General Motors takes hit to chase e-car boom

General Motors Co stands to lose as much as $9,000 on its electric subcompact Chevrolet Bolt. Sounds crazy, but it makes perfect business sense under the no pain, no gain policy driving the electric-vehicle boom in the US.

California crafted the doctrine, with tough clean-air rules and a mandate that automakers sell some nonpolluting vehicles if they want to do business in the state, and nine others have adopted it, including New York and New Jersey.

The states’ rules are set to tighten so that zero-emission vehicles, or ZEVs, will have to increase by an estimated 15.4 percent of sales by 2025, some five times the current level.

The hurdles may go even higher in California, where greenhouse-gas emissions are required to be 40 percent below 1990 levels by 2030. To get there, ZEVs, plug-in demand seems sure to rise, gas targets was championed hybrids or fuel-cell cars may with major economies, includby then- Governor Arnold have to comprise 40 percent of ing China, having recognized Schwarzenegger. sales, up from about 3 percent climate change as a threat and Under the rules, GM needs now, according to the Califoremissions from gas-powered to sell enough Bolts so that it nia Air Resources Board staff autos a chief contributor. can sell other vehicles, includprojections. The US has a zero-emission ing pickups and SUVs. The

“The idea that automakers vehicle incentive, offering a Bolt’s anticipated per-sale loss will sell 40 percent of their $7,500 tax credit to buyers, and of roughly $8,000 to $9,000 is vehicles at a loss in California also gives credits to manufacan estimate based on a sticker is ludicrous,” said Eric Noble, turers to reward them for cars price of $37,500, according to a president of CarLab, a Califorthat meet the greenhouse-gas person familiar with the matnia-based consultingter.company,reductiontargetssetbythe who reckons most electric cars Obama administration. Here’s how the math works lose at least $10,000 per sale. O n We d n e s d ay, t h e US for GM in California: Let’s

The industry’s willing to Environmental Protec tion say it sells a total of 219,962 take the hit on a small scale Agency took a formal step vehicles in one model year (as now. Fiat Chrysler Automoto make it harder for Presiit did, in fact, in 2015). To avoid biles NV’s battery-powered dent-elect Donald Trump to heavy fines or the threat of getFiat 500e is made for Califorundo Obama’s targets. EPA ting shut out entirely, it would nia alone, and Chief ExecuAdministrator Gina McCarneed state-awarded ZEV credtive Officer Sergio Marchionne thy announced a preliminary its equal to 14 percent of the said in 2014 that it was losing determination that Obama’s total — or 30,794. That would $14,000 per sale. 2025 targets are achievable, mean finding buyers for 7,698

The industry might figure affordable and appropriate. Bolts, earning four credits for out how to make zero-emisWhatever happens in the each, or 10,082 Chevy Volt sion cars into money makers national capital, California plug-in hybrids or a combinaonce the charging-station will be where the power is for tion of the two. infrastructure is built up years to come. The bill that “Electric vehicles are compliand battery costs fall. Global established its greenhouse- ance vehicles and GM knows this,” said the CarLab’s Noble. “The Bolt will take sales from all of the other vehicles on the market, and GM will get a lot of credits.”

The more ZEVs a company peddles to the public, the more credits it earns, and those with a surplus can sell them to competitors that are falling behind. Tesla has been able to really tap the program. In the third quarter, it made $139 million by selling credits, which helped Tesla hit its second-ever quarterly profit on a GAAP basis.

The US is one-fifth of the global car market, and groups ready to go to battle over emissions like to offer an argument beyond the threats of smog and global warming. California’s policies are forcing companies to be innovative, said Luke Tonachel, a senior analyst for the Natural Resources Defense Council. If they stop, “US manufacturers could lose market share.”