Regulatory & Government Related News Update

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The following is an update on some of the regulatory and government related news affecting the NEV market that has occurred from the beginning of the year.

California aims to increase NEV credits – The California Air Resources Board announced and took comments on changes to their ZEV program. One of the proposed changes is to increase the credits for NEVs from 0.15 to 0.3 per vehicles ??????to reflect the vehicle???s positive environmental benefits but limited functionality compared with full function battery or fuel cell EVs.??? Regulators are calling for as few as 27,500 no-emission vehicles to be introduced between 2012 and 2017, compared with 75,000 in the existing mandate.

The following synopsis is from my interview with a program manager: The proposal will be reviewed within a year or less and other changes may move partial ZEV vehicles into the low emission program and hybrids into the green house gas program which will push vehicles in these programs down to the emission levels of these type of vehicles respectively. The idea is to leave the ZEV program as an incubator for new technologies with the goal of bringing these technologies to market quickly. The inclination is to make these requirements more stringent to speed up bringing technology to the market. This begs the question of where NEVs will fit since their technology is not new and a viable market has been established.

Arizona drafts zero emission vehicle mandates – In January of this year state environmental officials in Arizona released draft rules that would mandate that 11 percent of each company’s vehicles sold in Arizona beginning in the 2011 model year have zero emissions. The percentage would increase to 16 percent by 2018. Other options for meeting the standards include selling more partial zero emission vehicles or purchasing zero emission vehicle credits from other manufacturers. Currently NEVs are the primary zero emission vehicles operating on the roads.

Alternative fuel vehicle rebates – California is offering rebates of up to $5,000 to residents who purchase alternative fuel vehicles. $1.62 million in rebates are scheduled to be granted statewide by California Center for Sustainable Energy, an independent nonprofit organization based in San Diego. Owners of Vectrix electric motorcycles may qualify for up to $1,500 and Global Electric Motorcars owners may receive $950 and $1,300.

According to the California Air Resources Board website the 2008 model year Miles ZX40S AD and ZX40ST neighborhood electric vehicles have been added to the list of vehicles eligible for rebates under the Alternative Fuel Vehicle Incentive Program (also known as Fueling Alternatives). They will be available for a $1,500 rebate, Other models from GEM, Zap and ZENN are also available for rebates ranging from $950 to $1,500. See the following list for more information.

New car buyers in the state of Washington are going to get a break on their sales taxes when they buy some vehicles that run on alternative fuels. The tax break (9.3 percent in the Seattle area) covers vehicles that run on natural gas, propane and hydrogen, as well as ???neighborhood electric vehicles??? or ???medium speed vehicles??? (street legal, but can???t go faster than 35 mph).

Chrysler, maker of the GEM, and Vectrix, an electric scooter manufacturer, are both trying to get their vehicles covered by a new tax credit for plug-in electric cars. The legislation now covers ???regular??? sized passenger vehicles which are eligible for a $3,000 tax credit when purchased. Chrysler and Vectrix are pushing for a $1,500 credit for ???urban commuter vehicles???. The legislation is part of a larger bill covering renewable energy and other tax credits that may be passed in the coming months.

Current NEV manufacturers listed as GSA suppliers – NEV manufacturers listed on the General Services Administration supplier list include GEM, ZENN, Columbia Parcar and Classic Golf Car

NEV Manufacturers Going Full-size

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Since the beginning of the year a number of NEV manufacturers have announced intentions to produce full-size electric vehicles.

RTEV plans wide-ranging electric vehicle product line – RTEV which currently produces LSVs under the Ruff and Tuff brand are planning on expanding their electric vehicle offerings with bicycles and scooters from their Wheego division in 2008, auto-shaped LSVs in 2009 and full-speed electric vehicles in 2010.

In March, 2008 ZENN reported that it was moving forward with plans to sell a highway speed vehicle starting in Fall 2009. The vehicle will be powered by ultracapacitor technology from EEStor, a Texas based firm in which ZENN has a 3.8% equity stake. The highway speed vehicle, to be called the cityZenn, will have a top speed of 80 miles per hour and a range of 250 miles, according to Zenn. The company said the car will be rechargeable in less than 5 minutes.

BG Automotive Group is starting with LSV production but plan to produce full-size vehicles in the following year.

Growing Market Still Attracting New Market Entrants

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Electrovaya enters vehicle arena – Electrovaya which develops lithium ion batteries announced it will be producing their own electric vehicle, a two-seater with top speed ranging from 25-45 and a range up to 120 miles. It will be called the Maya-300. The company states that the vehicle could be ready for market by later this year. The initial target market is fleets and the price point is expected to be in the $20,000 to $25,000 range with a longer term price target of under $20,000.

Philadelphia steel wholesaler Barry D. Bernsten has formed BG Automotive Group for the purpose of producing electric vehicles. Plans call form importing 4,000 cars from Asia and installing batteries and electric motors in them at a local assembly plant. The initial vehicles will be low-speed vehicles with plans to upgrade the vehicles the following year to highway-ready vehicles. The initial retail price is expected to be $16,000. Targeting urban commuters, students and vacation homeowners.

Kentucky Moves Quickly To Lure Electric Vehicle Production

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According to various news reports, ZAP and their partner Integrity Automotive announced that initial construction has started on a facility in Franklin, Kentucky for the production of electric vehicles. ZAP is a minority stakeholder in the venture. Randall Waldman, Integrity’s CEO expects production at the one million square foot facility to start in approximately one year with a work force of 1,250. While plans are still in the development stage, Integrity management states that the plant will make electric buses in addition to ZAP???s product line. A possible scenario is to have the facility replace all of the production from ZAP???s China facility. Management cited the logistics expense of shipping vehicles from China to California to the East Coast as a factor in building the facility. ZAP had previously made vehicles in the US but lower labor costs in China made manufacturing overseas more cost effective. Government incentives are making US based manufacturing more feasible.

Integrity Automotive is reportedly investing $125 million in the facility and quickly garnered government assistance which came from all levels including:

  • $84 million of tax-exempt industrial revenue bonds for construction of the plant from city an county governments
  • $48 million in tax incentives from the state based on the company’s commitment to create 4,000 full-time jobs within the first four years
  • An executive order from Kentucky???s governor permitting the use of low-speed vehicles on Kentucky highways with a posted speed limit of 45 miles-per-hour or less.

While the production will serve the global market, in some respects, the shifting of production from China to the US is a reversal of the globalization trend I have been seeing in the market in general. I followed up the story with a call to ZAP to understand more about the situation. According to ZAP, the venture came together very quickly and the details of what vehicles will be produced and how many are still being worked out. Like some other electric vehicle manufacturers ZAP is reporting strong sales increases. In the quarter ending September 30th, 240 vehicles were sold including 121 in September compared to just 80 vehicles in the 3rd quarter last year. Most of the vehicles are sold in the US to consumers as well as some municipalities and are primarily the Xebra truck model. The company has increased their headcount by 30% this year and recently opened up a $10 million line of credit to fund expansion. The company is also planning on adding an NEV to their product line.

Army To Purchase Thousands of NEVs

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According to a U.S. Army press release, a Senior Energy Council has been established to “…serve as a board of directors focusing on Army energy policy, programs and funding to leverage the Army’s nationwide energy-conservation efforts.” One of the pilot projects underway is the purchase of 4,000 NEVs to replace gas-powered vehicles on various posts. There was no information available on how many vehicles have been purchased so far and what the time line is for purchasing all the NEVs. more info

GEM Has A New Model & A New Name

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New model for 2009
GEM Peapod – New model for 2009

GEM recently announced a re-designed model called the Peapod, which will go into production in 2009. The Peapod includes a newly-designed center console that will offer iPod integration and hands free operation of an iPhone. Additional new features includes the use of eco-friendly recycled and recyclable materials and ergonomic, mesh seating which enables air circulation for comfort.

GEM Peapod features a re-designed console

GEM Peapod features a re-designed console

According to management GEM also has plans to market a new light-duty, battery electric commercial truck and a larger city electric vehicle, with more range and performance. These vehicles are scheduled for production within the next year.

In a related note, GEM has changed its name from Global Electric Motorcars to GreenEcoMobility to reflect the company’s goal to redefine environmentally-friendly vehicles.

Globalization In The STOV Market

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Since tracking this industry from 2000, there has been a trend towards increasing globalization and the following developments are more evidence of this trend.

Miles Electric Enters Benelux Market – Miles Electric signed their first international distribution agreement with AllGreenVehicles of the Netherlands which will distribute the vehicles in Belgium, Luxembourg and the Netherlands.

GEM & Tata Team Up On Mini-truck – GEM is working with TATA Motors to develop and market an electric version of the Tata???s Ace mini-trucki in the US. GEM is expected to fit the vehicles which will be delivered nearly fully built with an electric motor and controller. The Ace was launched in India in 2005 and has exceeded the company???s expectations. Sales for the vehicle marketed to small businesses are estimated to be around 130,000 annually with double digit growth. In a related note, The Economic Times reports that the Tata Ace mini-truck being developed with GEM is expected to cost upwards of $5,000 and the companies may consider doing a joint venture depending on the success of the Ace.

Start Of A New Dynasty – Karakoram Motors Ltd. of Karachi has agreed to buy the design and manufacturing operations of Delta, B.C.-based Dynasty Electric Car corp. the company was only producing 30-40 vehicles a year but the new owner is hoping to increase production to 5,000 and sell into the EU and US markets.

New Entrant Uses Asian Imports – New market entrant BG Automotive Group plans on importing cars from Asia and installing the batteries and motors here in the US.

Introduction – Gas Prices Drive NEV Sales

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While this blog will be based mostly on current and more recent events, my first few posts will include some information and insights about the NEV/LSV market I???ve been gathering from the beginning of this year.

According to GEM???s sales and marketing director Jay Wik, GEM Asia reports strong increases of 30% in sales revenue attributing the increases to rising oil prices and concern about global warming. In the US dealers are reporting increases of 10-30 percent in the last year and inquiries have increased ten-fold. Increases have occurred in all parts of the country and for exports as well. The company reports that production increased 15 percent in May. Second quarter sales were reportedly up 30% from last year. One GEM dealer experiencing the sales jump is Greg Welsh of Gulf Atlantic Vehicles in New Smyrna Beach, FL who has reported a sales increase f 30%.