California’s Advanced Clean Cars

Midterm Review

March 24, 2017

Advanced Clean Cars Approved as an integrated regulatory package in 2012 LEV III Criteria and GHG Standards 75% reduction in fleet average

NMOG + NOx emissions 90% reduction in PM emission

standard 34% reduction in GHG emissions

ZEV More ZEVs and PHEVs

LEV Criteria Air Quality

Improvements

LEV GHG

Greenhouse Gas Reductions

ZEV Technology

Advancement

1

Meeting long term emissions targets

n Climate Goals

Air Quality Standards

2015

LEV III – Criteria and GHG: Improving Conventional

Vehicle Technology

2020

2020 GHG Emissio

Target

2025

Ozone and PM2.5

Attainment

ZEV Program: Accelerating Advanced

Technology Development

2030

2030 GHG Emission

Target

75 ppb 8-hr Ozone Attainment

2

2035

70 ppb 8-hr Ozone Attainment

2040 2045 2050

2050 GHG Emission

Target

Advanced Clean Cars Midterm Review and the Federal Process

3

LEV Criteria Air Quality

Improvements

LEV GHG

Greenhouse Gas

Reductions

ZEV Technology

Advancement

Midterm Evaluation of One National

Program

Inter-agency Coordination on MidterEvaluation of One National Program

m LEV GHG

2012 January:

ACC 2017-2025 standards

er: Federal 2017-2025 GHG standards

ber: CA GHG “deemed to comply” adopted

Octob

Novem

2013-2016 External Research, Survey and Analysis,In-House Testing Inter-agency coordination

2016

July: Joint Technical Assessment Report (TAR)

September: ACC Symposium

2017 January:

EPA Final Determination MTR Report

ch: Announced Reconsideration of Final

Mar

Determination

4

LEVCriteria

Air QualityImprovements

ZEV

LEVGHG

GreenhouseGas ReductionsCA only

Light-duty GHG Standards

Technology Advancement

Model Year

500 )

mi 450

e/ 2 400

COg ( 350

dsr 300

nda

at

250

Sn 200

oissi 150

m 100

G E

GH 50

0

Passenger Car Combined light-duty Light Truck

First National Program

Subsequent National Program

Midterm Review: Focus on the

MY2022 - 2025 Federal GHG

standards

5

Manufacturers are over-complying with current GHG standards

Actual Compliance Standard 310

e l 300

mi

/ 290

ms

ar

280

gt n

270

ale 260

viuq 250

e- 2 240

CO 230 220

US CA US CA US CA US CA MY2012 MY2013 MY2014 MY2015

LEV GHG

Standards calculated based on sales from the six large volume manufacturers subject to CA GHG regulations for MY 2012-2015 including credits. 6

Technology has evolved rapidly to meet the standards

LEV GHG

Advanced engines and transmissions

Vehicle light-weighting Improved aerodynamics Low rolling resistance tires Stop-start and advanced

stop-start (e.g., 48 V olt) technology

~21% of the 2016 fleet already

complies with 2020 standards

7

Future standards can be met with conventional technology at reduced cost

LEVGHG

Strong Plug-in Hybrid

2016 Proposed

Costs in 2015$ Proposed Determination costs represent most recent analysis, using newer data and assumptions than used for the draft TAR

8

Advanced Gasoline 75%

Hybrid 2% Electric Vehicles

Gasoline Vehicles 2% w/Adv. 3%

Stop-Start 18%

Incremental vehicle costs to meet 2025 stds

2012 EPA Rulemaking

$1,163 Determination

$875

California on target for fleet GHG reductions 300

) ile 280

m/g 260

( t e 240 gra T 220

nis

sio 200

mE 180

2 160

CO

140

153 to 164 g/mi in 2025

2012 Sc enario 2016 U pdated Scenario

LEV GHG

Even with increasing sale of trucks,

California is still on track to meet targeted

GHG reductions

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Model Year

9

Issues Raised by Industry Industry: Analysis overestimates efficiency/underestimates needed

LEV GHG

technology • More technology required, including stronger electrification, which means

higher costs • Consumer acceptance/demand, especially of stronger electrification, is

inadequate CARB Response: Data well grounded in actual testing and analysis concluded higher levels of technology are not needed

• Alternative technology evaluations confirmed strong electrification not needed

• Electrified sales in CA already near levels projected for 2025

10

Staff Recommendation LEV GHG

Review Question: Are the model year 2022 - 2025 Federal GHG standards appropriate?

Recommendation: Yes, analysis affirmed current federal standards are appropriate, and CARB recommends continued participation in the National Program through 2025, provided no future changes weaken expected benefits in California.

11

Continue monitoring other activities

• Reconsideration of federal re-opening of Final Determination

• Canada’s midterm review • Global activities

12

Analysis of National Fleet LEV

GHG

MY2025 nationwide fleet target 180

e 175

l/m

i

170

2 CO 165

g 160

155

Larger fraction of truck sales projected in 2025 results in

a higher fleet CO2 target.

175

163 175 g/ mi $875

2012 US EPA 2016 Draft TAR Rulemaking

2025 Fleet Incremental Average Vehicle Costs

163 g/ mi ~$1,375

13

Technology

1 mg/mi Particulate Matter (PM) Standard

Advancement

Model Year

12

) i 10 m/gm 8 (

s no 6

ssi

im 4

EM

P 2

0

LEV II LEV III

LEV LEV Criteria FleeGHt PhasGe -in

100%

Greenhouse Air Quality Gas Reductions Improvements 100%

3 mg/mi 0%

ZEV 0% 1 mg/mi

Midterm Review: Is it feasible as scheduled for MY2025? Midterm Review:

Is it measurable?

14

PM Measurement Evaluation Staff Recommendation

Review Question: Can we accurately measure PM emissions at 1 mg/mi?

LEV Criteria

Recommendation: Yes, as reported to Board in 2015, mass-based measurement method is accurate and most appropriate

15

Some vehicles already meeting future PM standards

• Many already meeting 3 mg/mi

• Further refinement needed for many to meet 1 mg/mi

9

8 Average PM Mass Results

P T F) 7

/mi

6 2017+ 2025+

mg

5 Standard Standard

ss (

aM 4

M

Pe 3

gare 2

vA1

0

LEV Criteria

16

Combustion technology evolving to meet 1 mg/mi standard

LEV Criteria

Focus on fuel injection system and combustion chamber design

Standard Spray Optimized Spray

17

Gasoline particle filters provide additional technology path

• Prototype catalyzed GPFs tested • Can control PM levels below 1 mg/mi on FTP • Limited use worldwide

PM Removal Efficiencies FTP US06

F-150 88% 72%

Malibu 88% 54%

LEVCriteria

PM with and Without GPF

) 8 7

/mi

7

mg 5.5

6

ss (

a 5

M Without GPF

M 4

P With GPF

PT 3

Feg 2

ar 0.6

e 0.8

v 1

A

0 2016 CHEVY MALIBU 2015 FORD F150

18

Real-world PM control varies

More aggressive driving can result in higher emissions

LEV Criteria

P 5.0

FT) 4.5 Average PM Mass Results

im/ 4.0 Standard Test Cycle

g 3.5

m( More Aggressive Driving

s

3.0 2.5

sa

M 2.0 M

1.5

e P 1.0

gar 0.5

ev 0.0

A

19

PM Staff Recommendations

Review Question: Is the 1 mg/mi standard feasible by 2025?

LEV Criteria

Recommendation: Yes, the standard is feasible and the current implementation schedule maintains necessary lead time to refine engine and injection system designs

Additional R ecommendation: Develop additional PM standards, to

supplement the 1 mg/mi standard, to better ensure robust PM control in real world driving conditions 20

Zero Emission Vehicle (ZEV) Regulation Midterm Review: Are the ZEV requirements in California appropriate for continuing to help develop the ZEV market?

Midterm Review: Are the ZEV requirements in Section 177 ZEV states appropriate for continuing to help develop the ZEV market?

Midterm Review: How should PHEVs be treated in the ZEV regulation?

250,000 Projected 15% ZEV+PHEV

Sales in 2025

s 200,000

EVH

New ZEV

P +

requirements 150,000

s adopted in 2012 Projected ZEVs

EVZal

100,000 unnA 50,000 Projected Plug-in Hybrids

0

Model Year 21

A growing ZEV market ZEV

CA + Section 177 N ew Sales 100,000

PHEV 90,000

ZEV 80,000

s 70,000 ela 60,000 Sl nn

ua

50,000

40,000

A 30,000

20,000

10,000

0 2011 2012 2013 2014 2015 2016

Calendar Year

Today’s Model Offerings

10 PHEV 12 BEV

Initial Model Offerings

1 BEVx 3 FCEV

22

Manufacturers are over-complying California

Total Credits Required

ZEV

350,000

300,000

250,000

s t 200,000

dieCr 150,000

100,000

50,000

0 2012 2013 2014 2015 2016 2017

roj) Model Year (proj) (p

Section 177 States

Total Credits Required

350,000

300,000

250,000

200,000

150,000

100,000

50,000

0 2012 2013 2014 2015 2016 2017

Model Year (proj) (proj) 23

2012 2013 2014 2015 2016 201Model Year 24

Credit banks provide insuranceagainst future requirements

ment (CA+S177) 1,200,000

1,000,000

800,000

s tdie 600,000

Cr

400,000

200,000

0

Total Credit RequireTotal Credits Earned Total Credits Projected

Credits earned for MY 2015 salunder MY 2018+ program

es

7 2018 2019 2020 2021 2022 2023 2024 2025

ZEV

Updated ZEV Compliance Scenarios ZEV CA + S177 ZEV State Volumes

4,500,000

4,000,000

Vs

E 3,500,000

HP +

3,000,000

sVE 2,500,000

Zevi 2,000,000

lat

u 1,500,000

muC 1,000,000

500,000

0 2018 2019 2020 2021 2022 2023 2024 2025

Model Year

Updates reflect: Increased electric range on

BEVs and PHEVs Use of regulatory flexibilities Use of banked ZEV credits Misc. other updates

(e.g., total new vehicle sales)

25

OEMs appear committed to electrification

ZEV

26

ZEV Technology costs falling fast

Fuel cell system costs have fallen 57% from 2006 to 2015

Battery cost73% from 2

s have fallen 06 to 2015 0

Neither FCEV nor BEV cost parity anticipated with conventional gasoline technology by 2025

27

Consumers still need more all-electric range

ZEV

“Range is the most important feature to

customers buying EVs, and we know that consideration

increases significantly as range goes up.”

My PEV does not travel far enough before needing to be charged.

100% Strongly Agree Agree

80%

60%

40%

20%

0%

PHEV BEV<200 BEV200+ Source: 2016 CVRP Ownership Survey

– Pam Fletcher, General Motors Executive Chief Engineer

28

Electric Range (EPA Label) 29

Current and Future ZEV/TZEV Models by MY Year = PHEV Model = BEV Model = BEVx Model = FCEV Model

p u ck

ck ur

Pi T n

Va

MY 2MY 2MY 2MY 2MY 2MY 2MY 2001000001111116481532- - 1271 s s dr

la and UV

CSatS

e z llUV

ai

A S m

KEY

SS

P

1 ge r E ra Ca

2

L e

3

z i r S-id Ca

4

M ll r

5+

am CaS

Multiple Makes 0% 10 -20 5% 20 - 30 10%30 -40 15% 40 -100 20%100 -150 25% 150 -200 30% 200 -250 35% 250 -300 40% 300 -400

US Market Share (MY2015)

Section 177 State Flexibilities ZEV

• CA BEVs allowed to “travel” to S177 states through MY2017, creating credit banks for compliance

• Reduced requirements for PHEVs and BEVs through MY2020

• Allowed if a few BEVs are delivered prior to 2018 • Pooling amongst states through MY2021 for

compliance credits 30

Intermediate Volume Manufacturers (IVMs) can comply ZEV

• 2014: Board adopted flexibilities to ease requirements for IVMs • 2017: All IVMs (Mazda, Subaru, Jaguar Land Rover, and Volvo) have

announced electrified products (BEVs and PHEVs) to be released by MY2020

The overall industry is now shifting its electrification focus toward EVs. We are in the age where we cannot just go on launching EVs only as regulation compliance cars.

-Yasuyuki Yoshinaga, CEO, Fuji Heavy Industries (which owns Subaru)

31

Sunsetting policies ZEV

2017

BEV travel provision

expires

Federal tax credit projected to phase out for some OEMs

2018

HOV lane incentive expires

2019 2020 2021 Optional compliance path

and overcompliance provisions expire

2022

ZEV multipliersexpire in GHG program

2023

AB 8 funding expires

2024 2025

ZEV upstream emission exemption expires in GHG program

Further costs reductions needed 200-mile BEV: 40-mile PHEV:

$13,000+ $10,000+ incremental cost incremental cost Estimated MY2025 costs relative to MY2016 conventional ICE vehicle

32

2018-2025 ZEV Requirements

Staff Recommendation ZEV

Review Question: Is the ZEV regulation appropriate as adopted for model year 2018 through 2025?

Recommendation: Yes. Maintain the current ZEV stringency through model year 2025 including the existing regulatory and credit structure in California, the Section 177 States, and for IVMs.

33

Plug-In vehicles and eVMT ZEV

Board direction • How are plug-in vehicles

used? • Are they credited

appropriately? • What are the criteria

pollutant impacts? • What are the greenhouse

gas impacts?

Data collected from 8 OEMs

Over 90,000 vehicles

11 different models

Over 20 million miles of trip-level data

34

Credits are consistent with usage

4.0

Aver

age

Annu

al M

iles

(Bar

s)

25,000

20,000

eVMT (miles) Gasoline Miles Credits

3.0

2.5 15,000

2.0

10,000 1.5

1.0 5,000

0.5

0 0.0 Toyota Honda Ford C-Max Ford Chevrolet BMW i3 BMW i3 Ford Focus Honda Fit Nissan Tesla Prius Accord Energi Fusion Volt (PHEV) (BEVx) (BEV) Electric (BEV) Leaf (BEV) Model S

(PHEV) (PHEV) (PHEV) Energi (BEV) (BEV) (PHEV) Vehicles Analyzed

3.5

Tota

l ZEV

Cre

dits

Ear

ned

per V

eh (

Line

)

ZEV

35

Criteria Pollutant Considerations

for PHEVs ZEV

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

Official Emission

Test (FTP)

Accel 1 Accel 2 Accel 3 Accel 4 Accel 5 Accel 6

Gram

s (N

MO

G+N

Ox)

Fusion Energi Prius Plug-In Sonata Plug-In Hybrid • Testing found some real world engine starts can have significant emissions • 2-5x higher

• Vehicle technology improvements are needed to minimize emissions

36

PHEV eVMT usage depends on consumer behavior

ZEV

“My main purpose for purchasing it was the HOVsticker. I'm very happy with the car, but I don'tcharge it very often. If it got more mileage off acharge, I would charge it more.”

-2013 Ford C-MAX Driver

“Love the car, more Level 2 destination chargers andability to charge at home without pushing into thehighest rate tiers are my biggest issues. Currentlythe price of gas is less than comparable chargingcost (break even around $3-4/gal) so I don't charge much right now.”

-2013 Toyota Prius Plug-in Driver Source: 2016 CVRP Ownership Survey, open-ended final comments

37

PHEV GHG emissions can be highly variable

+15 to 60% GHG increase if much larger PHEV sales

±8% in GHG emissions based on driver habits

High PHEV Sales + Low eVMT

High PHEV Sales + High eVMT

Low eVMT

High eVMT

) 12

e2CO 10

mt

m( 8

s nios 6

ismE

G 4

H G 2

inegan 0

hC

-2 2025 2030 2035 2040 2045 2050

ZEV

38

PHEVs Role and Usage Staff Recommendation

ZEV

Review Question: Are PHEVs credited and treated appropriately in the ZEV regulation?

Recommendation: Yes. Maintain existing credit structure and credit caps for PHEVs through MY 2025

39

ZEV: Stakeholder Concerns ZEV

• Section 177 Dealers: concerned OEMs will require them to take delivery of more ZEVs than they can readily sell

• Auto Industry: concerned about PHEV credits, S177 state markets, support for complementary policies

40

Alternatives for increased ZEV stringency

ZEV

MY 2022 through 2025: • Increase stringency with focus on pure ZEVs

(BEVs, FCEVs) • Require PHEVs with greater all-electric

functionality • Add credit usage restrictions

41

New complementary policy actions needed to accelerate ZEV Market ZEV

Challenge Complementary Policy

Low consumer awareness

• New consumer education campaigns • VW Appendix C: ZEV awareness campaign

Shortage of fueling infrastructure

• SB 350: Electric utility investments • VW Appendix C: Electric infrastructure

investments • Hydrogen grants for traditional energy firms

42

2026 and beyond

Evolution of the light-duty vehicle

emission program

43

Need large emission reductions beyond current programs

NOx, South Coast, All Sources

)

600

ya d

s pe

r 500 Current Programs

no 400

t (snoi 300

ssm

i 200

x E 2023 South Coast Target

ON 100

2031 South Coast Target 0 2010 2015 2020 2025 2030

GHGs, Statewide LDV & HDV 200

) Current Programs

yr 180

E/ 2 160

OC 140

mm

t

120

s ( SB 32 40%

n 100

oi Reduction

ss 80

mi

E

60

G Exec Order 40

GH 80% Reduction 20

0 2010 2020 2030 2040 2050

44

Mobile Source Strategy & Scoping Plan Re-affirm Need for ZEVs & Clean Cars

By 2050, 100% sales of ZEVs and PHEVs

FCEV

BEV

PHEV ICE+HEVs By 2030, 4M to 4.5M

ZEVs and PHEVs on the road

40

elc 35i ) he ns 30

d V oilla i 25

o Mr-n n (

o 20

O ie atd 15i ul

ew pot 10

PatS 5

-2010 2015 2020 2025 2030 2035 2040 2045 2050

Calendar Year 45

Tracking published literature for 2026 and Beyond

American Lung Association (Oct 2016) • Large public health and climate benefits from ZEV fleet expansion

Environmental Defense Fund (Feb 2017) • Feasibility of 10-90 gCO2/mi reductions between 2025 and 2030

International Council on Clean Transportation (Mar 2017) • Feasibility of 4%-6% annual reductions in GHG emissions by 2030

Indiana University (Mar 2017) • Combined GHG and ZEV regulations can have long-run positive

economic impacts 46

2026 and beyond: Thinking “Outside the Box”

Early considerations: • Should fuels be addressed in the regulations?

Broader considerations: • What is best structure of GHG and criteria emission stds to

accelerate necessary technologies like ZEVs? • Should vehicle regulations include elements for new

transportation systems? • Should the ZEV regulation be expanded to include heavier

vehicles? 47

2026 and beyond: Guiding Principals and Approach

• Maximize emission reductions long-term cost effectively • Maintain tech forcing requirements as long as barriers exist • Learn from other jurisdictions, including Europe & Asia • Consider transition from current rule to new rule • Leverage partnerships • Board proposal within 3-4 years for model year 2026 start

48

Midterm Review Recommendations Summary

• Adopted MY 2022-2025 GHG standards remainappropriate

• PM standard is feasible but further action needed to ensure robust control

• Continue with existing technology-forcing ZEVrequirements to develop the market

• Direct staff to immediately begin rule development for MY 2026 and beyond

49