CARB-Certified Fisker Inc to Sell Emission Credits to Allow Automakers to Avoid Penalities

Fisker Inc. (NYSE: FSR) (“Fisker”), driven by a mission to create the world’s most emotional and sustainable electric vehicles, is preparing to incorporate the sale of emission credits into its overall business strategy in the United States. The company has already entered into an agreement to sell credits to a major automaker at competitive rates.

“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 US,” Chairman and CEO Henrik Fisker said. “We have been looking forward to participating in the emission-credits market since we founded Fisker Inc. in 2016.”

Fisker will start US deliveries of the all-electric Fisker Ocean later this month. The Fisker Ocean Extreme has received both an EPA Certificate of Conformity (CoC) and a California Air Resources Board (CARB) Executive Order, approving the vehicle for sale and delivery in all 50 US states and the District of Columbia.

Fisker’s emission credit strategy is detailed below.

US Emission Credits

The California Air Resources Board has confirmed that both Fisker Ocean One launch edition and the Fisker Ocean Extreme, thanks to a best-in-class range of 360 miles1 on standard 20-inch wheels and tires, will generate the maximum allowable credits per vehicle – 4.0 ZEV credits – for units sold in California as well as in over a dozen other US states that have adopted California’s environmental standards. Automakers can purchase these credits to help avoid a non-compliance penalty of up to $5,000 per violation.

In addition, the National Highway Transportation Safety Administration (NHTSA) sets forth annual target measurements for miles per gallon, pursuant to the requirement set forth in the “Corporate Average Fuel Economy” (CAFE). Automakers generate a credit for each tenth of a mile of overcompliance. Based on 2023’s target measurement, each Fisker Ocean sold will generate approximately 395 credits. The penalty for noncompliance is $15 per credit, and carmakers again can purchase credits to offset the penalty.

The EPA also established Tier III emission requirements in 2014. As part of that program, it instituted a credit-based system for non-greenhouse gas (GHG) emissions, including oxides of nitrogen and non-methane organic gases (NMOG+NOx credits). For model years 2023 and 2024, Fisker expects to generate significant credits.

The EPA has established greenhouse gas requirements for new vehicles. Based on 2023 GHG requirements, each Ocean will generate approximately 159 credits per vehicle sold. The EPA does not have a standard penalty for noncompliance. California administers its own GHG program, which is like the EPA’s GHG program.