 Those impacts are part of the cost of the
5 existing transportation system that we have.
6 We also have in California some particular
7 demands on petroleum that, from a supply standpoint, I
8 think are important.
9 Can I have that first slide, please?
10 This gives you a flavor of the trend lines for
11 gasoline, jet fuel and diesel in terms of our
12 consumption between now and the next 20 years, and you
13 can see that we're going to be up above 20 billion
14 gallons a year from the present approximately 13.
15 If you look at the second slide after this,
16 the oil supply sources, the amount of supply is
17 increasing over that same period from foreign sources.
18 If you look at the next slide, you see that
19 global crude production is continuing to expand, and at
20 some point in this period we're going to reach a point
21 where demand crosses supply, and at that point is when
22 the crunch will come.
23 In California, that next slide shows where we
24 are in terms of the next 20 years, from 2000 to 2020.
25 The Energy Commission recently projected more
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1 than a 40 percent increase in transportation fuel
2 demand.
3 My point of bringing these issues up is
4 because we believe that the decision that you have
5 before you today and tomorrow and the guidance that you
6 give your staff and the staff comes back with, has to
7 be seen in a context of both the broader economic needs
8 and demands to the State and its income, as well as the
9 dependence that we have with respect to petroleum.
10 If you add to those two factors the economic
11 and environmental consequences, both from air pollution
12 directly emitted from the vehicles and from the entire
13 petroleum fuel cycle, the need to turn the page is
14 evident.
15 I don't think that we are really having an
16 argument with the auto companies. I was pleased to
17 hear Kelly Brown say how much he agrees with staff.
18 That's always reassuring.
19 But I think what we do disagree upon is the
20 level of urgency and the amount of investment that is
21 required.
22 While we talked about these costs and the per
23 vehicle cost and the customer response, all of this has
24 to do with how long a view you take of the program that
25 you are designing.
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1 If you really think about this program is
2 effectively the launching pad for getting to the next
3 stage of transportation propulsion technology and
4 alternative fuels that rely less heavily than we
5 presently rely on the petroleum fuel cycle, you see the
6 value is as important as the cost.
7 It was my honor and privilege to appear before
8 this Board in 1990 when the original decision was made.
9 I know how burdensome the weight of the
10 evidence and the length of the presentations are, and I
11 do not want to take more of your time, but I do want to
12 commend to you that you appreciate, you are on the
13 global stage at this moment, and the consequences of
14 your decisions are going to resonate throughout the
15 planet hopefully in a way that will begin to accelerate
16 the process of reconciling our consumption with the
17 impacts that we cause and begin moving us towards a
18 much more sustainable transportation technology in our
19 lifetime.
20 Thank you very much.
21 CHAIRMAN LLOYD: Thank you very much, John.
22 I gave you some extra time, because I know you
23 delayed some well-earned vacation after dealing with
24 the Legislature here and to join your family.
25 Professor Friedman, who had signed the MOU,
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1 but he's going to ask a quick question.
2 BOARD MEMBER C.H. FRIEDMAN: I'm going to
3 break the pledge here.
4 I've got to ask you, because this is really, I
5 think, a very important question for me at least.
6 Do you see a sustainable market presently or
7 in the near-term future in the EV, and if so, at all,
8 do you see any role or responsibility that
9 organizations such as yours might have and could play?
10 MR. WHITE: The answer to both questions is
11 yes.
12 I drive an EV every day now. I am very proud
13 and privileged to do so. You have to think a little
14 more about where you go and how far you go and where
15 the charging stations are, but it is a habit that you
16 can easily get into, particularly if you are
17 reinforced.
18 I think one of the greatest phenomenons that
19 I've observed as I've worked on this issue is the
20 extent to which when you get a lot of the cars
21 together, things start to happen with the public.
22 If you just have one or two and nobody sees
23 them, but when they are all lined up like they were the
24 other day at Miller Park, you really get to get a
25 feeling that's created, and I think to some extent,
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1 your point about the marketing is related to that
2 phenomenon.
3 Part of what we have to do is look at the
4 consequences of our petroleum transportation system,
5 each of us in every day of our lives, we have to look
6 at changing those within reason, we have to work
7 together on the marketing.
8 One of the things I'm most proud of working
9 on, side by side with Ford's lobbyist at the last night
10 of the Legislature, was a bill to provide State funds
11 for incentives for customers that purchase ZEVs.
12 As we have before with other products, South
13 Coast has been very active over the years, probably
14 more than any other agency, at working with people
15 selling and producing the technology and getting them
16 out to the public.
17 I think that the non-governmental sector, the
18 public interest groups, need to play a part in that,
19 and not just with EVs but also with hybrids, the Sierra
20 Club, our organization that I am affiliated with, have
21 taken the step of giving awards to both Toyota and
22 Honda for the hybrids.
23 We like them all. We are not only for ZEVs.
24 We are for changing the entire transportation system
25 gradually, steadily, but I think part of the nature of
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1 the market has to be reflected in advertising and
2 consciousness that occurs through advertising.
3 We can help with that. But we don't have the
4 dollars to be on the National football League every
5 Sunday and the MBA during the week.
6 If we have these cars, and I am very glad to
7 see Ford taking a step to advertise the Think vehicles.
8 You have to look quick through the ad to find them, but
9 they're there.
10 The fact that instead of just the big trucks
11 and the sport utility vehicles, if the advertising
12 begins to gets the same attention for the ZEVs and the
13 hybrids that they get for the other vehicles, I think
14 you will see a customer response.
15 We all have to help. I'm committing to you in
16 response that we will be there to help with the selling
17 of the cars and with the marketing of the program.
18 CHAIRMAN LLOYD: Thank you very much.
19 Thank you, John. We appreciate it.
20 Next we have Michael Field, with Xpress
21 Shuttle, then Ellen Garvey, then Henry Perea and Steve
22 Larson.
23 MR. FIELD: Good afternoon, and thank you for
24 the opportunity to speak to you.
25 My name is Michael Field. I'm with Xpress
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1 Shuttle, headquartered in Los Angeles.
2 We are a 24-hour, door-to-door, passenger
3 ground transportation company, operating in all five
4 airports in Los Angeles area, in San Diego and in Salt
5 Lake City.
6 But the anchor of our business is a five-year
7 contract to provide on-demand shared ride shuttle
8 service at LAX. The contract obligates us to be 100
9 percent alternative fuel, that is 250 vehicles, in two
10 years.
11 So, we have to meet this obligation, and we
12 have to do it profitably. After almost two years of
13 planning and development, in January of 2000, we
14 started phase one of a program running zero emission
15 vehicles as airport shuttles.
16 We have 11 now, and we'll have a total of 20
17 in the next two months. We take people to and from LAX
18 in zero emission Daimler Chrysler EPIC minivans.
19 This is what we have found. The economic and
20 operational model we created that would even allow us
21 to consider electric vehicles is proving to be valid.
22 We can make money with this vehicle. Charging
23 and range are not obstacles. 70 to 80 percent of our
24 business lies within the range of this vehicle.
25 New technology, rapid charging in 20 minutes
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1 or less, allows us to keep the vehicles in continuous
2 use and continuously producing revenue, and the vehicle
3 is a good one.
4 Daimler Chrysler has been extremely supportive
5 and helpful in making this program work.
6 It is not easy to do something like this, but
7 it's also not that hard.
8 We want to expand the use of these vehicles
9 and increase our fleet. We want more of these vehicles
10 available to us and to other fleet operators, so that
11 the technology and infrastructure will develop and
12 evolve.
13 We want to be able to meet the stringent
14 vehicle emission requirements currently included in
15 both public and private contracts.
16 We need to be able to bid on RFPs like the
17 recent one for shuttle service at Sacramento Airport or
18 transportation for Kaiser Permanente Medical Center in
19 Los Angeles.
20 These vehicles have excellent applications in
21 large campus scenario operations, whether that's an
22 airport, hospital, medical center, university, or movie
23 studio or for on-demand delivery, as we do with
24 passengers.
25 Taxis which are area-based would be an
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1 excellent use of this vehicle, and they are also under
2 the gun now to cleanup their vehicles.
3 In our experience, there is also a tremendous
4 approval value from our customers. This was no small
5 factor in our decision to implement and in our desire
6 to increase the scope of our program.
7 It is a market discriminator for our company.
8 People like it, and they want it.
9 We also recognize that for us the health and
10 economic viability of our airport is the health of our
11 business and our community.
12 We need to meet and exceed the demands that
13 our community has for cleaner airports and cleaner
14 transportation.
15 But the rub is currently that we can't get
16 enough vehicles. With the onesy-twosy approach, the
17 applications and the infrastructure just never develop.
18 If they were available in sufficient amounts,
19 fleet operators would use them. With the new
20 technology, if I can make money with it, I want it.
21 We want to sell our product. We want
22 passengers. We have to give something to get them.
23 I think that equation works all the way
24 around.
25 Thank you.
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1 CHAIRMAN LLOYD: Thank you very much. Thank
2 you for keeping to your time limit.
3 Next is Ellen Garvey, Bay Area AQMD.
4 MS. GARVEY: Good afternoon, Chairman Lloyd
5 and Members of the California Air Resources Board.
6 My name is Ellen Garvey, and I'm the Executive
7 Officer at the Bay Area Air Quality Management
8 District.
9 I'm here today to speak in support of the
10 mandate and in support of a cleaner future.
11 I'd like to begin my remarks this afternoon by
12 commending Mike Kenny and his staff at the Air
13 Resources Board for giving a very fair and a very
14 equitable review to this very important issue.
15 I have read through the staff report. It's
16 very balanced, and it's very sound.
17 In the San Francisco Bay Area, it is no
18 different than any other major metropolitan area in
19 California. We collectively drive a lot of cars,
20 almost six million cars, and the cars are the number
21 one source of air pollution in the Bay Area.
22 I know this personally that we are driving
23 about six million cars, because I think I was in the
24 middle of about a million of them stuck this morning in
25 gridlock on the San Francisco Bay Bridge as I was
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1 making my way here.
2 Cars are the number one source of pollution,
3 and the ZEV mandate is a huge step forward towards the
4 solution.
5 We have had a lot of experience in the Bay
6 Area with electric vehicles. Through the allocation of
7 almost $5-million through our motor vehicle
8 registration program, we have helped to purchase almost
9 300 electric vehicles that are being used in a variety
10 of public agencies throughout the nine Bay Area
11 counties.
12 In cooperation with the Department of Energy,
13 we have allocated over $350,000 to help with the
14 infrastructure for charging. We have helped to fund
15 almost 26 charging stations, more than 26 charging
16 stations, located in a variety of locations throughout
17 the nine Bay Area counties.
18 I would also like to credit our partners at
19 the Air Resources Board as well as the California
20 Energy Commission for helping us in this effort.
21 Here is what we've learned so far in the Bay
22 Area. I'd like to give you sort of a Bay Area
23 perspective on what we have learned with respect to
24 electric vehicles, the good news as well as the bad.
25 Let's start with the good news.
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1 People love the product. They love driving
2 electric vehicles.
3 Those few that have been fortunate enough to
4 get the cars, whether they purchased it or leased it,
5 love the car.
6 I have an electric car. I love driving it.
7 The neighbors on my street love it when I'm able to
8 drive it home, and they get to see it, learn more about
9 it, talk about it.
10 It has been an educational experience for me
11 as well as them as well as something that's good and a
12 positive step forward for air quality.
13 One of the issues that we have heard so much
14 about is limited range. We undertook several surveys
15 at the Bay Area Air District to see just how important
16 this issue of range was to folks who were driving these
17 electric vehicles, and what our surveys found is that
18 the range issue is largely a perception issue.
19 Once the folks get the cars, they learn to
20 drive them, they understand them and they embrace them,
21 and the range issue, according to our surveys, goes
22 away.
23 It's not a real issue. It seems to be more of
24 one of perception.
25 Two Bay Areas counties believe very, very
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1 strongly in the mandate. Both San Francisco as well as
2 Contra Costa Counties have looked forward to the future
3 to see what they can do to help contribute to cleaner
4 air and advancing the electric vehicle technologies.
5 Resolutions have been passed mandating that at
6 least 10 percent of the fleets purchased by public
7 agencies in both of these counties be at least 10
8 percent by the year 2003.
9 We salute Marc DeSaulnier for his visionary
10 leadership in this area, and my hope is that if the ZEV
11 mandate holds, and I hope it does, that other local
12 jurisdictions will follow in their lead.
13 I would like to say a few words about the
14 Legislature, tagging on to some comments that were made
15 earlier today about where is our Legislature when it
16 comes to electric vehicles.
17 In the flurry of activity that was the last
18 week of the Legislature, AB 2061 passed, with a
19 two-thirds vote, which it needed a two-thirds vote, and
20 it received it, bipartisan support, largely from all
21 over the State in support of this bill.
22 CHAIRMAN LLOYD: Can you just mention what
23 that bill does, for those who are not familiar?
24 MS. GARVEY: Yes.
25 I will mention that what the bill does, it
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1 provides for incentives for electric vehicles that are
2 acquired in the next two years.
3 So, this gives folks an incentive to take that
4 extra step, those people who were wondering, well, do I
5 want to do it, can I afford it, well, this bill
6 provides them the financial incentive to make that
7 extra step.
8 Now for the bad news.
9 There is no product. There is a lack of
10 product in the Bay Area.
11 I receive calls in my office almost daily from
12 folks who have heard about electric vehicles, they've
13 read about electric vehicles, they want an electric
14 vehicle, and they can't find one.
15 Folks in the Bay Area can be very persistent,
16 and they have very persistently been looking for this
17 car, and they tell me, and they don't hold back any
18 punches, that they are extremely frustrated at not
19 being able to find this product.
20 There has also been a lack of promoting or
21 marketing of the product. There has been very little
22 done by the manufacturers to promote or market the
23 product.
24 What I'm finding in the San Francisco Bay
25 Area, is that largely the promotion and the marketing
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1 of electric vehicles is happening and occurring from
2 the folks who have actually secured a vehicle.
3 There are incredible testimonials that are
4 stemming from the mouths of those that have the
5 vehicles.
6 It is this word of mouth that is getting the
7 ball rolling and keeping it rolling in the Bay Area.
8 Lastly, the cars, in a very general way, have
9 been priced to fail. Prices as we know are tied to
10 volume, but the manufacturers have refused to price the
11 cars as if the EVs are product lines that will be with
12 them for a long period of time.
13 In conclusion, I can pledge to you that the
14 Bay Area Air Quality Management District whose Board of
15 Directors just yesterday unanimously adopted a
16 Resolution in support of the ZEV mandate and in support
17 of keeping it at a minimum of four percent, I will
18 pledge to you today that we will continue to work
19 cooperatively with the Air Resources Board, the Energy
20 Commission, the Engine Manufacturers, the public and
21 other regulatory agencies to make sure that we do
22 everything that we can to advance this very important
23 technology to continue to roll it out into, not only
24 the San Francisco Bay Area, but throughout California.
25 The opposition is clamoring very loudly that
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1 the ZEV mandate be either watered down or be killed,
2 but to date they have failed to offer an alternative
3 path, let alone one that offers the benefits, the
4 incredible benefits that the ZEV mandate does.
5 The finish line is in sight. I encourage you
6 today to give the whole program an opportunity to go
7 the distance.
8 Thank you very much.
9 CHAIRMAN LLOYD: Thank you very much, Ellen,
10 and thank your Board for its support. I appreciate it
11 very much.
12 You reminded me when you talked about gridlock
13 and whatnot, I think Dr. Burke had a question this
14 morning about the number of vehicles per person -- has
15 staff had a chance to look at that?
16 MS. GARVEY: I can tell you what it is for the
17 Bay Area.
18 It is almost one to one.
19 I don't know what it is statewide.
20 CHAIRMAN LLOYD: Thank you.
21 Henry Perea, from the City of Fresno.
22 MR. PEREA: Yes, good afternoon, Mr. Chairman,
23 Members of the Board.
24 Thank you for the opportunity to speak before
25 you today.
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1 My name is Henry Perea, and I am a member of
2 the Fresno City Council. I am here today to urge your
3 Board to uphold this mandate for four percent pure zero
4 emission vehicles by the year 2003.
5 Fresno, California, is in the center of the
6 San Joaquin Valley, and regretfully, according to the
7 American Lung Association the center of five of the 25
8 worst air polluted metropolitan areas in the United
9 States.
10 We are concerned about the air we breathe and
11 the rising damage it has already caused on human lungs
12 and lives.
13 As a community, we understand the effects of
14 air pollution and its effect on our public health, our
15 economic health, the impact that it has on our ag
16 community, and of course, we are always concerned and
17 looking for ways to reduce our dependency on foreign
18 fuels.
19 This past January, I lead the effort to have
20 the Fresno City Council unanimously pass a Zero
21 Emission Vehicle ordinance, the second in the State of
22 California, the effort lead by the City and County of
23 San Francisco.
24 We now have a Clean Air Committee to advise
25 the City on all future vehicle purchases do ensure we
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1 get the very latest in zero emission technology.
2 At present, electric vehicles that fit our
3 fleets' needs are not available to us. If they were,
4 we would be waiting in line for them.
5 If you delay the current mandate for
6 compliance, we will be delayed even further in
7 achieving our goal of having zero emission vehicles for
8 the City fleets and reducing the air pollution in our
9 City and our Valley.
10 You should also know that as a result of our
11 ZEV ordinance, the Fresno City Council is currently
12 moving towards the purchase of 20 natural gas buses, a
13 good alternative, but I can tell you, if we had
14 electric buses available to us, that's probably what we
15 would be buying.
16 I need to say that it was not an easy task to
17 pass this ordinance in the City of Fresno. You can
18 imagine the opposition we had.
19 But I'll tell you, a lot of the witnesses that
20 came before us, a lot of the research that was cited,
21 was research that was conducted by your staff, and we
22 thank you for that, and we thank you for the leadership
23 that you all have shown in clearing the path for this
24 type of technology to happen in our State.
25 Our San Joaquin Valley Air Basin is in grave
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1 danger of failing to meet both Federal and State Air
2 Quality Standards and has in the past been penalized
3 for failure to meet criteria set forth by the Federal
4 Clean Air Act.
5 We believe this program is critical to our
6 region's ability to meet these Federal standards, and
7 it is hard for us at the local level to do our job
8 without your continued support.
9 Please, keep the current mandate.
10 Automobile manufacturers are making record
11 profits from their high polluting trucks and sports
12 utility vehicles.
13 A requirement to produce a limited of ZEVs to
14 help offset the pollution from these vehicles is little
15 to ask if we all are serious about cleaning up our air.
16 The California Air Resources Board has been
17 the leader in technology-forcing regulations. This is
18 the next step in the automobile evolution.
19 As a City, we have no regulatory authority
20 over the automobile manufacturers. You do.
21 I am here to ask that you stay the course and
22 keep the current mandate as stated. Certainly, we
23 understand that there have been probably some good
24 reasons to allow them some flexibility, and there have
25 been two in the past.
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1 What we are saying now, it's time to hold
2 their feet to the fire, live with the mandate that we
3 have, and help us clean our communities.
4 Thank you very much.
5 CHAIRMAN LLOYD: Thank you for taking the
6 time, and thank your City Council for its leadership.
7 I would also thank the City for hosting some
8 of the studies we are doing on health effects, looking
9 at the impact of air pollution on health.
10 So, thank you very much, indeed.
11 MR. PEREA: Happy to do it.
12 Thank you.
13 CHAIRMAN LLOYD: Supervisor Patrick.
14 BOARD MEMBER PATRICK: I just wanted to thank
15 Councilman Perea very much for his leadership.
16 I know that there has been quite a
17 contentious -- this has been quite a contentious issue
18 in Fresno, and his leadership has been definitely on
19 the cutting edge in getting Fresno to move to this
20 area.
21 So, we are going to have to take you and have
22 you visit all the cities in the San Joaquin Valley and
23 put you out on the road, because you have been very
24 successful, and I compliment you on that.
25 MR. PEREA: No problem.
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1 CHAIRMAN LLOYD: Thank you very much.
2 Thank you, Barbara, for your insight.
3 Next we have Steve Larson, California Energy
4 Commission.
5 We welcome you here.
6 MR. LARSON: Thank you, Mr. Chairman, Members
7 of the Board.
8 It is a pleasure to be here and to talk a
9 little bit about the Energy Commission's role in ZEV.
10 First, I would like to congratulate the Board
11 for its role and progress that has been made in
12 improving air quality in a number of nonattainment
13 regions throughout the State.
14 Through your leadership, the State of
15 California is making great strides toward meeting
16 California's goal of State and Federal air quality
17 attainment.
18 We face a similar challenge concerning
19 California's transportation energy system.
20 The Energy Commission is charged in part with
21 ensuring that the use of energy resources is consistent
22 with society's needs for public health and quality of
23 life.
24 Thus, as an energy agency, we are especially
25 interested in the potential contributions that the Zero
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1 Emission Vehicle mandate offers in addressing energy
2 efficiency, fuel flexibility and global climate change
3 issues.
4 In terms of energy consumption, as has been
5 noted, I'm sure, that California is the third largest
6 in the world, behind only the United States, and as a
7 whole, in Japan, and the State uses half of the energy
8 it consumes for transportation services.
9 More than 50 percent of transportation energy
10 is used in light-duty vehicles. To put this energy use
11 in perspective, light-duty vehicles alone consume
12 approximately double the amount of energy the
13 residential sector in California uses, and even more
14 than the residential and commercial sectors combined.
15 Nearly 100 percent of our transportation
16 energy is provided by petroleum.
17 It is unlikely that California can continue to
18 rely nearly exclusively on petroleum-based fuels if it
19 desires a stable transportation system.
20 Forecasters disagree about how long our
21 petroleum supplies will last, but as noted in some of
22 the earlier tables and charts, we can certainly expect
23 our children to feel the effects of declining reserves
24 within our lifetimes.
25 As California's population and economic
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1 activity continue to grow, its demand for
2 transportation services also will continue to grow.
3 If current trends continue, gasoline and
4 diesel use is projected to increase by approximately 40
5 percent over the next 20 years.
6 Our already strained in-state refining
7 industry will not be able to keep pace with the
8 forecasted growth without major changes in industry
9 operations and infrastructure.
10 Sudden price increase for both gasoline and
11 diesel fuels will likely be more frequent, and higher
12 prices are likely to be sustained for longer periods.
13 California must begin to meet its growing
14 demand for transportation energy by augmenting
15 petroleum supplies with energy conserving measures and
16 with other energy sources.
17 Efficient vehicle technology now entering the
18 market place as a result of the ZEV mandate can
19 certainly help to extend the life of petroleum and add
20 to the menu of transportation options.
21 The Energy Commission has supported
22 alternative fuel vehicles to gain both fuel flexibility
23 and air quality benefits.
24 We have taken advantage of the leverage that
25 tough air quality regulations provide to gain
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1 experience in fuel flexibility.
2 Given current conditions, we need to
3 reemphasize the need to balance our energy flexibility
4 and clean transportation energy goals.
5 From the standpoint of fuel flexibility, we
6 believe that the Zero Emission Vehicle mandate has
7 fostered a number of very efficient and environmentally
8 preferred technologies, including electric vehicles,
9 hybrid electric vehicles, fuel cells and super ultra
10 low emission vehicles that would not have been
11 developed without your program.
12 Electric vehicles can be considered the
13 ultimate flexible fuel vehicle, we think.
14 In California, electricity is generated, of
15 course, by natural gas, but also by hydroelectric power
16 plants, geothermal energy, nuclear, wind and solar.
17 In addition, the generating capacity needed to
18 charge millions of EVs during off-peak hours is already
19 available.
20 Although the Commission recognizes that the
21 State is facing an electricity supply challenge in
22 meeting daytime peak loads, especially during the hot
23 months of the summer, studies of existing EV use show
24 that the majority are recharged during these off-peak
25 periods.
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1 Charging EVs off-peak increases the
2 utilization and improves the overall efficiency of
3 California's existing electric generating system.
4 In the meantime, partial zero emission vehicle
5 technology, such as gasoline hybrid electric vehicles,
6 are being introduced into the market place, giving
7 California an environmentally superior way to achieve
8 both air quality and efficiency goals.
9 The ZEV mandate has also provided for us, we
10 think, an additional unforeseen benefit by creating an
11 opportunity to other states and Federal agencies, air
12 districts and local government to coordinate efforts
13 and to enter into partnerships and sponsor programs
14 that promote dual energy and air quality goals for
15 California.
16 The Energy Commission along with local air
17 districts and California's public and private sector,
18 have made significant investments in the development of
19 ZEV technology and infrastructure development,
20 including providing vehicle and infrastructure
21 incentives, code modifications, public charging
22 stations and, of course, jobs.
23 Along with developing a number of other
24 electric vehicle projects over the last four years, the
25 Energy Commission has worked with local air districts
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1 to provide incentives for electric vehicles leased or
2 purchased in California.
3 To create statewide consistency, this program
4 replicated the incentive program offered by the Mobile
5 Source Air Pollution Reduction Committee.
6 We are also currently developing an expanded
7 program, with funds we requested from the current
8 budget, and will provide incentives for new emerging
9 technology, vehicle technologies, including City and
10 Neighborhood EVs, hybrid electric vehicles and fuel
11 cells.
12 These partnerships and coordination efforts
13 have provided opportunities to enhance the broader
14 mission of the State by combining air and energy
15 aspects of EV technology development into one
16 coordinated effort.
17 Through this initiative, individual State
18 agencies, local cities and counties and air districts
19 have had the ability to attain greater benefits than
20 they could have attained individually.
21 Based on its commercial availability zero
22 emission vehicle technologies offer more opportunities
23 to help achieve the goals of both the ARB and the CEC
24 for energy flexibility, efficiency and air quality in
25 California.
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1 In closing, I want to state that the
2 Commission believes that near-term energy benefits from
3 electric vehicles, indeed, itself may be minor,
4 however, due to the technological advancements that
5 this program has promoted and fostered, we believe that
6 the overall long-term benefits from the ZEV mandate
7 will no doubt be very major.
8 On behalf of the Energy Commission, I
9 appreciate the opportunity to be here today and speak
10 to you about this important subject.
11 CHAIRMAN LLOYD: Thank you very much, Steve,
12 and we appreciate the support of you and your staff for
13 all the areas that we work on together.
14 Thank you very much.
15 We will now go back to the conclusion of the
16 auto manufacturers testimony with Ben Knight and Sam
17 Leonard, and then after that we have Mr. Robert
18 Stempel.
19 MR. KNIGHT: Good afternoon, Board Members and
20 Chairman.
21 I'm the Chair of Honda's Goal of Air Quality
22 Attainment and Advanced Transportation.
23 Honda doesn't find argument with the vision of
24 ZEV or near-ZEV. In fact, we are pursuing these goals
25 on many fronts.
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1 We do, however, have big concerns for the
2 practicality and the practical reality of battery
3 electric vehicles. The issue is not a question of
4 commitment.
5 The issue is not a question of will or
6 willingness or willing. The issue is a question of the
7 technology and the market acceptance.
8 Air quality improvements will depend on
9 widespread use of effective solutions. While the
10 initial promise of battery electric technology has not
11 been realized, a new mix of technologies is already on
12 the market, and innovative technology shows promise.
13 The good news is the road map to our clean air
14 goals looks broader than currently framed.
15 Technology is moving too fast for government
16 to pick technological winners and losers.
17 We need to focus our attention on the
18 technologies and fuels that show high potential, those
19 with greater practical prospects than for the battery
20 electric.
21 Honda's EV-Plus program has very broad goals.
22 The scope of the program and the marketing efforts went
23 well beyond the MOA requirements.
24 We know that a consumer market will be
25 critical to the commercial success of battery
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1 electrics.
2 EV-Plus is not at all a first generation EV
3 design. Honda had prior EV experience to build on with
4 a series of EV battery prototypes beginning in 1988, we
5 began US field trials in 1994.
6 EV-Plus sedan uses an all new, very compact,
7 very efficient platform. This vehicle is six inches
8 shorter than the shortest Civic hatch-back we make. It
9 is an extremely short, compact vehicle.
10 The motor and controller are world class in
11 efficiency, 96 percent. Still, more than a thousand
12 pounds of battery, nickel-metal hydride battery, is
13 required to propel it 60 to 80 practical miles.
14 All EVs in our experience see about 60 percent
15 of the practical range versus the test, dynamometer
16 tested range to empty, and this 40 percent discount
17 factor needs to be taken into account when assessing
18 technology performance and marketability.
19 We now know a great deal more about the market
20 and the technology than we did in 1995 and 1996,
21 because we got out there in the market.
22 Unfortunately, it has become quite clear to
23 Honda, and it's clarified in the Battery Panel report,
24 that only minimal improvements in cost and energy
25 density are now foreseen, because we understand the
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1 fundamental limitations, fundamental issues related to
2 battery chemistry and material composition.
3 Breakthroughs would be necessary.
4 In an extremely positive and challenging
5 manner, Honda approached this new potential market
6 through diverse media activities and events, as well as
7 through the efforts of our dealers and sales people.
8 The wide range of promotional activities for
9 the EV-Plus is frankly much broader than we use for our
10 conventional vehicles.
11 It included extensive product advertising,
12 press relations, also cooperative campaigns and some
13 special direct marketing efforts, getting the vehicle
14 out there for trial, for test drives into the
15 communities, leaving them with people for time, over
16 time.
17 The ads and promotions were made month after
18 month for about two years. A great effort was made.
19 Auto shows were covered with the cars, with
20 staff, with the dealers, brochures were handed out,
21 ride and drive opportunities were made, demonstration
22 cars were supported.
23 The dealers were extremely excited about the
24 car and the lease program that Honda supported at the
25 beginning.
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1 To further ensure a very high level of dealer
2 enthusiasm for the EV program, American Honda took
3 extraordinary steps to provide support. American Honda
4 guaranteed a profit to the dealers for a sales
5 commission on every EV-Plus.
6 It was significantly higher than the income
7 earned on the average new car sale. Extensive sales
8 training materials, demonstration vehicles were
9 provided, sometimes two per dealer to have cars to get
10 out there with people.
11 Cars flooring costs were covered. Regional
12 events were sponsored and supported. Brochures and
13 exhibit costs, direct mail campaigns were done, all
14 funded by American Honda and free to the dealer.
15 Almost no proposal was turned down. We had
16 lots of creative and exciting ideas.
17 In fact, our plan was originally to build 20
18 EVs a month and promote their use by California
19 consumers, and we would review the early results toward
20 the next constructive step.
21 However, despite broad promotion, great
22 publicity on the vehicle, full support for the vehicle
23 and customer, great word of mouth from our customers, a
24 doubling of the sales regions covered and extending the
25 months of sales availability, we could only lease about
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1 120 cars to consumers over a two-year period of time.
2 Intensive study clarified that battery
3 performance and cost prospects are far from the levels
4 required for a sustainable market. I would like to
5 highlight some of that research.
6 Honda has been conducting primary research
7 among EV customers, EV intenders who rejected the car
8 and our dealers who were there face-to-face with
9 potential buyers in order to understand the best
10 marketability factors for EV success in a future
11 market.
12 Some of the results follow.
13 Honda EV dealers and sales people gave us this
14 list of consumer requirements. When asked what needs
15 to be improved to see wider market acceptance, and by
16 the way, these are dealers and sales people who said,
17 each of them said, I can sell 300 vehicles at my
18 dealership alone the first year, and now they inform us
19 very clearly that increased EV sales potential would
20 require at least double the range performance, quick
21 charge capability, public infrastructure, additional
22 features and amenities and a $15,000 price plan.
23 Our EV-Plus owners have much contact with
24 neighbors and public who use their car on a daily basis
25 and were very excited to talk about it.
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1 When asked to consider what product
2 improvements would be needed for electric vehicles to
3 appeal to a wider audience, they often suggest a usable
4 practical real world range of 150 to 210 miles might be
5 necessary as a starting point, that's double, faster
6 recharge time, greater public infrastructure and a
7 lease fee or price of about half of the current EV-Plus
8 rate.
9 That also is about a $15,000 car equivalent.
10 Right now the lease fee that is vehicle applicable is
11 about a $25,000 car equivalent.
12 A number of potential customers for the
13 EV-Plus carefully considered leasing a car, but they
14 did not, and we investigated the reasons why.
15 They saw a combination of issues which
16 deterred them, notably, limited range, long recharge
17 time, value perceived and infrastructure issues.
18 These results are very interestingly so
19 consistent with our other research findings.
20 In conclusion, our EV-Plus program and
21 technical research activities were implemented in a
22 constructive effort to advance toward a sustainable EV
23 market, however, despite our best efforts, we have to
24 conclude that EV performance limitations and
25 characteristics with advanced nickel-metal hydride
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1 batteries do not warrant expansion of production at
2 this time.
3 A basis for commercial viability is clearly
4 not established nor foreseeable.
5 Honda recommends that the Board direct staff
6 to find positive alternatives to the current mandate.
7 Significant changes are necessary.
8 Implementing the 2003 mandate in its current
9 form would divert resources from more promising
10 technologies, would not result in commercially viable
11 EVs and, importantly, is not the most cost-effective --
12 is not the most effective strategy for improving air
13 quality.
14 Thank you.
15 CHAIRMAN LLOYD: Thank you, Ben.
16 I was surprised. You finished before time.
17 Any questions?
18 BOARD MEMBER CALHOUN: Yes.
19 A few moments ago, I think Ellen Garvey, from
20 the Bay Area Air Quality Management District, said that
21 the range is a perceived problem and not real, at least
22 that is kind of what I got out of her comment, but I
23 have also heard other people say that the EVs that are
24 available today will satisfy the range of most people,
25 and that may very well be true, but I wonder if it's a
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1 major factor that one takes into consideration when
2 they get ready to buy an EV?
3 MR. KNIGHT: We also, before the program,
4 wanted to challenge that issue, that very issue,
5 because rationally it seems that should be the case,
6 and so, certainly, too, we expected this EV to be a
7 second or third car where there might be ability to go
8 also on the longer trips.
9 UC Davis also many years ago had that idea.
10 We were able to check that idea out, and the result was
11 different than we expected, that it was not a function
12 of people going through that calculation or living with
13 it over a period of time, and deciding rationally, I
14 think I can fit this into my driving patterns.
15 In fact, the more they learned, the more they
16 understood fairly what the capabilities or limitations
17 of the EV were, it was not for them, so the barriers
18 got greater when they got more information, closer to
19 the car, rather than lower.
20 I think that is one of the reasons that
21 EV-Plus customers are very exceptional, were very
22 willing to make significant changes, willing to
23 accommodate these factors and their special priorities.
24 We don't see additional EVs in their
25 neighborhoods. They are very exceptional individuals.
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1 BOARD MEMBER CALHOUN: She also mentioned the
2 fact that none of the manufacturers have come forth
3 with a proposed alternative to the current ZEV
4 requirement.
5 I want to ask you if Honda has a proposal?
6 But that is something that I guess you and all
7 the other manufacturers need to think about.
8 I guess I have one more question.
9 Toyota, Dave Hermance from Toyota, talked
10 about the price differential and that impacted the
11 volume of vehicles that they sold.
12 And all the manufacturers, I assume, are faced
13 with the same problem.
14 What do you see in the short-term as, or the
15 near-term as a solution to that particular problem?
16 I heard you say that there will be a need for
17 a breakthrough in the batteries in order to get the
18 price down, but who knows when that's going to occur.
19 So, given that, what do you see that can be
20 done during this interim period?
21 MR. KNIGHT: I missed one key word of what you
22 said.
23 Was this a cost issue?
24 BOARD MEMBER CALHOUN: Yes, the cost
25 differential between what the manufacturers are having
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1 to spend versus what they are leasing or selling the
2 vehicle for?
3 MR. KNIGHT: First, I would like to say we
4 have never been making cost the issue, because we are
5 looking fundamentally at could this be a viable product
6 and market, is this usable by the public.
7 The answer to that, unfortunately, is clearly
8 no. There is a big gap compared to the technology
9 performance that would be required.
10 Of course, cost certainly is an issue.
11 Unfortunately, that gets you into a technology story,
12 where five years ago, we did expect, our battery
13 experts as well as the battery suppliers, did expect to
14 make significantly additional progress both in
15 nickel-metal hydride, in terms of energy density, cost
16 side, reducing material or the amount of the precious
17 material, and all of these were very actively looked,
18 as well as lithium toward the longer term.
19 However, after ten years of seeing a
20 saturation and deeply understanding some of the
21 chemical phenomenon, it is quite clear that it would
22 take a breakthrough.
23 That instead, we have saturated, and every
24 time we try to reduce the cost, we get much shorter
25 life.
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1 We have just fundamental trade-offs. So,
2 again, we know with much more confidence there is not a
3 prospect of improving on those very fundamental issues.
4 CHAIRMAN LLOYD: Thank you very much, Ben.
5 Dr. Burke.
6 BOARD MEMBER BURKE: Before you leave, Matt,
7 please, give me a break.
8 I visited just about all of the auto
9 manufacturers, and there's some that are good and some
10 that are bad.
11 There are some that are trying and some that
12 are not trying. I've got to tell you, that I was very
13 impressed by what you guys were doing.
14 I think that at least you are working within
15 the spirit of the mandate.
16 I know this is made by man, so it is not
17 perfect. So, the cars are made by man, so they are not
18 perfect.
19 I, as one Board Member, appreciate the effort
20 with which Honda has been pursuing with this mandate.
21 MR. KNIGHT: Thank you.
22 I appreciate the time that you spent with us.
23 CHAIRMAN LLOYD: Thank you very much.
24 Last for the auto companies here is Sam
25 Leonard.
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1 Sam has got 20 minutes.
2 As I mentioned to Sam earlier, by the way, I
3 had a dream about Sam the other night. He said it
4 wasn't a dream, it was a nightmare.
5 MR. LEONARD: If I'm in his dream, it's got to
6 be a nightmare.
7 Oh, good afternoon. For the record, my name
8 is Sam Leonard. I'm here as Director of General Motors
9 Public Policy Center Responsible for Mobile Emissions
10 and Fuel Economy.
11 I thought long and hard about my testimony
12 today, because as many of you may know, this may well
13 be the last time that I will be addressing the Board as
14 a General Motors employee. I will be retiring at the
15 end of this year.
16 I have been involved with the automotive
17 emissions throughout my career with General Motors. I
18 began in 1970 just as the 1970 Clean Air Act was
19 adopted.
20 As a product engineer, I was there when GM
21 went across its product line -- all that would be up
22 there right now is my title slide, so I will keep
23 talking.
24 As a product engineer, I was there when GM
25 went across its product with catalytic converters and
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1 high energy ignition in the 1975 model year, the only
2 manufacturer to do so.
3 I was there in 1977 when we had new 1978 model
4 year vehicles stored in every available parking lot
5 waiting for the Clean Air Act to be amended so that we
6 could ship them.
7 On the public policy side, I was there when we
8 went across the product line with the on-board
9 diagnostics in the 1981 model year, years ahead of any
10 regulatory requirement.
11 Now we can go to next slide.
12 I've been just as involved in California. I
13 was at the January 1990 LA Auto Show when GM introduced
14 the EMPAC electric vehicle, the precursor to the EV-1,
15 and the technological stimulus to the issue before us
16 today, when we announced that GM intended to make a
17 business of electric vehicles, and would introduce a
18 purpose built electric version of the EMPAC for sale in
19 California in mid 1990s.
20 I then testified at the September 1990 Board
21 meeting at which the LEV I program and the ZEV mandate
22 was adopted, which I might add ruined our business
23 case, and I was deeply involved in negotiation the MOAs
24 in 1996 which allowed this Board to delay in the ZEV
25 mandate in the face of the first Battery Panel report
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1 which concluded that the advanced batteries would not
2 be ready by 1998.
3 I was there in 1998 when the LEV II program
4 and the PZEV alternatives were adopted.
5 Throughout all this, the Board and the
6 industry have made amazing progress in reducing vehicle
7 emissions and made good decisions when the data and the
8 analyses had time to be fully comprehended, and as you
9 saw with the Alliance presentation, this progress will
10 continue through 2020 with or without the ZEV mandate.
11 While we have at some times had differing
12 views regarding the means and the timing, we have
13 always agreed on a goal, clean air for California.
14 The ZEV mandate presents another instance
15 where we do not agree with the means of reducing
16 vehicle emissions, that is the ZEV mandate itself, but
17 we continue to agree with the goal of clean air.
18 The first part of my presentation will explain
19 why we don't agree with the means, and I will finish
20 with a recommendation on how I believe we should
21 proceed from here.
22 No other company has demonstrated the
23 dedication to electric vehicle and electric vehicle
24 drive componentry and to creating a sustainable market
25 for electric vehicles that General Motors has applied.
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1 Our investment to date approaches $1-billion.
2 The EMPAC announcement and the concurrent commitment
3 that GM would bring the EV to market in the mid 1990s
4 were the first elements of an integrated strategy to
5 create a sustainable electrical vehicle category for
6 transportation.
7 That integrated product strategy consisted of
8 five primary components.
9 The first was the development and production
10 of the purpose-built EV-1, the world's first electric
11 sports car for the retail market.
12 Step number two was the development and
13 production of the S-10 electric pickup conversion for
14 the fleet market.
15 Third was development and production of a new,
16 safe inductive charging system, a system that has since
17 been adopted by some other manufacturers as well.
18 Fourth was our investment in advanced battery
19 development, first through the U.S. Advanced Battery
20 Consortium and then through the formation of a joint
21 venture, GM Ovonic, to actually bring these prototype
22 nickel-metal hydride batteries to production.
23 Finally, continual product iterations on the
24 prime electric vehicle components, the power
25 controller, the battery, the electric drive system to
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1 work down the cost curve.
2 The 1997 EV-1 had generation one systems. The
3 1999 EV-1 had generation two systems. The recent
4 Precept Prototype PNGV vehicle had generation three
5 components.
6 Our marketing strategy was just as
7 multi-faceted. Our media spending was directed at the
8 full range of traditional outlets, as well as innovated
9 web-based activity, because that is where we found the
10 technology innovators.
11 We also had dedicated EV-1 sales specialists
12 to assist interested customers to explain the vehicle,
13 because we wanted good word of mouth from our
14 customers.
15 As you will hear from our customers later
16 today, we satisfied our customers. They love the
17 product.
18 But despite all of the work and, in fact, with
19 all of the marketing expense that we went to, we did
20 not even recover our marketing cost in the lease
21 payments that we charge for our vehicles.
22 Forget the development, forget the research,
23 forget the material, forget the assembly, forget the
24 batteries, the lease payments that we ended up charging
25 for these vehicles did not recover the per vehicle
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1 marketing cost.
2 Despite that, based on our marketing
3 experience, the type of marketing cost we put into this
4 vehicle, we expected to sell 10 to 20 times as many
5 vehicles.
6 We were tooled to do that. We had two
7 assembly plants, each capable of producing several
8 thousand vehicles a year.
9 So, despite the anecdotal comments, the
10 electric vehicle market failed to materialize, not for
11 lack of effort but for lack of customers willing to
12 sacrifice the utility of today's gasoline-powered
13 vehicles.
14 That brings us to the question of the ZEV
15 mandate which is scheduled to take effect in the 2003
16 model year.
17 As we look at the ZEV mandate, we have to look
18 at past results and current projections for the future.
19 Despite the large investments in electric
20 vehicles and battery technology made by General Motors
21 and others, the past results have not been favorable in
22 terms of sales, and both current and projected costs of
23 electric vehicles remain far greater than those of
24 conventional gasoline vehicles.
25 You have seen this table before. I would
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1 point out that even in the latest Battery Panel report
2 concluded that the hoped for cost and performance
3 breakthroughs for advanced batteries have not come to
4 fruition and are not expected to do so in the
5 foreseeable future.
6 I would also point out that today, because of
7 the aggressive LEV II standards adopted by this Board
8 in 1998, and the resulting additional emission
9 reductions required of conventional gasoline vehicles,
10 the incremental ZEV benefit has dropped to about two
11 tons per day.
12 This is a testimony to the significant
13 advancement in emission controls on conventional
14 gasoline vehicles.
15 While the ZEV mandate is predicted to slightly
16 reduce vehicle emissions, that is absent any change in
17 fleet turnover, and that is why we felt it was
18 necessary to commission National Economic Research
19 Associates and Sierra Research to model the impact on
20 fleet turnover and subsequentive emission productions,
21 and that presentation was made to you this morning.
22 The study assumed that the State would not be
23 able to provide sufficient subsidies on electric
24 vehicles to offset the added $20,000 to $25,000 cost
25 per vehicle stated in the staff report.
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1 It is clear to achieve the ZEV mandate, the
2 high ZEV costs must be subsidized, because people are
3 not willing to pay a premium for them, as shown by
4 several testifiers before, and that when a manufacturer
5 cross-subsidizes, the most rational economic way to do
6 so would be to across the base which creates demand,
7 across the passenger car, LDT market.
8 If you subsidize $20,000 across those
9 vehicles, that means you increase the price of those
10 vehicles by about $2,000 a piece, one-tenth of $20,000.
11 Such price increases would decrease new
12 vehicle sales. Many, many cases showing the impact of
13 price increase versus sale elasticity, causing older
14 vehicles to stay on the road longer, and the net impact
15 of the ZEV mandate on vehicle emissions would not be a
16 two ton per day increase or decrease but instead could
17 be up to a 22 ton per day increase in ROG plus NOx in
18 the South Coast in 2010.
19 As reported, the NERA-Sierra study looked at
20 other scenarios as well as that base scenario, but in
21 all scenarios there was an increase in emissions
22 through 2020.
23 Both the $1.8-million per ton cost
24 effectiveness calculation that has been performed for
25 you before and the implications of the NERA-Sierra
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1 report have implications.
2 As you know, all of you on the Board,
3 California enabling legislation requires the Board to
4 choose the most cost-effective combination of control
5 measures in achieving air quality goals.
6 Aside from the legal implications of these
7 levels of cost-effectiveness for the ZEV mandate, what
8 perhaps should be even more troubling for this Board
9 are the policy implications for future rule makings.
10 If this Board maintains the ZEV mandate, it
11 will have established a new and a very expensive
12 standard for cost-effectiveness, for what is acceptable
13 cost-effectiveness for the Board.
14 Thereafter, any control measure that comes
15 before the Board that has a cost-effectiveness of less
16 than $1.8-million per ton, will have to be adopted,
17 because that is the level that you will have
18 established as acceptable.
19 The Board needs to consider whether this is in
20 the best interest of California citizens and of the
21 economy of California.
22 For example, at the $1.8-million per ton
23 cost-effectiveness, to project a two tons per day
24 benefit in South Coast, would cost over $1.3-billion
25 per year.
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1 Surely there has got to more cost-effective
2 ways for the South Coast citizens to cleanup the air,
3 and the recently announced AQMD-GM Community Clean Air
4 Partnership is just one example of the types of things
5 that we can do.
6 If the South Coast had to spend even a million
7 dollars a ton to eliminate the entire 2,000 tons per
8 day of ROG plus NOx in the Basin, the cost to its
9 citizens would approach $750-billion a year.
10 This is very, very expensive way to control
11 emissions.
12 I told you at the beginning of my presentation
13 that I would finish with a recommendation of where I
14 believe we should go from here.
15 With the knowledge from the staff report and
16 from EMFAC 2000, we have a unique opportunity to work
17 together to develop a new approach to the ZEV issue.
18 We need to develop a new way to address the
19 issue, and we want to develop that in the context of
20 the ZEV mandate.
21 We need the Board to encourage the staff to
22 work with the stakeholders to develop a more
23 cost-effective approach to deployment of an advanced
24 technology vehicle, including ZEVs, as provided by the
25 ZEV mandate.
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1 We must work together to create sustainable
2 markets. The societal benefit of clean air can only be
3 achieved if we put advanced technology into daily use.
4 This requires creating a valuable proposition for
5 customers.
6 I encourage the Board to pursue this approach.
7 For our part, the industry intends to proceed and GM
8 commits to continue pursuit of advanced vehicles and
9 improved fuels as demonstrated by urban buses, hybrid
10 full-size trucks and the recent announcement on
11 gasoline reform breakthrough.
12 In summary, it does not take a ZEV mandate to
13 continue the progress. It takes cooperation and all of
14 us working together for us to make that progress.
15 Thank you.
16 CHAIRMAN LLOYD: Thank you very much, Sam.
17 This may be the last time for any of us to
18 make a comment to you or ask a question.
19 BOARD MEMBER CALHOUN: Sam, since this is
20 going to be your last appearance before the Board, I
21 cannot resist the opportunity to ask you a question.
22 Your next to last statement, industry commits
23 to the same or better ZEV, does that consider the
24 long-term expected benefits from the ZEV?
25 MR. LEONARD: Certainly 2020, according to the
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1 staff report, long-term is three and a half tons.
2 If you had 50 percent ZEVs, it would be nine
3 tons. We'd work hard to make that up and work with the
4 Board and staff to do that cost-effectively, and that
5 could be achieved.
6 CHAIRMAN LLOYD: Thank you.
7 BOARD MEMBER DeSAULNIER: When some of us were
8 back with you before the LEV II, we went in and looked
9 at the marketing direction, and I believe you were in
10 the room, and you gave an outline historically of how
11 long it would take, and we talked about computers, cell
12 phones, and he was telling us, this is going to take a
13 long time, at best, it takes ten years.
14 From history and the commitment from the top
15 executives, there was acknowledgment that it was a
16 long-term commitment.
17 What is happening? Is it that you feel like
18 you can't get past the price issue?
19 MR. LEONARD: A couple of things.
20 One happened before that, as you know, when we
21 originally announced that we were going to do EV-1, and
22 we had assumptions on where the price of the battery
23 and material and vehicles were going, that have not
24 come true, despite the millions of dollars that have
25 been invested, a billion on our part to drive it down
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1 to be competitive.
2 The staff said they estimate that a $20,000
3 premium, for conventional today, I think that estimate
4 is low. I think it is low.
5 You can only subsidize internally in fairness
6 to the shareholders because you owe them return on
7 investment.
8 So long before you have to stop, especially
9 when you do not see yourself getting over the curve,
10 where you start making money on the product, the
11 introduction of the other technologies, microwaves and
12 so forth, when they first came out, they cost -- they
13 were priced at what they cost. They were $1200, $1500
14 a piece for a microwave oven.
15 You are asking us to price well below cost and
16 make a 10 percent level. That is too much for the
17 manufacturer to lose and too much burden for the
18 shareholder and market value, and California's Pension
19 is one of the shareholders, and they do not want us to
20 give away the --
21 BOARD MEMBER DeSAULNIER: Apparently, the
22 return is good.
23 CHAIRMAN LLOYD: On that point, they would
24 like to gain market share rather than lose.
25 BOARD MEMBER DeSAULNIER: I would like to get
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1 at -- is there a market, and can you develop it, and
2 how long?
3 Like microwaves, how much did it cost and will
4 it come down? Can you make a business plan?
5 MR. LEONARD: They are the same issue.
6 I develop a market for ZEVs, if I price them
7 for $5,000 a piece, I sell them and make a 10 percent
8 share at $5,000 a piece, but if they cost me $25,000 a
9 piece, I cannot ask the shareholders to eat that.
10 BOARD MEMBER DeSAULNIER: The market is
11 dependent on the cost and range, and you do not see any
12 future?
13 MR. LEONARD: I do not see the breakthrough.
14 You are not into a profit situation. We are
15 in a loss situation.
16 CHAIRMAN LLOYD: It would be helpful when Mr.
17 Stempel comes on, as he has a unique perspective.
18 BOARD MEMBER RIORDAN: Congratulations on your
19 requirement.
20 Also, please take back the message to GM, I
21 think it is commendable that you are partnering to do
22 the research as necessary on the batteries and those
23 types of things.
24 I really thank you for any other efforts that
25 you are doing, because I think that is critically
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1 important.
2 I might not have said that to others, but you
3 are retiring, so I get to say it to you. It is
4 important that you work and look at all aspects,
5 regardless of what the hurdles are.
6 R and D is very important to succeed.
7 MR. LEONARD: We have extensive R and D
8 programs on fuel cells on which there will be
9 announcements of breakthroughs.
10 CHAIRMAN LLOYD: Thank you for your efforts
11 over the years.
12 Again, we have had spirited discussions, and I
13 appreciate you coming forward.
14 One area on the last thing, you offered to
15 work closely with us without a mandate, and yet
16 performance, in all honesty, EV-1 and 2, there is a big
17 credibility gap.
18 I hear you, but the response is disappointing.
19 I have one speaker who has to go on before Mr.
20 Stempel.
21 MR. LEONARD: One of the inherent properties
22 of nickel-metal hydride batteries is that if it sits
23 around and is not charged for approximately 30 days,
24 that battery goes dead, and it is irreversible, it is
25 dead.
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1 Those batteries today are worth $50,000 a
2 piece in items of being in the vehicle. We had two
3 incidents of failure that potentially could have caused
4 fires. We had no choice, we were not going to be a
5 fire starter, so we got the vehicles out of the hands
6 of the customers.
7 CHAIRMAN LLOYD: I hear you, and again, I
8 commend you for your offer to work together with the
9 staff to develop more trust.
10 MR. LEONARD: I ask the Board to direct staff
11 to work with us, and by us, I mean all the
12 stakeholders.
13 BOARD MEMBER BURKE: Mr. Chairman, I agree
14 with you.
15 A couple of months ago, because our experience
16 had been similar, but I have to say this, General
17 Motors has been in the South Coast for eight months on
18 various projects which have shown a complete turnaround
19 as far as my perception.
20 I am the guy who got up and walked out of a
21 meeting on the top floor of the Renaissance Center
22 because I was insulted and left the Chief Financial
23 Officer there, and everyone was in a huff.
24 I'm telling you some of the out-of-box
25 thinking that they have brought to us over the last six
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1 or seven months, I'm not saying kill the mandate, but
2 I'm saying I hate to see Sam go, because I think he was
3 an integral part in remolding of the thinking there at
4 the headshed, but there were other people around that
5 will carry your march forward, and I think that the
6 people of California will be better by the ZEV mandate
7 and the out-of-the-box thinking by you.
8 CHAIRMAN LLOYD: I do not know what
9 out-of-the-box means, but we have a responsibility to
10 the total environment here, that is what we are looking
11 at.
12 I wish you good luck.
13 MR. LEONARD: Depending what you have on the
14 December Board meeting --
15 CHAIRMAN LLOYD: Is that as Santa Claus?
16 BOARD MEMBER McKINNON: I was going to keep it
17 short, so have a great retirement, if we do not get to
18 see you or get a chance to say so later.
19 CHAIRMAN LLOYD: Thank you very much.
20 By the way, the next witness, I apologize to
21 Mr. Chris Noram for Diane Feinstein, I did not realize
22 that you were here.
23 MR. NORAM: Briefly, I know you have got of
24 lot of reading material, but I would direct your
25 attention to the letter signed by the House
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1 Representatives and Congressmen, making several key
2 points.
3 One is that the Clean Air Act and the Federal
4 funding, the Senate is in strong support for and an
5 integral part of that.
6 I really wanted to make that quick point and
7 thank you for your time and everyone's diligence.
8 CHAIRMAN LLOYD: Thank you. Thank the Senator
9 and her colleagues.
10 Mr. Stempel.
11 MR. STEMPEL: I appreciate the opportunity to
12 appear today.
13 Electric vehicles are fun to drive, safe and
14 practical and can be an effective part of
15 transportation and an alternative to the
16 gasoline-powered vehicle.
17 That said, I'm the Chairman of the Energy
18 Coalition. The Board is aware of my prior experience,
19 and I am not supportive of mandates for technology
20 forcing means or change, but once in place, I am
21 definitely not in favor of changing one decision back
22 and forth, because it increases the uncertainty among
23 the manufacturers and suppliers.
24 It's been ten years since the original
25 mandate, 1990. What don't we know?
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1 We have studied them. The market has been
2 studied. It's been analyzed.
3 Today they are available. EVs only have to
4 have some effort to get them started.
5 They can be battery now and eventually fuel
6 cell.
7 Let's just focus on the reported disadvantages
8 of EVs, cost of the battery and driving range. These
9 are what I've heard every day and I have heard them all
10 again.
11 Electric vehicles cost, without the battery,
12 is reported to be equal to an internal combustion
13 powered car.
14 The analysis without batteries for EVs should
15 cost less. Why less?
16 Start with the gasoline-powered car. We keep
17 the wheels, tires, brakes, steering, suspension. That
18 is similar between the two.
19 EV case, there is costs, electric power
20 steering, electric window, window glazing to reduce the
21 solar heat and lightweight, and they are going into the
22 gasoline powered vehicle.
23 So far, the vehicles are even. See what is
24 not in an EV. No internal combustion engine, no
25 transmission, no evaporative control, no catalytic
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1 converter, no fuel, no electronic ignition and
2 management system.
3 Now we have to add a few. Electric motor, and
4 usually they are lower cost compared to the basic, and
5 the reduction and fewer gears than manual electronic
6 motor, probably less than an entire control system, so
7 the car itself should be less costly than similarly
8 comparable conventional when produced in volume.
9 The vehicle cost is without the battery. What
10 about the battery cost?
11 In spite of the lack of industry enthusiasm
12 for EV mandate changes, the battery companies continued
13 the develop with the nickel-metal hydride family of
14 batteries and develop support for the PNG program and
15 General Motors EV-1 batteries with specific energy of
16 70 kilowatt hours per kilogram.
17 We demonstrated 80 watts per kilogram and have
18 them now for OEM testing. They are showing and will
19 soon have demonstrations for auto makers.
20 We have to get going. We have a new business
21 partner for nickel-metal hydride batteries at the
22 current capacity, which is increased to 2,000 a year
23 for HEV, and with orders, guys, to 6,000 a year by year
24 2003.
25 We will soon be announcing an available full
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1 line to all of the automotive potential customers for
2 use in EVs for 2003.
3 Tooling and automation will reduce cost.
4 Understand, in the automotive industry, 20,000 is not
5 many vehicles.
6 We need volume to keep our buyers interested.
7 Our suppliers cannot make the investment to bring the
8 costs down.
9 When you buy the car, why not pay as you go,
10 spreading the payment over years.
11 Finally, the recycling responsibility and
12 recycling life of the battery, we are going to
13 investigate these and other methods too.
14 It is getting harder to keep the suppliers
15 interested. It is coming. They say it is Christmas,
16 and I would rather do business today and not build an
17 EV, but we know normal things that we are doing,
18 continuous improvement, cost reduction, we cannot start
19 those programs without continuing volume flow.
20 If we heard one thing over the years and in
21 the papers and repeated, of course, the problem with
22 EVs is that they do not go forward enough on a single
23 charge.
24 If you do not drive or do not like them, you
25 may not like the facts. Most EV drivers report a range
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1 of 150 to 160 miles daily drive, which is more than
2 adequate for the battery, according to most of them.
3 If you think about it, you drive a lot of
4 miles a day, given the hours spent in the car, in spite
5 of more people, but the average vehicle in the U.S.
6 travels less than 50 miles a day.
7 There's a lot of room for EVs. EVs are
8 superior to gasoline. If you think about the city
9 deliveries and United Parcel, as Ford mentioned the
10 Post Office, home to work, work to home commuter,
11 second car and shopping, stop and go driving, the EV
12 has reduced maintenance and lower costs in addition to
13 societal advantages of no emissions.
14 The average gasoline-powered car can carry
15 enough to go 350, and not every tank gives you that
16 range.
17 In 1998, in Manhattan, a GEO metro, on a
18 nickel-metal hydride battery, stop and go, New York
19 driver, went the equivalent of 246 miles, and the
20 gasoline 120.
21 Range is not always range. Under the
22 conditions, EV shows up, stop lights, the motor is not
23 running, not emitting, no heat restriction, no noise,
24 and you gain with regenerative braking.
25 If you have not figured it out, I am partial
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1 to the electric vehicles and their potential role that
2 they play in the nation. We recognize that the
3 competition is good for affordable cars, and we are
4 competing with them, not bringing it in to compete with
5 a horse, but we hope today to make the EV competitive.
6 We need to get generations 3 and 4 on the
7 road. It is time for the new vehicles to get out.
8 We are learning more today. Charging
9 infrastructure, cost, service network, we are nearly in
10 the stages of development where we see hundreds of
11 customers, and that was in 1994.
12 We have learned a lot in six years since this
13 hearing, and we have accomplished most of the tasks,
14 and importantly, we have the vehicles in daily customer
15 use that are meeting the customers needs.
16 Is there still more to do?
17 Yes.
18 Let's get started. Just as ICE vehicles
19 improve, so will EVs in production.
20 I urge the Board to maintain 2003 mandate.
21 Chairman Lloyd, I thank you for the
22 opportunity to appear before the Board. I will be
23 happy to answer questions.
24 CHAIRMAN LLOYD: Thank you very much.
25 Thank you for the time and coming out.
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1 We are going to take a moment while the court
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1 CHAIRPERSON LLOYD: I we get started please. I'd
2 like to announce that the Board is scheduled for food
3 here. We're going to take a break at 5:30 for
4 approximately half an hour so that people can get an idea.
5 So technically we'll take a break at that time, eat and
6 then come back around 6:00 o'clock.
7 So we'd like to continue and welcome Dave Freeman
8 very well recognized here and a great leader down at Los
9 Angeles Department of Water and Power. Of course, a big
10 supporter of what we're trying to do.
11 MR. FREEMAN: Well, thank you, Mr. Chairman. I
12 just wish my name were David Friedman, I might pick up a
13 couple more votes here.
14 (Laughter.)
15 MR. FREEMAN: But my name is Freeman and I'll
16 stick with it for the time being.
17 I have been a participant in the march of
18 progress of electric cars for a long, long time. When I
19 was the chairman of the Tennessee Valley Authority, we had
20 a test track near Chickamauga Dam near Chattanooga, where
21 we tested electric vehicles. There were fairly crude
22 models. And I remember personally burning out the clutch
23 in one of the cars that I test drove.
24 So that I see the models of today from the
25 perspective of someone who's watched this technology grow
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1 and flourish. And you know what it is today, I don't need
2 to repeat it.
3 But let me ask this question, does anyone
4 including the General Motors Company seriously believe
5 that we would have had the development that we've had
6 without the very brave action of this board in 1990 to
7 create the mandate? I don't think anybody does.
8 (Applause.)
9 MR. FREEMAN: I think that's beyond dispute. And
10 I've had the privilege of testifying before the CARB board
11 in 1990. I was the newly arrived General Manager of the
12 Sacramento Municipal Utility District. And let me just
13 say to you, with all due respect to the awesome
14 responsibility you have, those folks showed courage. The
15 members of that board in Jan Sharpless and Jim Boyd and
16 the people that put on that presentation, they had a faith
17 that was larger than this room, because the technology
18 wasn't there.
19 The problem was there and they knew that they
20 needed to develop the technology to help solve the
21 problem. The task you have before you is, with all due
22 respect, relatively modest compared to the awesome tasks
23 of imposing the mandate. You have seen the progress that
24 has occurred under this mandate. And, frankly, the folks
25 appointed by Governor Deukmejian and Governor Wilson have
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1 brought this ball game down to about the five yard line.
2 And I realize these last five yards are very difficult.
3 But you have a heritage of courage and devotion
4 to air quality as you sit on this board. And I know each
5 and every one of you are going to live up to the awesome
6 responsibility you have, because it ought to be joyous.
7 We have moved very far, and I'm speaking not as
8 somebody that's a member of the Sierra Club or somebody
9 that's just talking, we are a big customer of electric
10 vehicles. And let me tell you, we can't buy enough of
11 them. I mean we hear people from the automobile industry,
12 but they're appearing before you and talking about the
13 problem of marketing. Well, they're not making enough of
14 them. I am ready, willing and able with the money to buy
15 more electric cars, and I can't get them. Our electric
16 vehicles are all over Los Angeles on demonstrations. They
17 stir up tremendous interest. People want to buy them, and
18 they're not available.
19 Now, I'm talking like a guy -- when I was
20 Chairman of TVA, the General Motors Company, the CEO of
21 that company sent me a personal letter guaranteeing that
22 there'd be an electric car in every GM showroom in 1980.
23 (Laughter.)
24 MR. FREEMAN: The GM policy on electric cars was
25 vividly demonstrated in the testimony just now. It comes
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1 and goes with the guy in charge. When Mr. Stempel was in
2 charge, you had one policy. You've had different policies
3 since, and you don't know what the policy will be
4 tomorrow.
5 You have to keep this mandate intact and go the
6 course, because otherwise it's not going to happen. Do
7 you think that the companies will be putting the money in
8 the fuel cell, which they all proclaim is going to do it.
9 It wouldn't have happened without this mandate.
10 You have got something to be very, very proud of, of the
11 work of this board, which has been the leader in the world
12 on advancing air quality. And this is, I think, your
13 finest hour.
14 Now, we have been your partners. We have put in
15 over 350 public charging stations in Los Angeles,
16 California. We have built the infrastructure to
17 accommodate the large scale use of electric vehicles. You
18 know, sorry about the fact --
19 (Thereupon the lights went out.)
20 CHAIRPERSON LLOYD: See what's happened to SMUD
21 since you left.
22 (Laughter.)
23 MR. FREEMAN: Yeah. They're just jealous because
24 we're making money down there.
25 (Laughter.)
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1 BOARD MEMBER RIORDAN: They just turned off the
2 electricity.
3 MR. FREEMAN: But we're not shooting in the dark.
4 (Laughter.)
5 MR. FREEMAN: We put in an off peak electric rate
6 many, many years ago. I think we were the first in the
7 country. We'd charge one-third of the regular rate for
8 battery charging at night, and I think that what's missing
9 in this dialogue about the market and the availability is,
10 one, I don't think that the automobile companies are
11 telling you that there is a waiting list for electric cars
12 in Los Angeles, California. And they're not pointing out
13 that they know how to sell a car.
14 Cars are not sold just on price. They're sold
15 with something called advertising. And the minute that
16 you see a sustained, not just a few ads, but a sustained
17 television ad program in prime time for electric cars like
18 you've seen for the SUVs, then you'll know that this
19 industry is serious about electric vehicles, and then
20 you'll know that they are trying to live up to the
21 mandate.
22 Until that happens, this is all the same kind of
23 talk that we've heard out of the industry over the years.
24 It took a law to put seat belts in the cars. It took a
25 law to put airbags in. I took a law to get mileage up in
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1 the seventies through the CAFE standards and it took a law
2 to get catalytic converters on them. And it took this
3 brave Commission to get the ZEV mandate in place to begin
4 to get a whole new generation of vehicles which are
5 coming. And I think that they will come if you just stay
6 the course.
7 Let me say to you that I think if I were sitting
8 in your shoes, I look at it this way. Look at the
9 options. Suppose you have some doubt about their ability
10 to do it. If you stay the course on this mandate, what is
11 the worst thing that could happen? What is the very worst
12 thing that could happen?
13 That they may not make enough cars or not sell
14 enough cars. If they come in to you with a bunch of
15 electric vehicles in their showrooms that they can't sell,
16 I'm sure that this commission will do something about the
17 fines and penalties. It won't be a very traumatic thing
18 to do.
19 But if you do not stay the course with this
20 mandate, and you look your grandchildren in the eye, how
21 will you ever say to yourself that you did your duty. How
22 will you ever say to yourself that you saw it all the way
23 and that you know for sure that what they're saying is
24 right, that the American people don't want to buy electric
25 cars, that they just can't be sold. You'll never know
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1 unless you stay the course.
2 I urge you to do so.
3 CHAIRPERSON LLOYD: Thank you very much.
4 (Applause.)
5 CHAIRPERSON LLOYD: Questions or comments from
6 the Board?
7 Thank you very much, David.
8 Next is Judy Bishop with the US Postal Service,
9 then Cecile Martin with Cal ETC and David Modisette with
10 Cal ETC.
11 MS. BISHOP: Hi, I'm Judy Bishop, environmental
12 consultant for the United States Postal Service. And I
13 just want to say that to the automakers, you know in your
14 heart of hearts it's what is the right thing to do, so
15 just do I.
16 Thank you.
17 CHAIRPERSON LLOYD: Thank you.
18 Thank you very much.
19 (Applause.)
20 CHAIRPERSON LLOYD: I appreciate the time saved
21 as well.
22 Thank you very much.
23 BOARD MEMBER DeSAULNIER: I've got a question.
24 (Laughter.)
25 CHAIRPERSON LLOYD: Overruled.
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1 (Laughter.)
2 CHAIRPERSON LLOYD: Took you by surprise Cecile.
3 MS. MARTIN: Yes, it did. Well, good evening.
4 Cecile Martin, Cal ETC appreciates the opportunity to
5 address the Board today on this important subject. This
6 is Cal ETC's 10th year of working to achieve the goal that
7 we set for ourselves in 1991 in response to the 1990
8 mandate. Our goal is to realize the environmental energy
9 and economic benefits that EV's can bring to California's
10 marketplace and to its driving public. And we are
11 drivers.
12 More and more of us each day take to the roads
13 with the expectation that we can go where we want, when we
14 want. In this room we all know the impacts of this
15 freedom in the form of air and water pollution. They
16 literally take our breath and sometimes our lives away.
17 As our population soars, so do our expectations.
18 Yet we are taxing an already strained petroleum supply
19 system and suffering the high prices that result. There
20 are multiple solutions to these problems. And CARB's ZEV
21 program is one very important solution.
22 The public is relying on this board to continue
23 the work of the ZEV program. I want you to know that
24 throughout these ten years and before, Cal ETC's founding
25 members and board of directors, the Los Angeles Department
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1 of Water and Power, Pacific Gas and Electric Company,
2 Sacramento Municipal Utility District, Sempra Energy and
3 Southern California Energy have made significant
4 investments, more than 115 million, in EV development and
5 demonstration, in battery development as I founding member
6 of the USABC through EPRI, in infrastructure development
7 and installation, in educating customers about the
8 benefits of EV's by leasing EVs for their fleets, in some
9 cases by supporting auto maker warrantees, in some cases
10 by offering company incentives and, of course, as fuel
11 providers.
12 In a regulated utility environment and within the
13 throes of early deregulation, these companies have made a
14 business case again and again for ZEVs. To support the
15 continuation of their ZEV program, in a sense, each year
16 at budget Cal ETC companies have to ask the same questions
17 of the program as the Board will be asking today.
18 Each time, as budgets were decided in favor of
19 continuing the program, this was done with eyes wide open.
20 Although I must say that the declining number of EV's that
21 were planned by the regulation made it more and more
22 difficult.
23 I want to focus on three things that we feel are
24 important that we've learned throughout these years of
25 effort. The first is that EV technology continues to
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1 improve and these improvements have enabled EV's to have
2 performance attributes that are more desirable to a larger
3 number of customers and to increase the potential of wider
4 market acceptance. EVs have more potential today than
5 they did ten years ago and with public education and broad
6 marketing, consumers will learn that EVs have
7 characteristics even more desirable than conventional
8 internal combustion engine vehicles and that they offer
9 significantly lower operating and fueling costs and longer
10 life. To quote GM Vice Chairman Harry Pearce, "...EVs
11 literally last forever."
12 Second, consumer satisfaction remains high. Now,
13 for the past six years we've been able to gather EV Market
14 data from individuals who have had some experience with
15 EV's. As I'm sure you all know, it's been difficult to
16 gather market data over these years because many of us
17 tried to do it before customers had any experience at all
18 with the vehicles.
19 Now, we know of at least seven surveys that have
20 been conducted since 1996, and the results have been
21 remarkably similar and consistent and consistently
22 positive. We've just completed the update of this most
23 recent survey of EV drivers that was conducted in
24 cooperation with the Energy Commission and all of the air
25 districts that have been offering incentives for the
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1 vehicles. And this is updated information, which now
2 includes San Diego, so I feel like it gives a fairly full
3 statewide picture.
4 And I'm not going to read these in the interest
5 of time, but I think that the numbers are striking. And
6 people's satisfaction with the vehicles has remained very,
7 very high. They drive them every day. It's become their
8 primary vehicle. Even if they have two cars, it
9 substitutes for some of the gasoline vehicles' trips. And
10 I'm not certain that we would see this from any other
11 products in the marketplace right now.
12 Third, the number of EV's required in 2003 and
13 beyond we believe are achievable with today's technology.
14 Now, I want to look at the results of three market
15 surveys. And the first survey was conducted by Dohring
16 Company for Automotive News in 1994. They concluded that
17 16.7 percent of those surveyed would seriously consider
18 purchasing an EV. And remember this was 1994 when EVs
19 were not yet available to the public and performance
20 expectations were not as high as they are today.
21 Then in 1995 come Tom Turrentine and Ken Kurani,
22 who you heard from earlier, from the ITS that David
23 conducted a more in-depth survey. They did actual
24 household surveys with driver diaries and ongoing
25 interviews. And they came up with a potential market of
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1 about 15 percent, in a study called The Household Market
2 For Electric Vehicles. EVs at this time had not yet
3 broken through to the 100-mile range.
4 But this year this Dohring Company conducted a
5 market survey for Green Car Institute, and you'll hear
6 more in detail about this later, but this is a little bit
7 of a preview. They determined that the retail market
8 potential for EVs is about 12 to 18 percent.
9 And that's not all. Additional efforts on the
10 part of the Green Car Institute determined that EVs have
11 the potential to capture from five to ten percent of the
12 fleet market.
13 Now, what do these numbers look like in relation
14 to the CARB ZEV requirement, and I think you can see them
15 up there, is that if we're going to assume that the new
16 vehicle sales per year are 1.5 million light duty
17 vehicles, fleet vehicles we're estimating to be about 16
18 percent of this total. The survey results show that the
19 EV retail market potential could be 150,000 to 226,000
20 vehicles. That's quite remarkable. And the fleet market,
21 if we capture only five to ten percent of that market is
22 12,000 to 24,000 vehicles. And look at that, the addition
23 of those numbers contrasted with the 22,000 vehicles that
24 we're talking about for 2003.
25 Now, some people will criticize these numbers.
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1 And in no way do we say that all of these people are
2 actual buyers, but these are annual sales numbers. And I
3 think that's important to remember. And let's look if 1
4 in 7 people from the lower estimate of 163,000 vehicles
5 were to choose electric in a given year, we would easily
6 make that 22,000 number.
7 And also I want to remind you that our member
8 utilities are part of this market. Because of their EPAct
9 fuel provider requirements, as well as their interest in
10 electric vehicles, electric utilities must acquire
11 increasing percentages of EVs for their fleets. For the
12 record, California utilities would have a demand of
13 approximately 1,000 vehicles annually.
14 So here's what we know. EVs perform well and
15 continue to improve. Drivers and would-be drivers like
16 EVs and they want to see and purchase more of them. And
17 market surveys have consistently shown that about 15
18 percent of the public is interested in having their next
19 vehicle be electric.
20 We have also seen that even a small percentage of
21 the fleet market alone could absorb a great number of the
22 required vehicles that we're talking about today. That
23 being said, we have given considerable thought to what
24 regulatory conditions we think would support a future
25 market.
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1 CHAIRPERSON LLOYD: Cecile, you're well over your
2 five minutes here.
3 MS. MARTIN: I am?
4 CHAIRPERSON LLOYD: The red light says five is
5 up, but can you wrap up?
6 MS. MARTIN: It says three minutes and
7 thirty-nine seconds remaining on my little thing.
8 CHAIRPERSON LLOYD: That's the overtime.
9 MS. MARTIN: Oh, really. I apologize.
10 (Laughter.)
11 I apologize. We've made some points here about
12 things that we would like to have the Board consider, and
13 you have my written testimony. And I hope that you have
14 the updated version with the nice shaded boxes and the
15 correct numbers. I encourage you to look at them.
16 And then I just don't want to stop before
17 thanking staff for doing what we feel is an excellent job.
18 We appreciate the balance and the effort evident in the
19 report and that the workshop process has been a very
20 positive experience.
21 And in conclusion we just want to say that we
22 believe that the future will hold additional progress, a
23 growing market for EVs and other advanced technologies,
24 and hopefully a team effort to set this technology firmly
25 on the California roads.
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1 Thank you.
2 CHAIRPERSON LLOYD: Thank you. You recognize
3 that you've left Dave with one minute.
4 (Laughter.)
5 CHAIRPERSON LLOYD: But Dave before you get on, I
6 would like to just hold on a minute, because Susan Frank
7 with the Steven and Michele Kirsch Foundation has to leave
8 here, so I'd like to put her on just before you, if you
9 don't mind, please.
10 MS. FRANK: Thank you. I actually turned in a
11 card for Steve and myself. And Steve's going to be on the
12 video and I promise between the two of us, we will not
13 take up more than our allotted time.
14 CHAIRPERSON LLOYD: Which is?
15 MS. FRANK: Ten minutes, but I promise I'll be
16 efficient. We're going to do the video first. Now for
17 something completely different.
18 CHAIRPERSON LLOYD: For those of you who haven't
19 seen the recent edition of Red Herring, Steve had a very
20 nice write-up in Red Herring Magazine there.
21 (Thereupon a video presentation was made
22 by Mr. Steven Kirsch as follows:)
23 MR. KIRSCH: Dr. Lloyd and Board Members, hi, my
24 name is Steve Kirsch and I'm the CEO of Propel and Silicon
25 Valley startup developing ECommerce Software.
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1 Formerly, I was the CEO of InfoSeek, one of the
2 most popular portals on the Internet acquired by Disney
3 last June. I'm sorry I couldn't be there today, but I had
4 a really important business meeting that I couldn't miss.
5 I wish I could be there to tell you how much I
6 love to drive my EV1. I drive it all the time, 59 days
7 out of 60. That's no exaggeration. My wife drives a
8 RAV4, electric. Both of us have other cars that almost
9 never get driven. We're on 100 percent green power, so
10 when we drive our ZEVs we aren't polluting at all.
11 Why do we drive ZEVs? Because when I look out my
12 window at work, I can't see the mountains. It's one
13 simple thing that everyone can do to help clean up the air
14 for us and for our kids and for their kids. It's simply a
15 lot cheaper not to pollute in the first place than later
16 to clean up.
17 So why isn't everyone driving ZEVs? Several
18 reasons I think. The cars are relatively expensive, there
19 aren't enough models available and the advertising on the
20 benefits is minimal. Nobody knows that the range is more
21 than adequate, they cost virtually nothing to charge and
22 how fast they accelerate and where you can go to get a
23 ZEV.
24 Have you ever gone to the Chrysler web site and
25 looked for information on their electric minivan? It's
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1 not there. And the automakers have done zero to advertise
2 electric vehicles, that this is an incredible difficulty
3 for people to drive a ZEV. So when you couple that lack
4 of promotion and the benefits with the automakers telling
5 people that you can only buy one of these vehicles if you
6 qualify and then we'll put you on a wait list and there is
7 no guaranteed delivery date, is there any wonder that
8 people aren't tripping over themselves to get these
9 vehicles.
10 Even with the lame marketing, the problem is not
11 lack of demand. There are zero ZEVs sitting on the car
12 lot waiting to be purchased, zero, zilch, nada. That's
13 not a lack of demand, that's a lack of supply.
14 The automakers would argue let the market decide.
15 Well, I'm all for free markets, but there's one problem
16 with that logic, we have an air quality problem in
17 California and free markets have led us to a market place
18 that prefers SUVs over more efficient and clean vehicles.
19 The argument of ZEVs are too expensive to make
20 and economic to sell is certainly true. If ZEVs have the
21 same profit margins as SUVs, car makers would be promoting
22 ZEVs like crazy. I wish we had these economics today.
23 But you know we aren't that far away.
24 You can buy a Selectria which is a conversion for
25 under 25K. And you can buy a handmade electric car, a T0,
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1 a high performance hand made electric car for less than a
2 lot of luxury cars. And the T0 is a lot faster than a
3 Ferrari.
4 Society is all about imposing rules of behavior
5 so that we can all live together. For example it is
6 socially unacceptable to commit a crime like murder. Have
7 you ever read those warning signs when you pull up to a
8 gas station. Take a look next time you fill up. Gasoline
9 is toxic. The exhaust from gas vehicles isn't safe
10 either.
11 So it's very reasonable for us to regulate this.
12 In fact, I'd argue that the mandate doesn't go far enough.
13 We should only sell ZEVs in California and then we'll let
14 the market decide which models to sell.
15 So is it reasonable for us to regulate the auto
16 industry on this? Gas and car exhausts are toxic.
17 California has an air quality problem where 90 percent of
18 us live in areas where the air can be unsafe to breathe.
19 In fact, let's say we mandated 100 percent of all new
20 vehicles sold to be ZEVs. Do any of you know how many
21 years it would take before California came into compliance
22 with state and federal clean air guidelines?
23 I've asked some experts and they couldn't give me
24 an answer. In fact, they said it might be never. So to
25 me the question is not whether ZEVs are required. That's
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1 not the issue. The question you should be asking
2 yourselves is, is four percent ZEVs enough?
3 You know, we only need four things to survive in
4 the world, air, water, food and shelter. One of these
5 essential elements is seriously at risk here. If you
6 weaken or delay the mandate, the air will not be cleaner.
7 automakers will stop making ZEVs and consumers will not
8 have a choice of whether to make an environmentally
9 responsible purchase decision.
10 In fact, even with the ZEV program in place
11 today, you can't get a ZEV at any price. It doesn't take
12 a rocket scientist to figure out that things won't get
13 better if the mandate is weakened. So there's no question
14 in my mind that the ZEV program must continue. And the
15 really good news is that the California State Legislature
16 has finally figured out that you need a carrot as well as
17 a stick to get something done. They passed AB 71 to
18 compensate for the inconvenience and AB 206 went to
19 compensate for the higher cost of ZEVs.
20 Both just happened recently. What was the point
21 of that legislation if there are no ZEVs available? In
22 fact, with these pieces of legislation, the California ZEV
23 program now makes a lot of sense. So everything is
24 aligned now for ZEVs to take off.
25 We finally got the monetary and the non-monetary
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1 incentives in place. We have the technology and we have
2 the California ZEV program. We have an opportunity to do
3 something that can substantially clean up the air in
4 California. I urge you to continue California's ZEV
5 program. It's the only chance we have if we are ever to
6 meet state and federal clean air standards. We owe it to
7 our families and to our kids.
8 Thank you.
9 (Applause.)
10 CHAIRPERSON LLOYD: Thank you, Steve, for that,
11 and also as he was saying, all this help in the
12 Legislature of actually trying to get some of the
13 incentives and getting some of the subsidies.
14 MS. FRANK: Right. And in fact, if you'll
15 indulge me for just another couple of minutes, and I thank
16 my colleagues for allowing me to go ahead of them, I just
17 want to very quickly talk a little bit about incentives.
18 I think I'm supposed to do this, so let me --
19 most of you, I think, or some of you know about the Kirsch
20 Foundation. I won't spend a lot of time talking about
21 what we do. And Steve obviously already told you what he
22 does. But we are in the business of both grant making and
23 advocacy, and my job is as Director of Environmental
24 Programs for the foundation.
25 We talked a little bit about incentives earlier.
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1 Steve mentioned them in the video. AB 71 has passed.
2 It's in place. We've got all of these great vehicles now
3 able to use the carpool lanes. And unfortunately, the
4 rest of us can't take advantage of this benefit, because
5 there aren't any vehicles to be had, and so that is the
6 bad news, no vehicles available. We want to be able to
7 promote it. We'd love to be able to advertise the
8 benefit, but we're concerned that it would create
9 incredible customer frustration.
10 Then we have 2061 that just passed last week. A
11 wonderful grant program, $9,000 over the course of three
12 years of a lease of a ZEV. And if signed by the Governor
13 would provide an incredible incentive. Once, again, the
14 bad news, we have this incentive possibly available as
15 soon as October and we have no vehicles available.
16 There's a lot of marketing that needs to be done and a lot
17 of education, but most of all we need the cars.
18 Final thoughts, you've heard it before, the road
19 block today is lack of product. We believe the major
20 reason is dismal marketing. Steve mentioned the carrot
21 and stick approach of the program and these incentives.
22 In his own words, you've already heard them, but
23 another quote, and I know you have this before you in a
24 written document, so I won't read it, simple formula ZEV
25 incentive, ZEV marketing, more ZEVs. It's program
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1 success.
2 I do urge you, on behalf of the Foundation, on
3 behalf of Steve Kirsch, who really did want to be here
4 today, please I hope you will continue the program.
5 Thank you.
6 CHAIRPERSON LLOYD: Thank you very much, Susan.
7 (Applause.)
8 CHAIRPERSON LLOYD: I think we'll finish off with
9 Dave with Cal ETC.
10 (Thereupon the lights went off.)
11 MR. MODISETTE: Okay. This is going to be hard
12 to do in the dark. Chairman Lloyd, Members of the Board,
13 I'm Dave Modisette. I'm the Executive Director of the
14 California Electric Transportation Coalition. And the
15 purpose of my testimony is very, very focused. It's
16 simply to tell you and to show you, that using the
17 flexibility of the existing regulation, that automakers
18 can build a ramp to success, a ramp of vehicle production
19 which is reasonable and achievable.
20 And there's some handouts that you have and that
21 we'll follow along on the slide here. What I did here was
22 I picked an auto maker and then later on if you want to
23 see them, I can do it for all six automakers combined. I
24 picked Toyota here just because I wanted to use a large
25 auto maker. Toyota is the second largest producer of
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1 light duty vehicles in California, second only to General
2 Motors. They're actually very, very close to General
3 Motors. So the numbers that you see here for comparable
4 vehicles for other automakers are going to be less than
5 these numbers. That's the whole purpose here.
6 What I've done here up the vertical access is
7 I've plotted -- in the blue, I've plotted Toyota's total
8 vehicle production in 1998, the same figure that the staff
9 used. This number, though, includes all of their vehicles
10 including the SUVs and larger vehicles. And then along
11 the bottom I have their ZEV requirement, using their
12 Toyota Electric RAV4 as an example.
13 And so the numbers of ZEVs come right out of the
14 staff report. You can see in 2003 it's about 2,500
15 vehicles. But I want you to notice for purposes of this
16 slide what the percentage is. The percentage is one
17 percent of their total vehicle production.
18 And maybe just by way of illustration, I'd like
19 you to think for a moment of a new car lot. Let's say
20 it's a Toyota car lot, and they have all different kinds
21 of models of Toyota vehicles on the lot. What this
22 regulation requires is one of those vehicles to be
23 electric. And so what the automakers are telling you when
24 they're saying that they cannot market these vehicles is
25 that they're saying that one of those vehicles cannot be
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1 electric.
2 And I guess I want to suggest to you that that is
3 not only contrary to the marketing that you're going to
4 hear more of later on, but it's also contrary to common
5 sense. If you've driven any one of these vehicles, you
6 know that automakers can market one vehicle out of a
7 hundred as an electric vehicle. You can see in this
8 percentages that by 2006 we go to about two percent, and
9 by 2008 you go to the highest percentage which is a little
10 over three percent.
11 Now, what I'm going to do in the next slide is
12 just to change the access a little. We're going to go
13 just to a different -- do I do this myself, is that how I
14 do this.
15 So this is the same number of vehicles, but
16 instead of having 250,000 vehicles up on the vertical, I
17 went to 10,000 just so you could see how the numbers
18 actually ramp. And, again, this is the existing
19 requirement.
20 Now, Toyota in 1999 sold a few more vehicles than
21 they were required to sell under the MOA. They sold 162
22 vehicles more than they had to under the MOA requirement.
23 And the reason for doing that was to try to build a ramp,
24 to try to reduce the number of vehicles that they're
25 required to make in 2003. And they get multiple credits
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1 to do that, actually quite substantial multiple credits.
2 Just those 162 vehicles that they produced over the MOA
3 reduces their 2003 obligation by about 785 vehicles.
4 So you can see the fact that Toyota has already
5 done that has reduced their obligation in 2003 to about
6 1,700, 1,800 vehicles or .73 percent of their total
7 vehicle production.
8 Now, there's another opportunity available for
9 automakers and that is if they introduce vehicles before
10 2003, in 2001 and 2002, they can again generate multiple
11 credits which they can use against their obligation in
12 2003 or following years. So what I tried to do just for
13 illustrative purposes here is to build in what I thought
14 was a reasonable number, a very low number of vehicles
15 that they could introduce in 2001 and 2002, and therefore
16 reduce their 2003 obligation.
17 So I just added 100 vehicles in 2001, next year.
18 And I know that that's a realistic figure. I added 400
19 vehicles in 2002. And I know that's a realistic figure.
20 So what happens when you do that, they generate enough
21 multiple credits so that their 2003 figure is only 880
22 vehicles or .36 percent of their total vehicle production.
23 CHAIRPERSON LLOYD: Dave, you've got less than
24 one minute.
25 MR. MODISETTE: Okay, I can do it.
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1 Now, in the next slide, which is the last slide,
2 what I'm going to do is there's also the opportunity for
3 automakers to take vehicles from the 2004 column and put
4 it on 2005 and to take vehicles in the other columns as
5 well. And that's what I'm going to do in this next slide.
6 So you can see what I've done here is I've built
7 a ramp using the existing regulation that any auto maker
8 can do. Any auto maker can do this. They can either use
9 the ramp that's in the regulation or they can build this
10 ramp with the flexibility that's already there to create,
11 what I think is, a reasonable and achievable ramp.
12 So I want to show you just kind of in conclusion
13 that they don't even get to their one percent figure under
14 this kind of ramping scenario until 2005. They don't get
15 to two percent until 2007, and they don't get to three
16 percent until 2011. And I want to submit to you that
17 these numbers for other automakers that are very, very
18 similar, this is a reasonable and achievable goal.
19 Thank you very much.
20 CHAIRPERSON LLOYD: Thank you very much.
21 Questions of staff, do you disagree with Dave's
22 analysis?
23 MR. SHULOCK: We'd have to look at the numbers,
24 but I believe that we've already been working with him on
25 that, so they look reasonable from what we've seen so far.
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1 CHAIRPERSON LLOYD: Thank you. Next is Janet
2 Hathaway.
3 MR. HWANG: I'm going in her place.
4 CHAIRPERSON LLOYD: Okay, so does she give you
5 her time?
6 MR. HWANG: No, we're just swapping. It was an
7 equitable trade.
8 CHAIRPERSON LLOYD: Thanks, Roland.
9 MR. HWANG: My name is Roland Hwang. I'm the
10 Transportation Program Co-director for the Union Of
11 Concerned Scientists. And I appreciate the opportunity to
12 address the Board on this very important issue today.
13 The Union of Concerned Scientists commissioned
14 two studies to investigate the impacts and benefits of
15 this program. One study is on the climate change impacts
16 of ozone -- potential climate change impacts of ozone
17 level in Sacramento, Los Angeles. That study should be in
18 front of you. It was a study done by Lawrence-Berkeley
19 National Labs.
20 Somebody else, Susan Stephensen, from the
21 California Global Warming Campaign, will present those
22 results. What I want to do is present the results of
23 another study which we commissioned to study the cost and
24 benefits of an expanded ZEV program. I think we've talked
25 a lot today about the impact of the current four percent
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1 program. But I think it's very important to remember the
2 program is not about four percent, the program is about
3 100 percent. It's eventually getting to the point where
4 we can eliminate tailpipes from California's roads.
5 So we wanted to look at a study which looked at a
6 reasonable ramp up of a successful ZEV program and what
7 kind of benefits would that deliver to the State of
8 California. The person who conducted this study was Dr.
9 Timothy Lipman from UC Davis formally UC Davis, formerly
10 of UC Davis, now UC Berkeley. He's done many studies. I
11 think he's actually going to -- one of his colleagues is
12 going to present a study that he also participated on for
13 the Air Board. And he's participated on many studies for
14 the Air Resources Board.
15 So we used a detailed cost methodology model that
16 Tim Lipman and other researchers at UC Davis developed to
17 study the incremental cost of the vehicles and how those
18 costs change over time, drop rapidly with volume and
19 increased innovation.
20 We used MFACT 2000 to examine the emission
21 benefits of the program. These are two very well tested
22 models. And finally we used standard control cost
23 evaluations to examine the monetary benefits of the
24 pollution reductions.
25 So our key assumptions of the study is that we
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1 looked at a ten percent ZEV penetration by 2010, the
2 current program, and then we looked at a five percent
3 increase per year from that level till 2030 when you get
4 to 100 percent of the passenger car and light duty truck
5 market or about two-thirds of the total passenger vehicle
6 market. And we looked at a scenario that had $2 a gallon
7 of gasoline.
8 Our results of the study show something very
9 different than what you get when you look at a tons per
10 day four percent program in 2010 or even 2020. What we
11 found was that for the Los Angeles area 155,000 tons of
12 smog forming pollutants would be removed from Los Angeles
13 air over the time frame 2003 to 2030, 435 million tons of
14 CO2 would be removed from California's air, and finally
15 and very importantly 75 billion gallons of gasoline would
16 be reduced essentially by 2030 returning California to its
17 current level of gasoline consumption.
18 The cost and benefits we evaluated. We valued
19 the air pollution reductions by control cost and damage
20 cost for the particulate matter and the greenhouse gases,
21 all very standard values found in literature. What we
22 found was that when you compare the incremental costs of
23 this expanded program to the total pollution benefits of
24 the expanded program, the benefits outweighed the cost by
25 a factor of greater than 2 to 1. So therefore, it's
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1 obviously a very good deal for the State of California to
2 continue with this program and have this program grow in
3 the future.
4 Finally, we looked at the cost effectiveness. We
5 heard a lot about cost effectiveness this morning. And,
6 again, I think it's very important, I think that staff did
7 a good job of pointing out that the short-term cost
8 effectiveness is a very limited way to look at this
9 program. When you look at I over a 30-year program,
10 expanded markets for the zero emission vehicle
11 technologies, you get instead of $1.8 million per ton, you
12 get $8,000 per ton.
13 And finally, when we included the damage value,
14 the human health valuation and the damage costs of CO2
15 into those calculations, we actually get a negative $3,000
16 per ton. So obviously at a negative $3,000 a ton, it's a
17 very attractive program, but $8,000 a ton is less than
18 half of what we're currently paying on the margin for a
19 ton of reductions in the Los Angeles area.
20 So those are the results of our study. And I
21 wanted to point out that there is a group that UCS is a
22 participant in called the ZEV Alliance. Many of our
23 members will be testifying today. And we wanted to tell
24 you our three core principles which we think are very
25 critical to you getting this program started and making
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1 sure that the State of California accrues the benefits
2 that we need to clean our air up.
3 First of all, it's very critical that there be no
4 delay in the program. We need to continue to drive the
5 commercialization of advanced technology. We're afraid if
6 we let up our foot on the accelerator, that the technology
7 just won't come to market as fast as we need it.
8 That we need product now is a reoccurring theme.
9 But the lack of product in the market right now is
10 obviously a very dangerous thing for our ability to make
11 this program successful.
12 And finally, as the results of our study showed,
13 that it's really critical that we lay the foundations here
14 in order to expand the market. There's many ways of doing
15 that, but certainly looking at programs like the carpool
16 lane access, like the incentive bills, but there's more
17 that we can do, the State of California can do,
18 environmental community can do, automakers can do to
19 create a market, not just try to make sure that we have
20 certain numbers of vehicles required.
21 Allan, are you giving me the red flag here?
22 CHAIRPERSON LLOYD: Quickly. Do it quickly.
23 MR. HWANG: I've got two slides left. The
24 Partial ZEV program. Our alliance also believed that
25 there are, at least, two modifications that we'd like to
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1 see to strengthen and enhance the program. First of all,
2 there are existing loopholes for Partial ZEV vehicles, and
3 that allows up to eight times more pollution to occur from
4 a SULEV during, so-called, off-cycle events.
5 We think this is just an oversight by the staff
6 and we think that that should be remedied in the next go
7 round of examination of this program in the near future.
8 And we also think that an energy efficiency
9 incentive in the Partial ZEV program should be included so
10 that we encourage the best advanced technologies out on
11 the road, and also produce some ancillary benefits
12 reducing CO2 and emissions.
13 So in conclusion, we believe the ZEV program is
14 the cornerstone of a California transportation energy
15 policy that can protect the environment and consumers by
16 reducing gasoline consumption. We think an expanded
17 program can deliver tremendous health, climate change, and
18 consumer benefits. We believe the battery electric
19 vehicle technology in the market is more than adequate to
20 meet the 2003 plus requirements. I think that Dave
21 Modisette's presentation pointed out that it's not
22 incredibly challenging to current requirements.
23 And finally, it's very critical to keep the
24 momentum alive in terms of commercialization and
25 development of these ZEV technologies so we cannot at this
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1 time delay the program.
2 Thank you.
3 CHAIRPERSON LLOYD: Thank you very much for all
4 the work of you and your colleagues reflected in this
5 report we got here. And I think that goes for, I think,
6 your colleagues were talking earlier on about the uniform
7 higher level of information that's been provided to the
8 Board from all segments here. So we really appreciate
9 that. In fact, there's a lot to digest and a lot that the
10 staff will have to digest for us and put it back in a form
11 so we can assimilate it pretty quickly.
12 Thank you.
13 MR. HWANG: Thank you.
14 (Applauce.)
15 CHAIRPERSON LLOYD: Bonnie Holmes-Gen and then is
16 it Janet after that?
17 MS. HOLMES-GEN: Thank you. We've changed our
18 order slightly. My name is Bonnie Holmes-Gen. I'm the
19 Assistant Vice President for Government Affairs of the
20 American Lung Association of California.
21 And I'm going to give you a little break. I'm
22 not going to talk to you about studies or reports right
23 now. I'm going to talk to you about the commitment of the
24 American Lung Association to the Zero Emission Vehicle
25 Program.
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1 You heard earlier from our medical
2 representative, Dr. Sletten, about the air pollution
3 benefits of pursuing ZEVs, the air quality benefits of
4 pursuing ZEVs. And I will focus on the efforts by the
5 American Lung Association to support the Zero Emission
6 Vehicle Program and to demonstrate that a viable market
7 exists.
8 You may know that the American Lung Association
9 has dedicated significant staff time and resources and has
10 made the Zero Emission Vehicle Program a statewide
11 priority for our organization. We have involved all of
12 our 15 local associations in efforts to promote the ZEV
13 program and have conducted extensive outreach activities
14 to local governments around the State to demonstrate that
15 there's broad based support and market viability for the
16 program.
17 In March of this year, the American Lung
18 Association Board of Directors adopted a position
19 statement on Zero Emission Vehicles, and I presented that
20 to your staff at the previous workshops. And this
21 position statement documents the case for maintaining and
22 strengthening the ZEV program. It reads in part, "The
23 American Lung Association supports full implementation of
24 the California Air Resources Board ZEV program and opposes
25 any efforts to weaken Zero Emission Vehicle regulations or
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1 expand the partial credit provisions."
2 Furthermore, the American Lung Association
3 supports a stronger ZEV regulation that prohibits
4 petroleum based fuels and vehicles that qualify for
5 Partial ZEV credits.
6 Since we adopted this position statement, we've
7 worked tirelessly with our local associations to expand
8 public understanding and support for the ZEV program
9 through our annual clean air month campaign, other public
10 outreach activities you'll hear about later in the agenda
11 and to gain local government participation in an
12 endorsement of the ZEV program.
13 We've been communicating with approximately 100
14 local governments around the State on the importance of
15 the ZEV program urging them to take leadership, to
16 incorporate ZEVs into their fleets on a sustained and
17 growing basis and urging them to take formal action to
18 demonstrate their support by passing ordinances, requiring
19 primary consideration of ZEVs before any new fleet
20 purchases are made as well as by adopting resolutions and
21 letters of support for maintaining the ZEV program.
22 We've also written model resolutions and model
23 ordinances to assist city and county staff in these
24 efforts. And the response from local governments has been
25 tremendous. Approximately 30 local government entities
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1 have formally taken action to support the ZEV program
2 through letters, resolutions and ordinances. Over 20
3 additional cities are slated to consider ZEV resolutions
4 on their city or county agendas over the next month.
5 And we believe that even more local governments
6 will come on board, because we're not stopping this effort
7 tomorrow. This is an ongoing effort in our organization
8 and we're going to be working over the next six months and
9 even longer. You've heard earlier today from Council
10 Member Henry Perea about the Fresno ordinance. We're also
11 very proud of the City of San Francisco ordinance and our
12 local association worked closely with the City on that,
13 and you'll be hearing from a city representative.
14 But there's a problem here which you've heard
15 about earlier. Unfortunately, when these cities like San
16 Francisco and Fresno pass ZEV ordinances, then they go out
17 to buy ZEVs and there's none available. So, you know,
18 we're very concerned that this lack of product
19 availability is extremely discouraging to these cities and
20 others who are very serious about making a strong
21 statement in their communities and investing in pollution
22 free vehicles.
23 I do have a list of all the cities and counties
24 and associations of governments and fleet managers that
25 we've been working with and I will give that to your clerk
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1 so that you'll have the list of all the entities that
2 we're working with, those who have taken action, those who
3 are going to. We've even had cities in the past two days
4 passing resolutions, and so our numbers have gone up.
5 Very briefly, 41 seconds here, why are we
6 focusing on cities and counties, because we're well aware
7 that these fleets can play a very important role. When
8 you lump city and county fleets together, you're talking
9 about a total of 39,000 vehicles or more. I mean, that's
10 just a preliminary number. And a significant percentage
11 of these fleets could easily be converted to ZEVs.
12 We're not even talking here about the State
13 fleet, the federal government fleet, the Post Office, for
14 example. I mean there's a huge market out there in
15 fleets. You know, we've just focused on the local
16 government fleets, but there's still a lot more work to be
17 done.
18 Given that, from our perspective, and we believe
19 from your perspective, you would agree a substantial
20 market exists. What can we do to ensure a successful ZEV
21 program? We go back to the principles that Roland just
22 presented to you a moment earlier, stand firm on the
23 number of ZEVs required to be produced between now and
24 2003, number one. Number two, make sure there's a full
25 range of ZEVs available now and continuously available.
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1 And number three, expand the market.
2 The ZEV program is a down payment to a pollution
3 free transportation future. It's not just about 2003.
4 We're talking about the longer term.
5 In closing, over the many years, the American
6 Lung Association has been proud to be a partner with the
7 Air Board and with the local air districts in the quest
8 for cleaner air in our communities and now we are facing a
9 critical crossroads. We hope we can work together, once
10 again. We're urging you to do the right thing for public
11 health and the environment, to endorse the ZEV program,
12 stay the course and do everything possible to ensure a
13 successful market launch and continued growth of the
14 program. And we assure you we will be there with you to
15 help make it work.
16 CHAIRPERSON LLOYD: Thank you very much, Bonnie.
17 We'll take at least one more witness. Our dinner hasn't
18 arrived yet, so we'll go on a witness-by-witness case. I
19 will just say that we've now taken about 30 witnesses
20 signed up today. We have 76. You can see it's in
21 everybody's interest to try to curtail the testimony. If
22 there's new information, that's very important, but if
23 there's other things which are just a repetition, a
24 reinforcement, please consider that as a benefit to all of
25 us. And I didn't say that for you, Janet, I was just
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1 giving a perspective on here.
2 MS. HATHAWAY: I'm assuming you're speaking
3 directly to me.
4 (Laughter.)
5 CHAIRPERSON LLOYD: No, no. You've taken the
6 effort to come over here, and I would never do that.
7 MS. HATHAWAY: Well, I'm very appreciative of
8 this opportunity and I understand the lateness of the hour
9 and that people have heard a very great deal of testimony.
10 I want to focus on a benefit of the electric vehicle
11 program that tends not to get as much attention. And even
12 in the excellent staff report, it did not feature as
13 prominently as I believe it should, and that's the air
14 toxics benefit.
15 Just earlier, this year, the Association of State
16 and Local Air Pollution Officials sent a letter to Carol
17 Browner of US EPA and they stated emissions of toxic air
18 pollutants pose a critical and pervasive public health and
19 welfare problem across the nation. I don't think many
20 people are aware that this is truly of that magnitude.
21 The air toxics problem is truly a public health crisis.
22 And the principal toxic air contaminants are
23 primarily from our gasoline vehicles and infrastructure.
24 They are benzene, butadiene, acetaldehyde and
25 formaldehyde. You know, aside from the whole diesel
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1 issue, these four toxic air contaminants from vehicles are
2 our principal problem with air toxics.
3 First, benzene is a human carcinogen, well known
4 to be a human carcinogen, has affects on the immune system
5 that are toxic. It's also a neurotoxin at parts per
6 million. This is not something that, you know, is just
7 non-problematic. It's a huge issue because leukemias and
8 especially childhood leukemias have been increasing in
9 recent decades. Leukemia is one of the known diseases
10 associated with benzene exposure in the work place. So
11 there are some suggestions that there may be a direct link
12 with the ambient benzene levels. ARB says 85 percent of
13 ambient benzene is from vehicles.
14 1,3-butadiene is also a very potent human
15 carcinogen. Also associated with some lymphomas and 96
16 percent of it is from motor vehicles.
17 And I looked at the various monitors of ambient
18 butadiene over the last decade. And even though there
19 have been reductions, the average monitored level in
20 recent years of 1,3-butadiene is still a hundred fold
21 above what is considered to be a reasonable public health
22 protective cancer standard. The one-in-a-million risk
23 number that you hear so often is being exceeded by a
24 hundred fold at the average monitor. And, obviously, you
25 know, at extremes, it's substantially above that in order
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1 of magnitude above that.
2 Acetaldehyde is a respiratory irritant. And
3 there is increasing information about it, perhaps working
4 synergistically with formaldehyde to exacerbate
5 respiratory problems. And it's also a possible
6 carcinogen. It's formed in the air, but primarily from
7 motor vehicle hydrocarbons.
8 Formaldehyde is also a respiratory irritant.
9 Plenty of worker studies have showed that it does lead to
10 certain kinds of cancers, especially of the upper
11 respiratory system. It's ubiquitous in our air. The
12 National Toxicology Program this year talked about how
13 there is not any place in this country where you're not
14 exposed to formaldehyde and vehicles are a primary source.
15 And, I think most importantly, the average levels are
16 hazardous in this State.
17 Next slide, please.
18 Looking at the measured levels, which are
19 averaging around three parts per billion in the State,
20 which sounds so minuscule, that level exceeds California's
21 acute hazard standard. In fact, it's almost double the
22 acute hazard standard. And that's very troubling, because
23 it is well known that the aldehydes are sensitizing
24 people, do increase their asthmatic responses and of
25 course we know about the asthma increases. And the
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1 seriousness of asthma is something very troubling to us
2 all.
3 California, from OEHHA earlier this year, this
4 quote comes, "Sensitive people probably are experiencing
5 adverse effects from current levels of formaldehyde in
6 air." And I think that's something that people are not
7 recognizing fully.
8 So to get to the bottom line, obviously, I
9 entirely endorse the statements that have been made by
10 others of our alliance. We do want the program to be
11 sustained and strengthened and we think that there are
12 truly so many more benefits than have been fully accounted
13 for and they're difficult to do. It's difficult to do an
14 accounting when you're talking about pollution prevention.
15 But one thing about the electric vehicle program
16 is you have certainty in reducing not just ozone but
17 particles, not just from the air, but from other media as
18 well.
19 And in closing I just want to cite something that
20 Tom Cackette, your distinguished staff member, said to me
21 earlier this year. And that is if you look at the
22 chemicals that are in our ambient air, their
23 concentrations and their identity, it looks just like
24 gasoline. If we want to be breathing something that
25 doesn't look just like gasoline, it's time to go with
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1 electric vehicles.
2 So thank you very much.
3 CHAIRPERSON LLOYD: Thank you very much, Janet.
4 And, again, I compliment --
5 (Applause.)
6 CHAIRPERSON LLOYD: I'd like to compliment you
7 here, there are 113 references, very impressive for
8 somebody putting this together.
9 Thank you.
10 With that, we're going to -- our dinner is here,
11 so we're going to take a half hour break, come back at
12 6:10. I know we have some witnesses here who have to be
13 away by 7:00 o'clock. We'll continue then.
14 (Thereupon a dinner recess was taken.)
15 CHAIRPERSON LLOYD: We do have a few people that
16 want to leave early and I'm going to have David Swan. I
17 don't see David. But I know he wanted to go early.
18 David.
19 There he is. I can see him.
20 David Swan.
21 Did you sign up by the way?
22 MR. SWAN: Yes, I did.
23 CHAIRPERSON LLOYD: What number, do you remember?
24 MR. SWAN: No, I don't.
25 CHAIRPERSON LLOYD: You traded for a higher
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1 number, obviously.
2 SECRETARY KAVAN: Thirty-six.
3 CHAIRPERSON LLOYD: On our list it's Susan
4 Stephensen. Good to seed you, David. I know you've got
5 to leave early. Board members are pounding me for time by
6 the way. There were some points that you cut your time,
7 any speakers here, if they cut their presentation short
8 some of the board members saying they'll get two votes.
9 MR. SWAN: Okay, I'll do my best. Would you like
10 me to begin?
11 CHAIRPERSON LLOYD: Yes, please.
12 MR. SWAN: My name is David Swan. I've been
13 working in the design development of battery and fuel cell
14 electric vehicles since 1987. I've worked on OEM,
15 suppliers and others, and am intimately familiar with
16 battery systems for these vehicles. In fact, because of
17 the mandate, when I had an opportunity in 1993, I moved to
18 California. I felt that this was where it was happening.
19 This is where I had to be, to see that it did happen.
20 Now, I'm not alone. There are many engineers
21 that are working on this problem. Electric vehicles in
22 general are fascinating to work, the technology, the
23 newness to it. And it's just a very exciting place to
24 work. It's a real technical challenge.
25 But a lot of people are staking their careers at
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1 the OEMs and the suppliers based on your mandate, and I'm
2 one of them. If you change the mandate or waffle, that
3 will affect people's careers. So a steady hand on the
4 mandate, how you're going to approach in making it clear,
5 is very, very important. You want the A Team working on
6 this. You don't want people coming and going. You want
7 continuity. The way to get continuity with an engineering
8 group is to show that there is a future for this. If you
9 waffle on it, they will leave and they will move to other
10 parts. No one within the OEMs or the suppliers wants to
11 work on a program that's a losing program. It's not good
12 for their career.
13 The other point I wanted to make this evening
14 quickly was there are other applications I think the staff
15 has missed that is important to the management.
16 CHAIRPERSON LLOYD: Staff could you respond?
17 (Laughter.)
18 CHAIRPERSON LLOYD: Thank you, Jack. You get
19 many brownie points for being there. How do you remind
20 your colleagues that when we looked for help they were not
21 there?
22 MR. SWAN: These are applications that are highly
23 dependent on high specific energy batteries, and
24 high-powered batteries you haven't seen yet, but they are
25 coming out in the next few years. And the one example
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1 that I'll give you that I know about that I can talk in
2 general terms is medical applications.
3 There are medical devices being designed right
4 now that need the kind of batteries that are being
5 developed for the EV and hybrid industry. There are black
6 programs, because there's large investor dollars and so
7 on, but these devices are mobile and they're going to go
8 in vehicles like ambulance vehicles. They're also mobile
9 so that they'll be used in hospitals to move quickly from
10 place to place, require high quality, high power, high
11 energy batteries, the type of batteries the mandate has
12 actually brought forth.
13 Now, what I heard today was a lot of
14 polarization. The automobile industry is saying, gee I
15 really don't want to do this. The environmental community
16 very much wants it to happen. Californians, in general,
17 are very interested in seeing it happen. The engineering
18 community is caught in the middle.
19 As an engineer, I'm torn. I want to do the best
20 I can for the public in designing and building things.
21 And the mandate has to be clear to keep the very best
22 engineers working on this and the right teams moving
23 forward. And that's a message I want to bring home to you
24 is that you're affecting not only large amounts of
25 dollars, but people's career choices. And those are the
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1 very people that can develop the technology that can help
2 you meet the requirements and the things that California
3 needs.
4 Thank you.
5 CHAIRPERSON LLOYD: Thank you, David. And I
6 appreciate focusing on that element which adds to the
7 debate. I think that's an important message there to keep
8 the talent working on that issue. I appreciate it very
9 much.
10 BOARD MEMBER RIORDAN: Mr. Chairman, may I just
11 ask a brief question. Did you have any written testimony?
12 MR. SWAN: No, I do not.
13 BOARD MEMBER RIORDAN: Thank you.
14 CHAIRPERSON LLOYD: You should be aware that Dr.
15 Swan moved from Texas A&M where he built EVs, came out to
16 Davis, worked and taught on EVs and fuel cells, and is
17 with one of the premier companies working on EV, also fuel
18 cells, also on the -- some, I think, defense application
19 and whatnot, so David knows what he's talking about.
20 MR. SWAN: Thank you.
21 CHAIRPERSON LLOYD: Next, we have Karen Hay,
22 IMPCO. And we have also Patrick Moseley has to be on by
23 6:30.
24 Hi, Karen.
25 MS. HAY: Good evening, how are you?
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1 CHAIRPERSON LLOYD: Good. You can make our
2 evening better, the shorter the better.
3 MS. HAY: Is that what you're trying to say,
4 okay. Good evening, Dr. Lloyd and members of the board.
5 I want to thank you for the time, and I want to introduce
6 myself. My name is Karen Hay. I'm with IMPCO
7 Technologies. And I just want to point out that whatever
8 written material you may have in front of you may not be
9 complete as some of the slides are for visual only.
10 They're confidential materials, so you may not have a
11 complete package just for your information.
12 Now IMPCO Technologies, we recognized the
13 challenges that the car companies have with meeting the
14 ZEV mandate. IMPCO is working hard towards developing and
15 commercializing ZEV enabling technologies for fuel cell
16 vehicles. I want to point out that these technologies to
17 support the ZEV development are available today.
18 A little information about IMPCO. IMPCO is 100
19 percent committed to the design, integration and
20 commercialization of fuel systems for internal combustion
21 engines and fuel cell applications, which utilize clean
22 burning gaseous fuels, such as hydrogen, natural gas and
23 propane.
24 We've been in the business for over 40 years and
25 this is our only business. This is what we do. We have
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1 been in it for 40 years. We have the development. We
2 have the technology to bring this to commercialization.
3 We are the world leader in the alt fuel market. We are a
4 technology and product leader in the fuel cell industry.
5 And we've also invested over $65 million in the research
6 and development of gaseous fuel enabling technologies.
7 And to put this in perspective, over the last
8 five years that's about 15 percent of our net revenue. So
9 we are heavily invested in R&D and in making this
10 technology work.
11 IMPCO has a global presence. We have 18 offices
12 throughout the world. We're positioned in north and south
13 America, Europe, Asia and Australia. We have a
14 distributor network over 400 strong. As far as core
15 competencies, we don't just provide a product. We provide
16 a service, a supply to the customers, and this is
17 critical, because I want to give a little background on
18 IMPCO and demonstrate the technologies that I'm talking
19 about are viable, they are ready to go to production, they
20 are ready to go to market.
21 So to give you an idea, we do a full system
22 service from design and development to vehicle
23 integration, calibration. This includes hot and cold
24 weather testing, validation, which includes all of the
25 federal motor vehicle safety standards, crash tests and
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1 analysis, a mission certification service production, and
2 all of this is centered around new technology and
3 development.
4 Now some of that new technology that's out, as
5 you can see, is surrounding around fuel storage, fuel
6 pressure and management, flow management, and electronics
7 and software algorithms.
8 Now these can be directly applied to the fuel
9 cell technologies as inputs to the fuel cell stack. This
10 slide shows a few applications for fuel cell vehicles
11 namely an on-board fuel source, which is hydrogen, natural
12 gas or liquid fuel combined with electronic controls, fuel
13 metering, air and vapor metering before introducing it
14 into the fuel cell stack.
15 Now, when you think of hydrogen storage, what's
16 the first thing that comes to your mind? For most of us,
17 I think it's safety.
18 CHAIRPERSON LLOYD: Karen, again, I don't like
19 doing this, but remember we're focusing here on what
20 you're doing for the ZEV mandate and I can see the
21 relationship with hydrogen fuel cells, you're in that
22 business. You support the mandate, I presume.
23 MS. HAY: We do. Oh, come on.
24 CHAIRPERSON LLOYD: I think that's the key
25 message.
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1 MS. HAY: Well, but the point is that today
2 everybody's been focused on the electric technologies,
3 electric vehicle technologies, which we respect. However,
4 I think it's critical, everybody kind of has passed over
5 the fuel cell vehicle technologies, because the technology
6 isn't there. Well, what I'm saying is that it is. And
7 there's a lot of the enabling technologies that are
8 available that can be contributing towards this.
9 CHAIRPERSON LLOYD: I think that's a great
10 message when we look at zero emission vehicles. It's not
11 just electric, fuel cell should compete. You are a strong
12 contributor in that area. You're based in California. I
13 think that's the message that is important here.
14 MS. HAY: All right. Well, you wrapped it up for
15 me, didn't you.
16 Well, thank you, Allan. I guess, in closing, I'd
17 like to thank the Board, once again. And if the Board or
18 staff are ever in southern California, I'd more than
19 welcome you to come to our facilities. We have three
20 facilities located in southern California that include the
21 tank manufacturing facilities, as well as our advanced
22 vehicle componentry and advanced vehicle design centers.
23 CHAIRPERSON LLOYD: The reason, by the way I was
24 able to recite that, I was down there recently at an
25 opening of additional space down in Lake Forest. And
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1 they're a rapidly growing company in southern California,
2 in your area, Dr. Burke. And it's very impressive all the
3 things that they're doing, and it plays right into this.
4 And I know from the Vice President of the company
5 there, they were saying this program is critical to your
6 continued growth.
7 And thank you very much.
8 MS. HAY: Okay, I couldn't have said it better.
9 Thank you.
10 CHAIRPERSON LLOYD: Next is Denny Zane,
11 representing this time the American Lung Association.
12 MR. ZANE: Good evening, Members of the Board.
13 It's very much my pleasure to be here tonight. I think
14 it's been six years since the last time I spoke before the
15 California Air Resources Board and it's a great pleasure
16 to be back, again, on the issue of the zero emission
17 vehicle technology.
18 I would like to acknowledge that I am speaking
19 here tonight as a consultant to the American Lung
20 Association of California. And in their employ I have
21 been, for the last three months, spending a great deal of
22 time reaching out to other organizations in the community
23 of California, adding, in fact, I think, support to the
24 already mountainous support that's here before you today.
25 But my mission was to talk to communities which
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1 have not been customarily involved in the discussion about
2 zero emission vehicles, to labor organizations, to
3 children's advocacy organizations, to community based
4 organizations in the new majority communities, to cities,
5 councils of governments, health groups, and the League of
6 Women Voters. There was a lot of constituencies to cover
7 in just really a few short months.
8 I want to call your attention to a booklet that
9 if I don't mention this to you, Wendy James will scramble
10 me. There's been a booklet that's been passed out to you,
11 I think, a little blue booklet with a clear cover that
12 includes a number of letters from organizations that we
13 have been speaking to in the last several months,
14 organizations who have written letters of support for the
15 zero emission vehicle program. Now these groups often
16 have a well developed agenda of their own on other issues
17 and frequently have overwhelming workloads and little time
18 really to consider anything new.
19 Six years ago when I appeared before you, I
20 think, at that time, it may have been true that there was
21 only a small subculture of the communities in California
22 who had an interest in this program, those of you, of
23 course, in the regulatory community and the leadership
24 community, those in the environmental community and the
25 automobile industry.
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1 Well, that has changed. There now is a community
2 of interest throughout California and a wide variety of
3 constituencies. When I began, first of all, to talk with
4 members of the labor community, I was very pleased and
5 surprised to discover the level of interest that that
6 community had for environmental concerns in general, but
7 for the ZEV program in particular. They recognized that
8 their members not only have concerns in their work place,
9 but they have concerns in their communities as well, that
10 they are, in fact, the breathers who have to deal with the
11 problems associated with air pollution.
12 I think we have five or six letters in this
13 booklet from labor organizations in support of the
14 program. I believe the next month or two I'll have four
15 or five more labor organizations that will submit letters
16 of support to you.
17 Similarly, there are letters of support from new
18 majority communities who, especially in southern
19 California, have come to recognize that air pollution by
20 its very nature is an environmental justice issue, that
21 communities of color, that lower income communities are
22 often, in fact, always the communities that have the most
23 severe problems with air pollution.
24 There is a growing interest in these communities
25 and letters from them as well urging you to stay the
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1 course, support the ZEV program. They recognize that
2 there is no long term future without air pollution, unless
3 there is a future for a zero emission technology.
4 I've also talked to elected officials in many
5 cities who have written you letters, people from councils
6 of governments, from counties, et cetera, people who are
7 not only leaders in the community but an important part of
8 the new market for the technologies that are stimulated by
9 the Zero Emission Vehicle Program.
10 One elected official from the Inland Empire,
11 where I grew up, has said to me we have to support the
12 zero emission vehicle. Air pollution is not only a threat
13 to our health, it is a threat to our communities. The
14 kids who grow up here do not want to live here long when
15 they experience the air pollution that our communities
16 have had to experience. Were it not for the improvements
17 of the last two decades, many of our communities would be
18 scarcely viable today.
19 In fact, every community in the Inland Empire
20 holds the efforts of this board in the last 20 years and
21 the efforts of the South Coast Air District in great
22 esteem, because they know that those efforts have provided
23 new quality of life opportunities for those communities.
24 The Zero Emission Vehicle Program is not simply about the
25 health of children or the health of individuals, it is
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1 indeed about the health of communities.
2 I believe that you are fortunate people that you
3 should recognize that you are in an enviable position.
4 Very few people in public life will ever have the
5 opportunity that you have to have an impact on both the
6 health, the quality of life and the nature of the future
7 not only of the communities of California, but indeed all
8 of the communities of this nation, perhaps of this world.
9 Stay with the zero emission vehicle program and
10 you will know that you will personally, as well as
11 collectively, have a legacy to leave all of us and all who
12 come after us a proud legacy.
13 Thank you very much for your leadership, for your
14 service, and for your time.
15 CHAIRPERSON LLOYD: Thank you very much for
16 coming, Denny. We appreciate it.
17 Now Patrick Moseley, with Advance Lead Acid
18 Battery Consortium.
19 MR. MOSELEY: Thank you, Mr. Chairman, ladies and
20 gentlemen. I will just take three minutes of our time.
21 My name is Pat Moseley. I'm the program manager of the
22 Advanced Lead Acid Battery Consortium, ALABC. ALABC is a
23 consortium of the world's major lead acid battery
24 manufacturers, lead producers and other interested sectors
25 of industry launched in 1992 and jointly concerned to
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1 advance the cause of electric vehicles by driving forward
2 the technology of the valve regulated lead acid battery.
3 In eight years ALABC --
4 BOARD MEMBER HUGH FRIEDMAN: Could you turn your
5 mike up a little.
6 MR. MOSELEY: In eight years, ALABC has carried
7 out $50 million worth of research and development to
8 improve the technology. It's a pleasure today to bring
9 you the news that the technology of the VRLA battery
10 intended for EV duty has advanced enormously during the
11 past ten years and is continuing to do so.
12 In 1992, the specific energy was around 25, only
13 25-watt hours per kilogram. Now, as we've already heard
14 today, it is over 35-watt hours per kilogram, so that the
15 vehicle range per charge is close to 100 miles.
16 Perhaps, more importantly, it has been shown in
17 our research and is widely accepted that VRLA batteries
18 can be recharged very rapidly when necessary so that the
19 daily range of an EV employing a VRLA battery can readily
20 be several hundred miles. And last, but not least, the
21 life of the VRLA battery in EV duty has been extended
22 dramatically.
23 In 1997, I published a calculation that allowed a
24 comparison between the cost of running an electric vehicle
25 and the cost of running an equivalent internal combustion
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1 engine. For the electric vehicle, one takes account of
2 the cost of the electric power used to charge the battery
3 plus the cost of the battery amortized over its life. The
4 combined cost is compared with the cost of fuel for the
5 internal combustion engine vehicle.
6 In 1997, the cost of running the EV, assuming a
7 battery life of 500 cycles, which was the best available
8 at that time, was 11.7 cents per mile, compared with 3.8
9 cents per mile for the internal combustion engine vehicle.
10 Today, the life we can expect from an EV battery
11 has risen to around 1,000 deep cycles, and the cost of
12 gas, of course, is very much higher. The result is that
13 today's cost of running the EV at 4.3 cents per mile for
14 this particular example, has fallen below the fueling cost
15 of the internal combustion engine vehicle, which stands at
16 5.4 cents per mile for the equivalent.
17 Most likely scenarios see the comparison in costs
18 continuing to swing in favor of the electric vehicle into
19 the future. This kind of improvement and the advanced
20 lead acid battery stand ready to make a serious
21 contribution to electric vehicles into the future, and
22 they would not have been advanced lead acid batteries were
23 it not for your mandate.
24 I thank you for this opportunity to testify to
25 your board.
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1 CHAIRPERSON LLOYD: Thank you very much.
2 Question, Dr. Friedman?
3 BOARD MEMBER WILLIAM FRIEDMAN: Just a quick
4 question. On your slide, the 4.3 cents per mile, how many
5 cycles is that based on?
6 MR. MOSELEY: That's based on 1,000.
7 BOARD MEMBER WILLIAM FRIEDMAN: Okay, so that's
8 three years.
9 MR. MOSELEY: Yes, three years.
10 BOARD MEMBER WILLIAM FRIEDMAN: And does that
11 presume a new battery at the end of three years?
12 MR. MOSELEY: Yes.
13 BOARD MEMBER WILLIAM FRIEDMAN: But the cost
14 doesn't -- the 4.3 is on the first battery?
15 MR. MOSELEY: The 4.3 is on the total number of
16 miles that you can do with that battery. The specific
17 energy tells you how many miles you can go with a vehicle
18 of a particular size. You multiply that by the number of
19 cycles through that charge/recharge cycle, gives you the
20 total number of miles you can do before the life of the
21 battery is expired and you must buy a new one. So you buy
22 one battery and it takes you that number of miles and
23 that's the cost. It's the same calculation which is done
24 in the Board's staff document. Their figures are slightly
25 different from mine, but the emphasis here is the
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1 improvement in three years between 1997 and this year.
2 CHAIRPERSON LLOYD: Thank you very much.
3 BOARD MEMBER D'ADAMO: I had a question.
4 CHAIRPERSON LLOYD: Oh, sorry, Ms. D'Adamo.
5 BOARD MEMBER D'ADAMO: You've probably already
6 said this, but it just wasn't made clear to me. The
7 factors that led to that reduction between'97 and 2000?
8 MR. MOSELEY: The principal factors are the
9 increase in life, which has been called into question
10 earlier today, but I assure you is a secure position now
11 and the increase in specific energy, combined with the
12 increase in gas price, which makes a favorable comparison.
13 BOARD MEMBER D'ADAMO: But not any decrease in
14 cost for the battery or is that also a factor?
15 MR. MOSELEY: The cost I've assumed is the same
16 both times.
17 BOARD MEMBER D'ADAMO: All right. And then one
18 other question, you referenced a rapid charge. What
19 period of time would you consider a rapid charge?
20 MR. MOSELEY: Less than half an hour for a full
21 recharge. If you want to put 80 percent of the charge --
22 our criteria within the ALABC is 80 percent of return in
23 15 minutes and a full recharge in 30 minutes, but 80
24 percent in 15 minutes is very convenient, time for a cup
25 of coffee.
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1 BOARD MEMBER D'ADAMO: And we can do that with
2 the current technology?
3 MR. MOSELEY: Oh, yes.
4 BOARD MEMBER D'ADAMO: Including infrastructure?
5 BOARD MEMBER BURKE: But does that take 480
6 volts?
7 MR. MOSELEY: It takes a suitable charger.
8 BOARD MEMBER BURKE: Does this primary source of
9 power have to be 480 volts?
10 MR. MOSELEY: For that kind of rate, yes, it
11 does.
12 BOARD MEMBER BURKE: You see, I don't know where
13 you find that a lot. Not in my house.
14 BOARD MEMBER WILLIAM FRIEDMAN: Thank you, Mr.
15 Moseley. Our next speaker is Susan Stephensen. Following
16 her will be Jack Doyle.
17 CHAIRPERSON LLOYD: I think Mike Thompson wanted
18 to go.
19 BOARD MEMBER WILLIAM FRIEDMAN: Oh, I'm sorry,
20 Allan.
21 I thought you had taken authority. That's fine.
22 (Laughter.)
23 BOARD MEMBER WILLIAM FRIEDMAN: I was just doing
24 what I was told.
25 (Laughter.)
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1 CHAIRPERSON LLOYD: I think we did fine, but I
2 think Mike Thompson here wanted to leave by seven -- get
3 on by seven, but, Susan, that's fine.
4 MS. STEPHENSEN: I'll be quick.
5 Thanks very much for the opportunity to address
6 you today. I'm Susan Stephensen. I'm here on behalf of
7 California Global Warming Coalition. And this is a
8 coalition that's led by the Union of Concerned Scientists
9 and made up of more than 50 environmental, public health,
10 and civic organizations that support a common blueprint to
11 reducing California's global warming emissions.
12 And the goal of this coalition is to promote
13 common sense or no regrets policies that reduce global
14 warming pollution while improving air quality and making
15 our economy more competitive by advancing the clean
16 technologies of the future.
17 The ZEV program is just such a policy and it is a
18 high priority for the coalition. It's our hope that
19 action taken here in California by this board will finally
20 prod Congress out of its slumber to address the climate
21 change crisis that's upon us.
22 This may seem a tall order for a State agency,
23 but we know the California Air Resources Board has done it
24 in the past, leading the world in clean air innovations
25 from the catalytic converter to unleaded gasoline.
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1 But in spite of the outstanding leadership this
2 State has provided and particularly this Board in air
3 quality, we've essentially ignored greenhouse gas
4 emissions and California continues to emit more greenhouse
5 gases than any other state in the nation. As evidence
6 grows that global warming will exacerbate air pollution,
7 we need to expand our vision to fully address greenhouse
8 gas emissions.
9 So to encourage you down this path, I have three
10 quick points I want to leave you with. Number 1, CO2
11 emitted by motor vehicles in California makes up nearly 60
12 percent of California's total greenhouse gas emissions.
13 So the single most effective thing we can do to combat
14 global warming is to move away from gasoline as the major
15 fuel source for these vehicles.
16 Number two, the accumulation of CO2 in the
17 atmosphere will ultimately increase air pollution. We
18 know that ozone and particulate matter concentrations
19 increase as temperatures rise. There's a new study that
20 Roland Hwang referenced that you should all have, I
21 believe we gave you a bunch of copies with a blue back and
22 a beige front, by the Lawrence-Berkeley Laboratory on the
23 effects of climate change on ozone air quality and
24 modeling specifically impacts in the Sacramento area and
25 the Los Angeles basin.
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1 The result of this study is that climate change
2 could bring about the equivalent to adding 2.7 million
3 cars to the LA area and 1.5 million cars to the Sacramento
4 region. So the Air Board should take into account the
5 increasingly indisputable evidence that global warming is
6 upon us and that it will have a serious impact on ozone
7 and air quality.
8 Finally, the Air Board should fully recognize CO2
9 reduction as a key benefit to the ZEV program. In fact,
10 the ZEV program is the most important program we have
11 currently at the State level to reduce global warming
12 emissions. Yet, the Air Board has not fully recognized
13 this key benefit of the program. To fully reach the
14 potential of the ZEV program, I want to urge you to
15 document the potential CO2 reductions and to work with
16 other State agencies, particularly the Energy Commission,
17 to put them into a comprehensive strategy to reduce
18 greenhouse gas emissions statewide.
19 And in conclusion, I want to urge you today as
20 you review the ZEV program to look to the past as well as
21 to the future. Hindsight is 2020 and foresight is more
22 difficult. But now it's easy to look back and to see the
23 wisdom in earlier steps that this board has taken. What
24 would air quality look like now if we had hesitated to
25 move towards adoption of the catalytic converter? What
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1 would air quality look like if we had hesitated to phase
2 out leaded gasoline?
3 If we make the right decision today, I believe 20
4 years from now we'll look back and say how could we have
5 hesitated to adopt zero emission vehicles.
6 Thank you.
7 BOARD MEMBER HUGH FRIEDMAN: Thank you, Ms.
8 Stephensen.
9 (Applause.)
10 BOARD MEMBER HUGH FRIEDMAN: Any questions from
11 the Board Members?
12 The next speaker is Mike Thompson.
13 Is Mike Thompson here?
14 Here he comes. You don't have to run.
15 MR. THOMPSON: I do have to get my visual aids in
16 order. And is the presentation up?
17 So we've been talking about the gold standard in
18 terms of EVs and zero emissions. And I think it's zero
19 emissions at point of use. And I notice the charts still
20 reflect that. We're still showing organic compounds,
21 nitrous oxides, CO2 from EV's. Well, if we tie the
22 incentives like the $5,000 Bay Area air quality management
23 district buydown, to switching to a hundred percent
24 renewable power, which can be done at less cost than your
25 current provider, EVs are zero across the Board.
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1 Now, the one thing I'm ignoring here is emissions
2 from the tire rubber and emissions from manufacture. But
3 we've also got for certain sectors a platinum standard and
4 that is zero everywhere. And we've got to address things
5 like tire rubber, et cetera, but the charts where we're
6 showing PZEV with a bar like this and EV with a bar like
7 this, well the EV bar can become zero. Try and do that
8 with any other technology.
9 Case in point, as a visual aid, this is my power
10 station. We're talking about SG&E going down. We're
11 talking about problems with the grid. We're talking about
12 pollution. This is my power station. I put up a 7.2
13 kilowatt array on my roof, personally financed, and I'll
14 tell you the numbers on that. It cost me $30,000 to do
15 it, okay. That's a personal choice. Buy a minivan? Put
16 solar panels on your roof and have clean air for your
17 kids?
18 It's a choice we all make. Buy a Porsche, buy a
19 BMW? It's not within the economics of everyone today, but
20 that's why we have to push the technology. It is within
21 the economics of a well compensated, professional silicon
22 valley software developer, but I am not a millionaire.
23 You know, my net assets are fractional millions, but
24 they're well below half and I can do it.
25 So since I'm waiting for the slides to come up
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1 I'm going to fly back to the notes here. So there were a
2 few comments that were very key for me to tie into.
3 One is a comment about in your heart of hearts.
4 Well, in my heart of hearts, I'm here at my personal
5 expense. And, frankly, the expense part of it isn't a big
6 deal. The time away from my family is. My spouse has a
7 one year and three year old kid that she's taking care of
8 and it taxes her to take care of them daily. So her
9 letting me be here is an allowance. And I believe
10 strongly enough in it that I have persuaded her to let me
11 be here. So that's in my heart of hearts, and it's in my
12 heart of hearts economically, because you can see I've
13 made the commitment.
14 And give us the cost of a lead acid EV1. I'll
15 pay that cost, because I know what the real numbers are in
16 volume. Thirty thousand vehicles, hundred thousand
17 dollars a vehicle in volume of EV1s production are going
18 to be $25,000 or $30,000 tops retail.
19 And, of course, I don't have access to the
20 internal auto maker data, but I do have access to some of
21 the data that's public from CARB, and I am an engineer by
22 training. And as far as the real concrete data we have,
23 those numbers are pretty close to valid as most.
24 The numbers that say we can't do it, those are
25 the ones we've got to think about pretty hard. We talk
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1 subsidies for EVs. So I put it to you and as we put it to
2 the California public and we're hearing their answer here,
3 how much is it worth for us to subsidize the status quo of
4 gasoline vehicles with our help? Okay, put a dollar value
5 on that. Increased asthma in children, put a dollar value
6 on it. What if your child is one of the ones that has
7 increased -- that contracts asthma. He's one of those
8 statistics, okay.
9 What compensation do you want to receive for
10 that, because you're providing it to the automakers as a
11 subsidy now. Our public health is subsidizing the
12 automakers. So the equation we're getting there is very
13 one sided. This is how much more it's going to cost. It
14 does not talk about the public health subsidy and the
15 public health subsidy is real. You know, we have bad hair
16 days, but a bad air day is a hell of a lot worse and you
17 see it in the hospital admission rooms.
18 From CARB statistics, 95 percent of Californians
19 live in air that's unhealthy. The automakers say we've
20 got vehicles today that are 98 percent cleaner than 30
21 years ago. Well, great, 95 percent of us are still living
22 in unhealthy air. It's not enough. Hybrids like the
23 Prius and the Insight that cannot be plugged in, the
24 cleanest thing you can do, too little, too late.
25 I referenced the California Lung Association,
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1 UCSC. Transportation produces 60 percent of the CO2. As
2 a platinum standard, I've gone to 100 percent renewable
3 energy previously. After that, I made the commitment to
4 solar panels, zero CO2. I know that's not one of the
5 regulated pollutants here, but that is a concern.
6 Next slide, please.
7 I did this next slide.
8 So this is my equation. I call it a healthy
9 equation. ZEV hundred percent renewable electricity, you
10 can tie the switch of renewable power providers, which
11 will actually save the customer money to ZEV ownership,
12 and you have, my term, TZEV. I'd like to see CARB come up
13 with some term for a vehicle that is true zero emissions
14 ignoring tire and manufacturers.
15 So for the moment, I'm coining TZEV until there's
16 a term to represent this category. It's a true zero
17 emission vehicle, and I can do it as an individual.
18 Switching electricity. The panels on my house,
19 and I do still have natural gas heat and natural gas hot
20 water, so my house is completely off grid powered by the
21 array. And the car is completely powered by the array. I
22 still use natural gas for heating and hot water. The
23 stove is electric, the dryer is electric.
24 CHAIRPERSON LLOYD: I think we -- are you
25 wrapping up?
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1 MR. THOMPSON: Yes. Gosh, we know this. We know
2 there's a waiting list. Many of the people I talk to do
3 not even show up on the waiting list, so the waiting list
4 that you may see are not relevant. What I am now telling
5 people is go down to your local Saturn dealer and demand
6 the vehicle. There's no place for them to be heard. They
7 don't even show up.
8 Next slide.
9 CHAIRPERSON LLOYD: Thank you.
10 MR. THOMPSON: Range, fast charging is critical
11 to address range issues.
12 Next slide.
13 Fuel cells 2X energy problem.
14 CHAIRPERSON LLOYD: I think we're up. I think we
15 understand this.
16 MR. THOMPSON: That was it.
17 (Applause.)
18 CHAIRPERSON LLOYD: Well, thank you very much for
19 coming.
20 Thank you very much indeed.
21 Professor Friedman.
22 BOARD MEMBER WILLIAM FRIEDMAN: I just wanted to
23 thank you, Mr. Thompson. I saw you, you've been here most
24 of the day and I appreciate your comments.
25 CHAIRPERSON LLOYD: We now backtrack a little bit
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1 to Jim Scheidler from Southern Cal Edison, and then Kevin
2 Finney Coalition For Clean Air.
3 Sorry we got jumped over for awhile there. I
4 appreciate your understanding while we had some other
5 people who had to catch planes.
6 MR. SCHEIDLER: No problem. Thank you. It's a
7 pleasure to be here. My name is Jim Scheidler. I've been
8 manager of the electric vehicle fleet at Edison for the
9 past three years, since '97. In fact, you can skip that
10 one already. I'm going to give you the turbo version here
11 tonight.
12 Why does Edison support EVs? Basically, it's a
13 combination of corporate policy, federal mandate and
14 because our business is electricity.
15 Next slide.
16 We have a plan, this was our plan, it is our
17 plan. Our plan is to incorporate 100 to 400 new EVs into
18 our fleet each year. And we have basically incorporated
19 everyone that we can get our hands-on. And as you can see
20 by the curve, it's been upward trend up until about this
21 year.
22 Next slide.
23 A picture makes for a thousand words and I'm
24 going to cut you 30,000 words short here today, so that
25 was the big bang of '99. This is a typical yearly deploy
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1 that we've seen at Edison in 98/99 but not in 2000.
2 So next slide.
3 We strive for diversity in the fleet. We acquire
4 all EVs that meet a performance spec and some that don't.
5 Basically, a performance spec is the absolute minimum the
6 vehicle can go on all conditions which is 65 miles. With
7 that, we've been able to make our clients happy and run on
8 our utility.
9 BOARD MEMBER BURKE: Did you say you have 400 or
10 you're wrapping up to 400?
11 CHAIRPERSON LLOYD: This year it's 320.
12 MR. SCHEIDLER: We can't. We would like to
13 acquire between 100 and 400 per year, that's based between
14 on what we can put into our clients and EPACT.
15 BOARD MEMBER BURKE: How many do you have now?
16 MR. SCHEIDLER: Three hundred and twenty.
17 CHAIRPERSON LLOYD: It's in here.
18 MR. SCHEIDLER: That's it right there, 320. This
19 is a basic snapshot of our fleet at the first of the year.
20 And as you can see that primarily it's RAV4. That seems
21 to be for the utility the best workhorse that we've found
22 to go. We would have taken more Hondas, but they weren't
23 available.
24 Next slide.
25 At Edison we put the vehicles through every kind
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1 of a mission test that you possibly could. In this case,
2 you can see some mountainous and off-road conditions. We
3 have snow. We have ice. We have mountains. We have
4 cities. We have just about everything from long freeway
5 commutes to adverse weather conditions. In that so far
6 even with salt air we've had no problems.
7 Next slide.
8 We've had to go back and modify some of these
9 cars to make them workhorses for the utility fleet. You
10 can see in this case we've actually built pickup beds in
11 the back of RAV4s to protect the interior and hold the
12 cargo, and we've installed radios, GPS systems and
13 computers.
14 Next slide.
15 And this has been the result. Basically, in some
16 of our clients, we've exceeded a penetration of 60
17 percent, so we're real proud about that. So out of a
18 hundred percent of the cars for a client, 60 percent are
19 EVs for meter reading for certain locations. We hope to
20 continue this momentum.
21 Next slide.
22 But unfortunately product availability has been
23 an issue, and in some cases negative product availability
24 has been an issue in the case of the recalls. So those
25 vehicles that were turned in were not replaced.
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1 Next slide.
2 One of the reasons I'm here today is to tell you
3 of a major concern and that seems to be that current
4 industry trend is to downsize the EVs. You've seen pickup
5 trucks and SUVs that work for me. The mini-EVs are good.
6 I'll put them into meter reader applications where I can,
7 but the application is limited. I'm going to have a hard
8 time placing these.
9 Finally, I wanted to leave with a fact that so
10 far Edison EVs are a success. Our total light duty
11 vehicle penetration exceeds 11 percent. I know ten
12 percent was looked at as a big goal. In some business
13 units, I have exceeded 60 percent. My concerns are
14 declining product availability and down scaling of the EV
15 designs.
16 And I am here today to encourage you and urge you
17 to maintain the mandate to keep the electric vehicles as
18 an option for my transportation solutions.
19 Thank you very much.
20 CHAIRPERSON LLOYD: Thank you.
21 BOARD MEMBER RIORDAN: A very quick question.
22 And that is, did I understand you, you would take delivery
23 on 400 vehicles a year, 100 to 400 a year, if they were
24 available?
25 MR. SCHEIDLER: I was having no problem with 100
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1 a year and that was my goal at a bare minimum. With the
2 EPACT mandate, we could take as many as 400 up to about
3 1,500 to 1,600 vehicles. And then with the fact that we
4 leased them and we've got 100 of them going away every
5 three years, I need that 100 back. So, yes, 100 or more
6 vehicles per year is not a problem for us.
7 BOARD MEMBER RIORDAN: Thank you.
8 CHAIRPERSON LLOYD: Ms. D'Adamo.
9 Hold on, Jim. We've got a question.
10 BOARD MEMBER D'ADAMO: You said that the city car
11 would be of a limited benefit, what percentage of the
12 cars, 100 to 400?
13 MR. SCHEIDLER: Well, we haven't seen the Think
14 Yet around, so I'd have to test that. What we do with all
15 new cars is put them through a test loop and then we have
16 to figure out the range and the drivability and that sort
17 of thing.
18 We have the Hyper Mini and since it's not -- it's
19 a right-hand drive car, that gives us certain union and
20 safety issues, so I would guess about seven to ten percent
21 of what I would use for EVs I could probably apply to the
22 small cars, the mini cars, the city cars, so about ten
23 percent.
24 BOARD MEMBER D'ADAMO: Thank you.
25 MR. SCHEIDLER: Anything else?
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1 CHAIRPERSON LLOYD: Thank you very much.
2 MR. SCHEIDLER: Thank you all for the
3 opportunity. It's appreciated.
4 CHAIRPERSON LLOYD: Thanks for coming.
5 Now, we have --
6 (Applause.)
7 CHAIRPERSON LLOYD: -- Kevin Finney.
8 MR. FINNEY: Good evening. I am Kevin Finney for
9 the Coalition For Clean Air. It's a pleasure to be here
10 tonight. I want to appreciate the patience and the
11 attentiveness through a long day of testimony.
12 Tonight, I want to talk a little bit about a
13 south coast air basin perspective on the ZEV program. You
14 all know that the south coast air basin has roughly 15
15 million people, nearly half the population of the State.
16 And that it's the most consistently polluted region not
17 only in the State, but in the entire nation. The
18 population of the region is growing rapidly, and so is the
19 number of vehicles miles traveled on a daily basis.
20 So if there's a region that the success of the
21 ZEV program is clearly important to, it's the south coast
22 air basin. At the same time, the south coast air basin is
23 very important to the success of the ZEV program.
24 Certainly any region that contains half the population of
25 the State is critical to the success of the ZEV program.
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1 The importance of the ZEV program to the south
2 coast air basin is compounded by the fact that current
3 mobile source emission reductions are showing significant
4 shortfalls in a number of measures relative to their
5 expected returns in the SIP. As a result of these
6 shortfalls and other factors, staff of the Southern
7 California Association Of Governments have recently
8 suggested that a real danger exists that the south coast
9 may fall out of conformity, potentially endangering
10 federal transportation funding.
11 Clearly a successful and growing ZEV program is
12 essential not only to the 15 million residents of the
13 south coast air basin, but to all people of the State.
14 This is no time to be reducing the number of zero emission
15 vehicles or near zero emission vehicles required under the
16 ZEV program. In fact, I would argue that a reasonable
17 case could be made that if you want to lower emission --
18 I'm sorry, increase emissions benefits, if you want to
19 provide an additional incentive to auto manufacturers to
20 market these zero emission vehicles, and if you want to
21 lower the cost of these vehicles, what's really needed is
22 a growing number of vehicles being produced and a real
23 increase in the requirements of the ZEV program.
24 I think it's also important to note that drivers
25 in southern California are used to driving on freeways as
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1 a daily part of their routine. And so I have some
2 concerns about the city cars, which I think are an
3 important -- have an important place in the ZEV program,
4 but I'm concerned that they not come to dominate the ZEV
5 program. And so I would like to see the Board asking the
6 staff to come back for some recommendations on how to
7 craft the program so that the full-size electric vehicles
8 continue to be a majority of the vehicles being produced
9 under the program.
10 I also want to note that while I think in a
11 hybrid household, a two car household, EV's frequently are
12 the car of choice, the first car, and they can rely on a
13 second car with an internal combustion engine for those
14 long trips that they may not feel comfortable taking their
15 EV on.
16 The perception of the range limitations of the
17 EVs may, for some drivers, especially in single car
18 households be a deterrent. And that's why, I think, the
19 hybrid -- the fact that this program helps to promote
20 hybrid vehicles is an important component.
21 But I also want to emphasize that there are two
22 kinds of hybrid vehicles. There's the kind the automakers
23 are producing now, the Insight and the Prius, which have
24 small battery packs and no true zero emission vehicle
25 range, and there are plug-in or grid electric hybrids.
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1 We've got one parked outside that the Davis hybrid
2 electric vehicle program brought down to show off.
3 I think these really combine the longer range
4 benefits of the hybrid vehicles that are out there now
5 with the true zero emission vehicle benefits. And they
6 enable you to have a smaller battery pack and lower costs.
7 In many ways, these are a vehicle that the program
8 currently encourages automakers to build, but they haven't
9 grabbed that opportunity.
10 I'd like to see the Board asking the staff what
11 can we do to really move automakers to produce these
12 plug-in or grid electric hybrid vehicles with a zero
13 emission range of 20, 40 or 60 miles.
14 I want to just thank you, in conclusion, for
15 allowing me the time to testify tonight and wish you well
16 with your deliberations.
17 CHAIRPERSON LLOYD: Thank you very much.
18 (Applause.)
19 CHAIRPERSON LLOYD: Next, we have Jack Doyle.
20 Jack, it's a pleasure to have you here. Your
21 book has been distributed widely by a number of people and
22 read by a number of people. And some of the people you
23 mentioned are here.
24 MR. DOYLE: Well, thank you, Mr. Chairman.
25 CHAIRPERSON LLOYD: Supervisor DeSaulnier, I
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1 guess, it's required reading for him.
2 BOARD MEMBER DeSAULNIER: I need a signature
3 afterwards.
4 MR. DOYLE: Well, if the Chair would indulge, I
5 would graciously make available copies to the entire board
6 if that's okay with the Chair?
7 CHAIRPERSON LLOYD: Well, is it okay with our
8 legal department? Is that okay?
9 GENERAL COUNSEL WALSH: Yes, we'll have to
10 determine a value. You may have to report it.
11 CHAIRPERSON LLOYD: That's okay. It's worth it.
12 MR. DOYLE: I'd be delighted to do that.
13 CHAIRPERSON LLOYD: That would be great. Would
14 you autograph it at no extra charge?
15 (Laughter.)
16 MR. DOYLE: Certainly.
17 CHAIRPERSON LLOYD: I think some of the executive
18 officers, they would like a copy. We wouldn't like to be
19 ahead of the staff in this case, so if you could extend
20 that offer there too.
21 MR. DOYLE: I would gladly extend the offer to
22 the staff, yes.
23 CHAIRPERSON LLOYD: Thank you.
24 MR. DOYLE: Mr. Chairman and Members of the
25 Board. I thank you for the opportunity to be here today.
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1 I will be brief because this has been a long day for
2 everyone here.
3 For the record, My name is Jack Doyle. I run a
4 small nonprofit project called corporate sources which
5 does investigative research on business and environmental
6 issues. And for the last three years, I have been engaged
7 in compiling this history of the clean car fight, a fight
8 that began here in California in the 1940s and has
9 continued up through today to the current situation and
10 the Kioto protocol and other forums where this technology
11 is debated very concertedly.
12 This story is a fascinating political history,
13 but it's also a very interesting business and technology
14 story. And if I could recount briefly here. Time doesn't
15 permit me to go into this whole story, but one of the
16 really revealing points to me in this research that I've
17 done is the missed opportunities, the missed business
18 opportunities that have recurred over the decades.
19 If I could recount briefly some of what has
20 happened over the last 50 years. In the 1960s there was a
21 denial that automobile exhausts were a problem. And for a
22 ten-year period there was giving and taking and reporting
23 about whether there was a problem or not, and that
24 initially it was only LA's problem. It was not something
25 that went beyond the LA basin.
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1 In the 1970s in Congress we had the Clean Air Act
2 fight. And again in the 1970s, you know what a different
3 world this would be today, if in the 1970's when the Clean
4 Air Act controversy emerged in those years, if the big
5 three automakers had embraced this as a business
6 opportunity rather than deciding to fight it. Granted the
7 law was enacted, but it wasn't long thereafter that we had
8 the energy crisis in the mid seventies and this became an
9 opportunity for the auto industry to use CAFE to try to
10 leverage weaknesses in the Clean Air Act.
11 And the 1980s were a very interesting period,
12 because we had a protected market in effect. There were
13 quotas or trade restraints placed on the Japanese. There
14 were benefits extended to Chrysler and its difficulty in
15 the eighties. There were rollbacks of regulation in the
16 1980's. All of these benefits were passed to the auto
17 industry in exchange for protecting the market and helping
18 with jobs and the energy situation at the time.
19 But what happened in the eighties, what benefits
20 did this industry bring to the nation as a result of these
21 protections that were offered them by Congress?
22 The 1980s became very profitable after a period
23 of time for the eighties. And instead of reinvesting some
24 of that money, the industry went out on a buying spree and
25 buying businesses that were not auto related businesses
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1 for a time. GM went after Hughes, Chrysler bought an
2 aerospace company. Chrysler, at the time, was also
3 interested in EF Hutton. Some of these -- this diversion
4 of profits in the eighties really we're paying for that
5 now, because there were opportunities there, business
6 opportunities, that could have been seized around fuel
7 economy and emissions control. If those had been made
8 central goals of the industry, we would see a very
9 different situation today.
10 CHAIRPERSON LLOYD: Jack, the light is red, if
11 you could wrap it up.
12 MR. DOYLE: Yes, I could.
13 CHAIRPERSON LLOYD: I'll forfeit a book, if
14 necessary.
15 (Laughter.)
16 MR. DOYLE: Yes, I understand. But just to sum
17 up here, in the 1990s this has been a very profitable
18 industry. We have seen seven consecutive years of
19 profitability here in this industry. Just for the big
20 three automakers alone, there have been $100 billion of
21 profits made in that period. And the question is now how
22 will those profits be reinvested, how are they being
23 reinvested?
24 We know that the SUV market has taken off and car
25 plants are being used now to produce SUV's and pickup
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1 trucks. So how is this money being invested? Are we more
2 vulnerable as a nation energywise in terms of our
3 situation? Oil now is $33 a barrel as we speak and shows
4 no signs of decreasing.
5 CHAIRPERSON LLOYD: I must ask you to wrap up.
6 MR. DOYLE: Okay. Finally, just my final point
7 is to look at some of the progression of technologies,
8 just to mention some technologies that in the interest of
9 good engineering practices if they had been embraced by
10 the auto industry, it would be a lot different situation
11 now. And it bears on your decision and our economy and
12 innovation going forward.
13 If you can think back into the fifties and
14 sixties, positive crank case ventilation, catalytic
15 converters, front wheel drive which came out of Britain in
16 the fifties, fuel injection, even four speed manual
17 transmissions, advanced automatic transmissions, overhead
18 cam shafts, multi-valve engines.
19 I just mention all of these technologies because
20 they do bear directly on efficiency and emissions. And in
21 every one of those technological cases Detroit had a lag
22 time of five to ten years behind their competitors. And
23 part of this really flows out of the situation that we had
24 a protected oligopoly in the 1950s and sixties for this
25 industry and they really had no competition, and we're
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1 still paying for that today.
2 Thank you, Mr. Chairman.
3 CHAIRPERSON LLOYD: Thank you very much and thank
4 you for you contribution.
5 Yes, Ms. D'Adamo.
6 BOARD MEMBER D'ADAMO: I wish that you could
7 focus on the mandate though and tell us based upon the
8 knowledge that you have what recommendations do you have
9 for us about the mandate specifically?
10 MR. DOYLE: Excuse my oversight, but, I mean, I
11 really -- I'm here to support the mandate certainly. I
12 think that California has a long and distinguished history
13 of being in the forefront on technological advance with
14 regulation, from the catalytic converter in the sixties
15 forward. You have been the leader globally. And you have
16 the opportunity to continue to do that and push the
17 envelope on technological innovation here and the rest of
18 the nation.
19 So I certainly urge this body to hold firm on the
20 current regulation, in fact, think about really going
21 beyond the reg that you have now.
22 CHAIRPERSON LLOYD: I think there was some
23 confusion. I'm glad, Ms. D'Adamo, you cleared that up,
24 because we have a check list here. Everyone on this list,
25 this particular sheet is in favor. There's nothing by
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1 your name.
2 MR. DOYLE: I'm in favor of it.
3 CHAIRPERSON LLOYD: Put a big X.
4 BOARD MEMBER D'ADAMO: I actually assumed that
5 you were in favor, but I was looking for something beyond,
6 if you had any specific recommendations. The automakers
7 are all coming here telling us about how this is
8 impossible. Do you have any guidance for us about things
9 that --
10 MR. DOYLE: Well, in all due respect, I think it
11 was in January of 1990 that Roger Smith who was Chairman
12 of General Motors presented the EV IMPACT precursor model.
13 And I believe Mr. Smith was waving around 100,000 vehicles
14 a year at the time. And that appearance and commitment by
15 Mr. Smith, at the time, really, I believe it really
16 encouraged this body to go ahead with the LEV regulations
17 of September 1990.
18 So we heard from the industry, initially, that
19 this was possible on a much grander scale than we're
20 talking here tonight.
21 CHAIRPERSON LLOYD: Professor Friedman.
22 BOARD MEMBER HUGH FRIEDMAN: I was just going to
23 say I read your book with great interest and I thought I
24 benefited greatly. I was very well informed or better
25 informed when I read it. And a good author always leaves
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1 where he stands or she stands to the very end, the last
2 chapter, that's why you had to hear that.
3 (Laughter.)
4 CHAIRPERSON LLOYD: Supervisor DeSaulnier.
5 BOARD MEMBER DeSAULNIER: Thank you. I just
6 wanted to say I read the book as well and enjoyed it a
7 great deal. I enjoyed reading it. Mr. Calhoun's name is
8 mentioned in here, Mr. Cackette, Mr. Leonard, but there's
9 nothing about Chairman Lloyd, so perhaps If you write
10 another book --
11 (Laughter.)
12 CHAIRPERSON LLOYD: That's --
13 BOARD MEMBER DeSAULNIER: I think that's why he
14 cut you off.
15 (Laughter.)
16 CHAIRPERSON LLOYD: That's incentive for
17 tomorrow.
18 BOARD MEMBER DeSAULNIER: If you need the
19 spelling on my name, I'll --
20 (Laughter.)
21 MR. DOYLE: Early on in the research, I had
22 actually called Allan Lloyd and we never really got
23 together, but I did call Allan Lloyd when he was in
24 Nevada, I believe, right?
25 CHAIRPERSON LLOYD: Yes, that's right.
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1 BOARD MEMBER DeSAULNIER: I'm disappointed that
2 Sam isn't here for you to get up, because Sam is featured
3 in here fairly lengthy.
4 MR. DOYLE: Sam, in fact, is quoted as saying
5 that the first time that we complied with 1970 goals of
6 the Clean Air Act was 1993. That's some tribute to the
7 auto industry's prowess and --
8 BOARD MEMBER DeSAULNIER: It's sort of
9 interesting in your acknowledgements in the front, you
10 thank Sam for contributing. I wonder how that went over
11 back in Detroit when they read that.
12 (Laughter.)
13 MR. DOYLE: I had a long meeting with Sam and
14 Denny as I was working on this book.
15 CHAIRPERSON LLOYD: Thank you very much.
16 (Applause.)
17 CHAIRPERSON LLOYD: Carolyn Scott, then Tom Gage,
18 Alec Brooks.
19 By the way, so that you get a feeling of where we
20 are, we're going to try to get through about another 20
21 witnesses this evening, if we can. That will leave us
22 about roughly 30 tomorrow. So if we can do that. And
23 again --
24 What happened to Carolyn Scott?
25 Well, I guess we got rid of her. Well, maybe we
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1 should reserve the right, if she comes back tomorrow, we
2 should make sure that she has the time there. Tom Gage
3 and Alec Brooks. Well, knowing Tom, he may have paid
4 Carolyn off, because I know he needed more than five
5 minutes.
6 MR. GAGE: Good evening, Chairman Lloyd, Members
7 of the Board, staff members, ladies and gentlemen. My
8 name is Tom Gage. My colleagues and I at AC Propulsion
9 believe that EVs will sell themselves if given a fair
10 chance in the market. I'm here today to share my
11 perspective on how the mandate needs to be changed in
12 order to make sure that EVs get that fair chance.
13 The mandate is a bold policy that attempts to
14 transform the 40 plus billion dollar new vehicle market in
15 California. Unlike previous technology forcing
16 regulations, under the mandate the automakers have to go
17 produce EVs but the customer can choose. Unless enough
18 customers choose the EVs the mandate policy will fail.
19 CARB recognized this in Resolution 96-12 adopted
20 four years ago. But in the four years since, with all due
21 respect, CARB has not done enough to market electric
22 vehicles to the buying public.
23 I suspect that when the mandate policy was
24 conceived, CARB assumed that automakers after spending
25 fortunes to develop and manufacturer EVs would
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1 enthusiastically and aggressively market them. But the
2 mandate does not require them to do this and so far they
3 have done exactly the opposite.
4 I believe the automakers will take their case to
5 the Governor and they will make a compelling case based on
6 near-term business and political considerations. In the
7 near term, the case for ZEVs is perhaps less compelling.
8 But I believe that the decision ultimately is about the
9 long-term business growth and environmental prospects for
10 our state and about who sets our priorities.
11 It may be impossible for the OEMs to make a
12 business case for electric vehicles in 2003, but that fact
13 alone is not a good enough reason to abandon the mandate.
14 And abandoning the mandate is one of three alternatives
15 that faces the Board and perhaps ultimately the Governor.
16 The other two alternatives are one, to hang tough
17 on the mandate, not change it at all, and two, to move the
18 mandate and the market closer together so that market
19 forces assist rather than oppose the goals of the mandate
20 policy.
21 Abandoning the mandate means that air quality
22 goals will have to be met without EV's. SULEVs are a
23 promising technology, but they are a bet that advanced
24 emission controls, inspection and maintenance efforts and
25 OEM warranty programs can keep emission levels at
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1 unprecedentedly low levels for 15 years and 150,000 miles.
2 The odds on that bet won't even begin to be known
3 for five to ten years. If it is a bad bet, then we will
4 be that much farther behind in commercializing EVs.
5 Fuel cells, too, are a risky bet. Despite
6 optimistic reports that fuel cells are a progress, the
7 facts are that they face the same cost, range and
8 refueling challenges as EV's multiplied by factors of two,
9 five or ten depending on who you talk to. Plan to wait
10 ten to twenty years for commercial fuel cell vehicles.
11 The OEMs have been trying to poison perceptions
12 of EVs. Consequently, if you do abandon the mandate now,
13 you'll validate what the OEMs have been saying and EVs
14 will not soon have another chance in the market.
15 If you hang tough on the mandate, one or more
16 automakers may turn around and take their best shot at
17 selling EV's. That would be good. Some of you have met
18 with high level automotive executives and you know more
19 than I do about their plans. But from what I do know, I
20 think it is possible that the OEMs will reduce production
21 costs and marketing costs as much as they can.
22 They will produce EVs that are cheap to build
23 possibly at the expense of market appeal. They will not
24 market them aggressively or effectively and they will
25 price them high. They will park thousands of unsold EVs
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1 in lots all over the state. What will CARB do then?
2 I strongly believe that you must take action to
3 change the mandate to make it more market friendly. I
4 suggest four action items here. I have already discussed
5 these ideas with CARB staff so they can brief you on the
6 details, but I'll mention them here briefly.
7 The easiest and most effective change you could
8 make to the mandate is to level the playing field for lead
9 acid batteries and for utilitarian EVs such as minivans
10 and small trucks by extending the multiple ZEV credit.
11 Right now only EVs with more than a 100-mile range can
12 earn multiple ZEV credits, as shown by the blue lines.
13 The 100-mile threshold is arbitrary and counter productive
14 and should be eliminated as shown.
15 The result would be lower costs for OEM's EV
16 compliance, yet more EVs would be built and more ZEV miles
17 driven. In private conversations representatives of the
18 Alliance of Automobile Manufacturers and several
19 automakers have shared their interest in this idea with
20 me. It is a win win for everyone.
21 The next suggestion is just common sense. Right
22 now heavy vehicles are not counted for the ZEV mandate.
23 The result is that automakers that want to reduce their
24 ZEV requirement can do so by selling more heavy SUVs and
25 pickup trucks and fewer small cars. It should be the
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1 other way around.
2 I'm sure GM, Ford and Daimler Chrysler will
3 oppose this, but Toyota, Honda and Nissan might support
4 it. In any case, it will reduce emissions by resulting in
5 either more small cars or more ZEVs or both. It is the
6 right thing to do.
7 CARB has to work to create demand for EV's. You
8 made the mandate. You must help make the market. The
9 best case would be to achieve detente with the OEMs and
10 combine resources to begin to move the market to EV's.
11 One way to do this would be to give additional credit to
12 OEMs for ZEVs actually sold or leased.
13 Finally, money talks. AB 2061 passed last time
14 and it will provide $9,000 over three years to EV buyers
15 until the end of 2002 if the Governor signs it. Arizona
16 has a much more aggressive and generous incentive program
17 for EVs. California is bigger, richer and more
18 progressive than Arizona. We should not lag behind.
19 There is money for funding out there. At the
20 workshop, one speaker suggested offering ZEV buyouts to
21 OEMs. If they contribute enough to be spent developing
22 ZEVs in the ZEV market, then they do have to produce ZEVs
23 themselves. It seems fair enough. As we will hear
24 tomorrow, there is a promising possibility that ZEVs will
25 have value as generated assets to electric power
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1 providers. If this is real, it's big. If so, the
2 providers will be a source of funding both to develop the
3 asset and then to pay some of its costs.
4 Finally, there is California. We have a budget
5 surplus. Failure to secure increased funding to support
6 the mandate will result in a loss of California leadership
7 in clean vehicle technology.
8 In conclusion, I urge you, the Board, to act
9 decisively and with urgency to confirm the mandate and
10 bring it into harmony with the market, create demand for
11 EVs among auto buyers and seek detente with the
12 automakers. Most important, now is the time to move
13 forward with the ZEV mandate.
14 Thank you.
15 Thank you for you attention.
16 CHAIRPERSON LLOYD: Thank you very much, Tom. My
17 understanding is you used to be working with one of the
18 OEMs, so you have a little bit of background in their
19 thinking.
20 MR. GAGE: Yes, I was with Chrysler for eight
21 years. In fact, I was there when the mandate was first
22 enacted.
23 CHAIRPERSON LLOYD: Thank you very much.
24 Next, we have Alec Brooks, then Rex Hodge.
25 MR. BROOKS: Good evening, Chairman Lloyd and
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1 Members of the Board. Thank you for the opportunity to
2 speak with you tonight. My comments are going to be a
3 response to the Alliance of Automobile Manufacturers'
4 public statements in the recent weeks and today actually,
5 some of the things we've heard today, specifically
6 relating to the costs and some of the costs per emission
7 benefits.
8 The press release that came out on August 24th,
9 you know, basically says electric vehicle -- that the Air
10 Resources Board themselves -- the staff report says that
11 electric vehicles will cost significantly more and the
12 clean air benefits will be minimal.
13 Well, those cost differences that they're citing
14 are due to early low-volume production. They don't take
15 into account production in some reasonable volumes.
16 They're also due to battery costs, which are also volume
17 sensitive. And battery costs are not all the same. There
18 are large differences in what a battery will cost.
19 So let's address some of these cost issues.
20 First, let's take drivetrain costs, the part of the
21 electric vehicle that's different that is not the battery
22 pack.
23 Well, in comparison to internal combustion
24 engines, the trends are moving in opposite directions.
25 Internal combustion engines, because of the emission
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1 standards, are getting more complex, they are higher
2 costs, the emission controls and the emissions warrantee
3 is longer and that's got to result in greater warrantee
4 costs.
5 On the other hand, in the electric systems, the
6 economies of scale will start to kick in and that will
7 reduce costs. And historically, we've seen a continuous
8 drop in electronics costs for a long period of time. High
9 volume costs of manufacturing electric drivetrains are
10 going to be less than ICE powertrains.
11 Battery life cycle costs have been a topic of a
12 great deal of discussion today. And let's say just as a
13 quick example that our goal is to have a cost parity with
14 gasoline and the associated maintenance, say eight cents a
15 mile. Electricity costs for typical EVs with nighttime
16 charging is one or two cents a mile evenings, six or seven
17 cents a mile for battery replacement costs. So how can we
18 get there? Some of the batteries are very much more
19 expensive than that.
20 First, you make more EVs so that you get more
21 batteries being made and you get the economies of scale
22 there. But, secondly, you can make EVs more efficient.
23 That seems to have been forgotten in some of the EVs we've
24 seen so far. We can reduce drag, aerodynamics and
25 rolling, improve the regenerative braking recapture,
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1 reduce accessory loads, reduce the battery cooling power.
2 And with such more efficient EVs, you can use less
3 expensive batteries. That's a big deal. Lead acid
4 batteries can work.
5 Also, developing a secondary market for spent EV
6 batteries can help although that's not the final answer.
7 And, as you'll hear tomorrow, using EVs as a source of
8 power production rather than just as a load might add
9 another value stream for EV's.
10 So let's get a scenario for a six-cent-a-mile
11 battery cost. Let's look at a four door -- four passenger
12 sedan with lead acid batteries and 90 miles range. First,
13 I'll make one quick comment on 90 miles range with lead
14 acid batteries. The battery report and some of the other
15 comments would have you believe that 70 to 90 miles range
16 requires nickel batteries.
17 We respectfully disagree with that. We have done
18 many vehicles at AC propulsion energy efficiencies that
19 are consistent with 90 miles range with lead acid
20 batteries. And as a quick example, yesterday I drove a
21 four passenger AC propulsion electric vehicle 72 miles
22 round trip from our shops to Burbank Airport and back,
23 with 179 watt hours per mile energy consumption at the
24 battery versus 330 watt hours that was cited earlier. So
25 that's a little bit more than half of what Dr. Calhammer
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1 suggested was the best we could do. And the battery was
2 at 35 percent state of charge when I got back. And this
3 is a lead acid battery and a 72 mile trip.
4 So it is quite possible to do, but I digress. So
5 I'm saying take 210 watt hours a mile and put some in
6 there for air conditioning and other accessories, 60 amp
7 hour Panasonic battery pack, 28 batteries in the pack,
8 assume that you can go 72,000 miles. That's an assumption
9 and that's not proven yet, but that's a scenario for a
10 possible future. And the pack replacement costs, I'm
11 looking $90 a module, which is a Panasonic price for 1,000
12 packs a month, that's what it would cost you, 40 percent
13 markup into the consumer parts channel. I don't know if
14 that's an accurate number, 28 batteries, 10 hours and $60
15 an hour is $4,128, which comes out to 5.7 cents a mile.
16 So if it comes out to seven cents a mile, because
17 it doesn't last as long, it's still not a big deal.
18 That's not the big cost of having a car, but the economics
19 for lead acid batteries really are there.
20 Okay, now, I'm going to go to emission benefits.
21 The Alliance of Auto Manufacturers' position is that the
22 cost effectiveness exceeds one and a half million dollars
23 a ton and this is a hundred times bigger than any other
24 emission control program ever adopted by the ARB. Their
25 calculations are based on near term cost penalties, due to
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1 low volume production. And also they're based on this
2 number, $22,817, which was in the staff report.
3 And I was surprised at how quickly they latched
4 on to that exact number and how tightly they're holding on
5 to it. It seemed actually a little bit suspicious to me.
6 The staff, of course, did a good job in trying to get the
7 real cost increments of electric vehicles, but they don't
8 have access to all of the data that the auto manufacturers
9 have themselves as to what their true costs are.
10 And since they're so happy -- the auto
11 manufacturers are so happy to use that $22,000 number and
12 parade it around all day today, I was starting to wonder
13 maybe the costs really aren't that high and they're just a
14 convenient number to grab onto, because it makes their
15 case quite well.
16 So we luckily have a very nice example in front
17 of us to look at and that is the Toyota Prius. That's a
18 vehicle that's a very high tech, tour de force vehicle.
19 It's on sale now nationwide. It has a big advertising
20 campaign. Toyota is selling these for $20,000 by the
21 thousands. Dave Hermance said today that they are
22 breaking even on those and they'll make a profit on the
23 next generation.
24 So with your $20,000 when you go to buy a Prius
25 what do you get? Well, you get the body shell and all the
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1 traditional car stuff. You also get two electric motors
2 and two electric drive inverters. One of them is big and
3 one is little. The big one actually has 230 foot-pounds
4 of torque which is more than most electric vehicle drive
5 motors.
6 So let's say we took the two motors and two
7 inverters and combined them into one and say it's the same
8 cost as their two. They have a small nickel-metal hydride
9 battery, but it's rather exotic, for a very high power to
10 weight ratio. In a thousand vehicles a month, that little
11 small nickel-metal hydride pack is about the same cost as
12 a full sized Panasonic lead acid EV pack.
13 So now we've converted the Prius into an EV. Oh,
14 but they throw in a piston engine and all of its
15 associated exhaust and cooling and fuel system and SULEV
16 mission system. And they sell it for $20,000. So
17 somewhere in here, I think there's something missing,
18 because with all of that content in a Prius, they can
19 break even at $20,000.
20 And the other comment I wanted to make was in
21 rapidly developing technology costs change very rapidly
22 and it's very bad to predict what they're going to be.
23 And my example is that back in 1960 who would have thought
24 that you could put the computing power of a mainframe
25 computer into every car and have a means to measure and
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1 squirt a tiny little amount of fuel into each cylinder
2 every time it fires to enable your exhaust system to work
3 properly. So it's very difficult to estimate costs and
4 things that are moving fast, and usually costs go down.
5 And also I wanted to point out that the
6 efficiency improvements enabled by fuel injection have
7 arguably resulted in negative costs per ton of emission
8 reduction due to the vast improvement of efficiency of
9 automobiles. That saves on the lifetime fuel costs of
10 that vehicle.
11 I think there's a potential for this with ZEVs so
12 the actual economics can be turned upside down.
13 CHAIRPERSON LLOYD: Are you nearly wrapping up?
14 MR. BROOKS: Yes.
15 CHAIRPERSON LLOYD: I know it's fascinating
16 stuff.
17 MR. BROOKS: The alternatives are SULEVs that
18 we're talking about. They don't do anything for upstream
19 emissions. And there's certainly uncertainties in the
20 durability of the emission systems. And a quick comment
21 on fuel cells, a wise person once called them the
22 technology of the future. And I'm just saying that this
23 statement has withstood the test of time.
24 (Laughter.)
25 MR. BROOKS: And in the interests of time I'm
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1 going to skip my chart on fuel cells, but it's in your
2 section there.
3 The bottom line is the Alliance is urging the
4 board to direct the staff to find more cost effective
5 alternatives. And I suggest that the Board position ought
6 to be to direct the Alliance members to find more cost
7 effective means to comply with the ZEV mandate. It seems
8 like the Alliance position is almost that the Board is
9 mandating them to spend $22,000 extra on every car. And
10 that certainly is not the case.
11 And in support of that position, I would urge the
12 Board to suggest adoption of the changes that Tom
13 mentioned in the previous talk to allow multiple ZEV
14 credit provisions that would encourage more cost effective
15 electric vehicles and let the market decide the range
16 versus cost issue.
17 Thank you.
18 CHAIRPERSON LLOYD: Well, given your vision on
19 some of these things. How would you respond to the
20 comment we heard earlier that John Wallace, a good friend
21 of ours, working together on the fuel cell partnership,
22 basically saying that God didn't intend us to have full
23 electric vehicles.
24 MR. BROOKS: Well, he said -- I think he said
25 fully capable electric vehicles. And, depending on how
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1 you interpret it, that may be right, because an electric
2 vehicle is not going to match, you know, feature for
3 feature and performance spec, you know, per performance
4 spec, a Ford Taurus with the range.
5 But, I mean, he also wonders, he's saying we
6 shouldn't have EVs that go on the freeway. And obviously,
7 the answer is no. And their business plan obviously
8 doesn't have vehicles that go on the freeway.
9 CHAIRPERSON LLOYD: Yes. Professor Friedman.
10 BOARD MEMBER HUGH FRIEDMAN: Could I just ask,
11 I've been very impressed with your comments and those of
12 your colleagues, Mr. Gage. But I'm not familiar with AC
13 propulsion. Could you just identify, for a moment, your
14 company?
15 MR. BROOKS: Yes, we are a drivetrain and
16 electric vehicle technology company in San Dimas,
17 California. We're about 25 people. We do drivetrains
18 with integrated fast charging, so the charger goes with
19 you in the vehicle at very little marginal cost. And we
20 are attempting to put a sports car into production as
21 well, which was parked outside today. And you can find us
22 on the Internet, if you want to find a lot more about us.
23 BOARD MEMBER HUGH FRIEDMAN: Thank you.
24 CHAIRPERSON LLOYD: I think Professor Friedman I
25 think is modest with his colleagues. They were key
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1 developers of the IMPACT. And I think Alec is mentioned
2 in the book there as driving out that vehicle at the LA
3 Auto Show, so they're a very capable California group,
4 which clearly is taking advantage of the opportunities
5 that the mandate provides.
6 Next, we have Rex Hodge, Anuvu.
7 And good, Rex, I guess Alec really set you up on
8 this.
9 MR. HODGE: Yes, he certainly did. I'm the CEO
10 of Anuvu, which is one of these companies of the future.
11 The first thing I'd like to do is apologize for my entire
12 industry being under-represented here today. And we're a
13 fuel cell company. And we've been around doing fuel cell
14 work for about six and a half years. I've been working on
15 fuel cells a couple more years than that.
16 And it's a new industry. It's an industry that I
17 think is much further along than was given credit today.
18 We plan to start mass producing fuel cell powered cars to
19 support the 2004 law. We're very serious about that.
20 We're privately funded. People don't hear about us very
21 often because our funds do not come from a public source
22 or from the car companies. It's all privately funded.
23 But we do work in automobile research, automobile
24 design, composite body development for safe crash test
25 composite bodies, light weight vehicles. And, of course,
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1 the heart of our projects are the fuel cell development
2 projects.
3 And we have a fuel cell that has been developed
4 specifically to be mass producible. And we know what our
5 competitors have and don't have, of course, because we're
6 in the same industry. And I think the reason why you
7 don't see the other fuel cell companies here today is
8 because those that are car related right now are tied into
9 the car companies. And I think it's not too hard to
10 imagine them wanting to have a central message for you
11 today, one per car company.
12 And since that message overall was negative,
13 naturally the fuel cell divisions within those companies
14 didn't have the opportunity to express to you today where
15 they're at. But on behalf of the industry, I'd like to
16 say we're pretty far along. The main issues that are
17 holding back fuel cells being deployed in automobiles have
18 to do with infrastructure for the fuel. And I would like
19 to say that if electrolysis is used as the way of
20 producing that hydrogen fuel, then that can be done in a
21 device that is in existence today, in people's garages.
22 In other words, a car sized electrolysis unit can
23 be produced for less than ten percent of the price of the
24 vehicle, packaged in with the price of the vehicle,
25 delivered, put in your garage. And now instead of 60-mile
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1 range, you're looking at a 600-mile range. That's the
2 range of the four door luxury sedan that we're currently
3 designing and developing at Anuvu as we speak and that we
4 plan to produce in 2004.
5 And we plan to do so profitably, I might add.
6 And there are still, of course, uses for the battery
7 vehicle if you're looking at around town type of vehicles,
8 smaller vehicles. But when you're looking at larger
9 vehicles or long-range vehicles, it's going to be the fuel
10 cell and it's going to be in place. And some of the other
11 fuel cell companies, if they're not ready in 2004, as we
12 plan to be, they should be ready in the not-too-distant
13 future, not ten or twenty years, but, you know, maybe 2008
14 at the outside.
15 And if you hold tight and keep the law in place
16 and allow the small percentage of cars, really modest if
17 you look at some of the speakers and how they said they
18 could manage this deployment and still satisfy the law,
19 hang tough, let that happen with batteries initially if
20 necessary, and sooner or later the fuel cells are going to
21 come into play. They're going to come in there and allow
22 people to have the kinds of vehicles they're used to
23 having today with the kinds of ranges they're used to
24 having today, in a completely zero emission state, if
25 hydrogen is the source of fuel that is used and if that
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1 hydrogen is created in a zero emission way, such as
2 electrolysis, using a clean air type of generation system
3 on the power grid, and using that energy at night just
4 like you would recharge a battery.
5 So the message I'd like to have is keep the law
6 on the books and do it with batteries if you have to early
7 on and we'll come in with fuel cells and be able to get to
8 100 percent. Because what this is all about is not the
9 four percent in 2003, it's getting on a stair-step path
10 leading up to 100 percent and our industry will help with
11 that.
12 CHAIRPERSON LLOYD: Thank you very much. And I
13 know you're located in Sacramento.
14 (Applause.)
15 CHAIRPERSON LLOYD: The other part I agree with
16 you, in having a lot of friends in the fuel cell industry,
17 they were very conspicuous by their absence, but I think
18 you put your finger on it there. I think a lot of the
19 people who work on fuel cells in the companies, you know,
20 are basically encouraging us to stand firm, because
21 obviously their future depends on what we do here.
22 But I did find it disappointing. IMPCO was
23 involved in fuel cells and you, so I really appreciate you
24 taking the time to come here.
25 MR. HODGE: Thank you. And one last point is
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1 that I said we are privately funded. And one of the
2 reasons why we can obtain this private funding and do this
3 important work and make all this progress is this 2003
4 law. So it's very important to keep that in place.
5 CHAIRPERSON LLOYD: Mr. McKinnon.
6 BOARD MEMBER McKINNON: It's great you're here.
7 I think I asked a question many, many hours ago that
8 related to your industry, and we haven't, I don't think,
9 talked about it hardly since. But are there things that
10 our board should be thinking about and doing specific to
11 the fuel cell development other than the partnership, I
12 think?
13 MR. HODGE: One thing that's very important is
14 hydrogen standards. And this relates to fire codes and so
15 forth. Hydrogen is far safer than gasoline. The
16 particular hydrogen vehicle that we're producing or that
17 we're planning to produce has one-fifth the energy content
18 of a normal gasoline powered car. And it can be designed
19 to be very safe.
20 However, the existing fire codes and so forth
21 aren't set up for it. And so we could use assistance in
22 terms of having new regulations put in place to help make
23 that happen and not have that be a barrier.
24 BOARD MEMBER McKINNON: Okay, thank you.
25 CHAIRPERSON LLOYD: Dr. Burke.
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1 BOARD MEMBER BURKE: Before you go. Since Matt
2 asked a question, I'll stay one behind. What keeps you
3 from doing it earlier? Is it money?
4 MR. HODGE: Primarily money and also the fact
5 that there's a lot of work to be done to put this product
6 in production and so forth.
7 BOARD MEMBER BURKE: So if you had more money,
8 the rate of speed is predicated partially on the amount of
9 money you have available?
10 MR. HODGE: That is correct. In fact, we have a
11 business plan, which I wouldn't mind making available to
12 your organization, it's 170 pages. It's quite detailed.
13 It goes into the entire system analysis of our vehicle.
14 It assumes a certain amount of investment will occur.
15 BOARD MEMBER BURKE: If you had twice as much
16 money as you have now, could you make it twice as fast?
17 MR. HODGE: Perhaps not twice as fast, but
18 considerably faster.
19 CHAIRPERSON LLOYD: I think, Dr. Burke, it's
20 important though to get the context, that if you're
21 talking about, you know, different parts of the fuel cell,
22 but if you're talking about putting that on a vehicle,
23 you've got to look at the total system.
24 BOARD MEMBER BURKE: But that's what he's talking
25 about. He' talking about a whole vehicle system.
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1 But the next question is --
2 CHAIRPERSON LLOYD: But with an OEM?
3 MR. HODGE: We're privately funded and we have
4 private investors that we work with. Our entire package
5 to get from where we're at to mass production is $235
6 million. That would allow us to produce about 36,000 cars
7 a year in the 2004 time frame.
8 BOARD MEMBER BURKE: But if you had 400 million?
9 MR. HODGE: We'd probably get there in the
10 beginning of 2003 instead.
11 BOARD MEMBER BURKE: Now let me ask you, how do
12 you plan to distribute?
13 MR. HODGE: We actually plan to sell our cars on
14 the Internet, which is something that the car
15 manufacturers want to do and are attempting to do right
16 now as we speak. They're doing it every opportunity they
17 can. However, they have restrictions, contract
18 restrictions, for selling cars through dealers.
19 But if you notice, many of the cars like the
20 hybrids are now being sold on the Internet.
21 BOARD MEMBER BURKE: Yeah. The problem with that
22 is maintenance problems and warrantee problems and stuff
23 like that.
24 MR. HODGE: In the terms of maintenance what we
25 plan to do is work with independent mechanics. And
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1 actually there's no shortage of those that want to come
2 forward and are willing to actually pay to be trained to
3 be, in our case, Anuvu certified to be able to maintain
4 these vehicles.
5 We also plan to have showrooms with salaried
6 people so that people can test drive these vehicles.
7 However, they won't be the vehicles that they buy.
8 They'll be special test drive vehicles, demo vehicles, and
9 then we will make these cars on order, which helps the
10 cash flow barrier, which is actually just as important as
11 the technology barriers.
12 And the fuel infrastructure barrier, which is
13 another big one, again, can be eliminated with these home
14 electrolysis units where the price of it is bundled into
15 the car.
16 BOARD MEMBER BURKE: But doesn't it use parking
17 space for your car? Doesn't it turn a two car garage into
18 a one car garage?
19 MR. HODGE: No, actually there is a unit that has
20 already been developed that can recharge your car over an
21 eight hour period, similar to a battery type application,
22 mostly limited by the electricity that goes to your house.
23 And it's about the size of 2 tower PCs backed up next to
24 each other. So it's something that would fit -- you could
25 fit probably a couple of them in the trunk type size.
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1 CHAIRPERSON LLOYD: Is it the Stewart System?
2 MR. HODGE: Yes.
3 CHAIRPERSON LLOYD: Thank you very much.
4 Good luck. Next we have Vibeke Hastrup, then
5 Terry Oxford, then Jack Reynolds.
6 MS. HASTRUP: My name is actually Vibeke Hastrup.
7 CHAIRPERSON LLOYD: Oh, sorry.
8 MS. HASTRUP: But I'll forgive you. It's a
9 Danish name. I live in Granite Bay with my husband and
10 our two kids, and I'm a stay-at-home mom, so I do a lot of
11 little errands and taking kids here and there and
12 everywhere. And I want to say I'm not a, kind of,
13 technology geek like Toyota was referring to earlier.
14 And to be honest, I was a little bit reluctant at
15 first to get into this electric car business. First of
16 all, because we didn't really need a new vehicle at the
17 time that we started talking about it and that lease
18 payments seemed a little bit high at first glance.
19 But my husband did convince me to go down and
20 test drive a Honda. And I'm kind of embarrassed to admit
21 that as we're driving some of the first words I said was,
22 "This drives just like any other car."
23 We filled out all the appropriate paperwork,
24 because my husband assured me there was no way that we
25 could meet all these stringent requirements that Honda set
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1 up for their potential lessees.
2 CHAIRPERSON LLOYD: Is your husband number 62
3 here, Tim?
4 MS. HASTRUP: He probably is.
5 And guess what? We passed, and on May 15th we
6 picked up our Honda EV Plus. It became my car. I've
7 driven most of its 36,000 miles. I love it like everybody
8 says. I figure it probably takes me to about 99 percent
9 of the places that I want to go. The Volvo that I used to
10 drive and that I insist we keep, it's at home in the
11 garage. It sits there weeks on end.
12 I thought we're going to use it more because of
13 the mileage restraints and also the seating capacity. But
14 it hasn't come true. I also figured that once the three
15 year lease was up, I would be back in my station wagon,
16 but, you know, you get hooked. And driving electric is
17 now the only way for me.
18 I don't feel bad anymore on these spare the air
19 days, don't miss a gas station and no more smog checks. I
20 plug in my car at night and its ready again the next day.
21 Thanks to Honda's decision to extend the leases,
22 I will be driving my Honda EV Plus for another two years,
23 and by the time that 2002 rolls around, I hope there will
24 be more options available, because I think, at that point
25 in time, our family would be looking to get another
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1 electric vehicle, but we would probably like a five seater
2 and four doors would really be nice.
3 Thank you.
4 CHAIRPERSON LLOYD: Thank you very much.
5 (Applause.)
6 CHAIRPERSON LLOYD: Would Tim like --
7 MS. HASTRUP: Don't feel bad for Tim, he drives
8 an EV1.
9 CHAIRPERSON LLOYD: Would Tim like to come up
10 now, so that he can -- say ride share.
11 MR. HASTRUP: I'm happy to report -- good
12 evening, my name is Tim Hastrup. I'm fortunately married
13 to Vibeke the good sport.
14 CHAIRPERSON LLOYD: You've got a tough act to
15 follow.
16 (Laughter.)
17 MR. HASTRUP: Actually, we have two EVs. I have
18 an EV 1, which I just love. I wanted to share a little
19 bit some of my experiences, being I work in the high tech
20 industry for a large California based company. And I've
21 really been fortunate to participate in the development of
22 a lot of innovative products that have had a significant
23 impact on the industry that I'm in.
24 I'm also a life-long resident of California. I'm
25 a very interested stakeholder in this whole Zero Emission
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1 Vehicle Program. I just wanted to share a few of the
2 learnings that I've gained in my career introducing
3 innovative products, and I think they're very relevant to
4 what we're talking about today.
5 In my business we talk a lot about some
6 innovations being, kind of, disruptive. They change the
7 rules. They have a whole new value proposition. A lot of
8 times they make things easier. They're more friendly.
9 You know, things like personal assistance, the palm
10 pilots, E-mail, cell phones, even computers, you know,
11 personal computers when they first came out.
12 As Vibeke talked about, we really enjoy our EVs.
13 We're very happy being partners with auto manufacturers in
14 testing out this early generation of EV's. Our Honda EV
15 Plus is serial number 3, so we were one of the five
16 families that got it on the first day that May 15th back
17 in '97. So we were early and we love them.
18 What we found and I've also found in my work, one
19 of the keys to success of innovative, especially
20 disruptive technologies, is education of folks. And we
21 feel that that's probably our biggest contribution with
22 our EVs is we're kind of setting a personal example.
23 People have said that really our lives haven't fallen
24 apart. They've actually probably improved. We don't have
25 to stop at gas stations like Vibeke talked about.
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1 And the neat thing is, at my work, I'm real proud
2 that I've gotten five of my friends there to get their own
3 EVs. They saw I came to work every day. I went home
4 every day. Actually, our company has been real
5 supportive. I charged at work and they were paying, you
6 know, 20, 30 bucks a week to charge up -- or fill up their
7 SUVs with gas. They go, hmm, we know Tim is tight, so
8 there must be something to this.
9 (Laughter.)
10 MR. HASTRUP: Quite honestly, I've got ten other
11 people waiting. I could sell other EVs. Maybe it's time
12 for a career change for me.
13 (Laughter.)
14 MR. HASTRUP: And the neat thing is when we give
15 test drives, people always say, wow, this is really neat.
16 I could live with this. Where do I get one? And
17 unfortunately right now we have to say you can't. You can
18 have a ride with me, and I'll gladly give you test drives
19 as much as you want and hopefully things will move
20 forward.
21 The neat thing is my new EV friends at work,
22 they've lived now the advantages. They talk about their
23 family and friends come over, hey can we borrow the EV, we
24 have to run to Home Depot. Can we borrow your EV Ranger
25 and stuff like that. And the neat thing is just like us,
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1 they've kind of discovered that gee, going back to just a
2 regular gas car that sits and idles at a stop light. Oh,
3 I don't want to go there.
4 So in summary EVs, ZEVs are certainly a
5 disruptive innovation in the marketplace, in the
6 automotive marketplace. Customer education has just
7 barely begun. In fact, honestly it seems that a lot of
8 misinformation is the focus of a lot of the stakeholders
9 today. And I think that's very unfortunate, because it
10 will only delay the inevitable success of ZEVs.
11 In summary, I personally know that bringing
12 disruptive innovation to market, it takes vision, it takes
13 leadership, dedication, significant investment, lots and
14 lots of hard work, and most important probably, is proper
15 education of your customers. You have to make them
16 understand what your new value propositions are.
17 Remember, you've changed the rules.
18 And also a personal commitment, you have to
19 believe that you really can change the world. It's not
20 going to be easy, but most things that are really
21 worthwhile aren't necessarily easy.
22 So I'd just like to conclude and say please
23 maintain the innovative ZEV program that we have here in
24 California. Once again, we're setting the standard for
25 the world. We're leaders. And I think that's a role that
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1 we really should continue. It's the right thing to do.
2 Thank you very much.
3 CHAIRPERSON LLOYD: Thank you very much.
4 (Applause.)
5 CHAIRPERSON LLOYD: Next we have Terry Oxford
6 Jack Reynolds and Wendy James.
7 MR. OXFORD: Hi. It's a pleasure to -- actually,
8 it's an honor to be able to speak to you guys today. I
9 just bought the Prius. And I have to tell you, I just
10 wanted to share my experience with you. I was not able to
11 buy an EV. They're just, as everyone is saying, they're
12 definitely not available.
13 I am just a citizen. I thought you guys might
14 want to hear from just, you know, the basic everyday
15 person who's not extremely educated on all this, although
16 it's very close to my heart. This is something that I've
17 felt very strong about for a long time.
18 And on an income of about $40,000 a year, even
19 when the EV first came out, I was making considerably
20 less. I'm a musician, so things have been going better
21 for me. But the EV was out of the question. So I was
22 very excited when I saw the Prius was being announced.
23 When I called the car companies, the typical
24 response was, "Hi, I'm calling about the Prius. The what?
25 The Prius. The Prius."
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1 The dealerships did not have a clue as to what
2 this car was. And my wife and I started to call these
3 dealerships and began to educate them through Southern
4 California. We live in the San Fernando Valley. And so
5 we decided to go down in person and we kind of shook
6 things up a little bit, you know, because they really --
7 the managers of the dealerships did not have a clue about
8 this car.
9 We bought this car on July 10th and up to that
10 point, they were just beginning to understand this. And
11 so far today, I don't know that the Prius is such a good
12 thing from what I've heard. People are not exactly saying
13 it's a good thing or not. They're saying it's sort of a
14 cynical attempt maybe by the car company. I don't know.
15 But to me, it seems like, at least, it's a step
16 forward. I would much rather buy a ZEV actually. But my
17 concern here is, is the public going to be educated about
18 what's going on. I don't think we really know what's
19 going on here. I think also my concern is, too, that can
20 we help bring these technologies closer to a reality?
21 Fuel cell sounds incredible to me. That seems like a
22 brilliant concept.
23 Batteries, you know from what I hear, they're not
24 really, you know, they're not -- they're too expensive and
25 so forth. So my concern is are there subsidies, are there
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1 public subsides, are there things that you can do or are
2 there things that we can do? Can the public become more
3 involved in this? Because we really don't know -- the
4 experts know. We really don't know what's going on.
5 I had so many things I wanted to say, but, you
6 know, I think this is more important, just telling you
7 about my specific experience. What I'd really love to see
8 happen is some kind of campaign to educate us, that this
9 technology is actually here that there are hybrid cars
10 that I hope you support, because at least the technology
11 is beginning in these vehicles, at least it's there.
12 And for my friends who have seen this so far,
13 they're absolutely amazed. And for the price they're
14 thrilled about it. This is something we can actually
15 afford, and it is here now, and it's tangible. And
16 hopefully the whole word of mouth thing will begin.
17 But I am concerned that the mandate may not be
18 even strong enough, because from what I've seen so far
19 with the mandate is that the car companies have been able
20 to make these sort of sporadic few EVs and meet some kind
21 of loophole through the mandate.
22 Quite frankly, I think that if the public were
23 more educated and they new about this, they would probably
24 exceed mandates, because now that these cars are actually
25 here, and I look outside and I see these wonderful
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1 brilliant examples of innovation, I just don't think that
2 we really know what's going on.
3 So my appeal to you is if you can help us in any
4 way besides moving those industries forward, which, of
5 course, with the mandate, these are can do companies, they
6 have the greatest engineers on the planet, they can do
7 anything. The EV is an example. They built that on a
8 shoestring budget. But if you could help the public to
9 become more involved through education, through being
10 informed.
11 Thank you very much.
12 CHAIRPERSON LLOYD: Thank you very much.
13 Next, we have Jack Reynolds, and Wendy James and
14 Ed Kjaer.
15 MR. REYNOLDS: Thank you. My name is Jack
16 Reynolds. I'm an EV1 driver. This is my third time to
17 speak to the ARB. I'm here on my own dime. I'm not part
18 of any special interest group. I wanted to let you know
19 that you're being lied to in two areas, lied to by GM,
20 because I know about GM, because I have that product.
21 The two areas are you're being told that they
22 tried to market it very hard and nobody wanted the car,
23 and that the cars cost too much.
24 In 1999, I went to a Saturn dealership to try and
25 buy an EV1. At that time, the salesperson told me that
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1 I'd have to get on a waiting list. I asked how long the
2 waiting list was. I was told that there were people on it
3 that had been there for over a year. This was in 1999.
4 I was finally able to get bumped up the list by
5 qualifying as a high profile person. So by qualifying as
6 a high profile person, I was able to get my car in March
7 2000. But anything in terms of their marketing efforts,
8 it's all hog wash. Nobody would buy a microwave if they
9 had to wait over a year to get a microwave.
10 (Laughter.)
11 MR. REYNOLDS: Secondly, at the ARB meeting in
12 March I gave the ARB a copy of the Car That Could
13 manuscript before it was edited by General Motors. And in
14 it it had the true cost of the car in 1996 with the
15 battery back, which, at that time, was $40,000 and that's
16 before the Gen II costdown. And you have a copy of that
17 manuscript.
18 And that clearly shows that when Bob Purcell was
19 here in 1996, he lied to you. He told you quote,
20 "$250,000 car in search of a market." Two weeks later he
21 presented information to the Board of General Motors
22 saying it was a $40,000 car. I want to make sure that
23 you're all aware that you have that manuscript.
24 Today I got here at 2:30. I don't know the
25 General Motors person who was here, but I caught three
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1 lies. I wanted to make sure you caught them also. The
2 first lie was that the lease payments did not cover quote,
3 "The marketing expense of the car."
4 Well, the real story is is that in 1996 alone
5 between General Motors, the oil companies and the AAMA, if
6 I said it right, they spent $30 million trying to get the
7 mandates struck down. Now, we don't know they're spending
8 now, because we can't get records from the PR agency
9 they've hired in LA to try and take this thing down, but
10 their cost in trying to defeat or change the mandate has
11 been higher than their marketing expense for the car.
12 He also lied about the price of the car again.
13 He said it was a $75,000 car that they would have to sell
14 for $5,000 to sell it. $75,000 is not what the car costs.
15 And the last thing he said is he said that the
16 battery had a 30-day life and that they had to scrap all
17 the batteries because they couldn't charge them for 30
18 days. Those Gen I cars were lead acid. They were not
19 nickel metal batteries. So I'm assuming that he didn't
20 lie on purpose. He was just as misinformed about the cost
21 and the marketing of the car as he was with the battery
22 pack.
23 Lastly, I'd like to say that I've had the car six
24 months. I've put 10,000 miles on it. I have two cars, a
25 gas car, electric car. I have three drivers in the
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1 household. The electric car is always the first one to
2 go. That's the favorite car to take on any trip.
3 I also want to point out that I don't get to
4 drive it anymore, because since the car pool thing, my
5 wife can save 45 minutes going to work, so I don't get the
6 car anymore. I have to drive a gas car now. I'm on the
7 waiting list for another EV1. I haven't been given a date
8 as to when I can have it.
9 (Laughter.)
10 MR. REYNOLDS: And in closing, I want to say that
11 things are a lot different than they were in 1996. In
12 1996 you didn't have any drivers or any cars that you
13 could point to to see whether or not this thing worked in
14 a family household. Now, you have people like me. I
15 think there are about 300 EV1s left in the world on the
16 road. So you've got 300 drivers and cars that can tell
17 you that it is part of our household, and it works fine.
18 And we're doing ZEV miles. And I think it should make a
19 big difference in you moving forward understanding that
20 there are cars, there are technologies, they do work and
21 it's just a matter of educating people to let me know
22 what's going on.
23 Thank you.
24 CHAIRPERSON LLOYD: Thank you.
25 (Applause.)
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1 CHAIRPERSON LLOYD: And also thank you for
2 appearing in the workshops. I heard you once.
3 Thank you.
4 Yes, hi, Wendy.
5 MS. JAMES: Hi. I'm Wendy James. And just to
6 clarify, I do wear a number of hats on this issue. I am
7 here tonight on behalf of Warner Brothers, which is one of
8 my clients. And I work with them to help them convert
9 their vehicle fleet to clean fuels and to undertake a
10 number of other environmental initiatives. And as Lisa
11 Rawlins, who is the Senior V.P. for studio and production
12 affairs testified at the May workshop in Diamond Bar and
13 would like to have been here today, but it was her
14 daughter's first day of school, and she thought that was
15 more important. But she also thought it was very
16 important that their message be heard.
17 So what I am providing tonight is her testimony,
18 which has been updated just slightly to record some of the
19 things that have happened since the May workshop.
20 Warner Brothers has been exploring the potential
21 for clean fuel vehicles in the fleet for a number of
22 years. Until recently, much of the technology did not
23 meet performance requirements for fleet applications.
24 Warner Brothers has looked at natural gas
25 vehicles for both on-road and off-road fleet application.
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1 So far installation of on-site refueling has been cost
2 prohibitive. And off-site refueling would create timely
3 inconveniences for fleet operations. Construction of a
4 public refueling facility on the lot would be impractical
5 for security reasons. Warner Brothers also would prefer
6 to switch to zero emission technology.
7 We have contacted every major manufacturer of
8 electric vehicles to express interest in obtaining
9 vehicles for our fleet. Daimler Chrysler informed us that
10 they were sold out of the EPIC electric minivan and would
11 be producing more until 2002. We saw the EPIC as
12 particularly attractive for our fleet because of its size
13 and fast charging capability.
14 Since Warner Brothers testimony at the May ZEV
15 workshop we were informed by Daimler Chrysler that a
16 limited number of demonstration or new EPICs may be
17 available. Upon pursuing this further, we have been told
18 that the demo vehicles will not be made available and that
19 availability of chargers is uncertain and that we will
20 learn in mid-October if any new vehicles will be available
21 at all until 2003.
22 Toyota informed us that their RAV4s are all
23 committed. Toyota tried to interest us in a pilot project
24 with their E-com micro-car. We have fewer or no
25 applications for such a small car that is not freeway
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1 capable.
2 Nissan told us that their Altra EV is sold out
3 for this year and that they have a long waiting list
4 should any become available. They offered to add our name
5 to the list, but expressed no hope that a vehicle would
6 become available. Again, they proposed that we consider
7 their Hyper Mini micro-car, noting that the car is only
8 available in a right-hand driver version and cannot be
9 taken on the freeway.
10 Ford told us that they may have a couple of
11 Ranger EVs with nickel-metal hydride batteries left in the
12 state. And I would say that was back in May, so I'm sure
13 they're gone. But they were only available at one dealer
14 in Ventura. The lead acid battery version of the Ranger
15 was on back-order we were told and the soonest we might
16 hope to obtain any was in January. And I will note that
17 the studios primary vehicles contract is with Ford and so
18 they kind of expected a little special treatment.
19 We contacted Honda to see if we might be able to
20 obtain any of their EV Plus vehicles through the company's
21 re-lease program with their used EVs. Again, we were told
22 that we could be added to an already long waiting list and
23 that the only customers who were turning in cars were
24 those who had died or moved out of state.
25 (Laughter.)
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1 MS. JAMES: They did suggest that we check back
2 again in a few months to see if this situation had
3 improved. And they also emphasized that the range would
4 be lower on the re-leased vehicles.
5 While the EV1 would not really not be an
6 appropriate fleet vehicle for Warner Brothers, we have
7 explored it's availability and understand that the current
8 production is fully allocated, and that even those
9 receiving vehicles from the current production run must
10 wait months for delivery.
11 Warner Brothers has also worked to gauge interest
12 among employees and has made a concerted effort to educate
13 employees about clean vehicle options by inviting
14 manufacturers to display product on the lot and to offer
15 test drives to employees. And I will note that in those
16 bags, there are cards and letters from Warner Brothers'
17 employees as well.
18 Interest among employees was high at a recent
19 event, not so recent now, this was last Earth Day. Nearly
20 50 employees identified themselves as seriously interested
21 in buying or leasing electric or other zero or near zero
22 emission vehicles in the near future. Since that time,
23 Warner Brothers has created a program to loan electric
24 vehicles to employees overnight with assistance from the
25 Los Angeles Department of Water and Power. The response
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1 has been extremely positive creating a demand for a
2 product that appears to be simply unavailable.
3 Based upon test drives and research, we believe
4 that today's electric vehicles can meet some of our fleet
5 needs and that a significant number of employees are
6 interested in securing these vehicles for their personal
7 use. To say that we are frustrated by the lack of product
8 and nonresponsiveness of the automakers is an
9 understatement.
10 And I will just add a little personal note here
11 that I think this is a company that, like I said, is very
12 accustomed to being responded to quickly and eagerly by
13 any prospective vendor. And I think they have, quite
14 frankly, been shocked by the response of the automakers
15 and very frustrated. And fortunately for me as a
16 consultant they just do it.
17 So I think it's been a pretty disheartening
18 experience for them.
19 Thanks.
20 CHAIRPERSON LLOYD: Next, we've Ed Kjaer, from
21 California Edison, and then Mike Jackson and then Jasna
22 Tomic.
23 MR. KJAER: Thank you. Good evening. For the
24 record, my name is Edward Kjaer and I'm the director of
25 electric transportation for Southern California Edison.
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1 I'm also an EVaholic. I'm sad to announce that I own a
2 Sport Utility Vehicle. My wife owns an ordinary internal
3 combustion engine car. I'm glad to announce, though, that
4 we manage to leave both those vehicles in the garage five
5 days a week.
6 We commute in an electric car 65 miles from
7 Newport Beach to downtown LA, and then I drive from
8 downtown LA to Rosemead where I work. And I charge at
9 work and then I do the reverse trip, so we do 120 miles a
10 day.
11 Mr. Chairman, distinguished Members of the Board,
12 my remarks are brief and I wish to make only one point.
13 The ZEV requirement is more than just 10 or 20 or 40
14 thousand EVs a year. It's the center piece of a
15 fundamental shift away from the total dependency on
16 internal combustion. What I've done is this chart here,
17 if you'd refer to it. I think you might have it in your
18 packages.
19 We know the center circle. We know that the
20 mandate has been successful -- excuse me, the
21 demonstration has been successful. We've got 2,300
22 vehicles on the California roads, about 3,500 nationally.
23 It's encouraged an unprecedented development of advanced
24 clean propulsion technology. There's something like 2,000
25 patents now registered.
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1 In the future, we hope that it's going to help
2 drive down the cost of components of the batteries for EVs
3 for hybrids, for fuel cells and other electric driver
4 products. And it's going to create unique opportunities
5 to migrate the technology developed in the EV industry and
6 the auto industry -- to migrate that technology into other
7 applications.
8 If you look at the top circle, it's key to
9 maintaining the battery company's commitment we heard from
10 Mr. Stempel today. It's going to require construction of
11 at least two plants to meet multi-state regulations.
12 We've got to keep remembering this is not just California.
13 It's going to encourage further technology development to
14 reduce costs and increase this reliability life of the
15 batteries. And it's going to encourage the search for
16 alternative applications of the technology such as
17 stationary battery applications.
18 The right-hand circle. It's key to maintaining
19 other state regulations. There's almost 40 states today
20 that have EV incentive programs to encourage these
21 products to market and encourage consumers to buy them.
22 There's other state regulations in terms of Massachusetts
23 and New York, that are basically waiting the outcome of
24 your decision. And we've got to remember that
25 Massachusetts and New York are going to be providing
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1 additional volume to help in terms of economies of scale.
2 The next, going clockwise, key to encouraging
3 technology in the global markets. We think that this will
4 encourage the automakers to seek new EV markets outside of
5 the United States, again, to get the economies of scale.
6 We know that it's going to help create consumer awareness
7 for electro drive, not just for electric cars but electro
8 drive.
9 The EV owner of today could be the hybrid or the
10 fuel cell owner of tomorrow. It may reduce marketing and
11 education costs to consumers for hybrids and fuel cells in
12 the future, if they understand what makes electric cars
13 work.
14 It's key to improving the business case for grid
15 connection. You've heard a lot today about engine
16 dominant hybrids versus grid connected hybrids and the
17 benefits of grid connection. We think with the battery
18 costs coming down, it's going to make the business case
19 for grid connection stronger.
20 It's key to helping the business case for other
21 clean technologies. With volume comes lower component
22 costs for the hybrids and the fuel cells. And lower costs
23 help to migrate the technology to other applications, such
24 as airport ground support, forklifts, buses, et cetera,
25 key to supporting other California regulations.
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1 You've got a 15 percent ZEV bus mandate. There
2 is some wonderful technology developed in the auto
3 industry that I'm sure could apply to the bus industry.
4 You've got pending airport GSE regulations. There's an
5 airport ground transportation regulation and you've heard
6 a little bit from our company today about EPAct
7 requirements, which is a federal regulation. And then you
8 have city and county clean fleet resolutions. All these
9 activities could use the technology being developed thanks
10 to the Regulation.
11 And then finally, key to technology migration.
12 I've talked a little bit about this. But there's
13 opportunity to migrate the controllers, the inverters, the
14 batteries, the motors to other markets such as the buses,
15 the forklifts, airport ground support and the patents and
16 the technology to other industries outside of the EV
17 industry.
18 Finally, this regulation impacts not only
19 California, as I've said, but other states and can impact
20 other countries. It impacts not only EVs but also hybrids
21 and fuel cells. It impacts not only autos but other clean
22 technologies such as the buses, the trams, the forklifts,
23 airport ground support, and stationary battery
24 applications. And it's not a matter of just the 10,000 or
25 20,000 or 40,000 cars, it's an issue of making a start
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1 now, not delaying any further.
2 Thank you.
3 CHAIRPERSON LLOYD: Thank you very much.
4 Mike Jackson, Jasna Tomic and then Tim Lipman.
5 MR. JACKSON: Good evening, Chairman Lloyd and
6 Members of the Board. My name is Mike Jackson. I'm with
7 Arthur D. Little, Acurex Environmental. We're an
8 engineering consulting firm located in California, that
9 has specialized in looking at clean technology for the
10 transportation sector.
11 What I'd like to do tonight -- am I trained on
12 this.
13 What I'd like to do tonight is give you an
14 overview of a study that we had performed for the
15 California Electric Transportation Coalition. And in that
16 study what we looked at was to try to review the estimated
17 manufacturing costs of the battery, electric vehicles
18 compared to conventional vehicles, and to assess possible
19 cost reductions of how you could lower the cost over the
20 longer term.
21 And then to put that into context relative to
22 what the benefits are, not only to the consumer, but
23 perhaps to the manufacturers as well as societal benefits.
24 So hopefully this will be an overview of what you've seen
25 today to a certain extent and review it.
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1 As part of this study, we went through a whole
2 bunch of different types of vehicles. There was City EVs
3 we considered, sedans, pickups, high performance EVs. And
4 the next two charts that are shown here kind of give you
5 an idea of some of the drivetrain costs and how they're
6 affected by the different vehicle types and the battery
7 types.
8 And what you see as a trend in terms of power is
9 that for high performance, the cost effectiveness or the
10 cost per kilowatt peak hour is actually lower in the high
11 performance cases than it is for the smaller vehicles.
12 Now, if you need energy storage, that trend would be just
13 the opposite.
14 When you move to volume, you greatly reduce the
15 cost of those components and you get closer to what the
16 range of the conventional drivetrains are for conventional
17 vehicles. Now, there's other future manufacturing
18 processes that you can start to look at that would drive
19 the costs down even lower.
20 Modular design that would work not only for EVs
21 but also for the conventional ICEs and also for hybrid
22 electric vehicles. Standardize the battery packaging is
23 another way of reducing cost. And then you drop to the
24 bottom there, obviously reducing the size of the battery
25 by reducing the weight or making the vehicles more
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1 aerodynamic also has a huge effect.
2 One concept of that is shown in this next
3 picture, where you could have one platform and you could
4 advertise the cost of that platform over a variety of
5 powerpacks. When you take all these concepts and then try
6 to add them up in terms of total vehicle cost and price,
7 I've shown a couple of examples in the next two charts.
8 The first is near term low volume production
9 2,000, 20,000 units, something in that order of magnitude.
10 And what you see here is a price differential that's
11 indicated which is about $14,000. That's what the
12 consumer would pay at the lot. If you went to buy an EV
13 with, in this case, a nickel-metal hydride in a four
14 seater MOA kind of vehicle, compared to a conventional
15 vehicle.
16 But also shown on this chart are the net present
17 value of some of the maintenance costs and some of the
18 fuel costs. You'll see how that works out in a minute.
19 At higher volume, you're going to drop that differential
20 to about $7,000. Again, you can see the cost of fuel and
21 maintenance as well as the cost of fuel maintenance.
22 Now, there's also benefits that are associated
23 with these cars. If you take some estimates of those
24 benefits. For instance on reduced criteria of pollutants,
25 we've made some estimates that that's worth about $810.
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1 And you'll see in a minute more detail of what that is.
2 We didn't look at multi media water pollution, but that
3 also would be a benefit. Enhanced energy diversification
4 or the dependency cost of having petroleum in our society
5 is worth about $1,400 per vehicle.
6 If you try to put this in terms of the
7 incremental costs then, you can see that in the low-volume
8 case the value of societal benefits is roughly about
9 $2,200. The operation and maintenance costs in the
10 low-term case you have battery replacements, so there's
11 actually almost an adder there. The price shortfall is
12 around $10,000.
13 On the long-term basis, you can see that the
14 societal benefits and the operational costs about wash
15 out. So on a long-term basis it's worth it -- EVs are
16 worth it from a societal point of view. The question is
17 how do you go from the short term to the long term.
18 There's many benefits that you can have to the EV
19 owner for example. One way of offsetting the short term
20 costs are the incentive programs that are in place. Other
21 values that the EV user will look at will be things like
22 using it in a single occupancy carpool lane. That's been
23 valued anywhere from zero to $5,000 depending on what you
24 value your time at.
25 Some people will value the fact that you don't
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1 have to go to gas stations to fill up. That would be a
2 value to them. Elimination of smog checks, the value to
3 the consumer. That's not counting any kind of costs you
4 would have relative to repair of your vehicle because of
5 durability issues.
6 Relative to the manufacturer, obviously, there's
7 currently in place CAFE compliance. That's a value to the
8 manufacturer. These vehicles are probably worth anywhere
9 from $1,000 to $2,000. If you look at an avoidance cost,
10 this is probably a disadvantage, but an avoidance for
11 PZEVs anywhere from $3,000 to $6,000. And there's a
12 number of other things that are not estimated here, but
13 you can think about what they might be.
14 Existing incentives, existing federal income tax
15 credit of $4,000. The existing State and local EV buydown
16 that's been in place in south coast for a number of years.
17 The new AB 2061, if it's signed, will be $9,000. Of
18 course the $5,000 probably won't apply in that case. The
19 Energy Commission is looking at an efficient vehicle
20 incentive program to determine other incentives. And
21 there's a CEC infrastructure incentive.
22 In conclusion, we see that EVs operate a unique
23 combination of high power and high efficiency. And I
24 think there's ways that you can emphasize and capitalize
25 on small city vehicles, as well as high performance
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1 vehicles. In the short term low production, low volume
2 production, it's going to be more costly. I think you've
3 heard that over and over today.
4 The cost differentials are going to vary widely
5 by the vehicle type that gets built. Nevertheless, I
6 think that in a private/public partnership of the auto
7 manufacture the prices I've shown you was an average
8 markup for an auto manufacturer in terms of what he would
9 normally markup on the average all his vehicles.
10 Public/private partnership, perhaps he doesn't
11 have to take full markup on his vehicles. The public puts
12 in money, and that draws down the cost to make, in the
13 short term, the transition to the longer term where the
14 societal benefits and the benefits you get from saving
15 from the fuel make the EVs cost effective.
16 You need to produce the EVs to move the
17 transportation sector to an electric drive system which is
18 going to reduce the emissions and reduce our dependency on
19 oil.
20 Thank you for your attention.
21 CHAIRPERSON LLOYD: Thank you, Mike. And again,
22 I gave him some extra time, because I knew it was new
23 information there, so I think it's important.
24 BOARD MEMBER BURKE: Can I ask a question?
25 CHAIRPERSON LLOYD: Yes, Dr. Burke.
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1 BOARD MEMBER BURKE: You see what I get real
2 confused about is this societal benefit. How do you
3 subscribe a value to that? You know, I just -- this is a
4 short question and half a remark. I just don't understand
5 that.
6 And the other thing that bothers me about this is
7 you have all these things that you add value to, add
8 numbers and subscribe values to that, you know, where do
9 you get these numbers?
10 MR. JACKSON: Well, on societal benefits, we can
11 go through, you know, for example you can take the
12 hydrocarbon emissions, the ROG emissions, you can take the
13 NOx emissions, you can take the CO emissions and you can
14 look at what the best available technology is, for
15 example, in the south coast, and subscribe a value in
16 terms of dollars per ton and then multiply it by the
17 emission reductions you get.
18 The same thing you can do for CO2 where you can
19 look at things like reforestation or scrubbing CO2 out of
20 various power plants. Those are costs associated with
21 that, that allow you to make those kind of judgments. I
22 agree that in certain soft areas it gets very, very
23 difficult to put a number value on it.
24 However, it may be used as a marketing tool to
25 help overcome somebody's objection to a barrier. And one
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1 of the things I didn't emphasize in here, which I should
2 emphasize over and over again, is that these are not apple
3 to apple vehicles. Range is always an issue with the EVs.
4 BOARD MEMBER CALHOUN: Mike, how do you define
5 near term and long term, what are you talking about?
6 MR. JACKSON: We're talking in terms of number of
7 units of production. So near term was sort of less than
8 20,000 units. Whereas, long term gets up into the
9 hundreds of thousands of units. And that transition
10 period is a real difficult one in all these kind of fuels
11 and --
12 CHAIRPERSON LLOYD: Thank you very much.
13 Thank you.
14 I think we're going to take a short break here.
15 The court reporter needs a break and his reinforcement
16 isn't coming. So let's take just a five minute break here
17 till 25 after. We're going to try to cut off here by 9:00
18 o'clock. I think that we'll have a manageable number
19 tomorrow. So I would appreciate, by the way, if the next
20 speakers, Jasna Tomic, Tim Lipman and Tom Turrentine, I
21 know, all UC Davis could come up here and have a chat.
22 (Thereupon a brief recess was taken.)
23 CHAIRPERSON LLOYD: Could my colleagues return
24 back please so we can start.
25 We now have Jasna Tomic, Tim Lipman and, I think,
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1 they're going to consolidate their talk. Then I have a
2 request from two EV drivers, Mike Kobb and Ed Huestis,
3 drivers here who would like to go on today. They will not
4 be here tomorrow, so I'd like to move them up, the two
5 speakers here.
6 So, Jasna.
7 MS. TOMIC: Good evening. I'm just waiting for
8 the main slide. My name is Jasna Tomic. I come from the
9 University of Delaware. And I would like to present to
10 you some quite different results from the things we've
11 been hearing so far.
12 As the title of the talk says the zero emission
13 vehicles can be used as a source of clean peak power for
14 electric utilities. This is a collaborative effort
15 between the University of Delaware, AC Propulsion, Green
16 Mountain College and the University of California, Davis.
17 CHAIRPERSON LLOYD: What is the connection? Were
18 You at Davis or were people --
19 MS. TOMIC: No. Willette Campton, who is at the
20 university -- how do I go back?
21 Okay. Yeah, Willette Campton had done some
22 preliminary work before on this, so somehow we all
23 connected in the same interests.
24 Okay, so the motivation for the work lies in the
25 fact that peak demand contributes to increased emissions,
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1 higher electricity prices and lower reliability. We will
2 argue today that zero emission vehicles help meet peak
3 demand and reduce pollution from power generation.
4 So let's look at the vehicle fleet. In
5 California there's approximately 25 million automobiles
6 registered currently. If zero emission vehicles were at
7 one percent of the vehicle fleet this would represent a
8 resource of 4,150 megawatts. That would compare to four
9 large nuclear power plants.
10 Now, looking at the current mandate of four
11 percent zero emission vehicles production, that would
12 represent a resource of 332 megawatts per year. If you
13 compare that to one large nuclear plant, it is 1,000
14 megawatts. That means that you get each three years
15 another nuclear power plant added into the system.
16 How do we envision the system? This is a
17 schematic diagram of what we see happening that power can
18 flow from the grid to the car and this is charging the
19 electric vehicle, but the power can flow also back from
20 the car onto the grid. There's some wireless Internet
21 links that connect the vehicle to the electric company.
22 And through that, you know -- through those, rather, the
23 electric companies can announce when they need the power
24 so that the vehicles can connect on and discharge it back
25 onto the grid.
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1 And the whole thing works because electricity has
2 different economic value at different times of day. Let's
3 look at the EV rates, which reflect time of day value.
4 For example, PG&E rates for E9, and these are specific
5 electric vehicle rates, are 4.5 cents per kilowatt hour
6 off peak versus 31 cents per kilowatt hour on peak. With
7 losses, if you buy the power at 4.57 cents, store it,
8 deliver it back to the grid, you come to 5.7 cents per
9 kilowatt hour.
10 Assuming there's net metering, this could then be
11 sold back to the grid at 31 cents per kilowatt hour. So
12 our concept is pretty simple, you buy low at 5.7 cents and
13 sell high at 31 cents. The utilities are ready to parade
14 the premium when the power is needed in the system. This
15 spread between 5.7 cents and 31 cents is quite large and
16 there's more detail involved in getting all the
17 calculations.
18 But let me show you some preliminary results.
19 And this is an example of the AC Propulsion vehicle, which
20 is a four door sedan with a lead acid battery. And we
21 assume two hour peaks, one hour call and spinning
22 reserves, 30 miles required by driver. And we used the
23 electricity prices for the year 2000.
24 So we looked at the value to the utility and zero
25 emission vehicle owner cost and for three different power
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1 markets depending on which power market you're providing
2 feeding power into. The margin that goes to the owner,
3 this is the difference between the utility, value to
4 utility and ZEV owner cost, is anywhere from $220 to $865
5 per year. So that is a plus that a Zero Emission Vehicle
6 owner can actually make by providing power.
7 This difference can really be used to buydown the
8 cost of EV vehicles or battery replacement costs, if those
9 are of concern, and they seem to be. So we find that the
10 value to the utility of power from Zero Emission Vehicles
11 is higher than the cost to the vehicle owner. And there
12 is a definite benefit there.
13 So in conclusion we see the zero emission
14 vehicles can have both short term and far reaching
15 benefits for electric generation and infrastructure in
16 California. They can provide peak power, increased
17 reliability and in the future support for renewable
18 energy.
19 Zero Emission Vehicles can reduce air pollution
20 in two ways, by replacing dirty peaking power plants and
21 from transportation. The market value of short-term
22 benefits to the energy sector can reduce the economic
23 barriers to purchase and ownership of a ZEV.
24 Finally, battery ZEVs can build infrastructure
25 for a vehicle to grid connection. And this can later be
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1 used by fuel cell ZEVs that will power the grid. That
2 concludes my talk. I will be happy to answer any
3 questions that you have.
4 CHAIRPERSON LLOYD: Thank you. Have you talked
5 to any utilities who think this may have some advantages.
6 MS. TOMIC: We have started all our data that you
7 saw here, all the calculations that we have done, is on
8 real data from California Power Exchange and from
9 utilities. So, you know, all they're interested in is at
10 what -- they will get the power wherever it's available.
11 But they need to have -- I think we need to have, first,
12 the sizable number of ZEVs in the system in order to talk
13 to them seriously about that.
14 CHAIRPERSON LLOYD: Professor Friedman.
15 BOARD MEMBER HUGH FRIEDMAN: Have you taken into
16 account the costs of the connection back into the grid?
17 You had a little diagram showing it coming from the car
18 back into the home, home charging unit and then somehow
19 connecting back in through to the power utility.
20 MS. TOMIC: Right. Those are some infrastructure
21 questions there, but they're all technically feasible.
22 There's, you know, ones -- I believe currently most of the
23 chargers that are used can be similarly used to discharge,
24 but there are some also inverters that are necessary in
25 the vehicle. But essentially there's no technical
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1 barriers in terms of technology.
2 BOARD MEMBER HUGH FRIEDMAN: I assume it's
3 feasible technically. I just wondered whether there would
4 be an additional cost to the ZEV owner that would reduce
5 that margin of resale profit or of --
6 MS. TOMIC: I don't have a price on the --
7 BOARD MEMBER HUGH FRIEDMAN: So, but there would
8 be -- presumably, there would be some cost that you didn't
9 reckon with?
10 MS. TOMIC: I don't have the exact prices for the
11 connections. We didn't really get into the
12 infrastructure. These are very preliminary studies right
13 now.
14 BOARD MEMBER HUGH FRIEDMAN: So it's the concept
15 you're presenting?
16 MS. TOMIC: Yes, but we've made out the concept
17 that there is sense to pursue this further, definitely.
18 BOARD MEMBER HUGH FRIEDMAN: Thank you.
19 CHAIRPERSON LLOYD: Thank you. Tim?
20 MR. LIPMAN: I just wanted to comment really
21 quickly that we're working with AC Propulsion on this.
22 And they have built the ability for an electric vehicle to
23 discharge power back into the grid, already into the
24 vehicle, so that they can test the capacity of the battery
25 back.
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1 So that was something that we had thought would
2 be a technical obstacle and potentially an additional
3 cost. They've already built it into the car. Now, there
4 are some other issues with meters and so forth that I
5 think will be minor cost issues that we'll fully detail in
6 our final report.
7 CHAIRPERSON LLOYD: Thank you very much. And,
8 Tim, you are forfeiting your spot?
9 MR. LIPMAN: That's right. We consolidated the
10 talk.
11 CHAIRPERSON LLOYD: Thank you, both of you.
12 Tom, just hold on. We're going to take Michael
13 Kobb and Ed Huestis, first, because they won't be here
14 tomorrow.
15 MR. KOBB: I'll try not to break everything up
16 here.
17 Mr. Chairman, Members of the Board, my name is
18 Michael Kobb. I'm an EV1 driver from Silicon Valley. I
19 came here today on my own time and my own expense to speak
20 to you and I appreciate the opportunity to give you an EV1
21 driver's perspective on some of these issues. I also
22 greatly appreciate your indulgence in fitting me into the
23 schedule this evening since I won't be here tomorrow.
24 CHAIRPERSON LLOYD: Maybe you can reset the
25 timer. He's already expired before he starts.
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1 MR. KOBB: Oh, dear, hopefully I didn't break
2 that.
3 So as tempting as it is to address some of the
4 rather inflated and misleading cost numbers that have been
5 presented by the automakers today, I wanted, instead, to
6 address my comments to the misleading and distorted
7 arguments that they've made about the marketability of
8 these vehicles.
9 And I'll be as brief as I can, but I think it's
10 important to keep the history of these companies in mind
11 in order to maintain perspective. So let me just point
12 out that these are the same companies who, on the one
13 hand, have claimed here today to share the goal of clean
14 air in California, while at the same time, as a recent
15 report from Friends of the Earth shows, they basically
16 evaded over 40 billion, with the B, dollars in federal gas
17 guzzler taxes in the last five years by taking advantage
18 of loopholes in the laws to market inefficient polluting
19 trucks as passenger cars.
20 So, please, keep that in mind as you evaluate
21 their arguments about how they would behave in absence of
22 the mandate. One specific example of automaker distortion
23 was put forth in May just before the Diamond Bar hearing,
24 by Kent Stewart from GM. And it was reiterated here,
25 again, today by Sam Leonard. They said, and I quote, "If
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1 the EV market has not developed, it is not because of GM's
2 lack of marketing, it is because of Californians' lack of
3 desire," close quote.
4 So that's an absolutely outrageous claim. And
5 let me demonstrate the outrageousness of it by telling you
6 what it actually takes to get an EV1. In May of last
7 year, I tracked down the EV dealership in my area, which
8 is 20 miles from my home. I had to make an appointment to
9 take a test drive. And when I went to the dealership, I
10 met the one person who dealt with EV1, who was very
11 friendly, but had no information at hand about
12 availability of the car and when I might be able to take
13 delivery.
14 I took the car for a test drive around the block,
15 but I was not allowed to take the car on the freeway.
16 Nonetheless, I said I was interested in pursuing the lease
17 and I was told I would be contacted by an EV specialist.
18 And after about a week of no contact, and I ask you to
19 imagine that scenario with any other car, I was finally in
20 touch with the representative and I was told that there
21 were no EV1s available except for a very few lease
22 assumptions and that there was no firm delivery date.
23 I was told I could fill out a credit application
24 to be placed on a waiting list, which I did. And I
25 selected my first and second color choices out of the
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1 spectrum of three and was placed on the list for a
2 nickel-metal hydride EV1. So that was by June my
3 paperwork was complete.
4 In October, I was told that I might be able to
5 take, might, be able to take GEN II EV1 for a one-day test
6 drive some time in November. In November, I was told that
7 it would be mid-February. In December, I got a call
8 asking if I could possibly complete the lease and take
9 delivery of the vehicle before the end of the month.
10 To make a long story short, I was able to get an
11 EV1 for a one-day test drive, signed the paperwork, get
12 the charger installation handled and take delivery of the
13 car in December. And that required a heroic effort by my
14 EV specialist from Saturn and not a little bit of
15 gymnastics on my own part to arrange all that that
16 quickly.
17 So I pose the question to you, how many car
18 buyers can wait half a year for a new car and then act on
19 short notice when their names come up on a list. It's the
20 kind of thing that people put up with if they're buying a
21 $100,000 Porsche or a $200,000 Aston Martin. We're
22 talking about a commuter car. And I think really that
23 this is a testament to the desirability of the vehicle,
24 that they've managed to lease as many as they have under
25 this kind of circumstance.
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1 I should also point out that the GM
2 representatives at the May workshop pretty much
3 acknowledged, although, you know, they didn't say it in as
4 many terms, but they acknowledged that they deliberately
5 limited the availability of the EV1, while they're
6 studying the batteries. So if that's the case, how can
7 they claim that there's no demand if they haven't even
8 made an attempt to see what the size of the demand is.
9 Finally, let me address the issue of advertising.
10 In his letter to the LA Times, Mr. Stewart asserted that
11 GM's marketing commitment has been, and I quote,
12 "Unmatched by any other manufacturer." So for purposes of
13 this discussion, let's assume that that statement is true.
14 And I'm actually willing to believe it because the only
15 other customer available EV was the Honda EV Plus and I
16 never saw an ad for it. And when I actually saw one at
17 work and called the dealership, I was basically brushed
18 off and told that there were no cars available.
19 So if you assume that Mr. Stewart is telling the
20 truth when he says that GM's commitment was unmatched,
21 then you have to take into account the quality of the
22 advertising. And there was extensive commentary in May on
23 the shortcomings of the EV1 advertising campaign. In
24 fact, Mr. Stewart himself admitted at an EV1 Club meeting
25 in November that the advertising needed improvement.
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1 So if that basically substandard, mistargeted,
2 ineffective advertising campaign was unmatched by any
3 other manufacturer, you have to ask if it's any surprise
4 at all that Californians weren't braking down the
5 dealership doors.
6 I see that my time is up, so let me just
7 summarize by saying that I don't think that the auto
8 manufacturers can be allowed to use an excuse of lack of
9 interest as an excuse to justify crippling the mandate
10 when they've utterly failed to make any credible effort to
11 market and advertise and actually deliver these products
12 effectively.
13 People I've talked to as they've inquired about
14 my EV1 are not turned off by the range issue. What they
15 want is a four door, four seat, practical family car that
16 they can actually get without waiting for a year.
17 So now is definitely not the time to give up on
18 these cars. The technology has developed since 1996 when
19 the first generation EV1 came out. We have this wonderful
20 new legislation, new high tech batteries. So, in my
21 opinion, as a citizen and an EV1 driver, California needs
22 to do what is right for the future and we need zero
23 emission vehicles to provide clean air for all of us, as
24 we move forward.
25 So I urge you to continue the mandate in full
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1 force if not increase it.
2 And thank you very much.
3 CHAIRPERSON LLOYD: Thank you very much. Thank
4 you for taking the time to come.
5 (Applause.)
6 CHAIRPERSON LLOYD: As I mentioned we've got Ed
7 Huestis. And then I think I'll give you my commitment to
8 end at 9:00, and then we'll have Tom Turrentine and that
9 will be the end for today. And then we'll continue at
10 8:30 in the morning.
11 MR. HUESTIS: Chairman Lloyd, Members of the
12 Board, my name is Ed Huestis. I am the transportation
13 systems manager for the City of Vacaville. But I'm here
14 on two accounts. First and foremost I'm a personal EV1
15 owner myself and then also as a frustrated electric
16 vehicle program manager, which is a collateral duty that I
17 have with the City.
18 When my wife entered into the lease for our first
19 EV1 in August of '98, a Gen 1, we were amazed at the lack
20 of knowledge, awareness by the people that were asking us
21 questions, when we got out of the car, when we got back
22 into the car or fingerprints all over the windows, if we
23 had missed them on either one of these two occurrences.
24 And that kind of planted a seed that I thought
25 that if we had ten or fifteen more people going through
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1 what we were going through that that would provide, again,
2 more exposure, sharing the information that these cars
3 actually do exist or did exist at that time, as far as
4 being able to get them, and that they were available to
5 the public as well.
6 So I went out after some grant funding. One of
7 the main functions of my job with the City is to go after
8 grant funds so that we can resurface our streets, build
9 bike paths, park and ride lots, air quality type projects
10 such as the electric vehicle program.
11 I applied for $300,000 of CMAQ, Congestion
12 Mitigation and Air Quality improvement program funding
13 that's part of the T21 legislation in January of last
14 year, '99. It got approved in July. It took another five
15 months then after full approval of the funding to work
16 with CalTrans who had never administered a project like
17 this. I believe we're the only ones in the State as a
18 municipality that are offering a discount to its residents
19 to buydown the cost of the lease for electric vehicles.
20 And so we got that all set up in place in
21 December of last year just in time to move some vehicles
22 to help the auto manufacturers meet their quotas for the
23 end of the year. We actually now have -- well that
24 300,000 -- of that 300,000, 210 is reserved for residents,
25 35 residents, of Vacaville $6,000 lease buydown and then
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1 some money set aside for fleet vehicles and some money set
2 aside for infrastructure.
3 We now have eight families that are driving EV1s
4 in Vacaville, just about 90,000 population, four families
5 that are driving the Ford Ranger. I have accumulated over
6 the last year and a half or so -- or maybe actually two
7 years now since August of '98 through ride and drives that
8 we've had and just interest being spread by the other EV1
9 and Ford Ranger owners that we have a list of 75 names in
10 Vacaville that I have in my office of people that would
11 like to get electric vehicles and they can't right now.
12 We have 35 incentives currently in place right
13 now. And we had to stop at 12, because there's no more
14 vehicles available for them to get. Because of this
15 waiting list, I applied for another $600,000 this past
16 January and that just got approved July 28th. That has
17 happened since the last workshop that I attended in my EV1
18 from here, from Vacaville all the way down to Diamond Bar
19 to do that workshop, and made a presentation there too as
20 well.
21 But since that time, another $600,000 has been
22 approved. That will take care of another 50 residents off
23 of that waiting list in Vacaville with a $6,000 buydown,
24 some more infrastructure almost at every exit in Vacaville
25 and then also some more city fleet vehicles.
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1 Part of the current program that's under way
2 right now is approved. I've ordered four RAV4s in April,
3 can't get them until at least January, two Ford Rangers
4 for our water meter readers, can't get them until end of
5 the year or January. So we've gotten to the point to
6 where it's taken a couple of years to have the money
7 available, and now I can't even spend it for the vehicles
8 either for our residents or for our fleet vehicles as
9 well.
10 A couple more points here. We've actually earned
11 the name, because of all the efforts, earned the name of
12 Voltageville for what we're doing.
13 (Laughter.)
14 MR. HUESTIS: We've gotten some incredible
15 positive press coverage in all of the regional papers
16 throughout Solano county and just most recently on the
17 front page of the Sacramento Bee on the July 29th edition.
18 And this past Sunday in the Vacaville Reporter,
19 unsolicited, they came out, saw me again to get an update.
20 We were able to announce the approval of the most recent
21 funding. And so we were on the front page of the C
22 Section in there and talked about our program with some
23 photos.
24 And our goal is to become an EV ready city and to
25 actually have the most electric vehicles per capita on the
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1 residential side of any other city in California.
2 And, in summary, we actually have -- our goal
3 is -- as part of that goal is to have 10 to 12 city fleet
4 vehicles that are electric within a year if we can get
5 them and to have as many as 75 to 90 people driving
6 electric vehicles if they're available. That could happen
7 by this time next year, if the vehicles were available.
8 We've already passed -- the city council has
9 passed a resolution that is directing staff to replace any
10 vehicles if at all possible with alternative fuel vehicles
11 that are due for replacement, CNG or electric. We're
12 building a nice CNG facility as well. And then to have
13 about 20 more charging stations installed throughout the
14 city of Vacaville, not so much for us but to serve as a
15 link between the Bay Area and Sacramento.
16 Thank you.
17 CHAIRPERSON LLOYD: Thank you very much.
18 Yes, Ms. D'Adamo.
19 BOARD MEMBER D'ADAMO: You should really be
20 commended for your creativity. I think that it's just
21 absolutely amazing what can be accomplished or what could
22 be accomplished in other areas of the state if people just
23 stick to it. And I think you ought to be proud for what
24 you've done for the residents of Vacaville.
25 Do you have any suggestions for us about ways
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1 that we could assist other communities in replicating what
2 you've done?
3 MR. HUESTIS: It's the incentives, I think, in
4 the near term that will help get the volumes of cars that
5 are out there. And the goal that I have is -- or the
6 premise that I'm doing this on is that we need to get the
7 people off of the fence and into the vehicles. And I
8 think the incentives will do that, because I know, as an
9 EV1 owner myself, and actually we had two, we had one that
10 was recalled and we've gotten a '99 now, so we're waiting
11 for our '97 to come back, so we can both drive electric
12 every day, is that I never want to go back to gas cars, if
13 at all possible.
14 And I feel we've gotten that impression from the
15 12 people that are driving electrics in Vacaville, they
16 want to continue driving electric. And we just need to
17 get them off the fence, into and experiencing the benefits
18 of electric vehicles. And I think that the subsidies are
19 needed -- or they actually help, the incentives, right now
20 in bringing down what appears to be an artificially high
21 cost and get it down.
22 BOARD MEMBER D'ADAMO: I think I should have
23 said, though, specifically on your experience with, I
24 guess it was CalTrans, that you were working through, is
25 there anything that the Air Board can do by way of
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1 education or otherwise to other municipalities so that
2 they could also apply for this. I suppose if a lot of
3 people apply, then it's going to limit your ability to
4 continue receiving grant funding. But is there anything
5 that we can do to help out other communities specifically
6 on the CMAQ dollars?
7 MR. HUESTIS: Again, it's the education. I'm
8 trying to model this so that others can then not have to
9 go through the same hurdles that I had to go through
10 educating other entities like CalTrans. That was quite a
11 lengthy process, but now they're ready to go on this
12 expansion of the program. And we'll be able to streamline
13 that.
14 BOARD MEMBER D'ADAMO: Thank you.
15 CHAIRPERSON LLOYD: Mr. McKinnon.
16 BOARD MEMBER McKINNON: Do people working in
17 positions similar to yours in cities have occasion to sit
18 down together and talk about this kind of thing? Would it
19 be a reasonable role for us to play if we tried to kick
20 start things to sponsor some event to bring people
21 together, in small public entities and in the cities in
22 California, to figure this stuff out? Is that something
23 that happens or is there a need there?
24 MR. HUESTIS: There is definitely a need there.
25 There is some of that happening in Solano county itself,
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1 because of what we've started in Solano County. And,
2 again, this has taken an incredible amount of hours above
3 and beyond the normal eight-hour day that I'm paid for.
4 It's uncompensated time and my wife can testify to that.
5 But Solano county is all excited about this now.
6 And so it has spread out. I know there's been some
7 interests expressed by Thousand Oaks, the City of Thousand
8 Oaks and other cities that would like to model what we're
9 doing in Vacaville. But there would definitely be a need
10 to have those small forums. Sharing of information is so
11 valuable.
12 BOARD MEMBER RIORDAN: Mr. Chairman?
13 CHAIRPERSON LLOYD: Ms. Riordan.
14 BOARD MEMBER RIORDAN: It occurs to me that this
15 is something that might happen in cooperation with the
16 League of California Cities and the California Association
17 of Counties, that they each have annual meetings and they
18 usually have workshops. This could be the subject of a
19 whole workshop. They also have publications for wide
20 dissemination amongst themselves and other interested
21 parties. So through their own literature, as well as at
22 their annual conferences, this would be perfect.
23 MR. HUESTIS: We made the July issue of Western
24 City, which is very difficult to get into in the
25 Alternative Fuel Section. We made that and that's on-line
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1 right now. You can go to Westerncity.com and tap into the
2 July issue. They keep the back issues in there. And the
3 article is in there. And I've gotten a lot of phone calls
4 as a result of other --
5 BOARD MEMBER RIORDAN: Now you need to get into
6 their annual meeting.
7 MR. HUESTIS: That's something we need to do,
8 yeah.
9 CHAIRPERSON LLOYD: Thank you very much.
10 (Applause.)
11 CHAIRPERSON LLOYD: Our last witness for today is
12 Tom Turrentine, UC Davis.
13 MR. TURRENTINE: Thank you very much for having
14 me speak here today. This is a study. And I think you
15 have a copy of the study, so you can look at it in your
16 leisure. This study is for the California Electric
17 Transportation Coalition. And it is actually an update of
18 a study we did in 1995.
19 The scope of the study is simple. It was a
20 summary of all the progress in EVs starting with the
21 beginning of the mandate, both in the vehicles themselves
22 and in the component technology and the impacts of EVs on
23 other vehicle technologies, and therefore, the impact of
24 the mandate on EV progress.
25 Just, if you were around in 1990, it was at that
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1 time I actually conducted the first work for UC Davis, a
2 market study, in which we had to find some electric
3 vehicles to have people drive them. It was quite
4 difficult at that time to find vehicles that were suitable
5 for a study. We couldn't even take vehicles on the
6 freeway for example. They weren't freeway capable at all.
7 They were borrowing batteries from marine applications.
8 Their range was 25 to 50 miles. I remember one night we
9 had to push one of the vehicles up a hill to get it out of
10 the parking lot at the Rose Bowl. The battery life was
11 terrible. Low top speeds. And the charging was very
12 slow, very overnight.
13 And by 2000 now we have vehicles with, this is an
14 amazing transformation in one decade, practical ranges
15 for -- we've done a lot of market studies at Davis and
16 these ranges fit into a huge section of the market that we
17 studied. They're powerful at freeway speeds, you can
18 accelerate with the AC motors. The biggest progress may
19 be in the charging area. I know I'll have some slides on
20 that later. And also specialized auxiliary systems,
21 things like air conditioning which you just couldn't get
22 in 1990. These were not available. They have special
23 systems now.
24 Kevin Finney showed you a similar slide. This is
25 a slide showing patent activity over the last 20 years
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1 beginning in 1980. The lowest sloping line is all US
2 patents. You can see there are 215,000. Now the electric
3 vehicle patents and the US patents are all indexed to
4 1980, which means you divide by that year how many you
5 had. There were 18 EV patents in 1980. You can see it
6 dropping off as Kevin showed before down to 1991, and then
7 climbing rapidly beginning in 1991.
8 Next slide.
9 This is a breakdown by certain areas of patents.
10 I think the charging equipment just shows you -- the top
11 bar, the light brown, is the 1980 to 1990 period. The
12 blue bar is the number of patents developed in the 1990's.
13 It's stunning the number of patents filed in each of these
14 areas, batteries, that's air conditioning at the bottom,
15 and heating.
16 Next.
17 The progress in charging, I think, is I'm not
18 giving the details here, but just know that it wasn't even
19 available, most of the charging technologies. We have
20 rapid fast charging up to 30 minutes now. The use of
21 computers to charge vehicles was not available then. You
22 simply had applied direct current, so we have very
23 sophisticated charging now.
24 Next.
25 Progress in batteries, you've heard a lot about
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1 batteries, but I think it's important to note the
2 differences in 1990. Look at the life of lead acid
3 batteries, this was optimistic 300 cycles at the time. We
4 now have the Panasonic lead acid battery, which is showing
5 cycle life of up to a thousand cycles. We did not have
6 nickel-metal hydride battery packs. In fact, we didn't
7 have battery packs in a sense made for a vehicle. You had
8 individual cells often for marine applications. Nobody
9 knew how to -- the technology of packaging them in large
10 packages -- and now we have specialized packages like
11 that -- did not have fast charging.
12 The thermal management of the batteries. Another
13 big area of development for cold climates, hot climates
14 being able to cool, keep battery packs so they operate in
15 the right range. Instrumentation of the vehicle. Now we
16 had only very primitive instrumentation for vehicles and
17 especially batteries. Now, you have sophisticated.
18 Drivetrains, an area I put here just a few facts
19 primarily about the -- well, one of the areas to look at
20 is the increase in voltage in the drivetrain and the
21 motors. This allows you to get a lot of power, that's why
22 you have fast vehicles now. The shifting from hand
23 soldered fittings in the original EV1 up to some very
24 sophisticated dual IGBT systems.
25 Power densities have improved. Just looking at
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1 the General Motors car you can see a 50 percent decrease
2 in volume, 50 percent decrease in cost.
3 Auxiliary systems, either heating, air
4 conditioning, thermal glass ventings, although most of
5 these were not even available in 1990. I won't give the
6 details, but we have various systems from different
7 companies available for electric vehicles, specialized
8 tires, electric steering.
9 EV platforms. Now this is probably worth noting.
10 Probably the area in which we have the least progress. We
11 do have the EV1 which is a sophisticated platform, but
12 really across the MOA vehicles, we do not have the
13 development of specialized platforms form EVs. And this
14 is an area which is a disappointment in development over
15 the years in coming up with specialized vehicle platforms
16 for these EVs. I mean you have some new developments, I
17 think, and then the tracks which is out in the future.
18 Thinking about summarizing the study. There's a
19 possibility of putting together a lot of technologies that
20 are out there to come up with the vehicle that everyone
21 wants. We're talking about five passengers. We need a
22 lighter platform. We now have advanced lead acid
23 batteries, which are in a price range which are very
24 interesting.
25 We have on-board charging and fast charging to
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1 allow for a very different type of vehicle. And that's
2 something that remember we were always trying to match. I
3 heard this morning looking for a vehicle with 300 miles
4 range. Everyone wants a lot of range. Really the fast
5 charging is having a much bigger impact on making these
6 vehicles practical, and the charging times come down for
7 convenience charges in the 15, 20 minute range and at home
8 for a couple of hours or at work for a couple of hours in
9 a good price range. These vehicles become quite practical
10 given people's driving habits.
11 CHAIRPERSON LLOYD: Thank you very much.
12 Any questions here?
13 Thank you very much, Tom.
14 (Applause.)
15 I'd like to adjourn the meeting for the day, and
16 reconvene at 8:30 in the morning. The Board Members, we
17 can leave our stuff. They will be secure. We'll look
18 forward to seeing you all in the morning.
19 (Thereupon the Air Resources Board meeting
20 recessed at 9:10 p.m.)
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PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345
491
1 CERTIFICATE OF REPORTER
2 I, JAMES F. PETERS, a Certified Shorthand
3 Reporter of the State of California, and Registered
4 Professional Reporter, do hereby certify:
5 That I am a disinterested person herein; that the
6 foregoing California Air Resources Board meeting was
7 reported in shorthand by me, James F. Peters, a Certified
8 Shorthand Reporter of the State of California, and
9 thereafter transcribed into typewriting.
10 I further certify that I am not of counsel or
11 attorney for any of the parties to said meeting nor in any
12 way interested in the outcome of said meeting.
13 IN WITNESS WHEREOF, I have hereunto set my hand
14 this 13th day of September, 2000.
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23 JAMES F. PETERS, CSR, RPR
24 Certified Shorthand Reporter
25 License No. 10063
PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345
492
1 CERTIFICATE OF SHORTHAND REPORTER
2
3 I, VICKI L. OGELVIE, a Certified Shorthand
4 Reporter of the State of California, do hereby certify:
5 That I am a disinterested person herein; that
6 the foregoing hearing was reported in shorthand by me,
7 Vicki L. Ogelvie, a Certified Shorthand Reporter of the
8 State of California, and thereafter transcribed into
9 typewriting.
10 I further certify that I am not of counsel or
11 attorney for any of the parties to said hearing nor in
12 any way interested in the outcome of said hearing.
13 IN WITNESS WHEREOF, I have hereunto set my
14 hand this thirteenth day of September, 2000.
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VICKI L. OGELVIE
18 Certified Shorthand Reporter
License No. 7871
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PETERS SHORTHAND REPORTING CORPORATION (916)362-2345