By: Christian Okolski
Last week at the New York International Auto Show, the Head of FIAT Brand for North America, Jason Stoicevich, announced that the Italian automaker will start selling the FIAT 500e in Oregon this summer. Up until now, the 500e has only been available to California customers, but Green Car Reports speculates that this expansion could begin a second phase of the car’s rollout in the U.S. However, the Fiat 500e is still a considered a “compliance car” that sells in very low volume just to satisfy zero-emissions vehicle (ZEV) requirements in California and other states.
So what exactly is a compliance car? They are built to meet the California Air Resources Board’s mandate requiring the state’s six top-selling automakers to sell a certain amount of ZEVs each year. If automakers do not meet this requirement, they can either pay for their non-compliance or no longer be allowed to sell any vehicles in state. In California though, the latter is not an option, since the Bear Republic is the largest auto market in the Country and a major contributor to the car companies’ bottom lines. Therefore, companies like FIAT (majority owner of Chrysler Group) would rather sell a few electric cars to avoid the consequences of being out of compliance.
The FIAT 500e is a perfect example of a compliance car. First, it is only available in California right now, which is a significant indicator. Second, the 500e is only available in limited quantities, meaning that FIAT is only making as many as it “has to” sell. In fact, if you go to FIAT’s website, the fine print notes that the “500e is available only in California at select FIAT Studios”, so there is no surprise that only 166 of them were sold this past March.
Keep in mind that compliance electric cars are not like the Nissan LEAF, which was designed from the ground up to be integral part of Nissan’s mass market electric vehicle strategy and is consistently one of the top-selling EVs. Instead, they maintain the designs of preexisting cars (like the gasoline FIAT 500), but replace the gas tank with an all-electric powertrain. Moreover, they tend to lose money. The 500e may be a great little car and did win Road & Track’s Best Electric Car of 2013, but each one loses approximately $10,000 after being sold. Regardless, FIAT and other automakers in similar situations would prefer to limit the sales of these EVs, cut their losses, and focus on profitable, gasoline vehicles. Ultimately, it is a small price to pay for access to California’s huge car market.
As Green Car Reports notes, other automakers in compliance car situations similar to FIAT’s include GM, Honda, and Toyota, who sell the Chevrolet Spark EV, Fit EV, and RAV4 EV, respectively. Like the 500e, these vehicles are based on gasoline versions, are sold primarily in California and few other, select states, and are sold in very small quantities, often not even selling 100 units per month. Simply put, they all meet the tell-tale characteristics of compliance cars.
Although the FIAT 500e will soon be available in Oregon, it is doubtful that the little EV will transition to high-volume production and sale. After all it is likely not a coincidence that, the ZEV requirements stipulated by the California Air Resources Board are being implemented in eight other states including, you guessed it, Oregon. If the 500e and other compliance cars do indeed roll out in other states, they will most likely be made available in those that adhere to California’s standards. However, as ZEV rules become more strict over the next few years, it will be interesting to see if the automakers who sell compliance cars change their strategies to meet higher volume requirements.