What The Heck Is A 'Compliance Car'?

What The Heck Is A 'Compliance Car'?

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Let's say you're a Honda fan. Your father bought Hondas and you naturally followed.

Now let's say that you are interested in an electric vehicle (EV), and you know Honda has an electric version of the Fit hatchback. But, unless you live in California, Connecticut, Maryland, Massachusetts, New Jersey, New York or Oregon you can't just waltz into your local Honda dealer for a test drive.

Here's why.

A California Mandate

Yes, the Left Coast is the reason that some electric vehicles are only available in a few states, and in some cases just one or two states. In 2012, the California Air Resource Board (CARB) mandated that automakers that sell at least 60,000 vehicles a year in the state - Chrysler (now Fiat Chrysler), Ford, General Motors, Honda, Nissan, and Toyota - must sell zero emissions vehicles (ZEVs) using the formula of 0.79 percent of their total California sales. Next year the number is bumped to three percent. Under the regulation, failure to meet the numbers would result in losing the ability to sell any vehicle in California.

Thus, the Chevrolet Spark EV, Ford Focus EV, Fiat 500e, Honda Fit EV and Toyota RAV4 EV were born. They are called compliance cars because they are designed and engineered specifically to comply with the CARB requirements and allow the automakers to continue selling cars in the state.

Of the six biggest car companies, Nissan avoided the “compliance car” moniker with its Leaf electric vehicle that debuted in late 2011. It not only meets the CARB sales number requirements, but it also exceeds it. Plus, the Leaf is the top selling battery-electric powered vehicle across the U.S.

Tesla is relieved from the CARB mandate, even though it sells roughly 1,000 Model S electric cars per month in the U.S., because of its small overall California sales numbers.

Other States Sign On

Under federal law, other states are allowed to adopt California's emissions rules even if they are more strict than federal regulations. At this point, the District of Columbia and ten states have signed on to follow the Golden State's lead with ZEV requirements of their own. They are Connecticut, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Rhode Island, and Vermont.

Now you know why Honda Fit EV availability is limited to seven states. And the other compliance cars?

Chevrolet's Spark EV and the Fiat 500e are both available in California and Oregon. The Toyota RAV4 EV, the lone electric sport-utility vehicle, is a California-only availability. RAV4 production will cease sometime this year as Toyota is betting on fuel cell vehicles. Lastly, sales of Ford's Focus EV started in California but can be purchased at select dealers in 48 states.

Oh, by the way, if you do live in a state where the Fit EV is available, you can't buy one. Honda, for some reason, will only lease the car. And, like Toyota, Honda believes future ZEVs will be hydrogen fuel cell powered and will discontinue the compliance Fit EV next year.

But Wait, There's More

As you might suspect, there's more to this ZEV mandate thing than just engineering and hopefully selling enough compliance vehicles to satisfy CARB regulators. Since it's not likely that Fiat Chrysler, Ford, GM, Honda, and Toyota can sell enough vehicles to meet the quotas, there is a way for these automakers to stay in the good graces of the state.

Under the regulations, a certain number of credits are earned by every automaker for each zero emission vehicle they make. A ZEV is not limited to vehicles that use an electric-drive powertrain and rechargeable batteries. Included are electric-drive vehicles that employ a fuel cell to produce electricity onboard from compressed hydrogen gas fuel in an electrochemical process.

A lesser credit amount is also given to plug-in gasoline-electric hybrid vehicles based on the amount of electric power provided.

To date, the biggest winner in this credit derby is Tesla. How so? Well, credits awarded can be sold to carmakers that didn't earn enough credits selling their compliance cars. Tesla has collected a very large number of ZEV credits, and in turn, has sold them for a very handsome sum of money. Buying these credits has allowed GM, Fiat Chrysler, and the others to continue to sell conventionally-fueled vehicles in the state.

More Compliance Cars to Come

In 2017, new requirements will be implemented. In addition to the six car companies affected by the current plan, BMW, Hyundai and its Kia subsidiary, Mazda, Mercedes-Benz, and Volkswagen along with its Audi unit also will be included under the new rules. But rather than waiting until 2017, these companies are getting a jump start.

First out of the gate is BMW with its i3, the lightest and perhaps the quirkiest-looking electric vehicle. You can order one now in every state but expect at least a six-month wait for delivery.

Electric vehicles coming later this year with limited distribution are the Kia Soul EV, the B-Class Electric Drive from Mercedes-Benz and the Volkswagen E-Golf. Hyundai is going a different route to meet the CARB mandate with its Tucson Fuel Cell. It is arriving now at a select few California dealerships and is available with a lease only.

There are also two EVs on the market that are not affected by California's regulations. The Mitsubishi I-MiEV and the Smart Electric Drive have been on sale for a couple of years, although Smart has a small number of U.S. dealerships. And of course, Nissan's Leaf and Tesla's Model S are available nationwide.

By the end of 2014, even with the addition of the cars from BMW, Mercedes, Kia and Volkswagen, the selection of electric vehicles will be very limited. Unless that is, you reside in California or one of the other states that have joined the CARB movement.

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