California says VW clean car spending plan has shortcomings

SAN FRANCISCO (Reuters) - California regulators said Volkswagen AG's VOWG_p.DE spending plan on clean vehicle infrastructure had shortcomings and that it lacked details on how it would help disadvantaged communities as well as promote hydrogen fuel cell technology.

FILE PHOTO: A U.S. flag flutters in the wind above a Volkswagen dealership in California, U.S. May 2, 2016. REUTERS/Mike Blake/File Photo

The remarks in a Wednesday letter from the California Air Resources Board to VW’s Electrify America come after criticism that the German automaker’s plan, part of a deal to atone for diesel emissions cheating, could give it a competitive advantage on other vehicle and charging station makers and ignore poorer communities where the state wants to promote clean cars.

The German automaker agreed to spend $800 million in California, part of a total of $2 billion nationally, after it was caught secretly installing software in diesel vehicles that allowed them to emit excess pollution.

The Air Resources Board told VW’s Electrify America that its plan for the first $200 million, 30-month tranche of the California spending plan had shortcomings.

It asked VW to explain how it would meet a requirement to spend funds in disadvantaged communities, including installing electric vehicle charging stations.

“CARB recommends that Electrify America make every attempt to attain investment of 35 percent of the first 30-month investment cycle in these communities,” said the letter, which was seen by Reuters.

It also asked VW to describe potential plans for hydrogen vehicles over the 10-year investment period, since California’s zero-emission vehicle plan includes battery-electric and fuel-cell vehicles.

Electrify America in a statement said it was committed to investing $2 billion in line with court-approved agreements with the U.S. Environmental Protection Agency and California. It said it was reviewing the state board’s letter.

Charging station maker ChargePoint Inc praised regulators for asking VW to focus on disadvantaged communities and ensuring that VW’s efforts were complementary to other investments.

Some automakers and charging station companies object to the proposed locations of some charging stations in areas that already have many electric vehicles, concerned about competitive advantages VW could get from the program.

In its initial California spending plan, Volkswagen proposed spending $120 million on more than 400 highways and community EV charging stations by 2019, often in high-traffic areas.

Environmental justice advocates also have pressed for California regulators to pay more attention to cleaning pollution in less affluent communities.

Under the agreement with California and the Justice Department, funds spent on education and outreach must be brand-neutral and cannot feature Volkswagen vehicles. Charging stations must be accessible to all vehicles.

Reporting By Peter Henderson; Editing by Himani Sarkar