Comment Log Display

I agree 100% with the following CalCars assessment as presented to
the board.  Please take these comments to heart when making your
final determination this Friday.

It's too early to impose specific regulations

The embryonic aftermarket conversion industry is mainly comprised
of promising small startups. So far we see only one hardly-mature
mid-sized company with deep enough pockets to have good prospects
of complying with CARB's proposed regulations. These proposed rules
would require potential conversion suppliers to complete all
design, long-term emissions testing and verification, and CARB
certifications up-front, as well as provide very extended
warranties. These new regulations would require existing and
yet-to-be-formed small companies to act as if they were large auto
companies with substantial technical and financial resources and
dramatically slower development cycles.

But today's conversions are the product of continuous design
refinement and street testing. Many have been financed from a
handful of sales by small companies with a few tens of thousands of
dollars to work with at any time. The proposed rules will
significantly raise the cost of entry, potentially excluding the
very entrepreneurial engineers whose innovations established the
market in the first place. Tellingly, today's highest-volume
converter, Hymotion, was such a small business until it was
acquired by battery maker A123 Systems.

Unfortunately, these companies have been too busy developing their
technology and products and responding to public demand even to
fully recognize, let alone adequately respond to, the developing
governmental processes that could so significantly affect their
work. Now we expect that too-early regulation will force some or
all of these companies to close, halting their continued
development work, losing jobs, promoting stagnation rather than
innovation in the industry.

The contraction of these companies will affect their suppliers.
Many have promising innovative products but lack the track record
and resources to bid for, let alone get, auto manufacturer
contracts. Small battery manufacturers, for whom testing and
validating their products in real-world vehicles is the sine qua
non of engineering and marketing success, will be most affected.

The consequences will not be restricted to California, since some
of these companies have been establishing installers or franchisers
in other locations in the US and globally. This is a broad industry
-- but California is its nerve center, and whatever is decided here
will have an impact everywhere. And finally: the result will be
less opportunity to reduce CO2 by displacing gasoline with
electricity.

Let's recognize how important conversions have been

A look back shows the unprecedented impact of the conversions from
late 2004-2006: they demonstrated how close we were to real
products from carmakers; they gave utilities and national labs, the
California Energy Commission, CARB and the state's air quality
districts testbeds upon which to evaluate the benefits and
logistics of PHEVs. They prompted the President, the US Department
of Energy, Senators, Representatives, Governors, Mayors, and others
to endorse this solution as a way to solve key intersecting
problems: energy security, CO2 emissions, the future product mix of
the auto industry, and costs per mile. They gave elected officials,
corporate executives, industry analysts, NGOs and ordinary drivers
a preview of a plug-in future. They helped motivate battery
developers to focus on the opportunities within the auto industry.

As the technology and solutions evolve, many of these
constituencies will still be eager to see and derive PHEVs during
the next two to five years until OEM-produced PHEVs are widely
available from dealers. They will want PHEVs, as will thousands of
citizen-drivers. Hundreds of citizen-drivers have visited our
listings at "How To Get a PHEV" at
http://www.calcars.org/­howtoget.html and from there they (and
hopefully in the future, thousands more) will find a company to
convert their vehicles.

An unrecognized broader implication of the regulations

Regulation now could provide potentially dangerous precedent for
regulation of conversions of non-hybrids to plug-in vehicles, both
PHEVs and EVs. (See our descriptive page and links about this
enormous market at http://www.calcars.org/­ice-conversions/­.)
The very aftermarket conversion companies and their suppliers whose
existences are threatened or prevented are precisely among the
firms we expect to take the lead in ICE conversions, which we
believe offer the opportunity to make significant near-term
reductions in CO2 and petroleum dependency during the five to ten
years before new plug-in vehicles achieve significant overwhelming
market penetration. And CARB, more than almost anyone, knows we
have no time to delay in replacing fossil fuels with low-carbon
electricity.

We believe this opportunity has been under-appreciated, with some
exceptions, such as former Intel CEO Andy Grove, singer Neil Young,
and PHEV inventor Andy Frank, and that they affect the prospects of
such far-flung companies as:

    * Efficient Drivetrains Inc in California
    * Electradrive in California
    * EV Power Systems in North Carolina
    * H-Line Conversions in Kansas
    * Hybrid Electric Vehicle Technologies in Illinois
    * Linc Volt in California
    * Poulsen Hybrid in Connecticut
    * Rapid Electric Vehicles in Vancouver

None of these companies are directly involved in or affected by
the current regulatory process. But, importantly, they are
interested parties, because the regulations the ARB adopts for
aftermarket conversions of hybrids could become precedents for
their (or other state/federal government agencies) imposing
unrealistic or unduly burdensome limitations on conversions of ICE
vehicles in the future.

Learning the lessons of unintended consequences

Though this issue begins on a far smaller scale, it reminds us of
what happened when we moved to insufficiently considered massive
support for biofuels, invoking cellulosic ethanol but giving us
corn ethanol. What happened should at least cause us to move from a
greenlight "go" to a yellow "caution--advance slowly."

Remember when the Energy Policy Act of 2005? It increased the
amount of biofuel (usually ethanol) that must be mixed with
gasoline sold in the United States to 4 billion gallons by 2006,
6.1 billion by 2009, 7.5 billion by 2012 -- and 30 billion gallons
by 2020. The European Union followed with similar targets. We can
only list the consequences that have been directly and indirectly
linked with this decision, which include the belated recognition of
the negative energy balance of corn ethanol and the overestimated
near-term prospects for cellulosic ethanol; the lack of greenhouse
gas benefits; the impact on corn, feed and human food prices;
global deforestation and water impacts; the boom and bust in
Midwestern farm states and the subsequent bankruptcy of ethanol
companies; and periodic food riots in locations around the world.
To its credit, Europe recognized the error and stepped back; we
still struggle with bad legislation and inappropriate incentives.

The Staff and Executive Officer have prematurely concluded there
are no negative impacts

The Staff Report: Initial Statement of Reasons for Proposed
Rulemaking for Plug-In Hybrid-Electric Vehicles on page 28 says,
"The proposed amendments to the Exhaust and Evaporative Test
Procedures are not expected to have a noticeable impact on the
status of California business creation, elimination, or
expansion."

In the Notice of Public Hearing, we read, "The Executive Officer
has made an initial determination that the proposed regulatory
action would not have a significant statewide adverse economic
impact directly affecting businesses, including the ability of
California businesses to compete with businesses in other states,
or on representative private persons. In accordance with Government
Code section 11346.3, the Executive Officer has determined that the
proposed regulatory action would not affect the creation or
elimination of jobs within the State of California, the creation of
new businesses or elimination of existing businesses within the
State of California, or the expansion of businesses currently doing
business within the State of California."

CalCars believes that although the companies involved have not yet
made their case effectively, the difficulties these regulations
cause will in fact have very significant impacts in these areas and
in the development path for plug-in vehicles. We believe the Board
needs to allow more time to explore these issues.

As a non-profit organization, CalCars has encouraged the
aftermarket companies and their suppliers (especially battery
manufacturers) to form a trade association. That way an organized
constituency can quantify the value and jobs it provides,
demonstrate that it is part of a supply chain that needs to be
encouraged, and characterize the significant social and
environmental benefits it delivers, and cooperatively to come up
with workable solutions . We hope this will happen in the coming
months.

We accept the magnanimous offer in the Notice of Public Hearing

There we find, "Before taking final action on the proposed
regulatory action, the Board must determine that no reasonable
alternative considered by the board or that has otherwise been
identified and brought to the attention of the board would be more
effective in carrying out the purpose for which the action is
proposed or would be as effective and less burdensome to affected
private persons than the proposed action." We appreciate the
Board's recognition that there may be alternative solutions; we
propose the Board consider those we present.

THEREFORE WE PROPOSE THAT BOARD MEMBERS AT THIS
MEETING REQUIRE: that all the companies involved in conversions
simply register with CARB, inventory their completed conversions,
project their 2009 volume, and make themselves available for a more
deliberative process. . CARB can then engage in a dialogue with all
the stakeholders, just as it has for many years with automakers, to
ensure a process that makes sense to all and takes into
consideration the very different state and form of the conversion
industry and its players.

We appreciate your growing support for plug-in vehicle solutions,
and hope that you can come up with a solution where all the players
win. Now, one more point…

CalCars' fallback position: if CARB must regulate now…

We understand that CARB is concerned about the durability of
warranties following conversions, either from vehicles requiring
repairs that are not made, or conversions that are not engineered
with sufficient rigor and testing. These are legitimate concerns,
but so far we are talking about only several hundred conversions in
the entire world. We support an approach that enables companies to
improve their products and their support services. The benefits of
encouraging this so-far-almost-exclusively-entrepreneurial
conversion industry far exceed the risk.

However, if CARB does go ahead, we present an example of a
graduated regulation scheme could continue to allow grass roots
innovation by holding compliance costs to around $500 per
already-sold conversion -- a high but not insurmountable hurdle:

    * A company enters the conversion business by presenting CARB
with an engineering proposal showing how it will avoid increased
criteria pollutants; it then shows a running prototype. Each
completed conversion is subject to an ordinary end-user smog test
for that model of unconverted vehicle. Buyers sign a contract
acknowledging the level of warranty accompanying the product,
accepting a level of risk for an 'experimental' conversion, and
perhaps committing to periodic smog tests that are not otherwise
immediately required of SULEV vehicles for several years.
    * After selling 10 conversions, the manufacturer explains how
the now-current version(s) avoid mechanical, reliability, and
emissions problems, and shows on paper how the system preserves
known OEM OBD functionality.
    * After selling 100 systems, one vehicle undergoes the most
basic manufacturer emissions testing, and the conversion
manufacturer shows how known OEM On-Board Diagnostic System (OBD)
functionality is both preserved and enhanced with similar
capabilities warning of conversion components needing service.
    * After selling 1,000 systems, the company complies with
CARB's whole set of production conversion rules

Note: such a proposal would require some cooperation with auto
manufacturers, who would need to provide aftermarket conversion
companies with some proprietary information, or the conversion
companies would need to collaborate on building a database of
discovered OBD functionality for multiple vehicle models, similar
to the reverse -engineered Prius and Escape CAN bus information
currently available at www.eaa-phev.org.