The ZEV Credit Market
Another element of the rules already in effect is the ZEV credit provision, which lets automakers earn credits based on all-electric range for vehicles that don't have gasoline engines, such as the Nissan Leaf, the Ford Focus EV and the Honda FCX Clarity fuel-cell sedan. Automakers earn fewer credits for partial zero-emissions vehicles, such as the plug-in hybrid Chevrolet Volt and the recently launched Toyota Prius Plug-In.
Automakers are required to amass a certain number of credits each year and they can meet the requirement in one of two ways. One is to build the required number of vehicles. If they can't or won't build as many as required, they can make up the difference by purchasing excess credits from automakers that have exceeded their base requirement.
Tesla Motors has been amassing ZEV credits for several years, and American Honda has been buying them to offset its own ZEV production deficit. Honda didn't build as many Clarity fuel-cell electric vehicles as it initially planned and is only now launching its first EV, a limited-production all-electric version of the Fit.
Nissan North America, which started selling the Leaf at the end of 2010, has said it has excess credits and probably will sell some to help offset the cost of developing its EV.
Different Zero-Emissions Vehicle Strategies
Not every automaker required to build zero-emissions vehicles for California will offer them in other states. Honda, for instance, plans to make only 1,100 of its Fit EV subcompacts over the next three years and will only offer it on a lease-only basis in California and Oregon. At least initially, Toyota also is limiting availability of some of its ZEV-compliant vehicles, such as the upcoming all-electric RAV4 SUV.
"There are a bunch [of automakers] in the middle — including Toyota — that are not sure how to make this work and are trying multiple paths," says Mike Love, national regulatory affairs manager for Toyota Motor Sales, U.S.A...