The days of the electric compliance car are almost over
‘Compliance cars’ are vehicles sold reluctantly — often in limited locations, numbers, and at a loss — by automakers for the sole purpose of meeting quotas to secure a place for their profitable, high emission models. Australians have never really had to come to terms with the idea because we’ve never actually had any emissions standards to which our vehicles must comply.
Where are Australia’s fuel efficiency standards?
The compliance EV: an American invention
The term ‘compliance car’ became attached to electric vehicles after the California Air Resource Board (CARB) amended its sales rules in 2012 to require that the highest-selling automakers include a zero-emission vehicle in their range. If they didn’t, they’d lose the right to sell any cars in California.
Chrysler, Ford, GM, Honda, and Toyota were all caught off guard by the change and quickly developed models to satisfy CARB. Nissan were also subject to the rules, but the LEAF — sold since 2010 in California — already fit the bill.
Some of the models released to meet CARB requirements
The models that emerged as a result were weak contenders, even in the relatively sparse EV landscape of the early 2010s. The Toyota RAV4 EV was sold exclusively in California and sold less than 2400 units in its first 3 years. The Honda Fit was offered as lease only to even less interest (retired in 2015 at just over 1000 units total).
Compare those numbers to the ‘non-compliance’ EVs of the time. The Nissan LEAF sold over 22,000 units in 2013 and the Tesla Model S moved over 19,000.
While the first batch of compliance EVs were never intended to light up the sales charts — FIAT CEO Sergio Marchionne famously asked people not to buy the 500e — the automakers behind them soon found that they’d need more than a handful of sales to meet the 0.79%-of-volume requirement imposed by CARB.
Thankfully, they were able to offset the under-performing numbers by purchasing ZEV sales credits from automakers with an excess. At the time, this was limited to Nissan and Tesla, who both made a tidy profit pawning them off to combustion-reliant competitors.
As the 2010s rolled on, automakers who initially rejected electric mobility began to wise up to its inevitable rise. Technology got better with each year and Tesla’s rapid ascension set an example for what was possible with all-electric mobility.
And as pressure continued to push toward electrification, many automakers started getting ahead by introducing electric models before CARB or other regulators forced them to. Many still saw the BMW i3 and the Hyundai Ioniq as compliance cars, but they were a definite improvement on the cynical box-ticking of the initial models.
Around the same time Volkswagen, the world’s largest automaker, was brought to its knees by Dieselgate. The scandal marked a massive change for the company from combustion to a massive electric transition. Today, VW have invested billions in EV design, production, and battery manufacture.
Who’s investing in EV tech?
The pro-EV regulations that gave way to the compliance car phenomenon aren’t going away; in many places they’re getting stricter (except Australia). The difference in 2020 and beyond is that automakers are no longer working against them, but rather leaning into the global shift away from combustion fuels.
Honda, who dragged their feet on EV tech in the 2010s, are moving into the space this year with the ‘e’. Toyota have been publicly rejecting battery electric in favour of hydrogen fuel cell tech for years, but have now revealed plans to deliver a 90% electrified fleet for the 2020 Tokyo Olympics.
Desperate early adopters may have been bullied into a purchase in 2012, but the days of electric compliance cars are rapidly fading as we pull into the 2020s.