Coda Sells California ZEV Credits to Unnamed Maker

Coda Sells California ZEV Credits to Unnamed Maker

By Danny King August 17, 2010

Part of the business plan of some small American electric-vehicle makers involves selling zero-emissions-vehicle credits to larger manufacturers.

These credits stem from a vote by California's Air Resources Board (CARB) in 2008 requiring Honda, Toyota, General Motors Co., Ford Motor Co. and Nissan Motor Co. to sell a total of more than 60,000 plug-in hybrid and battery-only models in the state over a three-year period, with fines and possible restrictions accruing for those that don't comply.

Tuesday, Coda Automotive agreed to sell ZEV credits to an unidentified automaker, as the Santa Monica, Calif.-based maker of all-electric cars looks to raise cash while preparing to start selling its first vehicle later this year.

Automakers may earn credits by making cars that can travel emissions-free. For instance, each vehicle sold that can travel more than 200 emissions-free miles on a charge receives five credits. While CARB doesn't disclose the monetary value of a credit, automakers and other familiar with the process estimate that they're worth about $5,000 each.

Dollars From The Tailpipe

California's air-quality regulators allow the boutique EV makers to sell credits to the big automakers, but until now the only known transaction has been American Honda Motor Co.'s acquisition of credits from electric-vehicle maker Tesla Motors.

Coda, which will be entitled to more than 50,000 ZEV credits for 2011, plans to sell 14,000 of its 4-door, five-passenger battery-electric sedans next year, the company said in a statement.

Coda didn't disclose which automaker bought the credits, how many credits were sold or how much was paid for the credits, nor did it immediately return a request for comment.

With California's emissions standards stricter than most other states in the U.S., alternative-fuel automakers are boosting cashflow by selling such credits to larger, mainstream carmakers looking for more leeway when selling vehicles in the most populous American state.

Tesla Motors, which makes the all-electric Roadster and plans to unveil its Model S sedan in 2012, reported in a June Securities and Exchange Commission filing that it has made almost $14 million selling ZEV credits equal to 368 cars to Honda over the past two years. The filing also said Tesla sold ZEV credits to another automaker it didn't identify.

Coda in May said it planned to build a manufacturing plant for automotive-grade lithium-ion-battery systems that would employ more than 1,000 workers Ohio. Construction of the facility, which would replace a China facility owned by a joint venture between CODA and Lishen Power Battery, was contingent upon finalizing an incentive package with the state and the approval of an application for a Department of Energy Advanced Technology Vehicles Manufacturing Loan.

Coda is looking to strengthen its position as an independent automaker debuting its 5-passenger Coda electric sedan just as Nissan and General Motors do the same with their Leaf battery-electric and Chevrolet Volt extended-range plug-in hybrid vehicles later this year.

Coda and joint-venture partner Lishen in March secured a $294 million line of credit with China-based Bank of Tianjin Joint-Stock Co. Ltd.

The automaker hopes to deliver as many as 14,000 all-electric cars within its first year of production. The cars will come with a roughly $40,000 price tag - about 25 percent more than the $32,780 price Nissan put on its all-electric Leaf last month - before factoring in the $7,500 federal tax credit given to Americans who buy a battery electric or plug-in hybrid.

Coda photo by Coda Automotive

Danny King:  is a contributor to Edmunds.com's Green Car Advisor.