[Federal Register Volume 72, Number 146 (Tuesday, July 31, 2007)]
[Notices]
[Pages 41814-41817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-14694]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2007-28821, Notice 1]


Tesla Motors, Inc.; Receipt of Application for a Temporary 
Exemption From the Advanced Air Bag Requirements of FMVSS No. 208

AGENCY: National Highway Traffic Safety Administration (NHTSA), 
Department of Transportation (DOT).

[[Page 41815]]


ACTION: Notice of receipt of petition for temporary exemption from 
provisions of Federal Motor Vehicle Safety Standard (FMVSS) No. 208, 
Occupant Crash Protection.

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SUMMARY: In accordance with the procedures in 49 CFR Part 555, Tesla 
Motors, Inc. (Tesla Motors) has petitioned the agency for a temporary 
exemption from certain advanced air bag requirements of FMVSS No. 208. 
The basis for the application is that compliance would cause 
substantial economic hardship to a manufacturer that has tried in good 
faith to comply with the standard.\1\
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    \1\ To view the application, go to: http://dms.dot.gov/search/searchFormSimple.cfm and enter the docket number set fourth in the 
heading of this document.
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    This notice of receipt of an application for temporary exemption is 
published in accordance with the statutory provisions of 49 U.S.C. 
30113(b)(2). NHTSA has made no judgment on the merits of the 
application.

DATES: You should submit your comments not later than August 30, 2007.

FOR FURTHER INFORMATION CONTACT: Mr. Ed Glancy or Mr. Ari Scott, Office 
of the Chief Counsel, NCC-112, National Highway Traffic Safety 
Administration, 1200 New Jersey Avenue, SE., Washington, DC 20590. 
Telephone: (202) 366-2992; Fax: (202) 366-3820.
    Comments: We invite you to submit comments on the application 
described above. You may submit comments identified by docket number at 
the heading of this notice by any of the following methods:
     Fax: 1-202-493-2251
     Web Site: http://dms.dot.gov. Follow the instructions for 
submitting comments on the DOT electronic docket site by clicking on 
``Help and Information'' or ``Help/Info.''.
     Mail: U.S. Department of Transportation, Docket 
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New 
Jersey Avenue, SE., Washington, DC 20590.
     Hand Delivery: U.S. Department of Transportation, Docket 
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New 
Jersey Avenue, SE., Washington, DC 20590, Monday through Friday, except 
Federal Holidays.
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
    Instructions: All submissions must include the agency name and 
docket number or Regulatory Identification Number (RIN) for this 
rulemaking. Note that all comments received will be posted without 
change to http://dms.dot.gov, including any personal information 
provided.
    Docket: For access to the docket in order to read background 
documents or comments received, go to: http://dms.dot.gov at any time 
or to M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey 
Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through 
Friday, except Federal Holidays.
    Privacy Act: Anyone is able to search the electronic form of all 
comments received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit: 
http://dms.dot.gov.
    We shall consider all comments received before the close of 
business on the comment closing date indicated above. To the extent 
possible, we shall also consider comments filed after the closing date.

I. Advanced Air Bag Requirements and Small Volume Manufacturers

    In 2000, NHTSA upgraded the requirements for air bags in passenger 
cars and light trucks, requiring what are commonly known as ``advanced 
air bags.'' \2\ The upgrade was designed to meet the goals of improving 
protection for occupants of all sizes, belted and unbelted, in 
moderate-to-high-speed crashes, and of minimizing the risks posed by 
air bags to infants, children, and other occupants, especially in low-
speed crashes.
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    \2\ See 65 FR 30680 (May 12, 2000).
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    The advanced air bag requirements were a culmination of a 
comprehensive plan that the agency announced in 1996 to address the 
adverse effects of air bags. This plan also included an extensive 
consumer education program to encourage the placement of children in 
rear seats. The new requirements were phased in beginning with the 2004 
model year.
    Small volume manufacturers are not subject to the advanced air bag 
requirements until September 1, 2006, but their efforts to bring their 
respective vehicles into compliance with these requirements began 
several years ago. However, because the new requirements were 
challenging, major air bag suppliers concentrated their efforts on 
working with large volume manufacturers, and thus, until recently, 
small volume manufacturers had limited access to advanced air bag 
technology. Because of the nature of the requirements for protecting 
out-of-position occupants, ``off-the-shelf'' systems could not be 
readily adopted. Further complicating matters, because small volume 
manufacturers build so few vehicles, the costs of developing custom 
advanced air bag systems compared to potential profits discouraged some 
air bag suppliers from working with small volume manufacturers.
    The agency has carefully tracked occupant fatalities resulting from 
air bag deployment. Our data indicate that the agency's efforts in the 
area of consumer education and manufacturers' providing depowered air 
bags were successful in reducing air bag fatalities even before 
advanced air bag requirements were implemented.
    As always, we are concerned about the potential safety implication 
of any temporary exemptions granted by this agency. In the present 
case, we are seeking comments on a petition for a temporary exemption 
from the advanced air bag requirements submitted by a manufacturer of 
an electric-powered, high-performance sports car.

II. Overview of Petition for Economic Hardship Exemption

    In accordance with 49 U.S.C. 30113 and the procedures in 49 CFR 
Part 555, Tesla Motors, Inc. (Tesla Motors) has petitioned the agency 
for a temporary exemption from certain advanced air bag requirements of 
FMVSS No. 208. The basis for the application is that compliance would 
cause substantial economic hardship to a manufacturer that has tried in 
good faith to comply with the standard. The requested exemption would 
apply to Tesla Roadster model vehicles and would extend for a period of 
three years beginning on August 1, 2007. A copy of the petition \3\ is 
available for review and has been placed in the docket for this notice.
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    \3\ The company requested confidential treatment under 49 CFR 
Part 512 for certain business and financial information submitted as 
part of its petition for temporary exemption. Accordingly, the 
information placed in the docket does not contain such information 
that the agency has determined to be confidential.
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III. Statutory Background for Economic Hardship Exemptions

    A manufacturer is eligible to apply for a hardship exemption if its 
total motor vehicle production in its most recent

[[Page 41816]]

year of production did not exceed 10,000 vehicles, as determined by the 
NHTSA Administrator (49 U.S.C. 30113).
    In determining whether a manufacturer of a vehicle meets that 
criterion, NHTSA considers whether a second vehicle manufacturer also 
might be deemed the manufacturer of that vehicle. The statutory 
provisions governing motor vehicle safety (49 U.S.C. Chapter 301) do 
not include any provision indicating that a manufacturer might have 
substantial responsibility as manufacturer of a vehicle simply because 
it owns or controls a second manufacturer that assembled that vehicle. 
However, the agency considers the statutory definition of 
``manufacturer'' (49 U.S.C. 30102) to be sufficiently broad to include 
sponsors, depending on the circumstances. Thus, NHTSA has stated that a 
manufacturer may be deemed to be a sponsor and thus a manufacturer of a 
vehicle assembled by a second manufacturer if the first manufacturer 
had a substantial role in the development and manufacturing process of 
that vehicle.

IV. Petition of Tesla Motors

    Background. Tesla Motors is a small, start-up motor vehicle 
manufacturer that was founded in California in July 2003. The company 
plans to produce its first model, the Tesla Roadster, beginning in 
August 2007. Tesla Motors is not affiliated with any other automobile 
manufacturer, and currently employs approximately 170 people in the 
United States, the United Kingdom, and Taiwan.
    This application concerns the Tesla Roadster (the first model of 
vehicle that Tesla Motors plans to produce) which as the company states 
will be an electric vehicle that will achieve the performance 
equivalent to a high performance car. The vehicle utilizes an energy 
storage system that provides power to the entire vehicle, and Tesla 
Motors expects the vehicle will be able to travel approximately 200 
miles on a single charge. To date, Tesla Motors has not produced any 
vehicles for sale in the U.S. or other markets.
    According to the petition, Tesla Motors had originally planned to 
produce a vehicle that would comply with the advanced air bag 
requirements in effect since September 2006. The Tesla Roadster 
utilizes the chassis and several other systems of the Group Lotus plc 
(Lotus) Elise, which at the time of design was a vehicle that intended 
to comply with the advanced air bag requirements by 2006. However, 
Lotus could not achieve compliance with the requirements by that date, 
and was granted an exemption for the Elise on August 31, 2006. This 
deprived Tesla Motors of a FMVSS No. 208-compliant air bag system that 
could have been used in the Roadster.
    The petitioner stated that it first became aware of Lotus's 
inability to obtain a compliant advanced air bag system in mid-2005, 
after it had committed to base the Roadster on the Elise platform. 
Tesla Motors therefore argued that it tried in good faith, but cannot 
bring the vehicle into compliance with the advanced air bag 
requirements, and would incur substantial economic hardship if it 
cannot sell vehicles in the United States.
    Eligibility. As discussed in the petition, Tesla Motors is an 
independent company formed in 2003. The entire organization currently 
employs approximately 170 people. The Roadster will be manufactured 
under Tesla Motors' supervision at Lotus's automobile factory in the 
United Kingdom. However, Lotus has no ownership interest in Tesla 
Motors, and the reverse is likewise true. No other entity has an 
ownership interest in Tesla Motors. Stated another way, Tesla Motors is 
an independent automobile manufacturer which does not have any common 
control or is otherwise affiliated with any other vehicle manufacturer.
    The company is a small volume manufacturer that has never produced 
any motor vehicles for sale. According to its current forecasts, Tesla 
Motors anticipates that worldwide production of the Roadster would be 
approximately 800 vehicles in the first year of production, and 
projected production would be 3000 vehicles per year in the two years 
after that. Tesla Motors also expects to produce a second model of 
automobile, the White Star, beginning in 2010, but believes that the 
company's total production will be less than 10,000 vehicles per year 
during the duration of the exemption request.
    As indicated earlier, a manufacturer is eligible to apply for a 
hardship exemption if its total motor vehicle production in its most 
recent year of production did not exceed 10,000 vehicles, as determined 
by the NHTSA Administrator (49 U.S.C. 30113). Moreover, in determining 
whether a manufacturer of a vehicle meets that criterion, NHTSA 
considers whether a second vehicle manufacturer also might be deemed 
the manufacturer of that vehicle.
    In this case, it appears that Lotus, as well as Tesla Motors, may 
be considered the manufacturer of the vehicle. Tesla indicated in its 
petition that in addition to utilizing the chassis and several other 
systems of the Lotus Elise, ``the Roadster will be manufactured under 
Tesla Motors'' supervision and direction at a factory owned by Lotus * 
* *.'' The term ``manufacturer'' is defined as a person ``manufacturing 
or assembling motor vehicles or motor vehicle equipment'' or 
``importing motor vehicles or motor vehicle equipment for resale.'' See 
49 U.S.C. 30102. It appears that Lotus is manufacturing or assembling 
the vehicles at issue in its factory under contract.
    We note, however, that Louts is a small manufacturer, and NHTSA 
granted a temporary exemption regarding this same issue for the Lotus 
Elise. See 71 FR 52851; September 7, 2006. We believe the combined 
production of vehicles for Lotus and Tesla Motors is fewer than 10,000 
vehicles in the year preceding the petition. Therefore, we believe 
Tesla Motors to be eligible for a hardship exemption. We also note that 
as production of the Tesla Motors vehicles proceeds, there could be an 
issue of whether combined production of Lotus' own vehicles and those 
it builds under contract may increase to more than 10,000 vehicles per 
year. The agency requests comments that will assist the agency in 
further evaluating this situation; specifically, whether it should 
influence the eligibility for future exemptions, or the duration of the 
current exemption, if granted.
    Requested exemption. Tesla Motors stated that it intends to certify 
the Tesla Roadster as complying with the rigid barrier belted test 
requirement using the 50th percentile adult male test dummy set forth 
in S14.5.1(a) of FMVSS No. 208. The petitioner stated that it 
previously determined the Tesla Roadster's compliance with rigid 
barrier unbelted test requirements using tests of prototype vehicles. 
As such, Tesla Motors is requesting an exemption for the Tesla Roadster 
from the advanced air bag requirements (S14), with the exception of the 
belted, rigid barrier provisions of S14.5.1(a); the rigid barrier test 
requirement using the 5th percentile adult female test dummy (belted 
and unbelted, S15); the offset deformable barrier test requirement 
using the 5th percentile adult female test dummy (S17); and the 
requirements to provide protection for infants and children (S19, S21, 
and S23).
    Tesla Motors did not make an explicit statement that it intends to 
comply with the advanced air bag requirements of the FMVSS upon the 
expiration of the temporary exemption period. We note, however, that 
Lotus signaled such an intention in its petition for the Elise,

[[Page 41817]]

and the Tesla Roadster uses the Elise's safety system.
    Economic hardship. Publicly available information and also the 
financial documents submitted to NHTSA by the petitioner indicate that 
the Tesla Roadster project will result in financial losses unless Tesla 
Motors obtains a temporary exemption. Over the period 2003-2006, Tesla 
Motors has had net operational losses totaling over $43 million. As of 
the time of the application, Tesla Motors has invested substantially on 
the design and development of the Tesla Roadster.
    The company has stated that Lotus could not acquire or develop an 
advanced air bag system for the Elise, on which the advanced air bag 
system was to be designed, and furthermore that Tesla Motors does not 
have the technical or financial resources to independently develop an 
advanced air bag system. As it does not have the ability to 
independently build or acquire an advanced air bag system, Tesla states 
that without an exemption, it will have to cancel its pending 
development of an electric-powered sedan, and would ultimately have to 
terminate its operations.
    Good faith efforts to comply. As stated above, Tesla Motors relies 
on the inability of Lotus to design or acquire an advanced air bag 
system, despite a good faith effort to do so, as a basis for Tesla 
Motors' efforts to comply. Tesla Motors initially planned to produce 
vehicles that were fully compliant with all FMVSS requirements, but 
after it had committed to using the design and manufacturing facility 
of the Lotus Elise, Lotus determined that that vehicle could not be 
supplied with a compliant advanced air bag system. Tesla Motors bases 
its petition on Lotus's good faith efforts to comply with the 
requirements in its September 28, 2005 petition for exemption (Docket 
NHTSA-2006-25324-3). Tesla Motors states that it does not have the 
technical or financial resources to develop an advanced air bag system 
independent of Lotus, and will, therefore, need a similar exemption in 
order to produce Roadster models for the U.S. market. Tesla Motors 
makes no further comments on its own independent efforts beyond this 
statement.
    Tesla Motors argues that an exemption would be in the public 
interest. The petitioner put forth several arguments in favor of a 
finding that the requested exemption is consistent with the public 
interest and would not have a significant adverse impact on safety. 
Specifically, Tesla Motors argued that the vehicle will have a variant 
of the bonded aluminum chassis structure of the Lotus Elise, dual 
standard air bags, and pre-tensioning, load-limiting seat belts. 
Furthermore, the company emphasized that the Tesla Roadster will comply 
with all other applicable FMVSSs.
    Moreover, the petitioner stated that the requested exemption will 
have a negligible impact on motor vehicle safety because of the limited 
number of vehicles sold. Furthermore, Tesla stated that it is unlikely 
that young children would be passengers in the Roadster, so an 
exemption from the advanced air bag requirements that are designed to 
protect children will not create a significant safety issue. In 
addition, as with the Lotus Elise, the front passenger seat in the 
Roadster is fixed in its rearmost position, thereby reducing air bag 
risks to children and other passengers.
    Tesla Motors asserted that granting the exemption will benefit U.S. 
employment, companies, and citizens. Affected individuals include both 
Tesla Motors' current employees as well as those who are likely to be 
involved in selling and servicing the Roadster and other future Tesla 
Motors models. Furthermore, Tesla Motors states that it has plans to 
open a manufacturing facility in the United States in 2009, with 
approximately 300 employees, a venture that will likely not go forward 
if the petition is denied.

V. Issuance of Notice of Final Action

    We are providing a 30-day comment period. After considering public 
comments and other available information, we will publish a notice of 
final action on the application in the Federal Register.

    Issued on: July 25, 2007.
Stephen R. Kratzke,
Associate Administrator for Rulemaking.
[FR Doc. E7-14694 Filed 7-30-07; 8:45 am]
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