New Legislation in California Spells Loses for Car Manufactures

New Legislation in California Spells Loses for Car Manufactures

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Are the new rules in California bad for car manufactures? California has become a difficult market for car manufactures such as Chrysler, Nissan, Ford (F), Toyota (TM) and Honda (HMC) as new rules implemented to fight smog and global warming are changing the way they conduct business. Selling hybrid cars will no longer meet the “green” credits set by the state, putting pressure on manufactures to sell either electric vehicles or hydrogen fuel-cell cars.

What the new credit rules mean is if GM (GM) sells 100,000 vehicles in California, it must also sell at least 1,000 EV cars during that same year. That is easier said than done with EV technology currently only allowing a 100-mile range in ideal conditions, along with long recharge times.

Meanwhile, consumers will also have to pay a price premium for these vehicles due to battery pack cost. To put things in perspective, the Ford Focus and Ford Focus EV both use the exact same body type and can be built along the same assembly line. Yet, the Ford Focus sells for $16,200 while it’s EV twin sells for $39,200, mostly because of the 23 kWh lithium ion battery pack that costs between $12,000-15,000 alone.

Chrysler has also announced that it will release its first EV, the Fiat 500e SpA, with the intention of losing between $8,000-9,000 on each vehicle sale. This backward approach to business shows that electric vehicles are not economically efficient for the marketplace yet. Before these cars can become feasible, the price per kWh of the battery pack must come down substantially and ranges must also improve. Until then, the EV market will continue to experience very small sales and manufactures will have to suffer the losses due to new legislation trying to force EVs onto the streets. These losses can become very material for big car manufactures if more states adopt this kind of legislation so investors should be on the look out for this kind of news.

 

Written by Nick Sousa

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4 Responses to “New Legislation in California Spells Loses for Car Manufactures”

  1. sandykoz says:

    Do you think the auto industry would consider adding a 1% surcharge in California to finance the EV requirements?

  2. They can’t do anything into it if they will add for it is their responsibility. Fuel charges are highly increasing and the reason why my father did not allow me to use my car and let me ride public transportation.

  3. marlenechip says:

    I prefer to own a second-hand car because if I buy a new one I have to pay too much on local taxes, environment fees and so on. I bought my current car from the Bartletts company three years ago and I am very pleased with my purchase.

  4. clarke says:

    The authorities should take immediate steps to change the situation soon. If this situation continues then it would most definitely affect the auto market. Online shopping has changed the car buying experience, now even the car parts are available online. Recently I had to replace one of my HVAC parts and I found HVAC replacement parts at HVACPartsShop.com.

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