We Need More Electric Vehicles, But Extending Regulatory Incentives For EVs Is A Bad Idea
Originally published by Union of Concerned Scientists, The Equation.
By Dave Cooke, Senior Vehicles Analyst
A recent New York Times article noted that the Biden administration will be looking to use vehicle efficiency standards to boost electric vehicles sales. Our analysis shows that strong standards are the best way to accelerate toward an electric future and that we need exactly what President Biden called for: “Setting strong, clear targets where we need to go.” However, if the administration is using voluntary agreements with automakers as the basis for its proposal, as reported, we could be in for continued delay in that transformation.
Automakers continue to push for extra credit for the small number of EVs they do sell, just like the voluntary California agreements. Previous standards have already included a number of incentives for electrification, so it’s worth examining both their historical impact and their significance moving forward. This is especially important with the Biden administration set to propose new vehicle standards later this month.
What regulatory incentives are there for EVs today?
Under EPA’s vehicle emissions program, EVs are credited as having zero emissions (emitting 0 grams CO2 per mile [g/mi]). While EVs are cleaner than gasoline-powered vehicles virtually everywhere in the U.S., ignoring the emissions from the grid powering those vehicles means that every electric vehicle sold can actually reduce the global warming emissions benefits of the program in the short term because it allows automakers to sell higher emitting gasoline vehicles than they would have otherwise.
In addition to ignoring grid emissions, for model years 2017–2021, each sale of an electric vehicle is given extra credit — for example, every EV sold in model year 2017 was counted as TWO vehicles, for the purpose of compliance. These credit multipliers lead to reductions on paper towards compliance, ostensibly encouraging automakers to invest in and sell electric vehicles, but don’t actually bring down real-world emissions. Similar to ignoring grid emissions from EVs for regulatory compliance, credit multipliers allow manufacturers to sell higher-polluting gasoline vehicles the more EVs they sell.
There are additional, somewhat comparable incentives under the fuel economy program that are more complex, but the bottom line is this: these EV incentives built into the regulatory standards were intended to support early electric vehicle sales to help with long-term emissions reductions, at the cost of some additional emissions in the short term. The question now is whether this tradeoff is worth continuing.
State EV policies are a key driver of EV adoption
The complicating factor about federal regulatory incentives to spur EV adoption is that states are already leading the way. California set the first zero-emission vehicle (ZEV) sales requirements in the country, and ten states have since adopted those ZEV requirements (with more on the way).
Unsurprisingly, the states with ZEV requirements see more EV models and greater EV adoption. While complementary policies and differences in local demography may play a role, the data is clear: manufacturers preferentially distribute and sell EVs in states with ZEV policies. As a result, while so-called ZEV states make up less than 30 percent of the new car buying market, consumers in those states purchase nearly two-thirds of all EVs.
While a 2017 change in federal policy was supposed to incentivize EV sales around the country, states with zero-emission vehicle (ZEV) sales requirements are leading the way in EV adoption. Data comparing EV sales before and after those incentives show that, if anything, state ZEV policies are now doing even more to drive adoption, with ZEV states making up a larger share of EV sales since EPA’s EV multipliers took effect. Nearly 2/3 of all EVs sold are sold in ZEV states, despite them making up less than 30 percent of the total U.S. new vehicle market. And this number has increased over time, with the elimination of flexibilities like the “travel provision” and with new states like Colorado adopting ZEV standards.
The EV market is growing
While ZEV sales requirements are driving sales upwards in those states, EV sales around the country are on the rise. Are EV credit multipliers helping to drive that boost? The data raises doubts.
Apart from Tesla’s sales, which skyrocketed beginning in 2017 with the releases of the Model 3 and Model Y (which now make up more than half of all EV sales annually), EV sales have grown steadily, consistent with the pace of growth required by state ZEV policies. While there may be some additionality from federal regulatory incentives (after all, EVs are not sold exclusively in ZEV states), there has been no proportional jump in sales in response to the additional EV incentives. For automakers other than Tesla, sales have remained proportional to the number of vehicle offerings, a number which is also related to increasing state ZEV requirements (since many of those models can only be found in ZEV states).
For Tesla, it is likely that federal EV incentives have helped support growth, since the sale of overcompliance credits to EV laggards like Stellantis (fka Fiat-Chrysler) and Mercedes helps improve profit margins on their EV offerings. However, such credits are reducing the incentive for those companies themselves to invest in electrification, so it is not clear how much of a win even Tesla’s bonus credits are, on net.
EV sales in states like California which require manufacturers to sell EVs track those requirements, indicating that at most federal policy is serving to facilitate the remaining 30-35 percent of EV sales. However, that spillover to the rest of the country is largely just proportional to the number of EVs offered, a feature which is also related to increasing ZEV requirements. While Tesla saw a large spike in sales nationwide with the release of its mass market Model 3 and Model Y, no other substantial increase in sales is observable resulting from the change in EPA EV incentives in 2017. (Note: State ZEV policies are based on complex credit accumulation, so the “ZEV obligation” represents an estimated annual sales requirement taking into account the average number of credits per vehicle and flexibilities in the regulation regarding non-EV sales.)
Growth in EV sales predominantly coming from Tesla and from sales in ZEV states indicates that federal emissions regulations (applicable to all states) are not a primary driver of EV sales. So if EPA’s incentives are not driving additional sales, overcrediting EVs act simply as a windfall to manufacturers for responding to other policies and incentives. This is especially important to reflect upon when manufacturers like GM clamoring for more of those credits are doing so to undermine the state programs helping to drive adoption.
This means the so-called incentives act only to weaken the federal program, and they are doing so at a significant environmental cost. Since 2011, manufacturers have reduced lifetime fleet emissions by nearly 1 billion metric tons by responding to strong standards set under the Obama administration — however, an additional 66 million metric tons of extra EV credits were used for compliance, resulting in a relative increase in emissions and fuel use of nearly 7 percent over where we’d be without those incentives. (To the extent that the grid continues to get cleaner with time, the long-term impact will be reduced somewhat, but the broader point remains.)
EV regulatory incentives can actually REDUCE overall EV sales
While EPA’s incentives appear to have little positive impact thus far, extending those incentives could be much worse. A recent economic analysis presented at a conference on energy and economic policy noted the potential hazards of overcrediting as EV technology improves:
- Pairing an EV multiplier with a lack of accounting for grid emissions for charging EVs directly, and significantly, reduces the stringency of a standard.
- Automakers have an incentive to sell less-efficient gasoline-powered vehicles under regulations which include a higher EV credit multiplier.
- EV incentives can increase EV adoption rates when sales are small and/or technology costs are high.
- BUT as soon as electric vehicles approach being priced competitively with conventional vehicles, extra credits become likely to decrease EV market share because fewer EVs are needed to comply.
While those first three points are all reasonably intuitive, it is that fourth point which has the most impact as we look to the next generation of fuel economy and emissions standards to help drive the industry towards our climate goals — offering extra credits for EVs could actually reduce the incentive to sell more of them.
UCS modeling shows that setting strong federal standards without specific EV incentives would save consumers tens of billions of dollars more than the type of credit-heavy proposal offered by industry, protecting lives, increasing jobs, and leading to more electric vehicles in the process. (For more details, see this blog.)
This data is consistent with our own analysis, which showed that extending EV credit multipliers would lead to fewer EVs on the road. As both analyses show, any EV sales with all these extra credits drastically reduces the overall stringency of the standard a manufacturer must meet — this reduction in stringency reduces the need for technology deployment to meet the standard (it’s easier), allowing for manufacturers to increase sales of gasoline-powered vehicles at the expense of more EVs.
On top of this, those remaining internal combustion engine vehicles are less efficient than they otherwise would have been, which is particularly problematic when EVs are still a small (but growing) share of the overall new car market. While this may be a gold mine for automakers, it’s disastrous for the environment. Clearly, we need a new direction.
The best way to get more EVs nationwide is setting strong standards
EVs are on the cusp of cost parity, and manufacturers are offering more and more models, including in popular vehicle classes like crossovers and pick-ups. This puts the industry poised to accelerate the transition to electrification. But as we move through that transition, we need to be driving emissions down in our gasoline-powered cars and trucks as well.
The best way to maximize emissions reductions as we move towards a more sustainable fleet is to set standards that are based on the real-world performance of these vehicles and ensure emissions are being reduced across the entire new vehicle fleet. The types of bonus credits manufacturers have asked for push us in the wrong direction, undermine emissions reductions, and are counterproductive for electrifying the transportation system.
Vehicles sold in the next few years will remain on the road for nearly two decades, impacting the climate for many more years to come. As the current administration moves forward to right the wrongs of the previous administration, we need to learn from the data and develop strong policies that will drive the industry forward, not policies with the kinds of hand-outs that have repeatedly delayed climate action. While we need to electrify passenger cars and trucks as quickly as possible, it is critical that our fuel economy and emissions standards not just help accelerate that transition, but do so while driving continued improvements in gasoline-powered vehicles as well.
California has led the nation in electric bicycle adoption, helping more people than ever before switch away from cars and toward smaller and more efficient transportation alternatives. However, the proliferation of electric bicycles has also led to a major uptick in higher-power models that have flaunted established e-bike laws, often being used on public roads and bike paths to the chagrin of many local residents.
A new law that came into effect this week has now further clarified which electric bicycles are street-legal and which fall afoul of regulations.
The legislation is meant to address the growing number of high-powered electric bikes, many of which use traditional electric bicycle components but are capable of achieving speeds and power levels that give them performance closer to mopeds and light motorcycles.
This phenomenon has led to a heavily charged debate around the colloquial term “e-bike” and the regulatory term “electric bicycle”. The main question has become whether increasing the power and speed of such bikes pushes them outside the realm of bicycles and into the class of mopeds and motorcycles. That distinction is important since the legal classification of “electric bicycle” provides for such bikes to be used in the widest possible areas, including on public roads and in bike paths, as well as negates the need to tag, title, or insure electric bicycles.
SB No. 1271 was signed into law last year and came into effect on January 1, 2015. The bill covered several new e-bike regulations, including fire safety regulations and requirements for third-party safety certifications that will come into effect over the next few years, as well as a further tightening of the three-class e-bike system to limit which electric bicycles can include hand throttles.
However, near the end of the new legislation is a three-line section that clearly outlines which vehicles are not considered to be “electric bicycles” under California law.
The following vehicles are not electric bicycles under this code and shall not be advertised, sold, offered for sale, or labeled as electric bicycles:
(1) A vehicle with two or three wheels powered by an electric motor that is intended by the manufacturer to be modifiable to attain a speed greater than 20 miles per hour on motor power alone or to attain more than 750 watts of power.
(2) A vehicle that is modified to attain a speed greater than 20 miles per hour on motor power alone or to have motor power of more than 750 watts.
(3) A vehicle that is modified to have its operable pedals removed.
The three points are used to exclude vehicles from the legal definition of an electric bicycle in California. This wouldn’t necessarily make these vehicles “illegal” per se, as they could still be sold, purchased, and ridden in California, simply not as “electric bicycles”. However, they could be illegal to use on public roads or in bike paths, where prohibited or not properly registered.
This not only impacts how such vehicles could be marketed, but also where and how they could be ridden. Powerful e-bikes that now fall outside the regulatory term “electric bicycles” could still be used off-road on private property or where allowed, and could potentially be ridden on public roads if properly registered as mopeds or motorcycles, though that would also require the e-bikes to meet the regulations for such vehicle classes.
Provision 1: E-bikes designed to be unlocked for higher power or throttle speeds
The first provision covered in the new law copied above applies to e-bikes designed by the manufacturer to be user-modifiable to go faster than 20 mph (32 km/h) on motor power alone (i.e. by use of a hand throttle that requires no pedaling input), or to provide more than 750 watts of power. To be clear: This does not make e-bikes that travel over 20 mph illegal (they can still travel up to 28 mph on pedal assist) but rather targets those that can achieve such speeds on throttle alone.
Most electric bicycles in the US, even those capable of traveling at speeds over 20 mph, ship in what is known as Class 2 mode, which includes having a software-limited top speed of 20 mph on throttle and/or pedal assist. However, it is common for many electric bicycles to be easily “unlocked” by the user, which often requires just a few seconds of changing settings in the bike’s digital display. This unlocking often allows riders to travel faster on pedal assist, usually up to 28 mph (45 km/h), and on some occasions unlocks that faster speed on throttle-only riding too.
Most of the mainstream electric bicycle brands in the US still limit throttle-only speeds to 20 mph, even when the e-bike is “unlocked” by the user, meaning they would not fall afoul of the new law based on higher speed pedal assist functionality. However, several brands do allow higher speed throttle riding above 20 mph, and these e-bikes would no longer be classified as electric bicycles in California, even when in their locked state with a 20 mph speed limiter. As the law is written, those e-bikes can not be considered electric bicycles in California because they are designed to be unlockable to higher speeds than 20 mph on throttle-only.
Additionally, any e-bike that can be unlocked to offer higher than 750W (one horsepower) will now also fall outside the confines of electric bicycles in California. This regulation, based on power instead of speed, is in effect a much wider net that will likely catch many – if not most- of the electric bicycles currently on the road. There has long been a 750W limit for e-bikes in the US, but this has traditionally been treated as a continuous power limit. The peak power of such e-bikes is usually higher, often landing in the 900-1,300W range. The new California law removes the word “continuous” from the regulation, meaning motors that are capable of briefly exceeding the 750W motor (i.e. most 750W motors), will now fall outside of electric bicycle regulations.
Provision 2: E-bikes modified for higher power or throttle speeds
While the first provision above ruled that any e-bikes intended to be unlocked for throttle-enabled speeds of over 20 mph or to provide more than 750W of power are no longer classified as electric bicycles, the second provision covers e-bikes that are modified to those parameters even without being intended for such modification.
This is a much smaller category of e-bikes and is usually indicative of custom or DIY builds. Most e-bikes capable of operating at performance levels now ruled outside of electric bicycle classification have simply been reprogrammed using the manufacturer’s own modifiable settings menu on the e-bike. But some riders use other methods to increase their e-bike’s power, such as by swapping out motors or controllers with faster and more powerful alternatives.
The second provision in the law targets these types of e-bikes, which weren’t intended to have been modified for higher speeds and power levels, but have been customized to do so anyway.
Provision 3: No pedals, no bicycle
The third provision simply clarifies the pedal rule: In order to be considered an electric bicycle, an e-bike must have functional pedals.
That doesn’t mean that if an e-bike has pedals that it is automatically considered to be an electric bicycle, but only that a lack of such pedals nullifies its status as an electric bicycle under the new regulations.
This has long been the case, but is simply further clarified in the new legislation to cover e-bikes that once had functional pedals that have since been removed.
The new legislation’s definitions of electric bicycles don’t mark a major shift for California, which has long used the three-class e-bike system. However, it does signify a clamping down on e-bikes that flaunt those regulations by more clearly codifying their out-of-class status and removing their ability to pass as electric bicycles, legally speaking.
Riders of Sur Ron-style e-bikes, including Talarias and other models that function more like light dirt bikes, have long known that their bikes were not legally classified as electric bicycles. But now, many of the more traditional-looking electric bikes, including from some fairly well-known manufacturers, are likely to find themselves on the wrong side of the law. This will be especially true in cases where the e-bikes are otherwise designed to appear and function like typical electric bicycles, yet are capable of reaching 28 mph speeds on throttle only.
What do you think of the new regulations for e-bikes in California? Let’s hear your thoughts in the comment section below.
tlv
FTC: We use income earning auto affiliate links. More.
Environment
BYD’s year-end sales surge closes out a record 2024, but is it enough to take the EV crown?
BYD’s aggressive year-end sales push worked. China’s leading EV maker sold a record number of electric cars in 2024, but will it be enough to take the sales crown from Tesla?
Will BYD’s EV sales surge take the EV crown in 2024?
Since it stopped making vehicles fully gas-powered vehicles in 2022, BYD has taken the global auto market by storm.
With another 509,440 passenger vehicles sold in December, BYD set a new sales record in 2024, easily topping the roughly 340,000 cars sold in 2023. Like many Chinese automakers, BYD reports new energy vehicle (NEV) sales, including plug-in hybrids (PHEVs) and fully electric vehicles (EVs).
BYD’s sales crossed the 500,000 mark for the third straight month after launching an aggressive year-end sales campaign, including free insurance on select models.
With 207,734 fully electric vehicles sold in December, BYD’s EV sales reached 1,764,992 in 2024, up 41% from the previous year.
Earlier today, Electrek reported that Tesla missed Q4 2024 expectations, delivering 495,570 vehicles in the fourth quarter. In comparison, BYD sold 595,413 EVs in the fourth quarter, up 13% from Q4 2023.
| Q4 2024 | 2024 Total | |
| BYD | 595,413 | 1,764,992 |
| Tesla | 495,570 | 1,789,226 |
Despite this, with 1,789,226 vehicles delivered in total last year, Tesla still topped BYD’s 1.76 million to maintain the global EV sales crown in 2024.
Although the race with Tesla is catching the headlines, BYD’s global sales growth is causing legacy automakers to make drastic moves. After selling more vehicles than Nissan and Honda for the first time in Q3, the Japanese automakers are now teaming up to survive the every “100 years” industry shakeup.
With its sights set on even more growth in 2025 as it starts local production in overseas markets, BYD is quickly closing in on Ford and others.
Source: BYD
FTC: We use income earning auto affiliate links. More.
Tesla (TSLA) released its production and delivery results for the fourth quarter and full year 2024 today.
The automaker confirmed having delivered 495,570 electric vehicles, way below expectations and its own guidance from just two months ago.
As we reported earlier this week, the analyst consensus for the fourth quarter was 507,000 vehicles delivered. The street expected Tesla to fall short of its goal to deliver more than 515,000 vehicles in order to be slightly up on deliveries for the full year 2024 compared to 2023.
This morning, Tesla released its official production and delivery results, confirming that it produced 459,445 vehicles and delivered 495,570 vehicles in Q4:
- Model 3/Y
- Production: 436,718 units
- Deliveries: 471,930 units
- Subject to Operating Lease Accounting: 5%
- Other Models
- Production: 22,727 units
- Deliveries: 23,640 units
- Subject to Operating Lease Accounting: 6%
- Total
- Production: 459,445 units
- Deliveries: 495,570 units
- Subject to Operating Lease Accounting: 5%
While this is both below Wall Street expectations and below the company’s own guidance, it is Tesla’s new quarterly record for deliveries.
Tesla achieved those results while implementing its largest-ever discounts and incentives through direct discounts on cars, boosted referral programs, and incentives like free Supercharging, free Full Self-Driving, and more.
With these results from Q4, here are Tesla’s total production and delivery numbers for 2024:
| Production | Deliveries | |
| Model 3/Y | 1,679,338 | 1,704,093 |
| Other Models | 94,105 | 85,133 |
| Total | 1,773,443 | 1,789,226 |
That’s a slight 1% decrease in deliveries compared to the 1,808,581 vehicles delivered in 2023, but it’s a giant swing in growth from a 38% increase in 2023 versus 2022.
Tesla’s stock went from being up almost 2% in pre-market trading to down 3% after the release of the delivery results.
However, there’s a silver lining in Tesla’s results. While the company’s main business remains automotive, it has a growing energy storage business, and Tesla has started including energy storage deployment in its quarterly delivery results over the last year.
Today, Tesla confirmed that it deployed 11 GWh of energy storage through its Megapack and Powerall products – a new record.
Electrek’s Take
This is worse than I expected. Again, Tesla hadn’t offered quarterly delivery guidances in years, but when it did, it was pretty good.
The reason for that is that it generally gave it when already into the quarter with great order visibility. As Tesla claims, it has the best sale data of any automaker thanks to its direct sale model.
But this time it was off by 20,000 units or even more since it claimed that it would achieve slight growth in overall deliveries for the year with a strong Q4.
FTC: We use income earning auto affiliate links. More.
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports9 months agoStory injured on diving stop, exits Red Sox game
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business2 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway