This article needs to be updated.(January 2024) |
A compliance car is an alternative fuel vehicle that is explicitly designed to meet tightening government regulations for low-emission vehicle sales, while the automobile manufacturer restricts sales to specific jurisdictions to meet the rules, or limits production, or both.[1]
While the introduction of compliance cars by the largest car manufacturers is sometimes explained by the companies arguing that they could not manufacture electric cars profitably and sell them for more than their cost to produce them,[1] another mechanism could be behind the auto companies practice of releasing EVs only in limited quantities and in limited markets. Since Tesla has shown profitability producing electric vehicles—with four consecutive quarters of company profitability as of July 2020—the large legacy manufacturers could also be facing the dilemma of the Osborne Effect. They are behind Tesla in building both the battery technology and EV assembly/service expertise of the frontrunner, while facing the inexorable problem that announcing high-quality mass market new EV vehicles will eat into the present sales of the internal combustion engine cars they currently produce in volume, and the exclusive current source of company profits.[2][3]
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