Fisker Inc. intends to sell emissions credits earned by its upcoming electric vehicles to car manufacturers on the allowance market.
On Tuesday, June 6, the EV brand announced its emissions credit strategy based on information from the California Air Resources Board (CARB), the National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency (EPA). The company, a revival of the short-lived Fisker Automotive brand, plans to launch its first generation of battery-powered cars in the U.S. on June 19. Its two vehicles, the Ocean One and Ocean Extreme SUVs, feature a driving range of 360 miles, beating out the Model Y, the automotive industry’s current best-seller.
Under the Corporate Average Fuel Economy (CAFE) standards, car manufacturers must meet annual fuel efficiency targets set by the NHTSA to reduce emissions. Every vehicle sold with better fuel economy than required by law will each earn their manufacturer one “credit” for every tenth of a mile per gallon over the target (thus, a vehicle with 50 mpg would earn 50 credits during a year with a 45 mpg target). Certain states, such as California, have set additional emissions rules but also award credits for every sale of a hybrid or battery-powered car. The EPA can also grant credits for compliance with its greenhouse gas standards. Companies that fail to satisfy federal or state targets must pay a noncompliance fee or purchase credits from competitors, such as Fisker, on the allowance market.
Based on the NHTSA, CARB and EPA estimates included in the EV company’s announcement, it will earn a combined total of at least 558 credits per vehicle, plus a “significant” but undisclosed amount from the Tier III emission requirements. Chairman and CEO of Fisker, Henrik Fisker, stated: “We are excited that as an all-electric startup, we can offer other carmakers competitive choices to obtain emission credits and remain in compliance with regulations in the U.S…We have been looking forward to participating in the emission-credits market since we founded Fisker Inc. in 2016.”