Final Regulation Order – Part 3

Hearing Date: 03/27/08 Adopted: 12/17/08 California Environmental Protection Agency

AIR RESOURCES BOARD

CALIFORNIA EXHAUST EMISSION STANDARDS AND TEST PRO CEDURES FOR

2005 AND SUBSEQUENT THROUGH 2008 MODEL ZERO-EMISSION VEHICLES,

AND 2001 AND SUBSEQUENT MODEL HYBRID ELECTRIC VEHIC LES, IN THE PASSENGER CAR, LIGHT-DUTY TRUCK AND MEDIUM-DUTY VEH ICLE CLASSES

Adopted: August 5, 1999 Amended: April 12, 2002 Amended: July 30, 2002 Amended: December 19, 2003 Amended: December 17, 2008Final Regulation Order – Part 3

Hearing Date: 03/27/08 Adopted: 12/17/08 TABLE OF CONTENTS

Section Page

No.

A Applicability ................................

................................................... ....................A-1

B. Definitions .................................

................................................... .....................B-1

C. Zero-Emission Vehicle Standards ...............

................................................... .... C-1

1. ZEV Emission Standard........................... .............................................. C-1 2. Percentage ZEV Requirements. .................... ........................................ C-1 3. Partial ZEV Allowance Vehicles (PZEVs) .......... .................................. C-7 8 4. Qualification for ZEV Multipliers and Credits ... ................................ C-14 12

5. Reserved ........................................ ................................................. C- 18 16 6. Extended Service Multiplier for 1997-2003 Model Year ZEVs

and PZEVs With ≥ 10 Mile Zero Emission Range ........................ ... C-21 16 7. Generation and Use of ZEV Credits; Calculation o f Penalties......... C-22 16 8. Severability .................................... .................................................. C -25 20

D. Certification Requirements ....................

................................................... .......... D-1 1. Durability and Emission Testing Requirements .... ................................. D-1 2. Information Requirements: Application for Certif ication ........................ D-1 3. ZEV Reporting Requirements.................... ............................................ D-2

E. Test Procedures ................................

................................................... ................E-1 1. Electric Dynamometer ............................ ................................................E-1 2. Vehicle and Battery Break-In Period............. ..........................................E-1 3. All-Electric Range Test ......................... ..................................................E -1 4. Determination of Battery Specific Energy for ZEV s ................................E-3

5. Determination of the Emissions of the Fuel-fired Heater ........................E-3 6. Hybrid Electric Vehicle FTP Emission Test Provis ions ...........................E-3 7. Hybrid Electric Vehicle Highway Emission Test Pr ovisions ....................E-8 8. Hybrid Electric Vehicle SFTP Emission Test Provi sions.......................E-10 9. State-of-Charge Net Change Tolerances ........... ..................................E-14Final Regulation Order – Part 3

Hearing Date: 03/27/08 Adopted: 12/17/08 A,B-1 CALIFORNIA EXHAUST EMISSION STANDARDS AND TEST PROC EDURES FOR

2005 AND SUBSEQUENT THROUGH 2008 MODEL ZERO-EMISSION VEHICLES,

AND 2001 AND SUBSEQUENT MODEL HYBRID ELECTRIC VEHIC LES, IN THE PASSENGER CAR,LIGHT-DUTY TRUCK AND MEDIUM-DUTY VEHI CLE CLASSES

A. Applicability

The emission standards and test procedures in this document are applicable to 2005 and subsequent through 2008 model-year zero-emission passenger cars, lightduty trucks and medium-duty vehicles, and 2001 and subsequent model-year hybrid electric passenger cars, light-duty trucks and medi um-duty vehicles. The general procedures and requirements necessary to certify a vehicle for sale in California are

contained in the “California Exhaust Emission Stand ards and Test Procedures for 2001 and Subsequent Model Passenger Cars, Light-Duty Tru cks and Medium-Duty Vehicles” (hereinafter “LDV/MDV TPs”), and apply except as am ended herein. A manufacturer may elect to certify a 2000 model-year hybrid elect ric vehicle under these standards and test procedures and the LDV/MDV TPs.

B. Definitions

In addition to the following, these test procedures incorporate by reference the

definitions and abbreviations set forth in the Titl e 40 Code of Federal Regulations § 86.1803-01, the definitions and abbreviations set f orth in the LDV/MDV TPs, and the definitions set forth in section 1900, title 13, CC R.

“Advanced technology PZEV” or “AT PZEV” means any PZEV with an allowance greater than 0.2 before application of th e PZEV early introduction phase-in multiplier. “All-Electric Range Test” means a test sequence used to determine the range of an electric vehicle or of a hybrid electric vehi cle without the use of its auxiliary power unit. The All-Electric Range Test cycle consists o f the Highway Fuel Economy Schedule and the Urban Dynamometer Driving Schedule (see section E of these test procedures). “Auxiliary power unit” means a device that converts consumable fuel energ y into mechanical or electrical energy. Some example s of auxiliary power units are internal combustion engines, gas turbines, or fuel cells. “Battery electric vehicle” or “BEV” means any vehicle that operates solely by use of a battery or battery pack, or that is powere d primarily through the use of an electric battery or battery pack but uses a flywhee l or capacitor that stores energy produced by the electric motor or through regenerat ive braking to assist in vehicle operation. “Battery or Battery pack” means any electrical energy storage device consisting of any number of individual battery modu les or cells that is used to propel a battery electric or hybrid electric vehicle. These terms may also generically refer to capacitor and flywheel energy storage devices in th e context of hybrid electric vehicles.45-day Notice 02/08/08

Hearing Date: 03/2708

2 nd 15-day Notice: 10/03/08 B-2 “Battery state-of-charge” means the quantity of electrical energy remaining in the battery relative to the maximum rated capacity of the battery expressed in percent. “Charge-depleting” means that the battery of a hybrid electric vehicl e ultimately fully discharges and impairs vehicle operation as t he vehicle continuously operates over a given driving cycle when no off-vehicle charging is performed and the consumable fuel is regularly replenished. Hybrid electric veh icles are required to be classified as either charge-sustaining or charge-depleting over e ach driving cycle (i.e. UDDS, HFEDS, US06, or SC03). “Charge-sustaining” means that the battery of a hybrid electric vehicl e ultimately does not fully discharge and impair vehi cle operation as the vehicle continuously operates over a given driving cycle wh en no off-vehicle charging is performed and the consumable fuel is regularly repl enished. Hybrid electric vehicles are required to be classified as either charge-sust aining or charge-depleting over each driving cycle (i.e. UDDS, HFEDS, US06, or SC03).

“Consumable fuel” means any solid, liquid, or gaseous matter that re leases energy when consumed by an auxiliary power unit. “Electric drive system” means an electric motor and associated power electronics which provide acceleration torque to th e drive wheels sometime during normal vehicle operation. This does not include co mponents that could act as a motor, but are configured to act only as a generator or en gine starter in a particular vehicle application.

“Fuel-fired heater” means a fuel burning device that creates heat for the purpose of warming the passenger compartment of a v ehicle but does not contribute to the propulsion of the vehicle. “Hybrid electric vehicle” or “HEV” means any vehicle that can draw propulsion energy from both of the following on-veh icle sources of stored energy: 1) a consumable fuel and 2) an energy storage device suc h as a battery, capacitor, or flywheel.

“HFEDS” means highway fuel economy driving schedule. See 40 CFR

 600.109(b). “Neighborhood Electric Vehicle” or “NEV ” means a motor vehicle that meets the definition of “low-speed vehicle” either in sec tion 385.5 of the Vehicle Code or in 49 CFR 571.500 (as it existed on July 1, 2000), and is certified to zero-emission vehicle

standards.

“HFEDS” means highway fuel economy driving schedule. See 40 CFR

 600.109(b). “Off-vehicle charge capable” means having the capability to charge a battery from an off-vehicle electric energy source that can not be connected or coupled to the vehicle in any manner while the vehicle is being dr iven.

“Placed in service” means having been sold or leased to an end-user an d not just to a dealer or other distribution chain entity , and having been individually registered for on-road use by the California Department of Mot or Vehicles.

“PZEV” means any vehicle that is delivered for sale in Ca lifornia and that qualifies for a partial ZEV allowance of at least 0 .2.45-day Notice 02/08/08

Hearing Date: 03/2708

2 nd 15-day Notice: 10/03/08 B-3 “Regenerative braking” means the partial recovery of the energy normally dissipated into friction braking that is returned a s electrical current to an energy storage

device.

“SC03” means the U.S. EPA SC03 driving schedule represent ing vehicle operation with air conditioning, as set forth in Ap pendix I of 40 CFR Part 86. “SOC Net Change Tolerance” means the state-of-charge net change tolerance that is applied to the SOC Criterion for charge-sus taining hybrid electric vehicles when validating an emission test. See section D.8 of th ese procedures for tolerance specifications.

“SOC Criterion” means the state-of-charge criterion that is applie d to chargesustaining hybrid electric vehicle to validate an e mission test. The SOC Criterion requires that no net change in battery energy occur s over a given test cycle, i.e. the final battery state-of-charge that is recorded at t he end of the emission test must be equivalent to the initial battery state-of-charge t hat is set at the beginning of the emission test. The SOC Net Change Tolerance shall be applied to the SOC Criterion. “Specialty ZEV” means a ZEV that is designed for a commercial or governmental fleet application, and either [i] has the same zero emissions energy storage device and chassis as an existing ZEV from which it is modified, or [ii] in the case of a vehicle that is not based on an existing ZEV platform, is optimized for a particular duty cycle, such as urban delivery servi ce, that conflicts with optimization for maximum vehicle range. “Type 0, I, II, and III ZEV” all have the meanings set forth in section C.4.4(a ).

“US06” means the US06 driving schedule for aggressive dri ving as set forth in Appendix I of 40 CFR Part 86.

“UDDS” means urban dynamometer driving schedule as set fo rth Appendix I of

40 CFR Part 86.

“Zero-emission vehicle” or “ ZEV” means any vehicle certified to zero-emission

standards.

“Zero-emission VMT” means the vehicle miles traveled with zero exhaust emissions of any criteria pollutant (or precursor p ollutant).Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-1 C. Zero-Emission Vehicle Standards.

1. ZEV Emission Standard. The Executive Officer shall certify new 2005 and subsequent through 2008 model passenger cars, light-duty trucks and medium -duty vehicles as ZEVs if the vehicles produce zero exhau st emissions of any criteria pollutant (or precursor pollutant) under any and al l possible operational modes and conditions. Incorporation of a fuel-fired heater s hall not preclude a vehicle from being certified as a ZEV provided: (1) the fuel-fired hea ter cannot be operated at ambient temperatures above 40 o F, (2) the heater is demonstrated to have zero fuel evaporative emissions under any and all possible operational mo des and conditions, and (3) the emissions of any pollutant from the fuel-fired heat er when operated at an ambient temperature between 68 o F and 86 o F do not exceed the emission standard for that pollutant for a ULEV under section 1961(a)(1), titl e 13, CCR.

A vehicle that would meet the emissions standards f or a ZEV except that it uses a fuel-fired heater that can be operated at ambient temperatures above 40 o F, that cannot be demonstrated to have zero fuel evaporativ e emissions under any and all possible operation modes and conditions, or that ha s emissions of any pollutant exceeding the emission standard for that pollutant for a ULEV under section 1961(a)(1), title 13, CCR, shall be certified based on the emis sion level of the fuel-fired heater.

2. Percentage ZEV Requirements

2.1 General Percentage ZEV Requirement.

(a) Basic Requirement. The minimum percentage ZEV requirement for each manufacturer is listed in the table below as the pe rcentage of the PCs and LDT1s, and LDT2s to the extent required by section C.2.2(c), p roduced by the manufacturer and delivered for sale in California that must be ZEVs, subject to the conditions in section

C.2.2.

Model Years Minimum ZEV Requirement

2005 through 2008 10 percent 2009 through 2011 11 percent 2012 through 2014 12 percent 2015 through 2017 14 percent 2018 and subsequent 16 percent

(b) Calculating the Number of Vehicles to Which the Per centage ZEV Requirement is Applied. A manufacturer’s volume of PCs and LDT1s produced a nd delivered for sale in California will be averaged f or the 1997, 1998, and 1999 model years to determine the California PC and LDT1 produ ction volume for the model year 2005 ZEV requirements. For subseque nt the three-year periods following model years 2005, a manufacturer’s California production volume of PCs and LDT1s, and LDT2s as applicable, will be based on a three-year average o f the manufacturer’s volume of PCs and LDT1s, and LDT2s as applicable, produced and de livered for sale in California inFinal Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-2 the prior fourth, fifth and sixth years (e.g. 2006 to 2008 model-year ZEV requirements will be based on California production volumes of P Cs and LDT1s, and LDT2s as applicable, for 2000 to 2002 model years). This pr oduction averaging is used to determine ZEV requirements only, and has no effect on a manufacturer’s size determination. As an alternative to the three year averaging of prior year production described above, a manufacturer may during model ye ar 2005 or the first model year of a subsequent three year period elect to base its ZE V obligation on the number of PCs and LDT1s, and LDT2s to the extent required by sect ion C.2.1(c), produced by the

manufacturer and delivered for sale in California t hat same year. If a manufacturer elects to use this method after model year 2005 it must be used for each year of the three-year period. In applying the ZEV requirement , a PC, LDT1, or LDT2 as applicable, (beginning in the 2007 model year) that is produced by a small volume manufacturer, but is marketed in California by anot her manufacturer under the other manufacturer’s nameplate, shall be treated as havin g been produced by the marketing

manufacturer.

(c) Phase-in of ZEV Requirements for LDT2s. Beginning with t T he ZEV requirements for the 2007 2008 model year, 34% of a manufacturer’s LDT2 production shall be included in determining the manufacturer’s overall ZEV requirement under section C.2.1(a). in the increasing percentages shown the table belo w.

2007 2008

2009

2010

2011 2012+

17% 34% 51% 68% 85% 100%

(d) Exclusion of ZEVs in Determining a Manufacturer’s S ales Volume. In calculating for purposes of section C. 2.1(b) and (c) the volume of PCs, LDT1s and LDT2s a manufacturer has produced and delivered for sale in California, the manufacturer shall exclude the number of ZEVs produ ced by the manufacturer, or by a subsidiary in which the manufacturer has a greater than 50% ownership interest, and

delivered for sale in California.

2.2 Requirements for Large Volume Manufacturers.

(a) Primary Requirements for Large Volume Manufacturers . In the 2005 through 2008 model years, a large-volume manufactur er must meet at least 20% of its ZEV requirement with ZEVs or ZEV credits generated by such vehicles, and at least another 20% with ZEVs, advanced technology PZEVs, o r credits generated by such vehicles. The remainder of the large-volume manufa cturer’s ZEV requirement may be met using PZEVs or credits generated by such vehicl es. As the ZEV requirement

increases over ti me from 10% in model year 2005 to 16% in model year s 2018 and subsequent, the maximum portion of a large volume m anufacturer’s percentage ZEV requirement that may be satisfied by PZEVs that are not advanced technology PZEVs, or credits generated by such ve hicles, is limited to 6% of the manufacturer’s appl icable California PC, LDT1, and LDT2 production volume; ad vanced technology PZEVs orFinal Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-3 credits generated by such vehicles may be used to m eet up to one

- half of the manufacturer’s remaining ZEV requirement.

(b) Alternative Requirements for Large Volume Manufactu rers.

(1) Minimum Floor for Production of Type III ZEVs.

(A) Requirement For the 2005-2008 Model Years. A large volume manufacturer electing to be subject to the alternat ive compliance requirements during model years 2005 through 2008 must produce, deliver for sale, and place in service in California enough 2001-2008 model-year Type III ZEV s to generate ZEV credits sufficient to meet a cumulative percentage ZEV requ irement of 1.09 percent of the manufacturer’s average annual California sales of P Cs and LDT1s over the five year period from model years 1997 through 2001, or submi t an equivalent number of credits generated by such vehicles. The manufacturer may m eet up to one half of this requirement with [i] 2004-2008 model-year Type I or Type II ZEVs, provided that 20 Type I ZEVs or 10 Type II ZEVs will equal one Ty pe III ZEV, and [ii] 1997-2003 model-year Type I or Type II ZEVs that qualify for an extended service multiplier under section C.6. for a year primarily during calendar y ears 2004-2008, provided that 33 years of such a multiplier will equal one Type III ZEV.

(B) [RESERVED] Requirement For the 2009

- 2011 Model Years. A large volume manufacturer electing to be subject to the a lternative comp liance requirements during model years 2009 through 2011 must produce, deliver for sale, and place in service in California enough 2009

- 2011 model

- year Type III ZEVs to generate ZEV

credits sufficient to meet the 2009

- 2011 alternative path percentage, as c alculated pursuant to section C.2.2(b)(1)(E), of the manufact urer's section C.2.1(a) percentage ZEV requirement for the 2010 model year, based on t he prior year method described in section C.2.1(b), or submit an equivalent number of credits generated by su ch vehicles. The manufacturer may meet up to one half of this r equirement with [i] 2009

- 2011

model

- year Type I or Type II ZEVs, provided that 20 Type I ZEVs or 10 Type II ZEVs will equal one Type III ZEV, and [ii] 1997

- 2003 model

- year ZEVs that qualify fo r an extended service multiplier under section C.6. for a year primarily during calendar years

2009

- 2011, provided that 33 years of such a multiplier w ill equal one Type III ZEV.

(C) [RESERVED

]Requirement For the 2012

- 2014 Model Years. A large

volume man ufacturer electing to be subject to the alternative compliance requirements during model years 2012 through 2014 must produce, deliver for sale, and place in service in California enough 2012

- 2014 model

- year Type III ZEVs to generate ZEV

credits sufficient to meet the 2012

- 2014 alternative path percentage, as calculated pursuant to section C.2.2(b)(1)(E), of the manufact urer's section C.2.1(a) percentage ZEV requirement for the 2013 model year, based on t he prior year method described in section C.2.1(b), o r submit an equivalent number of credits generated by such vehicles. The manufacturer may meet up to one half of this r equirement with 2012

- 2014 model year Type I or Type II ZEVs, provided that 10 Type I ZEVs or 5 Type II ZEVs will equal one Type III ZEV.Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-4 (D) [RESERVED] Requirement For the 2015

- 2017 Model Years. A large volume manufacturer electing to be subject to the a lternative compliance requirements during model years 2015 through 2017 must produce, deliver for sale, and place in

service in Californi a enough 2015

- 2017 model

- year Type III ZEVs to generate ZEV

credits sufficient to meet the 2015

- 2017 alternative path percentage, as calculated in section C.2.2(b)(1)(E), of the manufacturer's secti on C.2.1(a) percentage ZEV requirement for the 2016 model year, based on the prior year method described in section C.2.1(b), or submit an equivalent number of credits generated by such vehicles. The manufacturer may meet up to one half of this r equirement with 2015

- 2017 model year Type I or Type II ZEVs, provid ed that 10 Type I ZEVs or 5 Type II ZEVs will equal one Type III ZEV.

(E) [RESERVED] Calculation of a Manufacturer’s Alternative Path Pe rcentage

. A manufacturer’s alternative path percentage for a given time period is calculated as the target number of cr edits for each time period divided by the applicabl e combined model year ZEV obligation of all large volume manuf acturers for that same time period,

where:

Time

Period (MYs) Target

Number of

Alternative Path Type III

ZEVs Credits

per Vehicl

e Target

Number of

Credits Combined

Model Year

ZEV Obligation Alternative

Path Percentage

2009

– 2011 2,500 4 10,000 A 10,000/Ax100

2012

– 2014 25,000 3 75,000 B 75,000/B x100

2015

– 2017 50,000 3 150,000 C 150,000/C

x100

And where:

A = The combined total section C.2.1(a) percentage ZEV requirement, based on the prior year method described in section C.2.1(b), th at would apply for all large manufacturers for the 2010 model year, B = The combined total section C.2.1(a) percentage ZEV requirement, based on the prior year method described in section C.2.1(b), that wou ld apply for all large manufacturers for the 2013 model year, and C = The combined total section C.2.1(a) percentage ZEV requirement, based on the prior year method described in section C.2.1(b), th at woul d apply for all large manufacturers for the 2016 model year.

(F) Exclusion of Additional Credits for Transportation Systems. Any additional credits for transportation systems generated in acc ordance with section C.7.5 shall not be counted towards compliance with this section C.2.2(b)(1)(A)

- (E ).Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-5 (G) Carry-over of Excess Credits. Where a manufacturer generates more qualifying ZEV credits than are needed to meet the minimum floor requirement for the production of Type III ZEVs in one of the periods i dentifi ed in section C.2.2(b)(1)(A)

- (C), the qualifying ZEV credits may be used towards meet ing the minimum floor requirement for the production of Type III ZEVs in a subsequent period, provided that the value of these carryover credits shall be based on the mode l year in which the credits are used. ZEV credits generated from excess production in mo del years 2005 through 2008 may be carried forward and applied to the 2009 through 2011 minimum floor requirement specified in California Exhaust Emission Standards and Test Procedures for 2009 and Subsequent Model Zero-Emission Vehicles, and 2001 a nd Subsequent Model Hybrid Electric Vehicles, in the Passenger Car, Light-Duty Truck and Medium-Duty Vehicle Classes section C.2.2(b)(1)(B) provided that the va lue of these carryover credits shall be based on the model year in which the credits are used.

(H) Failure to Meet Requirement for Production of Type III ZEVs. A manufacturer that, after electing to be subject to the alternative requirements in section C.2.2(b) for any model year from 2005 through 2017 2008 , fails to meet the requirement in section C.2.2(b)(1)(A)

- (D ) by the end of the specified three or four year period in which the model year falls, shall be treated as sub ject to the primary requirements in section C.2.1(a) for all model years in the specifi ed three or four year period.

(I) The number of Type III ZEVs needed for a manuf acturer under section C.2.2(b)(1)(A)

- (D ) shall be rounded to the nearest whole number.

(2) Compliance With Percentage ZEV Requirements. In the 2005 through 2008 model years, a large volume manufacturer elect ing to be subject to the alternative compliance requirements in a given model year must meet at least 40 percent of its ZEV requirement for that model year with ZEVs, adva nced technology PZEVs, or credits generated from such vehicles. The remainde r of the large volume manufacturer’s ZEV requirement may be met using PZE Vs or credits generated from such vehicles. As the ZEV requirement increases ov er time from 11% in model year

2009 to 16% in model years 2018 and subsequent, the max imum portion of the large volume manufacturer’s percentage ZEV requirement th at may be satisfied by PZEVs that are not advanced technology PZEVs, or credits generated by such vehicles, is

limited to 6% of the manufacturer’s applicable California PC, LDT1, and LDT2 production volume; ZEVs, AT PZEVs, or credits generated by such vehicles may be used to meet the manufacturer’s remaining ZEV requi rement.

(3) [ RESERVED] Sunset of Alternative Requirements After t he 2017 2008

Model Year. The alternative requirements in section C.2.2(b) are not available after the 2017 model year.

(c) Election of the Primary or Alternative Requirements for Large Volume Manufacturers for the 2005 through 2008 Model Years

. A large volume manufacturer shall be subject to the primary ZEV requirements fo r the 2005 model year unless itFinal Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-6 notifies the Executive Officer in writing prior to the start of the 2005 model year that it is electing to be subject to the alternative complianc e requirements for that model year. Thereafter, through the 2008 model year, a manufacturer shall be subject to the same compliance option as applied in the previous model year unless it notifies the Executive Officer in writing prior to the start of a new mode l year that it is electing to switch to the other compliance option for that new model year. H owever, a large volume manufacturer that has previously elected to be subj ect to the primary ZEV requirements for one or more of the model years in the three or four year periods identified in section C.2.2(b)(1)(A)

- (D ) may prior to the end of the three or four year period elect to become subject to the alternative compliance requirements for the full three or four year period upon a demonstration that it has complied with all of the applicable requirements for that period in section C.2.2(b)(1)(A)

- (D ).

(d) Use of Credits from Model Year 2003-2004 PZEVs. A large volume manufacturer may produce, and deliver for sale in C alifornia, model year 2003 or 2004 PZEVs that generate credits exceeding the number of credits equal to 6 percent of the average annual volume of 1997, 1998 and 1999 PCs an d LDT1s produced and delivered for sale in California by the manufacture r. In that event, the manufacturer may use those excess credits as AT PZEV credits in the 2005 and 2006 model years.

2.3 Requirements for Intermediate Volume Manufactur ers. In the 2005 and subsequent through 2008 model years, an intermediate volume manufacturer m ay meet its ZEV requirement with up to 100 percent PZE Vs or credits generated by such

vehicles.

2.4 Requirements for Small Volume Manufacturers and Independent Low

Volume Manufacturers. A small volume manufacturer or an independent lo w volume manufacturer is not required to meet the percentage ZEV requirements. However, a small volume manufacturer or an independent low vol ume manufacturer may earn and market credits for the ZEVs or PZEVs it produces an d delivers for sale in California.

2.5 Counting ZEVs and PZEVs in Fleet Average NMOG Calcu lations . For purposes of calculating a manufacturer’s fleet aver age NMOG value and NMOG credits under sections 1960.1(g)(2) and 1961(b) and (c), ti tle 13, CCR, a vehicle certified as a ZEV is counted as one ZEV, and a PZEV is counted as one SULEV certified to the 150,000 mile standards, regardless of any ZEV or PZ EV multipliers.

2.6 Implementation Prior to 2005 Model Year

. Prior to the 2005 model year, a manufacturer that voluntarily produces vehi cles meeting the ZEV emission standards applicable to 2005 and subsequent model y ear vehicles may certify the vehicles to those standards and requirements for pu rposes of calculating fleet average

NMOG exhaust emission values and NMOG credits under sections 1960.1(g)(2) and 1961(b) and (c), title 13, CCR, and for calculating ZEV credits as set forth in

section C.7 4

.Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-7 2.7 Changes in Small Volume, Independent Low Volu me, and

Intermediate Volume Manufacturer Status.

(a) Increases in California Production Volume. In the 2003 and subsequent through 2008 model years, if a small volume manufacturer’s avera ge California production volume exceeds 4,500 units of new PCs, L DTs, and MDVs based on the average number of vehicles produced and delivered f or sale for the three previous consecutive model years, or if an independent low v olume manufacturer’s average California production volume exceeds 10,000 units o f new PCs, LDTs, and MDVs based on the average number of vehicles produced an d delivered for sale for the three previous consecutive model years, or if an intermed iate volume manufacturer’s average California production volume exceeds 60,000 units o f new PCs, LDTs, and MDVs based on the average number of vehicles produced an d delivered for sale for the three previous consecutive model years (i.e., total produ ction volume exceeds 180,000 in a three-year period) , the manufacturer shall no longer be treated as a small volume, independent low volume, or intermediate volume manu facturer, as applicable, and shall comply with the ZEV requirements for independent lo w volume, intermediate volume or large volume manufacturers, as applicable, beginnin g with the sixth model year after the last of the three consecutive model years. The lead time shall be four rather than six years Requirements will begin in the fourth model year ra ther than the sixth model

year where a manufacturer ceases to be a small or interm ediate volume manufacturer in the 2003 or subsequent through 2008 model years due to the aggregation requirements in majority ownership situations, exce pt that if the majority ownership in the manufacturer was acquired prior to the 2001 mod el year, the manufacturer must comply with the stepped-up ZEV requirements startin g in the 2010 model year.

(b) Decreases in California Production Volume. If a manufacturer’s average California production volume falls below 4,500, 10, 000 or 60,000 units of new PCs, LDTs, and MDVs, as applicable, based on the average number of vehicles produced and delivered for sale for the three previous conse cutive model years, the manufacturer shall be treated as a small volume, independent low volume, or intermediate volume manufacturer, as applicable, and shall be subject t o the requirements for a small volume, independent low volume, or intermediate vol ume manufacturer beginning with the next model year. In determining small volume m anufacturer status, vehicles produced by one manufacturer and marketed in Califo rnia by another manufacturer under the other manufacturer’s nameplate shall be t reated as part of the California production volume of the sales of the marketing man ufacturer.

(c) Calculating California Production Volume in Change of Ownership Situations. Where a manufacturer experiences a change in owners hip in a particular model year, the change will affect application of the aggregati on requirements on the manufacturer starting with the next model year. The manufacture r’s small or intermediate volume manufacturer status for the next model year shall b e based on the average California production volume in the three previous consecutive model years of those manufacturers whose production volumes must be aggr egated for that next model year. For example, where a change of ownership during th e 2004 model year results in aFinal Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-8 requirement that the production volume of Manufactu rer A be aggregated with the production volume of Manufacturer B, Manufacturer A ’s status for the 2005 model year will be based on the production volumes of Manufact urers A and B in the 2002-2004 model years. Where the production volume of Manufa cturer A must be aggregated with the production volumes of Manufacturers B and C for the 2004 model year, and during that model year a change in ownership eliminates th e requirement that Manufacturer B’s production volume be aggregated with Manufactur er A’s, Manufacturer A’s status for the 2005 model year will be based on the produc tion volumes of Manufacturers A and C in the 2002-2004 model years. In either case , the lead time provisions in

section C. 2.5 7 (a) and (b) will apply.

3. Partial ZEV Allowance Vehicles (PZEVs).

3.1 Introduction

. This section C.3 sets forth the criteria for iden tifying

vehicles delivered for sale in California as PZEVs. A PZEV is a vehicle that cannot be certified as a ZEV but qualifies for a PZEV allowan ce of at least 0.2.

3.2 Baseline PZEV Allowance

. In order for a vehicle to be eligible to receive a PZEV allowance, the manufacturer must demonstrate compliance with all of the following requirements. A qualifying vehicle will receive a baseline PZEV allowance of

0.2.

(a) SULEV Standards. Certify the vehicle to the 150,000-mile SULEV

exhaust emission standards for PCs and LDTs in sect ion 1961(a)(1), title 13, CCR (for model years 2003 through 2006, existing SULEV inter mediate compliance standards shall apply to all PZEVs). Bi-fuel, fuel-flexible and dual-fuel vehicles must certify to the applicable 150,000-mile SULEV exhaust emission stan dards when operating on both fuels;

(b) Evaporative Emissions. Certify the vehicle to the evaporative emission standards in section 1976(b)(1)(E), title 13, CCR ( “ zero” -fuel evaporative emissions standards);

(c) OBD. Certify that the vehicle will meet the applicable on-board diagnostic requirements in sections 1968.1 or 1968.2, as applicable , title 13, CCR for 150,000 miles; and

(d) Extended Warranty. Extend the performance and defects warranty perio d set forth in sections 2037(b)(2) and 2038(b)(2) to 15 years or 150,000 miles, whichever occurs first, except that the time period is to be 10 years for a zero emission energy storage device used for traction power (such as a b attery, ultracapacitor, or other electric storage device).Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-9 3.3 Zero-Emission VMT PZEV Allowance

.

(a) Calculation of Zero Emission VMT Allowance. A vehicle that meets the requirements of section C.3.2 and has zero-emission vehicle miles traveled (“VMT”) capability will generate an additional zero emissio n VMT PZEV allowance, calculated as

follows:

Urban All-Electric Range Zero-emission VMT Allowance

< 10 miles 0.0

10 miles to 90 miles (33.8 + [0.5 x Urban AER])/35

> 90 miles 2.25

The urban all-electric range shall be determined in accordance with section E.3.(2)(a) 2.1 of these test procedures.

(b) Alternative Procedures. As an alternative to determining the zeroemission VMT allowance in accordance with the prece ding section C.3.3(a), a manufacturer may submit for Executive Officer appro val an alternative procedure for determining the zero-emission VMT potential of the vehicle as a percent of total VMT, along with an engineering evaluation that adequatel y substantiates the zero-emission VMT determination. For example, an alternative pro cedure may provide that a vehicle with zero-emissions of one regulated pollutant (e.g . NOx) and not another (e.g. NMOG) will qualify for a zero-emission VMT allowance of 1 .5.

(c) Additional Allowances for Qualifying HEVs. The Executive Officer shall approve an additional 0.1 zero-emission VMT partial ZEV allowance for an HEV with an all-electric range if the manufacturer demonstrates to the reasonable satisfaction of the Executive Officer that the HEV is equipped with sof tware and/or other strategies that would promote maximum use of off-vehicle charging, and that the strategies employed are reasonably reliable and tamper-proof.

3.4 PZEV Allowance for Advanced ZEV Componentry . A vehicle that meets the requirements of section C.3.2 may qualify for an advanced componentry PZEV allowance as provided in this section 3.4.

(a) Use of High Pressure Gaseous Fuel or Hydrogen Stora ge System . A vehicle equipped with a high pressure gaseous fuel storage system capable of refueling at 3600 pounds per square inch or more and operatin g exclusively on this gaseous fuel shall qualify for an advanced componentry PZEV allo wance of 0.2. A vehicle capable of operating exclusively on hydrogen stored in a hi gh pressure system capable of refueling at 3600 pounds per square inch or more, o r stored in nongaseous form, shall instead qualify for an advanced componentry PZEV al lowance of 0.3.Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-10 (b) Use of a Qualifying HEV Electric Drive System.

(1) Classification of HEVs. HEVs qualifying for additional allowances or allowances that may be used in the AT PZEV category are classified in one of five types of HEVs based on the criteria in the followin g table.

Characteristics Type A Type B Type C Type D Type E

Electric Drive System Peak Power Output >= 4 kW >= 4 kW

<10 kW >= 10 kW >= 10 kW >= 50 kW

Traction Drive System Voltage <60

Volts >= 60

Volts < 60 Volts >= 60

Volts >= 60

volts

Traction Drive

Boost Yes Yes Yes Yes Yes

Regenerative Braking Yes Yes Yes Yes Yes

Idle Start/Stop Yes Yes Yes Yes Yes

(2) Type A HEVs. A 2008 or earlier model-year PZEV that the manufa cturer
demonstrates to the reasonable satisfaction of the Executive Officer meets all of the criteria for a Type A HEV does not receive an addit ional allowance for meeting those criteria but generates credits that may be used in the AT PZEV category through the 2008 model year.

(3) Type B HEVs. A 2008 or earlier model-year PZEV that the manufa cturer
demonstrates to the reasonable satisfaction of the Executive Officer meets all of the criteria for a Type B HEV qualifies for an addition al advanced componentry allowance

of 0.2.

(4) Type C HEVs. A 2011 2008 or earlier model-year PZEV that the

manufacturer demonstrates to the reasonable satisfa ction of the Executive Officer meets all of the criteria for a Type C HEV, and tha t is equipped with an advanced traction energy storage system – such as nickel met al-hydride batteries, ultracapacitors, or other similar systems – with a design lifetime o f at least 10 years, qualifies for an additional advanced componentry allowance of 0.2.

(5) Type D HEVs. A PZEV that the manufacturer demonstrates to the

reasonable satisfaction of the Executive Officer me ets all of the criteria for a Type D HEV qualifies for an additional advanced componentr y allowance of 0.4 in the 2003 through 2011 2008 model years, 0.35 in the 2012 through 2014 model ye ars, and 0.25 in the 2015 and subsequent model years

.Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-11 (6) Type E HEVs. A PZEV that the manufacturer demonstrates to the

reasonable satisfaction of the Executive Officer me ets all of the criteria for a Type E HEV qualifies for an additional advanced componentr y allowance of 0.5 in the 2003 through 2011 2008 model years, 0.45 in the 2012 through 2014 model ye ars, and 0.35 in

the 2015 and sub sequent model years

.

(7) Severability. In the event that all or part of section C.3.4(b) (1)-(6) is found invalid, the remainder of these standards and test procedures, including the remainder of section C.3.4(b)(1)-(6) if any, remains in full force and effect.

3.5 PZEV Allowance for Low Fuel-Cycle Emissions. A vehicle that uses fuel(s) with very low fuel-cycle emissions shall re ceive a PZEV allowance not to exceed 0.3 (0.15 in the case of an HEV that uses for propu lsion any fuel that does not have very low fuel-cycle emissions). In order to receiv e the fuel-cycle PZEV allowance, a

manufacturer must demonstrate to the Executive Offi cer, using peer-reviewed studies or other relevant information, that NMOG emissions associated with the fuel(s) used by the vehicle (on a grams/mile basis) are lower than or equal to 0.01 grams/mile. Fuelcycle emissions must be calculated based on near-te rm production methods and infrastructure assumptions, and the uncertainty in the results must be quantified. The fuel-cycle PZEV allowance is calculated according t o the following formula:

PZEV Fuel Cycle Allowance = 0.3 x [(percent of VM T using fuel(s) meeting the requirements of the preceding paragraph)/ 100]

A manufacturer’s demonstration to the Executive Off icer that a vehicle qualifies for a fuel-cycle PZEV allowance shall include test result s and/or empirical data supporting the estimate of the relative proportion of VMT whil e operating on fuel(s) with very low fuel-cycle emissions.

3.6 Calculation of PZEV Allowance.

(a) Calculation of Combined PZEV Allowance for a Vehicl e . The combined PZEV allowance for a qualifying vehicle in a partic ular model year is the sum of the PZEV allowances listed in this section C.3.6, multi plied by any PZEV introduction phase-in multiplier listed in section C.3.7, subjec t to the cap in section C.3.6(b).

(1) Baseline PZEV Allowance. The baseline PZEV allowance of 0.2 for vehicles meeting the criteria in section C.3.2;

(2) Zero Emission VMT PZEV Allowance. The zero-emission VMT PZEV allowance, if any, determined in accordance with se ction C.3.3.;

(3) Advanced ZEV Componentry PZEV Allowance. The advanced ZEV componentry PZEV allowance, if any, determined in a ccordance with section C.3.4; andFinal Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-12 (4) Fuel-cycle Emissions PZEV Allowance. The fuel-cycle emissions PZEV allowance, if any, determined in accordance with se ction C.3.5.

(b) Caps on the Value of an AT PZEV Allowance.

(1) [RESERVED] Cap for 2012 and Subsequent Model

- Year Vehicles. The

maximum value of AT PZEV allowances a 2012 and subsequent model

- year vehicle may earn, including the baseline PZEV allowance, is 3.0.

(2) Cap Based on the Credit Value of a Type III ZEV. In no case may the combined AT PZEV allowance for a qualifying vehicle in a particular model year, including the baseline PZEV allowance, exceed the Z EV credits for a Type III ZEV placed in service in the same model year.

3.7 PZEV Multipliers

(a) PZEV Introduction Phase-In Multiplier. Each 2000 through 2005 modelyear PZEV that is produced and delivered for sale i n California, other than a PZEV qualifying for a phase-in multiplier under section C.3.7(b), qualifies for a PZEV introduction phase-in multiplier as follows:

MY 2000-2003 MY 2004 MY 2005 Multiplier 4.0 2.0 1.33

(b) Introduction Phase-In Multiplier for PZEVs That Ear n a Zero Emission

VMT Allowance . Each 2000 through 2011 2008 model year PZEV that earns a zero emission VMT allowance under section C.3.3 and is p roduced and delivered for sale in California qualifies for a phase-in multiplier as f ollows:

MY 2000-2008 MY 2009

- 2011

Multiplier 6.0 3.0

4. Qualification for ZEV Multipliers and Credits.

4.1 1999-2000 Model-Year ZEV Multiplier Calculation for Extended Electric Range Vehicles. Each ZEV that is produced and delivered for sale in California in the 1999-2000 model years and that ha s an extended electric range shall qualify for a ZEV multiplier as follows:

All-electric range MY 1999-2000

100-175 6-10Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-13 ZEV multipliers under the above schedule will be de termined by linear interpolation

between the values shown in the above schedule. Ra nge shall be determined in accordance with section E.3.(2)(a) of these test procedures. ZEVs that have a refueli ng time of less than 10 minutes and a range of 100 mil es or more shall be counted as having unlimited all-electric range, and shall cons equently earn the maximum allowable ZEV multiplier for a specific model year. ZEVs tha t have a range of 80 to 99 miles shall qualify for ZEV multipliers in the 1999-2000 model years in accordance with the following equation:

ZEV multiplier = (6) x (AER equivalent to a 10 m inute recharge/100) x 0.5.

As an option to the above mechanism, the manufactur er of a 1999 model-year ZEV may elect to have its multiplier based on the regul atory requirements pertaining to multipliers based on range or specific energy in se ction 1960.1(g)(2) and (h)(2). title 13, CCR, that were applicable to 1999 model-year ZEVs i mmediately before this

section C 1962 became operative on November 27, 1999 as a result of the “LEV II” rulemaking.

4.2 ZEV Multipliers for 2001-2002 Model Years.

(a) ZEV Phase-In Multiplier. Each 2001 and 2002 model-year ZEV that is placed in service in California by September 30, 20 03 qualifies for a ZEV phase-in multiplier of 4.0. A 2001 or 2002 model-year ZEV t hat is placed in service in California after September 30, 2003 earns credits in accordanc e with section 4.4 instead of

section 4.2.

(b) ZEV Extended Electric Range Multiplier.

(1) Basic Multiplier Schedule. Each 2001 and 2002 model-year ZEV that is placed in service in California and that has an ext ended urban electric range qualifies for a ZEV extended electric range multiplier as fol lows:

Urban All-Electric Range Multiplier

< 50 miles 1

> ≥ 50 miles to < 275 miles (Urban AER-25)/25

> ≥ 275 miles 10

A NEV is not eligible to earn a ZEV extended electr ic range multiplier. In determining ZEV range multipliers, specialty ZEVs may, upon Exe cutive Officer approval, be tested at the parameters used to determine the ZEV multipl iers for the existing ZEV.Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-14 (2) Fast refueling.

(A) Full Fueling in 10 Minutes or Less. A 2001 -2002 model-year ZEV with the demonstrated capability to accept fuel or elect ric charge until achieving at least 95% SOC or rated fuel capacity in 10 minutes or less wh en starting from all operationally allowable SOC or fuel states is counted as having u nlimited zero emission range and qualifies for the maximum allowable ZEV extended el ectric range multiplier.

(B) At Least 60-Mile Range in Less Than 10 Minutes. A 2001-2002 model year ZEV with the demonstrated capacity to accept f uel or electric charge equivalent to at least 60 miles of UDDS range when starting from 20% SOC in less than 10 minutes is counted as having 60 additional miles (up to a 2 75 mile maximum) of UDDS range in the range multiplier determination in section C.4.2 (c)(1).

(c) Combined Multiplier. During the 2001-2002 model years, the combined ZEV multiplier for each ZEV in a specific model yea r is the product of:

(1) The ZEV phase-in multiplier if any as set forth in section C.4.2(a), times

(2) The extended electric range multiplier if any a s set forth in section C.4.2(b).

4.3 Effect of ZEV Multipliers in the 1996-2002 Mode l Years

. In calculating the number of ZEVs produced and delivered for sale in California by a manufacturer in

the 1996-2002 model years and the ZEV credits from such vehicles, the number of ZEVs qualifying for a particular ZEV multiplier sha ll be multiplied by the combined ZEV multiplier.

4.4 ZEV Credits for the 2003 and Subsequent through 2008 Model Years.

(a) ZEV Tiers for Credit Calculations . Starting in the 2003 model year, ZEV credits from a particular ZEV are based on the assi gnment of a given ZEV into one of the following five ZEV tiers:Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-15 ZEV Tier Common

Description UDDS ZEV

Range Fast Refueling Capability

NEV NEV No minimum N/A Type 0 Utility EV <50 miles N/A Type I City EV >= 50, <100

miles N/A

Type II Full Function

EV >= 100 miles N/A

Type III Fuel Cell EV >= 100 miles Must be capable of replacing 95% maximum rated energy capacity

in <= 10 minutes Must be capable of replacing 95 miles (UDDS ZEV range) in

≤ 10 minutes per section C.4.2(b)(2)(A)

A specialty ZEV that has the same zero emission ene rgy storage device and chassis as an existing ZEV from which it was modified may, upo n Executive Officer approval, be categorized on the basis of that existing ZEV. A s pecialty vehicle that is optimized for a particular duty cycle that conflicts with optimizat ion for maximum vehicle range may be promoted to the next higher ZEV tier upon a determi nation by the Executive Officer that the specialty vehicle has ZEV componentry equivalen t to that utilized by ZEVs in the next tier and would meet the requirements for the n ext tier if optimized for maximum

range.

(b) ZEV Credits for 2003 and Subsequent through 2008 Model-Year ZEVs. A 2003 and subsequent through 2008 model-year ZEV, other than a NEV, earns 1 ZEV credit when it is produced and delivered for sale i n California. A 2003 and subsequent through 2008 model-year ZEV earns additional credits based on t he earliest model year in which the ZEV is placed in service (n ot earlier than the ZEV’s model year). The following table identifies the total credits that a ZEV in each of the five ZEV tiers will earn, including the credit not contingen t on placement in service, if it is placed in service in the specified model calendar year or by June 30 after the end of the specified model calendar year.Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-16 Total Credit Earned by ZEV Type and Model Year for Production and Delivery for

Sale and for Placement

Tier Model Calendar

Year in Which ZEV is Placed in Service

2003 2004 2005 200

6 2007 200

8 200

9 201

0 201

1 2012+

NEV 1.25 0.62

5 0.62

5 0.15 0.15 0.15 0.15 0.15 0.15 0.15

Type 0 (Utility) 1.5 1.5 1.5 1.5 1.5 1.5 1 1 1 1

Type 1 (City) 8 8 8 7 7 7 2 2 2 2

Type II 12 12 12 10 10 10 3 3 3 3

Type III 40 40 40 40 40 40 4 4 4 3

(c) Multiplier for Certain Type I and Type II ZEVs. A 2004 through 2011 2008 model-year Type I and Type II ZEV shall qualify for a multiplier of 1.25 if it is either sold to a motorist or is leased for three or more years to a motorist who is given the option to purchase or re-lease the vehicle for two years or m ore at the end of the first lease term.

(d) Counting a Type III ZEV Placed in a Section 177 Sta te. Through the

2011 2008 model year, a Type III ZEV that is certified to the California ZEV standards and is placed in service in a state that is adminis tering the California ZEV requirements pursuant to section 177 of the federal Clean Air Ac t (42 U.S.C. § 7507) applicable for the ZEV’s model year may be counted towards complia nce with the California percentage ZEV requirements in section C.2, includi ng the requirements in section C.2.2(b), as if it were delivered for sale and plac ed in service in California. Similarly, a

2011 2008 and earlier model-year Type III ZEV that is certif ied to the California ZEV standards and is placed in service in California ma y be counted towards the percentage ZEV requirements of any state that is administering the California ZEV requirements pursuant to section 177 of the federal Clean Air Ac t, including requirements based on section C.2.2(b).

5. [Reserved]

6. Extended Service Multiplier for 1997-2003 Model- Year ZEVs and

PZEVs With ≥ 10 Mile Zero Emission Range

. Except in the case of a NEV, an additional ZEV or PZEV multiplier will be earned by the manufacturer of a 1997 through 2003 model-year ZEV, or PZEV with ≥ 10 mile zero emission range, for each full year it is registered for operation on public roads in Cali fornia beyond its first three years of service, through the 2011 2008 calendar year. For additional years of service sta rting earlier than April 24, 2003, the manufacturer will receive 0.1 times the ZEV credit that would be earned by the vehicle if it were leased or sold new in that year, includingFinal Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-17 multipliers, on a year-by-year basis beginning in t he fourth year after the vehicle is initially placed in service. For additional years of service starting April 24, 2003 or later,

the manufacturer will receive 0.2 times the ZEV cre dit that would be earned by the vehicle if it were leased or sold new in that year, including multipliers, on a year-by-year basis beginning in the fourth year after the vehicl e is initially placed in service. The extended service multiplier is reported and earned in the year following each continuous year of service. Additional credit cannot be earne d after model year 2011.

7. Generation and Use of ZEV Credits; Calculation o f Penalties

7.1 Introduction. A manufacturer that produces and delivers for sale in California ZEVs or PZEVs in a given model year exce eding the manufacturer’s ZEV requirement set forth in section C.2 shall earn ZEV credits in accordance with this

section C.7.

7.2 ZEV Credit Calculations.

(a) Credits from ZEVs . The amount of g/mi ZEV credits earned by a manufacturer in a given model year from ZEVs shall be expressed in units of g/mi NMOG, and shall be equal to the number of credits f rom ZEVs produced and delivered for sale in California that the manufacturer applie s towards meeting the ZEV requirements for the model year subtracted from the number of ZEVs produced and delivered for sale in California by the manufacture r in the model year and then multiplied by the NMOG fleet average requirement fo r PCs and LDT1s for that model

year.

(b) Credits from PZEVs. The amount of g/mi ZEV credits from PZEVs earned by a manufacturer in a given model year shall be ex pressed in units of g/mi NMOG, and shall be equal to the total number of PZEV allowanc es from PZEVs produced and

delivered for sale in California that the manufactu rer applies towards meeting its ZEV requirement for the model year subtracted from the total number of PZEV allowances from PZEVs produced and delivered for sale in Calif ornia by the manufacturer in the model year and then multiplied by the NMOG fleet av erage requirement for PCs and LDT1s for that model year.

(c) Separate Credit Accounts. The number of credits from a manufacturer’s [i] ZEVs and [ii] advanced technology PZEVs, and [i ii] all other PZEVs shall each be maintained separately.

7.3 ZEV Credits for MDVs and LDTs Other Than LDT1s . ZEVs and PZEVs classified as MDVs or as LDTs other than LDT1s may be counted toward the ZEV requirement for PCs, and LDT1s, and LDT2s as applicable , and included in the calculation of ZEV credits as specified in this sec tion C.4 if the manufacturer so designates.Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-18 7.4 ZEV Credits for Advanced Technology Demonstrati on Programs . A vehicle, other than a NEV, that is placed in a Cali fornia advanced technology demonstration program may earn ZEV credits even if it is not “delivered for sale. ” or registered with the California Department of Motor Vehicles (DMV). To earn such credits, the manufacturer must demonstrate to the r easonable satisfaction of the Executive Officer that the vehicles will be regular ly used in applications appropriate to evaluate issues related to safety, infrastructure, fuel specifications or public education, and that for more than 50 percent of the first year of placement the vehicle will be situated in California. Such a vehicle is eligible to receive the same allowances and credits that it would have earned if placed in serv ice. To determine vehicle credit, the model-year designation for a demonstration vehicle shall be consistent with the modelyear designation for conventional vehicles placed i n the same timeframe.

7.5 ZEV Credits for Transportation Systems

.

(a) General. In model years 2001 through 2011 2008 , a ZEV, advanced technology PZEV or PZEV placed as part of a transpo rtation system may earn additional ZEV credits, which may used in the same manner as other credits earned by vehicles of that category, except as provided in se ction C.7.5(c) below. A NEV is not eligible to earn credit for transportation systems. To earn such credits, the

manufacturer must demonstrate to the reasonable sat isfaction of the Executive Officer that the vehicle will be used as a part of a projec t that uses an innovative transportation system as described in section C. 7.5(b) below.

(b) Credits Earned. In order to earn additional credit under this section (g)(5) C.7.5 , a project must at a minimum demonstrate [i] share d use of ZEVs, AT PZEVs or PZEVs, and [ii] the application of “int elligent” new technologies such as reservation management, card systems, depot managem ent, location management, charge billing and real-time wireless information s ystems. If, in addition to factors [i] and [ii] above, a project also features linkage to transit, the project may receive further additional credit. For ZEVs only, not including NE Vs, a project that features linkage to transit, such as dedicated parking and charging fac ilities at transit stations, but does not demonstrate shared use or the application of intell igent new technologies, may also receive additional credit for linkage to transit. The maximum credit awarded per vehicle shall be determined by the Executive Officer, based upon an application submitted by the manufacturer and, if appropriate, the project m anager. The maximum credit awarded shall not exceed the following:

Type of Vehicle Shared Use, Intelligence Linkage to Transit

PZEV 2 1 Advanced Technology

PZEV 4 2

ZEV 6 3Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-19 (c) Cap on Use of Credits.

(1) ZEVs. Credits earned or allocated by ZEVs pursuant to t his section C.7.5, not including all credits earned by the vehicle its elf, may be used to satisfy up to onetenth of a manufacturer’s ZEV obligation in any giv en model year.

(2) AT PZEVs. Credits earned or allocated by AT PZEVs pursuant to this section C.7.5, not including all credits earned by the vehicle itself, may be used to satisfy up to one-twentieth of a manufacturer’s ZEV obligation in any given model year, but may only be used in the same manner as other cr edits earned by vehicles of that category.

(3) PZEVs. Credits earned or allocated by PZEVs pursuant to this section C.7.5, not including all credits earned by the vehi cle itself, may be used to satisfy up to one-fiftieth of the manufacturer’s ZEV obligation i n any given model year, but may only

be used in the same manner as other credits earned by vehicles of that category.

(d) Allocation of Credits. Credits shall be assigned by the Executive Officer to the project manager or, in the absence of a separat e project manager, to the vehicle manufacturers upon demonstration that a vehicle has been placed in a project. Credits shall be allocated to vehicle manufacturers by the Executive Officer in accordance with a recommendation submitted in writing by the projec t manager and signed by all manufacturers participating in the project, and nee d not be allocated in direct proportion to the number of vehicles placed.

7.6 Submittal Use of ZEV Credits . A manufacturer may meet the ZEV requirements in any given model year by submitting to the Executive Officer a commensurate amount of g/mi ZEV credits, consistent with section C.2. These credits may be earned previously by the manufacturer or acq uired from another party, except that beginning with the 2006 model year credits ear ned from NEVs offered for sale or placed in service in model years 2001 through 2005 cannot be used to satisfy more than the following portion of a manufacturer’s perc entage ZEV obligation that may only be satisfied with credits from ZEVs and, starting w ith the 2009 model year, the

manufacturer ’s percentage ZEV obligation that may be satisfied by credits from AT

PZEVs but not PZEVs :

ZEV Category

AT PZEV Category

2006 2007-2008 2009 2010 and

beyond

75% 50% 75% 50%

This limitation applies to credits earned in model years 2001 through 2005 by the same manufacturer or earned in model years 2001 through 2005 by another manufacturer and acquired. The amount of g/mi ZEV credits requi red to be submitted shall be calculated according to the criteria set forth in t his section C.7.Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-20 (a) Carry forward provisions for LVMs. ZEV credits generated from excess production in model years 2005 through 2008, includ ing those acquired from another party, may be carried forward and applied to the ma nufacturer’s percentage ZEV obligation that may only be satisfied by credits fr om ZEVs in section C.2.2(b)(1)(A). Beginning with the 2012 model year, those earned ZE V credits may no longer be used to satisfy the manufacturer’s percentage ZEV obliga tion that may only be satisfied by credits from ZEVs, but may be used to satisfy the m anufacturer’s percentage ZEV obligation that may be satisfied by credits from En hanced AT PZEVs, AT PZEVs, or PZEVs. For example, ZEV credit earned in 2008 woul d retain full flexibility through 2011, at which time that credit could only be used as Enhanced AT PZEV, AT PZEV, or

PZEV credits.

(b) Carry forward provisions for manufacturers other t han LVMs. ZEV credits generated from 2008 model year production by manufa cturers that are not LVMs may be carried forward by the manufacturer producing th e ZEV credit until the manufacturer becomes subject to the LVM requirements, after the transition period permitted in section C.2.7(a). When subject to the LVM requirem ents, a manufacturer must comply with the provisions of section C.7.6(a).

ZEV credits generated from 2008 model year producti on traded by a manufacturer other than a LVM to any other manufacturer, includi ng a LVM, are subject to

section C.7.6(a), applicable beginning 2008 model year (e.g ., a 2008 model year ZEV credit traded in calendar year 2010 can only be app lied towards the portion of the manufacturer’s requirement that must be met with ZE Vs through model year 2011; beginning in model year 2012, the credit can only b e applied to the portion of the manufacturer’s requirement that may be met with Enh anced AT PZEVs, AT PZEVs, or PZEVs).

7.7 Requirement to Make Up a ZEV Deficit

.

(a) General

. A manufacturer that produces and delivers for sa le in California fewer ZEVs than required in a given model year shal l make up the deficit by the end of

the next third model year by submitting to the Executive Officer a commensurate amount of g/mi ZEV credits, except that credits gen erated from PZEVs may be used to offset deficits for two model years . The amount of ZEV credits required to be submitt ed shall be calculated by [i] adding the number of ZEV s produced and delivered for sale in California by the manufacturer for the model year t o the number of ZEV allowances from partial ZEV allowance vehicles produced and de livered for sale in California by the manufacturer for the model year (for a large volume manufacturer, not to exceed that permitted under section C.2.2 1 ), [ii] subtracting that total from the number of Z EVs required to be produced and delivered for sale in C alifornia by the manufacturer for the model year, and [iii] multiplying the resulting val ue by the fleet average requirements for PCs and LDT1s for the model year in which the defic it is incurred.

7.8 Penalty for Failure to Meet ZEV Requirements . Any manufacturer that fails to produce and deliver for sale in California the required number of ZEVs or andFinal Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 C-21 submit an appropriate amount of g/mi ZEV credits an d does not make up ZEV deficits within the specified time period shall be subject t o the Health and Safety Code section 43211 civil penalty applicable to a manufacturer th at sells a new motor vehicle that does not meet the applicable emission standards ado pted by the state board. The

cause of action shall be deemed to accrue when the ZEV deficits are not balanced by the end of the specified time period. For the purpo ses of Health and Safety Code section 43211, the number of vehicles not meeting t he state board's standards shall be calculated according to the following equation, pro vided that the percentage of a large volume manufacturer’s ZEV requirement for a given m odel year that may be satisfied with partial ZEV allowance vehicles or ZEV credits from such vehicles may not exceed the percentages permitted under section C.2.2 1 :

(No. of ZEVs required to be produced and delivered for sale in California for the model year) - (No. of ZEVs produced and delivered f or sale in California for the model year) - (No. of ZEV allowances from partial Z EV allowance vehicles produced and delivered for sale in California for t he model year) - [(Amount of

ZEV credits submitted for the model year) / (the fleet average requirement for PCs and LDT1s for the model-year)].

8. Severability. Each provision of these standards and test procedu res is severable, and in the event that any provision of t hese standards and test procedures is held to be invalid, the remainder of the standards and test procedures remains in full

force and effect.Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 D-1 D. Certification Requirements [NO CHANGE]Final Regulation Order – Part 3

Hearing Date: 03/27/08

Adopted: 12/17/08 E-1 E. Test Procedures [NO CHANGE ]