UPDATE: Colorado’s Air Quality Control Commission voted to approve the zero-emissions vehicle mandate on August 16, 2019. The vote was 8-1. Commissioner Tom Gonzales voted against the rule.
Whether Colorado becomes a zero-emission vehicle state could be decided this week, as the state Air Quality Control Commission kicks off a three-day hearing on Tuesday.
If the commission decides to move forward, Colorado would become the 10th state to adopt California’s ZEV policy, which requires automakers to offer a certain number of electric vehicles in those states.
The policy aims to reduce greenhouse gas emissions caused by automobiles, as part of Gov. Jared Polis’ push for more renewable energy.
This story will be updated throughout the hearing. Got a ZEV question? Email Tamara Chuang at tamara@coloradosun.com.
But opponents say the state can get where it wants to go without more regulations. Newer vehicles pollute far less than many older models (the EPA says “new passenger vehicles are 98-99% cleaner” than cars produced the 1960s), and the types of vehicles Coloradans buy — mostly SUVs or pickups — aren’t available as electric vehicles. The belief is that consumers will buy EVs when they are priced right, vehicle charging stations are prolific and the car they want is available.
The vehicles are coming, including electric SUVs. Selection is improving and prices are coming down. The issues are as complex as they are political.
But here is the data that’s helping decision makers decide:
What will the ZEV mandate do?
The goal is to reduce pollution and if EVs replace gasoline vehicles, then that will happen to the tune of a reduction of 3.2 million metric tons between 2023 to 2030. Other key points:
- Automakers will be required to make EVs a certain portion of their vehicles sold in Colorado. This means in 2023, 4.9% of a company’s new vehicles for sale in the state must be battery-powered electric vehicles, plug-in hybrids, fuel-cell vehicles, or others that produce zero emissions.
- If adopted, the rules go into effect in 2023 with targets set for every year until 2030.
- This applies only to light-duty cars and trucks.
- Conventional, gas-powered vehicles will continue to be the dominant vehicle for sale in Colorado, even in 2030. With the mandate, roughly 95% of an automaker’s cars for sale would be gasoline-powered.
- Automakers that don’t meet the ZEV requirement must purchase special ZEV credits from another manufacturer that has a surplus, or face fines.
What electric vehicles will be available in Colorado?
The idea is that all EVs will be available in Colorado. There are at least 48 passenger ZEV models available, with dozens more hybrid plug ins that run partially on gas. Auto dealers in Colorado have complained that they’ve been unable to order EVs because the manufacturer is trying to fill the requirements in ZEV states.
In July, major automakers made a deal with Colorado to make their EVs available before the ZEV 2023 start date, and as soon as January. The deal gives those automakers credits for making the cars available before 2023. The credits would be used to offset future requirements.
Not all automakers are required to obey a ZEV mandate. According to California’s policy, manufacturers that produce fewer than 4,500 passenger cars or light-duty trucks in that state are exempt.
According to Jeremy Neustifter, Policy Advisor, Environmental Boards and Commissions for the state Department of Health and Environment, all the major brands in Colorado must comply. That includes Subaru, which started selling a plug-in hybrid, the CrossTrek Hybrid, and recently said it would work with Toyota to work on new EVs.
But don’t expect some of the hot new EV startups, like electric SUV and truck maker Rivian, to begin selling in Colorado if ZEV rules are adopted. Other state laws prevent automakers from selling directly to consumers. Only dealerships, or auto franchises, can sell cars. Tesla, however, was grandfathered in through an old law so it’s the rare automaker selling directly to Coloradans.
How many ZEVs will automakers have to sell?
The ZEV rules are based on a complicated system of credits where longer-range EVs, like Teslas, get more credits than EVs with less range. So, it’s not easy to say exactly how many cars an manufacturer needs to sell.
The state Air Pollution Control Division staff translated the credits into numbers of vehicles sold. In 2023, for example, the 12,876 EVs sold would be 4.9% of new car sales for automakers in Colorado that year.
That still allows for about 95% of all auto sales to be conventional gasoline cars.
The reason why auto dealers are unhappy about ZEV is they must buy the cars from the manufacturer before the vehicles are shipped to their car lot. The auto maker gets the EV credit, but it’s the dealer who must pay interest and other maintenance on the car until it sells.
But if automakers don’t meet the requirement from sales of their own EVs, they face fines. Or they could buy credits from others manufacturers, like Tesla, which has an excess since all of its models are electric. (Tesla reportedly made $200.6 million by selling such credits to other automakers in the first quarter, according to Bloomberg).
According to California’s ZEV requirements, auto manufacturers in ZEV states must have 17 credits for every 100 cars sold in 2023, 19.5 in 2024 and 22 in 2025.
So, in 2023, for example, an automaker could meet the requirement by selling four EVs worth four credits each and one worth one credit, or a total of five cars valued at 17 credits. The manufacturer would meet its EV goal with 5% its 100-car fleet.
How much is this going to cost consumers?
There is no direct financial impact to consumers if ZEV is adopted. Consumers are not obligated to buy one. Making up a target of 5 to 6% of an automaker’s fleet in the state, EVs still will be outnumbered by gasoline-powered cars at local dealerships.
But for consumers who want to buy an EV, prices tend to be higher than comparable gasoline-powered vehicles.
The state acknowledges this. In 2023, when the proposed mandate would go into effect, the average EV will cost about 23% more than a conventional car — or $34,219 for an EV and $27,916 for a conventional car. Plug-in hybrids will always cost more since they have electric and gasoline components.
But prices are coming down as battery and other EV technology costs decline. A Nissan Leaf, before any discounts, is today around $30,000. There’s also a growing used EV market.
The state expects prices to reach parity in 2027 or sooner, at $25,586 for an EV and $25,936 for a conventional car.
Consumer savings are expected to come in fuel and service savings, since EVs are typically plugged in overnight and are known for having less maintenance. Division staff also put a number on this. New EVs for model year 2023 would save their owners $5,127 in fuel and $5,057 in maintenance over the lifetime of the vehicle.
What impact will the ZEV mandate have on Colorado’s greenhouse gases?
According to the Air Pollution Control Division staff who did the research being presented to commission members, the ZEV mandate would reduce 3.2 million metric tons of greenhouse gases between 2023 to 2030.
This is based on vehicles that drive 150,000 miles in their lifetime.
EVs, however, do require to be charged and there is criticism that chargers rely on coal- and natural-gas generated energy. The state has separate mandates to tackle that issue and require power companies like Xcel Energy to move to renewable energy use. Xcel has publicly committed to reducing its greenhouse gas emissions statewide by 2026 from its 2005 levels. Staff based some greenhouse gas predictions on such details.
How popular are EVs in Colorado?
For a state that isn’t a ZEV state, Colorado does remarkably well in EV ownership.
The Alliance of Automobile Manufacturers ranks the state fourth nationwide with 1.82% of new car sales being battery electric vehicles and another .78% are plug-in hybrids. This means Colorado. with 2.6% of car sales qualifying as ZEV, does better than eight ZEV states (Washington is not a ZEV state).
Statewide, nearly 24,000 electric vehicles are registered. Almost every county in the state has a registered EV owner, with 55 of the state’s 64 counties represented, according to the state Division of Motor Vehicles. CHART
Last year, at least 10,362 new EVs, hybrids and plug-in hybrids were registered — or 4.9% of the 211,653 new car sales for 2018, according to the Colorado Automobile Dealers Association. (Non-plug-in hybrids are not counted as part of ZEV.)
Even so, EVs are a fraction of car ownership in the state and for many EV owners, it’s not their only car.
How does this affect those outside the Front Range?
As far as sales, this impacts automakers, not regions.
The ZEV proposal doesn’t stipulate where cars must be sold, only that the automaker must sell them in the state. There are no minimum requirements on rural communities.
This also targets only light-duty vehicles, which are regular passenger cars, SUVs and trucks. Tractors, heavy-duty trucks and other commercial vehicles are excluded from ZEV.
Read more transportation stories from The Colorado Sun.
Are tax credits still available?
Yes.
The $7,500 federal credits on EV purchases began phasing out in January on some models, including Teslas. But they are still available in smaller amounts.
Colorado offers $5,000 in tax credits on new EV passenger car purchases until Jan. 1. (Higher credits are available for medium and heavy duty trucks.) The program, which legislators extended this year, then drops to $2,500 through 2022 and then $2,000 through Jan. 1, 2026. There are also tax incentives for leased or vehicles converted to electric components.
How much will this cost the state?
The state will collect fewer taxes.
Right now, new buyers qualify for a tax-credit on new EV purchases. The state won’t collect as much tax revenue on new EV sales, but on the other hand, the money stays in Colorado since the new owner saves money.
If the estimated 12,876 new EVs owners cash in on the credit in 2023, that’s roughly $28.9 million the state won’t collect, according to Division reports.
For the following years, the tax credits means roughly $30 million a year in reduced revenues for the state.
There’s also an expected decline in fuel taxes, which pay for roads and other infrastructure, are also expected to decline.
EVs owners don’t use gasoline, which is taxed at 22-cents per gallon. They do, however, do pay a $50 fee on their annual registration.
That won’t offset what a similar gas car would contribute to state revenues. Comparably, the owner of an “average-efficiency car” pays $11 a month in gas taxes, according to The Denver Channel.
Colorado’s estimated loss of gas-tax revenues due to EVs is $1.3 million per year, according to Energy Ventures Analysis.
The state’s gas-tax revenues is still rising each year as more people and cars move here, according to data provided by the Colorado Department of Transportation.
Why is Colorado using California’s ZEV policy?
There are only two vehicle emission standards out there: California’s and the United States.
California’s was first, back in 1966 when the state created the first tailpipe emissions standards in the nation because of the bad pollution there. The U.S. Environmental Protection Agency and an emissions standard was created in the 1970s. The EPA exempted California, which went on to create stricter emission rules.
Having two policies was a pain for automakers so 13 of them worked with California and others to create a single national policy, which happened in 2012 under President Barack Obama. Then in 2018, the Trump-administration’s EPA deemed the goals were “not appropriate and should be revised” and kept at 2020 levels.
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To keep Colorado on track to meet air-quality goals, Gov. John Hickenlooper started the process to become a ZEV state and the commission adopted California’s Low Emission Vehicle standard last November. In January, Polis signed an executive order to take it to the next step of zero emissions.
California adopted its ZEV policy in 1990. Since then, nine other states joined in: Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island and Vermont.
Something to note: If California adds a provision to ZEV, Colorado must convene the Air Quality Control Commission again for approval.
Where and when is this ZEV meeting?
The Air Quality Control Commission hearing on ZEV starts Tuesday, Aug. 13, and testimony is expected to take three days.
Public comments begin at 12:30 p.m. on Tuesday. The meeting will also be streamed online via Adobe Connect.
Starting Wednesday morning, Division staff and official parties are expected to testify.
Commissioners are expected to vote on Thursday or Friday.
Location: Colorado Department of Public Health and Environment, 4300 Cherry Creek Drive South in Denver. The meeting is in the Sabin/Cleere Conference Room.
More details: colorado.gov/pacific/cdphe/aqcc-meeting-materials-aug-13-16-2019
This article has been updated frequently as new information was provided.