October 26, 2018 DMC

October 2018 Low-Volume Production Update

We’ve been keeping a low-profile over the past year or so as we work with suppliers (both potential and confirmed) and await the final regulations from both the National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency (EPA), which are now about two years overdue.

DeLorean and other car enthusiasts cheered loudly when the “Fixing America’s Surface Transportation (FAST) Act” was signed into law in December 2015. It included a Christmas present for car buffs hoping to drive a brand-new classic. The law allows low-volume manufacturers to produce up to 325 replicas a year for sale in the U.S. of vehicles that appear to be at least 25 years old.

Despite the law’s name, implementation has not been fast, since the National Highway Traffic Safety Administration (NHTSA) wants to first issue a regulation. Lawmakers gave NHTSA until December 2016 to accomplish that mission but it is still on bureaucratic hold. Turns out, NHTSA’s Christmas present was a lump of coal rather than a new car.

The law is very detailed, so a regulation isn’t necessary. NHTSA just needs to create a form allowing companies to register online and file annual reports. Seems simple enough.

Why was the law necessary? When NHTSA was established in the 1960s, it created just one system applicable to companies producing millions of cars. While many other countries have set up separate rules for low-volume production, NHTSA chose not to pursue a program. Congress finally stepped in and established the low-volume program.

The program applies to replica cars – new vehicles that resemble cars from another era—from hot rods and roadsters to classics from the 1950s through early ‘90s. Each company can produce and sell up to 325 completed replicas in the U.S. and a total of 5,000 vehicles (of any era) worldwide.

The vehicles will be current model year clean cars. The U.S. Environmental Protection Agency and California Air Resources Board (CARB) are putting the final touches on guidelines for the engine packages.

NHTSA can issue a regulation but it isn’t necessary. Replicas have been marketed for decades as “kit cars,” whereby a manufacturer sells car parts, frequently assembled, and the buyer installs the engine/transmission. The only distinction is that the manufacturer can now install the powertrain and sell a turn-key car. This is huge for hobbyists who want the option of buying a completed car.

Why can’t the manufacturer sell a completed car now? Until the law was passed, NHTSA would hold it to current model year standards rather than standards applicable to the year it was replicated from. Most states allow the cars to be regulated by the replicated year.

There is no reason manufacturers can’t register and begin production while NHTSA dawdles with a regulation. Both the industry and members of Congress who wrote the law have urged NHTSA to do this. But the requests have fallen on deaf ears. Federal bureaucrats rather than the Trump Administration are still in charge.

DeLorean Motor Company and other replica car companies—all small businesses—thought the 2016 deadline was real and have invested millions in supplier contracts and production facilities. Manufacturing jobs have been put on hold. Customers are frustrated and sales are lost. Perhaps a public outcry will help. NHTSA: allow companies to register and begin production.