BILL ANALYSIS �
AB 2042
Page 1
Date of Hearing: May 14, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 2042 (Levine) - As Amended: April 21, 2014
Policy Committee: JudiciaryVote:6-3
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill:
1) Requires a lease contract for a zero-emission vehicle
(ZEV), that was counted by the manufacturer towards toward
meeting the Air Resources Board's (ARB's) requirements of
the ZEV standards, to contain the option for the lessee to
purchase the vehicle at the end of the lease term.
2) Stipulates that, if a lease contract for a leased
zero-emission vehicle does not comply with (1), that
vehicle shall not be counted toward earning of credits
pursuant to the ZEV standards.
FISCAL EFFECT
The ARB will incur one-time special fund costs of about $200,000
to update regulations, including updating reporting requirements
to include whether vehicles were leased or sold and the terms of
the lease agreements, and to modify terms of the ZEV credit
structure, and to expand the ZEV database accordingly. The ARB
will also incur ongoing costs of about $80,000 to review and
monitor each lease contract to verify contract compliance with
respect to determining ZEV credits. [Motor Vehicle Account]
COMMENTS
Purpose . This bill seeks to ensure that motor vehicle
manufacturers who lease electric vehicles (EVs) and thereby
receive credits toward the state's Zero Emission Vehicle
program, allow EV lessees to purchase the vehicle at the end of
the lease term, as is the practice with non-EV leased vehicles -
AB 2042
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or otherwise forfeit the credits received initially. Leasing
electric vehicles is one way in which many motor vehicle
manufacturers fulfill California Air Resources Board (ARB) zero
emission requirements, which require that a certain percentage
of vehicles leased or sold by manufacturers in California be
ZEVs.
In an apparent program loophole, under current law, a ZEV can be
leased for a set term and, at the end of the term, the EV
manufacturer may refuse to allow the lessee to purchase the
vehicle in order to keep the non-polluting vehicle on the road.
Instead, EV manufacturers may currently reclaim the EV, remove
it from use, sell or lease another one, and get additional ZEV
program credits. The loophole is such that under this set of
facts the EV manufacturer will have earned the same amount of
credit for this temporary lease as it would have had it sold the
ZEV instead. This creates an apparent unintended incentive for
EV manufacturers to lease EVs and then pull them out of service
in order to get additional credits by leasing new EVs instead.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081