The Alliance of Automobile Manufacturers today called on the California Air Resources
Board (ARB) to adopt a "fair market test" to determine whether a successful,
sustainable consumer market exists for battery-powered electric vehicles (EVs)
at volumes required by the state’s Zero Emission Vehicle (ZEV) mandate. The Alliance
provided ARB with details of its Fair Market Test this week.

"The FMT is a common-sense approach to determine whether a viable and
sustainable market for EVs exists," said Josephine S. Cooper, president
& CEO, Alliance of Automobile Manufacturers. "Everyone, including ARB,
agrees that California’s ZEV mandate presents enormous challenges, and one of
the most difficult is low customer demand for electric vehicles. We developed
the FMT to evaluate consumer responses to a range of EVs that are marketed in
one specific geographic area."

In September, ARB voted to maintain the current mandate and directed its staff
to address substantial issues related to whether there is a sustainable market
for EVs. Under ARB’s ZEV mandate, at least 22,000 EVs are expected to be produced
in 2003, increasing to at least 40,000 vehicles per year in subsequent years.

The FMT outlined by the Alliance would be conducted through existing dealerships
in one California market over a reasonable time period, such as three years,
beginning in 2003. "Because the FMT will be limited to one specific area,
we can really focus our marketing and education programs and infrastructure
development to produce maximum impact," said Cooper.

Under the FMT, large automobile manufacturers would provide a mix of full-function
electric vehicles for sale or lease. Test funding would be provided by the auto
industry, and could include contributions from ARB, other governmental units,
utilities, battery suppliers, environmentalists, and EV owners. The consumer
market test would be run by a foundation with a governing board representing
a broad range of interests, including ARB and the motoring public. The foundation
would involve an independent blue-ribbon panel of experts to assist with implementing
the FMT.

"We’ve proposed to ARB how the FMT could work," said Cooper. "At
the outset of the test, we want ARB and the industry to agree upon clear, objective
measures to evaluate whether the consumer test is a success or a failure. We’ve
never had a common yardstick for evaluating consumer response to EVs, so it’s
time to develop a program with objective measures and put it to the test."

"The FMT program is a unique approach to resolving the complex issue of
whether a sustainable market exists for EVs that would enable manufacturers
to meet the current ZEV mandate," said Cooper. "It’s objective, and
it accommodates the interests of ARB, manufacturers, and others. By limiting
the FMT to a specific geographic area and time, the program assures that the
funds available to the foundation will be used in the most effective way. The
liberal use of independent third-party experts assures that the program will
be conducted objectively and fairly. And the inclusion of an objective bright
line test to determine the success or failure of the FMT provides us all with
needed certainty."

Under the FMT, the current ZEV regulation would be amended to defer its effective
date while the test is conducted. As required by California law, the final decision
regarding the FMT’s success would be made by ARB.