Michele Satterlund
Mar 16, 2021

Michele Satterlund Details Effect of Zero-Emission Vehicle Standards on Automakers as State Legislatures Debate Potential Programs

As states across the country consider legislation on zero-emission vehicle (ZEV) standards, McGuireWoods Consulting senior vice president, Michele Satterlund, explores how these bills will impact automakers – especially if the legislation is not accompanied by an investment in incentives and infrastructure support. Satterlund provided an overview of the current legislation in a March 16 article for Environmental Leader.

A handful of states have introduced bills mirroring California’s Advanced Clean Car Program zero-emission vehicle standards. This program requires automakers to deliver an increasing percentage of zero-emission vehicles, with a goal of reaching a ZEV standard of 100% by 2035.

New York is currently considering legislation establishing targets for the sale of zero-emission vehicles, and a bill has been introduced in Maryland that would prohibit state agencies from entering into a contract for a vehicle that is not a ZEV.

“Both New York and Maryland, similar to California, have already put in place investments to help further the deployment of ZEV programs. These investments include incentives like the New York Drive Clean program that provides up to $2,000 in rebates for the purchase of an EV, and Maryland’s Excise Tax Credit program that provides a tax credit of up to $3,000,” Satterlund said. “States that pass ZEV standards without customer-focused incentives could find themselves with more cars than buyers.”

Virginia passed ZEV standards this year requiring the adoption of the California Advanced Clean Car Program.

“While the Virginia legislation establishes a ZEV target that can be met with either the sales of EVs or a one-time deposit of proportional credits equal to the automaker’s 2025-model year California credit balance, the legislation does not include any of the investments and incentives needed to entice consumers to make the switch to EVs,” Satterlund noted.

The lack of incentives and infrastructure support means Virginia and automakers may not reach the ZEV mandates.

“For a state that has very little infrastructure and few incentives in place, there is some risk that the Virginia market will not be ready to absorb the increased numbers of EVs that automakers will be required to deliver as part of the California standard. This could lead to a glut of vehicles on dealer lots or force the industry to sell these cars at a loss in order to meet the required delivery percentages,” Satterlund said.