[Federal Register Volume 88, Number 104 (Wednesday, May 31, 2023)]
[Notices]
[Pages 34919-34926]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-11453]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2022-0057]


Czinger Vehicles--Grant of Petition for Temporary Exemption From 
Certain Requirements of FMVSS No. 205, Glazing Materials

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

ACTION: Notice of grant of petition for temporary exemption.

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SUMMARY: This notice grants the petition of Czinger Vehicles (Czinger) 
for a temporary exemption from windshield abrasion resistance 
requirements in Federal motor vehicle safety standard (FMVSS) No. 205, 
Glazing materials. The basis for the exemption is that compliance with 
these requirements would cause substantial economic hardship to a low 
volume manufacturer that has tried in good faith to comply with the 
standard. This action follows our publication in the Federal Register 
of a document announcing receipt of Czinger's petition and soliciting 
public comments. We received no comments on the petition.

DATES: The exemption from the windshield abrasion resistance 
requirements in FMVSS No. 205 is effective from August 1, 2023, through 
July 31, 2026.

FOR FURTHER INFORMATION CONTACT: Callie Roach, Office of the Chief 
Counsel, National Highway Traffic Safety Administration, 1200 New 
Jersey Avenue SE, Washington, DC 20590. Telephone: 202-366-2992; Fax: 
202-366-3820.

SUPPLEMENTARY INFORMATION: NHTSA is granting a request from Czinger for 
a temporary exemption from FMVSS No. 205's abrasion resistance 
requirements for windshields for its first vehicle model, the 21C. In 
accordance with statutory and regulatory requirements, NHTSA is 
granting the petition on the basis that compliance would cause 
substantial economic hardship to a low volume manufacturer that has 
tried in good faith to comply with the standard.

I. Relevant Legal Authority and Regulations

a. Statutory and Regulatory Requirements for Temporary Exemptions

    NHTSA is responsible for promulgating and enforcing FMVSS designed 
to improve motor vehicle safety. Generally, a manufacturer may

[[Page 34920]]

not manufacture for sale, sell, offer for sale, or introduce or deliver 
for introduction into interstate commerce a vehicle that does not 
comply with all applicable FMVSS.\1\ There are limited exceptions to 
this general prohibition.\2\ One path permits manufacturers to petition 
NHTSA for an exemption for noncompliant vehicles under specified 
statutory bases.\3\
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    \1\ 49 U.S.C. 30112(a)(1).
    \2\ 49 U.S.C. 30112(b); 49 U.S.C. 30113; 49 U.S.C. 30114.
    \3\ 49 U.S.C. 30113.
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    The National Traffic and Motor Vehicle Safety Act (Safety Act), 
codified at 49 U.S.C. Chapter 301, authorizes the Secretary of 
Transportation to exempt, on a temporary basis and under specified 
circumstances, and on terms the Secretary considers appropriate, motor 
vehicles from a FMVSS or bumper standard. This authority is set forth 
at 49 U.S.C. 30113. The Secretary has delegated the authority for 
implementing this section to NHTSA.\4\
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    \4\ 49 CFR 1.95.
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    The Safety Act authorizes NHTSA (by delegation) to grant, in whole 
or in part, a temporary exemption to a vehicle manufacturer if certain 
specified findings are made.\5\ The agency must find that the exemption 
is consistent with the public interest and the objectives of the Safety 
Act.\6\ In addition, exemptions under Sec.  30113 must meet one of four 
bases. Czinger petitioned under the first of these bases, asserting 
that ``[c]ompliance with the standard[s] [from which exemption is 
sought] would cause substantial economic hardship to a manufacturer 
that has tried to comply with the standard[s] in good faith.'' \7\
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    \5\ 49 U.S.C. 30113(b)(3).
    \6\ 49 U.S.C. 30113(b)(3)(A).
    \7\ 49 U.S.C. 30113(b)(3)(B)(i).
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    NHTSA established 49 CFR part 555, Temporary Exemption from Motor 
Vehicle Safety and Bumper Standards, to implement the statutory 
provisions concerning temporary exemptions. The requirements in 49 CFR 
555.5 state that the petitioner must set forth the basis of the 
petition by providing the information required under 49 CFR 555.6, and 
the reasons why the exemption would be in the public interest and 
consistent with the objectives of the Safety Act. A petition submitted 
on the substantial economic hardship basis must include the information 
specified in 49 CFR 555.6(a).

b. FMVSS No. 205 Abrasion Requirements for Windshields

    Czinger's petition seeks an exemption from requirements in FMVSS 
No. 205, Glazing materials. The purpose of FMVSS No. 205 is to reduce 
injuries (e.g., lacerations) resulting from impact to glazing surfaces, 
to ensure a necessary degree of transparency in motor vehicle windows 
for driver visibility, and to minimize the possibility of occupants 
being thrown through the windows in collisions. Most of the performance 
requirements for glazing, including the requirement from which Czinger 
is seeking an exemption, are found in an industry standard, the 
``American National Standards Institute American National Standard for 
Safety Glazing Materials for Glazing Motor Vehicles and Motor Vehicle 
Equipment Operating on Land Highways-Safety Standard'' (ANSI/SAE Z26.1-
1996), which FMVSS No. 205 incorporates by reference.
    Czinger's petition concerns requirements for glazing used in 
windshields. ANSI/SAE Z26.1-1996 sets forth groups of tests that must 
be met by different glazing types. The standard explains that 
``[s]afety glazing materials in motor vehicles shall comply with the 
applicable requirements listed in this subsection and shown in Table 1, 
item by item, in definite groupings of tests that are appropriate for 
the safety glazing material in question, and the location in the motor 
vehicle in which it is intended to be used.'' For example, AS-1 glazing 
may be used anywhere in vehicles, including windshields. For AS-1 
glazing, the standard provides a list of tests for Laminated Glass, 
Class 1 Multiple Glazed Unit, and Class 2 Multiple Glazed Unit. For AS-
1 glazing, Laminated Glass must meet Test Nos. 1, 2, 3, 4, 9, 12, 15, 
18, and 26. As additional background, although the glazing Czinger 
proposes to use in the 21C's windshield is polycarbonate, NHTSA does 
not prohibit the material from being used in windshields so long as it 
meets the tests for one of the glazing types listed. In an 
interpretation letter issued to Exatec, LLC, NHTSA explained that 
glazing types not listed in the standard may be used interchangeably 
with the corresponding materials specified in the standard if and when 
other materials are developed that possess properties such that they 
meet one or another of the prescribed groups of tests.\8\
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    \8\ See letter to Mr. Clemens Kaiser (September 23, 2005), 
available at https://www.nhtsa.gov/interpretations/04-005908drn.
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    Czinger's petition requests an exemption from the requirement that 
windshield glazing meet the performance requirements specified in Test 
18 for abrasion resistance. The purpose of these abrasion requirements 
is to ensure that the glazing will resist scratching that can distort 
the driver's view and thus reduce visibility. Test 18 requires that a 
specimen of the glazing be subjected to abrasion for 1000 cycles in the 
manner described in ANSI/SAE Z26.1-1996 section 5.17. After the 
specimen has been abraded, the amount of light scattered by the 
specimen cannot exceed 2.0%.

II. Czinger's Petition and Supplemental Information

    In accordance with 49 U.S.C. 30113 and the procedures in 49 CFR 
part 555, Czinger submitted a petition on December 12, 2021 for a 
temporary exemption from the windshield abrasion resistance 
requirements in FMVSS No. 205, Glazing materials. In addition to its 
original petition, Czinger submitted supplemental information on 
October 21, 2022 and January 25, 2023. Copies of these materials have 
been placed in the docket identified at the beginning of this document.
    In its petition, Czinger describes itself as a small volume start-
up producer of innovative sports cars.\9\ Czinger states that it is 
located in Los Angeles, California and was founded in 2021.\10\ Czinger 
further states that once production begins in 2023, the company will 
produce approximately 50 cars per year worldwide.\11\ The forecasted 
production and US sales estimates provided by Czinger indicate that, 
for the three years for which Czinger is requesting a temporary 
exemption, Czinger expects to sell a total of 55 vehicles to the U.S. 
market.\12\
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    \9\ Czinger petition at page 3.
    \10\ Id.
    \11\ Id.
    \12\ Id. at page 6. Czinger's forecasted production for Model 
Years 2023, 2024, and 2025 is 20 vehicles, 50 vehicles, and 10 
vehicles respectively, with an estimated 10 vehicles, 35 vehicles, 
and 10 vehicles sold in the U.S. in those years.
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    Czinger is seeking an exemption for the Czinger 21C model. Czinger 
states that its 21C model vehicle is presently under development and 
describes it as a hypercar comprised of lightweight materials and a 
hybrid electric powertrain system as its foundation.\13\ Czinger 
describes the 21C as a ``still-in development high-technology, ultra-
high performance, high quality Hypercar.'' \14\ In support of these 
assertions, Czinger states that the ``advanced AI developed multi 
material chassis delivers exceptional light weight'' and that the 
``crash structures have been optimized to deliver the safest Hyper-
sports car on the

[[Page 34921]]

market.'' \15\ Czinger states that the 21C's hybrid power train uses 
the world's most power-dense production internal combustion engine as 
its foundation and that the total strong hybrid system delivers a peak 
output of 1250hp (1233bhp).\16\ Czinger also states that the 21C's low 
drag configuration optimizes light-weighting and aerodynamics, allowing 
for greater efficiency at all speeds.\17\ Czinger explains that the 
vehicle is produced using Additive Manufacturing technology (the 
industrial production name for 3D printing), which Czinger asserts 
requires less material, less energy, and less infrastructure than 
current, widely used, production techniques.\18\
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    \13\ Id. at page 3.
    \14\ Id.
    \15\ Id.
    \16\ Id.
    \17\ Id.
    \18\ Id. at page 4.
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    Requested Exemption. Czinger petitioned for an exemption from 
requirements for glazing it seeks to use in the windshield of Czinger's 
21C model on the basis that compliance with the standard would cause 
substantial economic hardship. Czinger is seeking a temporary exemption 
for three years to allow Czinger to produce a total of 55 noncompliant 
vehicles. Czinger states that all glazing on the 21C will be compliant 
with FMVSS No. 205 with the exception of the windshield.\19\ Czinger 
states that it believes that the only requirements with which the 
windshield will not comply are those regarding abrasion resistance.\20\ 
In supplemental information submitted on October 21, 2022, Czinger 
confirmed that the glazing for use in the 21C's windshield meets the 
performance requirements in Tests Nos. 1, 2, 3, 4, 9, 12, 15, and 
26.\21\ Czinger also confirmed that the glazing is not expected to meet 
the abrasion requirements in Test 18.\22\
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    \19\ Id.
    \20\ Id.
    \21\ Czinger's Supplemental Information Submission from October 
2022 at page 2.
    \22\ Id. at page 2.
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    Eligibility. To be eligible for a temporary exemption on the 
substantial economic hardship basis, the petitioner's total motor 
vehicle production in the most recent year of production must be not 
more than 10,000 vehicles.\23\ To demonstrate compliance with this 
requirement, and pursuant to 49 CFR 555.6(a)(2)(v), Czinger stated that 
it has not produced any motor vehicles to date.\24\
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    \23\ 49 U.S.C. 30113(d).
    \24\ Czinger petition at page 4.
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    Substantial economic hardship. In support of its claim that 
compliance with the windshield abrasion resistance requirements would 
cause substantial economic hardship, Czinger states that it is 
experiencing substantial economic hardship, which would be exacerbated 
by the denial of its exemption petition.\25\ Czinger states that it has 
35 employees and has been operating since 2021 without any sales.\26\ 
Czinger states that, in a best-case scenario, the company will have two 
additional years with high expenses and no sales while product 
development for the 21C is completed.\27\
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    \25\ Id. at page 6.
    \26\ Id.
    \27\ Id.
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    Czinger states that compliance with the standard would result in an 
extra loss of $38 million.\28\ Czinger explains that the additional 
loss would result from an additional $3.7 million in research and 
development costs, a 6-month delay bringing its product to market, and 
a 15% loss of 21C sales due to the car's modified aesthetics (as 
necessitated by a laminated windshield).\29\
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    \28\ Id. at page 7.
    \29\ Id.
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    In further support of its petition, Czinger notes that it has been 
enduring the pandemic and supply chain issues which, Czinger states, 
are straining even established OEMs.\30\ As a startup, Czinger states 
that it needs flexibility to endure these challenges.\31\
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    \30\ Id. at page 8.
    \31\ Id.
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    In supplemental information submitted in January 2023, Czinger 
indicated that because compliance with the windshield abrasion 
requirement cannot be achieved with the current vehicle design, in the 
absence of an exemption, Czinger would produce the vehicle for export 
only.\32\ Czinger states that if the exemption were granted for only 
one year, production for the U.S. market would be reduced by 82% and if 
the exemption were granted for only two years, production for the U.S. 
market would be reduced by 18%.\33\ Czinger also provided information 
about the losses of revenue associated with those lower production 
volumes. Given the development costs Czinger has incurred to date, 
Czinger states that the loss in sales from not being able to sell 
vehicles in the U.S. would result in financial failure of the 
business.\34\
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    \32\ Czinger's Supplemental Information Submission from January 
2023 at page 3.
    \33\ Id.
    \34\ Id.
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    In the supplemental information submitted in January 2023, Czinger 
also stated that if the exemption were granted, it would allow Czinger 
to ``secure revenue essential to its continuation and allow it to form 
a bridge to be in a position to produce vehicles where such exemptions 
are not required.'' \35\ Czinger noted that while its first vehicle 
model, the 21C, is a low volume hypercar, the majority of Czinger's 
future business will be higher volume vehicles such as the Czinger 
Hyper GT which was revealed at Monterey Car Week in August 2022.\36\ 
This subsequent model, Czinger states, uses a more conventional 
windshield shape for which the production material will be conventional 
automotive glass.\37\
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    \35\ Id. at page 2.
    \36\ Id.
    \37\ Id.
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    Good Faith Efforts to Comply. Pursuant to 49 CFR 555.6(a)(2), a 
petition for a temporary exemption made under the substantial economic 
hardship basis must include a description of the petitioner's efforts 
to comply with the standard for which the exemption is sought. In 
support of its petition, Czinger asserts that it has put considerable 
good faith efforts into FMVSS compliance.\38\
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    \38\ Czinger's petition at page 8.
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    Czinger states that the 21C has been designed with in-line seating 
for two occupants.\39\ The central seating position, Czinger explains, 
allows for an extremely streamlined frontal profile, reducing drag and 
improving fuel economy, as well as improving performance.\40\ Czinger 
states that this ``fighter jet'' design has been highly regarded by 
media, and more significantly, by prospective clients.\41\
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    \39\ Id.
    \40\ Id.
    \41\ Id.
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    Czinger states that the wrap-around cockpit is realized by a unique 
double curvature windscreen, which, during prototype stage, was 
produced in polycarbonate by Isoclima, a supplier in Europe.\42\ 
Czinger states that the hard polycarbonate material passes European 
requirements in accordance with ECE R43, including impact performance 
and abrasion haze resistance.\43\ Czinger states that because of the 
extreme size and shape of the 21C windshield, its supplier, Isoclima, 
has informed Czinger that the windshield must be produced in 
polycarbonate.\44\
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    \42\ Id.
    \43\ Id.
    \44\ Id. at page 9.
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    Czinger also states that at an early stage in the development of 
the 21C, its supplier Isoclima indicated that it believed the 
polycarbonate windshield would meet regulatory requirements for the USA 
market.\45\ Czinger states that, based on this information, Czinger

[[Page 34922]]

proceeded with the polycarbonate windshield development.\46\
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    \45\ Id.
    \46\ Id.
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    Czinger also states that, despite Isoclima's opinion that the shape 
of the 21C windshield could not be produced in laminated glass, Czinger 
invested time and money trying to develop, with the help of multiple 
suppliers, the planned windshield shape in laminated glass.\47\ 
Specifically, Czinger states that it engaged a Los Angeles-based 
artisan glazing supplier and tried 20 iterations of tooling strategies, 
produced over 80 test samples, and made some design changes to improve 
formability.\48\ These efforts, Czinger states, have not been 
successful.\49\
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    \47\ Id.
    \48\ Id.
    \49\ Id.
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    In supplemental information submitted in January 2023, Czinger 
stated that it undertook a comprehensive assessment, at a cost of 
$80,000, of different physical manufacturing techniques with its 
windshield supplier, Isoclima, in a concerted effort to achieve a 
solution to manufacture the windshield in glass.\50\ The effort, 
Czinger states, proved unsuccessful and the conclusion was that due to 
the geometry of the windshield, it could not be manufactured in 
glass.\51\
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    \50\ Czinger's Supplemental Information Submission from January 
2023 at page 2.
    \51\ Id.
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    Public Interest. Czinger asserts that granting its petition is 
consistent with the public interest and the Safety Act for the 
following reasons:

    1. The 21C model range will comply with all FMVSS other than the 
windshield requirements in FMVSS 205.\52\
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    \52\ Id. at page 10.
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    2. The exempted cars will have a windshield that meets all EU 
requirements.\53\
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    \53\ Id.
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    3. The exempted cars will not present an unacceptable safety 
risk.\54\
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    \54\ Id. at pages 10-11.

    In support of this assertion, Czinger states that the 21C's crash 
performance and occupant protection performance is improved when using 
polycarbonate, compared to laminated glass.\55\ Czinger states that it 
has run crash simulations measuring occupant injury criteria and 
observes overall improvements in performance with the polycarbonate 
windshield.\56\ Czinger also notes that the 21C has an advanced dynamic 
knee bolster that deploys a lower IP surface to minimize forward 
movement of the driver in an unbelted impact scenario.\57\ Czinger 
asserts that this system, in combination with the highly optimized DAPS 
(Divergent Adaptive Production System) front crash structure, virtually 
negates the possibility of head impact to the windshield.\58\
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    \55\ Id. at page 11.
    \56\ Id. at page 11.
    \57\ Id.
    \58\ Id.
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    As regards visibility, Czinger states its belief that since 
polycarbonate windshields are permitted in aircrafts, the risks of 
unacceptable impaired driver visibility due to abrasion are de minimis. 
Czinger also states that 21C's windshield glazing passes the European 
requirements for abrasion haze resistance in ECE R43.\59\ In 
supplemental information submitted in October 2022, Czinger stated that 
the 21C's polycarbonate windshield will also meet all of the required 
tests for AS-4 glazing, which is rigid plastic glazing for use in 
specific areas of vehicles.\60\ AS-4 glazing is required to meet Test 
Nos. 2, 10, 13, 16, 17, 19, 20, 21, and 24 . In support of its 
assertion that the 21C's windshield glazing meets the AS-4 
requirements, Czinger submitted a copy of a 2016 third party laboratory 
test report that states that the 3mm and 6mm thick samples of the 
Isoclima material, which Czinger states that it is using in its 
windshield, have passed Item 4 (AS4) testing. A copy of this report is 
included in Czinger's supplementary submission from October 2022 and 
available in the docket identified at the beginning of this notice.
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    \59\ Id. at page 8.
    \60\ AS-4 glazing may be used in the windshield of low-speed 
vehicles, in interior partitions and auxiliary wind deflectors, 
folding doors, standee windows in buses, flexible curtains or 
readily removable windows or in ventilators used in conjunction with 
readily removable windows, openings in the roof not requisite for 
driving visibility, trailers, glazing to the rear of the driver in 
trucks or truck tractor cabs where other means of affording 
visibility of the highway to the side and rear of the vehicle are 
provided, the rear windows of convertible passenger car tops, the 
rear doors of taxicabs, readily removable windows of buses having a 
GVWR of more than 4540 kg (10,000lb), windows and doors in 
motorhomes (except for the windshields and windows to the immediate 
right or left of the driver), windows and doors in slide-in campers 
and pickup covers, and windows and doors in buses except for the 
windshield, windows to the immediate right or left of the driver, 
and rearmost windows if used for driving visibility. See 49 CFR 
571.205 S5.4 and ANSI/SAE Z26.1-1996 page 8.
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    4. The 21C will be produced in the U.S. in very low numbers and 
will not be used daily due to its unconventional design.\61\
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    \61\ Czinger Petition at page 11.
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    In support of this assertion, Czinger states that the 21C will be a 
hand-built specialty car, high-priced and with an unusual design.\62\ 
Czinger states that it believes owners of 21C vehicles will use their 
vehicles occasionally, rather than for regular transportation, and 
predicts that the 21Cs will be driven a mere 350 miles per year.\63\ In 
support of this estimate, Czinger provided data for 33 hypercars valued 
at more than $1 million demonstrating an average accumulated mileage of 
259 miles per year.\64\ Czinger provided additional information about 
the hypercar use case in the supplemental information submitted in 
October 2022. Czinger stated that a hypercar is atypical when compared 
to more conventional vehicles.\65\ Czinger also stated that it 
performed some analysis with a sample of 53 hypercars across a range of 
brands and found that the average mileage of these vehicles was 266 
miles per year.\66\
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    \62\ Id.
    \63\ Id.
    \64\ Id. at page 15.
    \65\ Czinger's Supplemental Information submitted in October 
2022 at page 3.
    \66\ Id.
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    5. The denial of the exemption request could have a negative effect 
on U.S. employment.\67\
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    \67\ Id. at page 11.
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    In support of this assertion, Czinger states that denying its 
petition could result in temporary job loses, not only at Czinger, but 
throughout its distribution chain.\68\ Czinger also notes that the same 
negative effect was identified by NHTSA in a 2006 decision notice 
granting an exemption to Ferrari.\69\
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    \68\ Id.
    \69\ Id. at 11 citing a May 22, 2006 notice (71 FR 29389) 
stating ``[w]e note that Ferrari is a well-established company with 
a small but not insignificant U.S. presence, and we believe that an 
85 percent sales reduction would negatively affect U.S. employment. 
Specifically, reduction in sales would likely affect employment not 
only at Ferrari North America, but also at Ferrari dealers, repair 
specialists, and several small service providers that transport 
Ferrari vehicles from the port of entry to the rest of the United 
States. Traditionally, the agency has concluded that the public 
interest is served in affording continued employment to the 
petitioner's U.S. work force.''
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    6. The 21C's innovative technology is a benefit to the public.\70\
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    \70\ Id at page 12.
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    In support of this assertion, Czinger states that the 21C offers 
very significant public interest benefits--the use of Additive 
Manufacturing technology, weight-saving technology, advanced hybrid 
drivetrain technology, and innovative crash protection technology.\71\ 
Czinger states that granting its requested exemption would expedite 
bringing these technologies to the U.S. market.\72\
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    \71\ Id.
    \72\ Id.
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    Additional Czinger Steps. Czinger states that each 21C sold under 
an exemption will undergo regular,

[[Page 34923]]

frequent inspections, and any windshield with degraded visibility will 
be identified and replaced free of charge. In supplemental information 
submitted in October 2022, Czinger stated that it would be willing to 
install tear offs, which are thin protective films.\73\ Czinger states 
that it could install these films on the windshield and the films could 
be a regular service item.\74\
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    \73\ Czinger's Supplemental Information submitted in October 
2022 at page 3.
    \74\ Id.
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III. Request for Public Comment

    On July 7, 2022, NHTSA published a notice in the Federal Register 
announcing receipt of Czinger's petition and requesting public 
comment.\75\ The notice provided a 30-day comment period, which closed 
on August 8, 2022. No comments were received.
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    \75\ 87 FR 40585.
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IV. Agency Analysis and Decision

    In this section we provide our analysis and decision regarding 
Czinger's temporary exemption request from certain requirements in 
FMVSS No. 205. As explained below, we are granting Czinger's petition 
for the 21C to be exempted from the requirement for the glazing 
materials in the 21C's windshield to meet Test 18. The agency's 
rationale for this decision is as follows:
    Eligibility. As discussed above, a manufacturer is eligible to 
apply for an economic hardship exemption if its total motor vehicle 
production in its most recent year of production did not exceed 10,000 
vehicles. In its petition, Czinger indicated that at the time of 
submitting the petition, it had not produced any vehicles for sale and 
stated that it predicted producing 55 vehicles during the exemption 
period if an exemption were granted. Accordingly, we have determined 
that Czinger is eligible to apply for an economic hardship exemption as 
a low volume manufacturer.
    Economic Hardship. Czinger states that compliance with the standard 
will result in an extra loss of $38 million.\76\ Czinger states that it 
has 35 employees and has been operating since 2021 without any 
sales.\77\ Czinger states that, in a best case scenario, the company 
will have two additional years with high expenses and no sales while 
product development for the 21C is completed.\78\ Czinger explains that 
denial of its petition would result in an additional loss of $3.7 
million in research and development costs, a 6-month delay bringing its 
product to market, and an estimated 15% loss of 21C sales due to the 
car's modified aesthetics (as necessitated by a laminated 
windshield).\79\ The confidential information Czinger submitted in its 
petition supports its assertion that it is experiencing substantial 
economic hardship, which would be exacerbated by the denial of its 
exemption petition.
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    \76\ Id. at page 7.
    \77\ Id.
    \78\ Id.
    \79\ Id.
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    The touchstone that NHTSA uses in determining the existence of 
substantial economic hardship is an applicant's financial health, as 
indicated by its income statements. NHTSA has tended to consider a 
continuing and cumulative net loss position as strong evidence of 
hardship.\80\ The theory behind NHTSA's rationale is that if a company 
with a continuing net loss is required to divert its limited resources 
to resolve a compliance problem on an immediate basis, it may be unable 
to use those resources to resolve other problems that may affect its 
viability. The agency has considered this especially important in its 
treatment of petitioners that are just starting to manufacture 
vehicles. Based on these factors, we conclude that Czinger has 
demonstrated the requisite economic hardship.
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    \80\ March 11, 1994 grant of petition of Bugatti Automobili, 
S.p.A., (59 FR 11649 at 11650).
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    Good Faith Efforts to Comply. In addition to demonstrating that 
compliance with the standard for which it is seeking an exemption would 
result in substantial economic hardship, Czinger must demonstrate that 
it has made good faith efforts to comply with the standard. NHTSA 
believes Czinger has met this requirement.
    In this present case, NHTSA finds that Czinger had reason to 
believe that it would be able to create a FMVSS-compliant version of 
its unique vehicle design. Despite the vehicle's unique inline cockpit 
seating arrangement necessitating a unique double curvature windshield, 
Czinger had early assurances that its supplier would be able to produce 
a windshield that met Czinger's shape requirements while also meeting 
FMVSS requirements. NHTSA also finds that, at the point that Czinger 
realized that the 21C's windshield would not meet the abrasion 
resistance requirements, it took good faith efforts to try to source a 
compliant windshield. Specifically, we note Czinger's statement that it 
began efforts in August 2020 to locate a supplier that could produce 
the windshield shape in laminated glass. Czinger stated that it engaged 
a Los Angeles-based artisan glazing supplier and tried 20 iterations of 
tooling strategies, produced over 80 test samples and made some design 
changes to improve formability. When these efforts were not successful, 
Czinger sought this exemption.
    As explained in its petition and supplemental information from 
January 2023, Czinger intends to stop production of the 21C for the 
U.S. market at the end of the requested exemption period because it has 
determined that it is not possible to create a FMVSS No. 205 compliant 
windshield in the shape required for the 21C. NHTSA has no reason to 
doubt this statement and believes that it further demonstrates that 
Czinger has made good faith efforts to comply with the standard but is 
unable to do so.
    Public Interest. The final consideration for granting an exemption 
under 49 U.S.C. 30113 and Part 555 is whether granting the exemption is 
in the public interest and consistent with the objectives of the Safety 
Act. NHTSA finds that in Czinger's case it is.
    In its petition, Czinger cites six reasons that granting its 
petition is in the public interest. The first four of these reasons are 
related to safety. Czinger states, first, that the 21C will comply with 
all applicable FMVSS except for windshield glazing requirements in 
FMVSS No. 205; second, that the exempted vehicles will have a 
windshield that meets all EU requirements; third, that the exempted 
vehicles will not present an unacceptable safety risk; and fourth, that 
the 21C will be built in small numbers and will not be driven daily due 
to its unconventional design.
    While NHTSA acknowledges that Czinger is only requesting an 
exemption from one requirement and Czinger will only produce a small 
number of the vehicles, this information alone is insufficient to 
demonstrate that granting the exemption is in the public interest. That 
is, a request for exemption from a single requirement for a small 
number of vehicles could be inconsistent with the public interest if 
that one exemption presents an unreasonable risk to motor vehicle 
safety. For this reason, NHTSA first considered how granting the 
exemption would impact safety.
    Czinger's request is for an exemption from certain requirements for 
windshield glazing. The abrasion resistance requirements are considered 
to be crash avoidance requirements because the safety benefit of the 
requirements is derived from the prevention of crashes as opposed to 
the mitigation of the results of crash impacts (i.e., crashworthiness). 
This means that instead of just considering how the exemption may 
impact the

[[Page 34924]]

safety to occupants of an exempt vehicle, we must also consider how the 
exemption may impact the safety of other road users.
    We now turn to Czinger's second point and its assertions about how 
it is able to assure that the 21C's windshield will provide adequate 
driving visibility despite not meeting the abrasion resistance 
requirements in Test No. 18 in ANSI/SAE Z26.1-1996. Czinger asserts 
that the exemption presents minimal risk to safety because the 
windshield complies with all European requirements for windshield 
glazing, including the abrasion resistance requirements in ECE R43. 
While NHTSA has not conducted a full analysis of the differences 
between Test 18 and the requirements in ECE R43, NHTSA does consider 
compliance with the ECE standard to be an indication that the glazing 
used for the 21C's windshield has some level of resistance to abrasion, 
which is expected to help maintain driver visibility.
    In further support of the assertion that the exemption's safety 
impact will be limited, Czinger provided information regarding the 
compliance of the 21C's windshield with another abrasion resistance 
requirement in ANSI/SAE Z26.1-1996. Specifically, Czinger states that 
the glazing for use in windshields would meet all requirements for AS-4 
glazing, including requirements for abrasion resistance. AS-4 glazing 
is permitted to be used in specific locations in a motor vehicle and 
must comply with Test Nos. 2, 10, 13, 16, 17, 19, 20, 21, and 24. The 
abrasion resistance requirements are found in Test 17 and differ from 
the requirements in Test 18 in two key aspects. First, while Test 17 
and Test 18 use the same test method, specimens are abraded for 100 
cycles in Test 17 and 1000 cycles in Test 18. Second, while Test 17 
requires that the light scattered by the specimens not exceed 15.0%, 
Test 18 requires that the light scattered by the specimens not exceed 
2.0%. As with the information regarding compliance with ECE R43, NHTSA 
considers the information regarding compliance with the less stringent 
AS-4 requirements of Test 17 to be some indication of the windshield's 
abrasion resistance. This information is supportive of Czinger's 
assertion that the safety impacts of granting the exemption would be 
minimal.
    The decision to grant or deny an economic hardship exemption under 
part 555 does not turn on whether the failure to meet the standard is 
consequential to safety.\81\ Instead, the decision is based on whether 
the petitioner meets the criteria for an economic hardship exemption 
and whether, on balance, granting the petition is in the public 
interest and consistent with the Safety Act.\82\ In implementing this 
authority, NHTSA considers the risk associated with the particular 
noncompliance and determines whether the specific circumstances warrant 
granting an exemption to a low volume manufacturer that would otherwise 
face economic hardship. NHTSA also considers whether granting the 
exemption would introduce a defect that presents an unreasonable risk 
to safety. The presence of such a defect would implicate NHTSA's defect 
authority under the Safety Act and NHTSA would be compelled to find 
that granting the exemption is not consistent with the Safety Act.
---------------------------------------------------------------------------

    \81\ However, as this glazing does not provide the same level of 
safety performance as compliant glazing, NHTSA notes that it views 
the failure to meet the abrasion resistance requirements of Test 18 
as ``consequential'' to motor vehicle safety, and not as a basis, 
e.g., for grant of a petition for inconsequential non-compliance 
under 49 CFR part 556.
    \82\ In contrast to the other three statutory bases for 
exemptions under 49 U.S.C. 30113(b)(3)(B), which articulate safety 
limitations (``safety level at least equal to the safety level of 
the standard,'' ``not unreasonably lower the safety level of that 
vehicle,'' and ``overall safety level at least equal to the overall 
safety level of nonexempt vehicles''), the economic hardship 
exemption contains no such limitation. NHTSA is left to apply the 
exemption in a manner that is in the public interest and consistent 
with the Safety Act.
---------------------------------------------------------------------------

    Considering the impacts of not meeting the abrasion resistance 
requirements is just one part of NHTSA's consideration of the overall 
safety impacts of granting Czinger's exemption request. NHTSA also 
considers whether there are mitigating factors that may reduce the risk 
associated with exemption, as well as whether there are any other 
safety risks associated with the vehicle.
    In order to mitigate risks associated with the noncompliance, 
Czinger proposed two different additional steps that it could take. 
First, in its petition, Czinger notes that each 21C sold under the 
exemption would undergo regular, frequent inspections. Czinger states 
that any windshield with degraded visibility would be identified and 
replaced free-of-charge. NHTSA believes that this is an appropriate 
mitigation measure and has decided to grant Czinger's exemption subject 
to this term.
    Czinger also suggested that it could install tear off screen 
protectors on the windshield that could be periodically replaced. NHTSA 
does not have sufficient information to evaluate the performance or 
safety impact of these tear off protectors. In particular, NHTSA does 
not know whether installation of the tear off protectors could decrease 
the overall safety of the vehicle. Accordingly, NHTSA is not requiring 
Czinger to install a protective screen on the 21C's windshield. 
Additionally, NHTSA cautions Czinger that if it chooses to install such 
a screen, it should take steps to ensure that the screen does not 
impair the safety of the windshield.
    NHTSA has considered the information provided by Czinger in its 
petition and supplemental documentation and concludes that 
noncompliance with the abrasion resistance requirements, if mitigated 
by frequent inspection, would not result in an unreasonable risk to 
safety.
    Apart from consideration of the risks associated with not meeting 
the abrasion resistance requirements, NHTSA believes it is appropriate 
to consider how polycarbonate windshields may differ from glass 
windshields in other ways. Czinger's petition is novel in that it is 
requesting an exemption from a requirement that has posed a barrier to 
the use of polycarbonate glazing and other plastics in vehicle 
windshields other than in low-speed vehicles.\83\ Because of this 
requirement, windshield glazing has, until now and to NHTSA's 
knowledge, included a glass component that enabled the glazing to 
comply with the abrasion resistance requirements in Test 18. 
Heretofore, there has not been a need for NHTSA to consider whether 
there are any additional requirements that should be met for 
windshields beyond those considered for glass glazing. This is an 
important consideration when evaluating a request for an exemption from 
the abrasion resistance requirements. Glass and plastic have different 
characteristics, such that when plastic glazing is permitted for use in 
other locations in a vehicle (e.g., AS-4 glazing), the glazing must 
also comply with tests that would not be applicable to glass glazing, 
such as those for dimensional stability, chemical resistance, 
weathering, and flammability. By providing information supporting its 
assertion that the plastic glazing meets requirements for AS-4 glazing, 
Czinger has addressed much of this concern. However, because AS-4 
glazing is not permitted for exterior windows in areas requisite for 
driving visibility, NHTSA notes that the safety performance of AS-4 
plastic glazing is

[[Page 34925]]

not equivalent to glass glazing permitted for use in windshields.
---------------------------------------------------------------------------

    \83\ 49 CFR 571.205 S5.4.
---------------------------------------------------------------------------

    Czinger's third statement supporting its assertion that granting 
its exemption request is in the public interest and consistent with the 
Safety Act pertains to additional safety features included in the 21C. 
Czinger asserts that the vehicles will not present an unacceptable 
safety risk and states that the crash performance and occupant 
protection performance of the vehicles is improved when using 
polycarbonate, compared to laminated glazing. Specifically, Czinger 
states that it has performed crash simulations measuring occupant 
injury criteria and has observed overall improvements in performance. 
Czinger also states that the 21C has an advanced knee bolster system to 
minimize forward movement of the driver in an unbelted impact scenario, 
reducing the possibility of head impact to the windscreen.
    As noted earlier, NHTSA considers, as part of its evaluation of 
whether granting a petition is in the public interest and consistent 
with the Safety Act, the impact on safety resulting from the 
noncompliance. If the noncompliance presented an unreasonable risk to 
motor vehicle safety, NHTSA would deny the exemption, regardless of 
whether the vehicles contained other features that increased the 
overall safety of the vehicles. That is, safety improvements in one 
area cannot offset unreasonable risks to safety in another. Therefore, 
NHTSA does not consider Czinger's addition of the advanced 
crashworthiness features described above as having a direct bearing on 
whether noncompliance with the specific crash avoidance feature 
(glazing abrasion resistance) from which it seeks exemption presents an 
unreasonable risk to safety. However, NHTSA does consider the addition 
of such safety features when considering the overall safety impact of 
the exemption and the public interest benefits of supporting a start-up 
manufacturer that is working to develop and deploy new safety features. 
In this context, NHTSA has taken into account Czinger's addition of 
these advanced crashworthiness features in today's decision.
    Czinger's fourth assertion is that the 21C will be produced in very 
small numbers and will not be used daily due to its unconventional 
design. Czinger asserts that the safety risks associated with the 
exemption would be minimal because the exempt vehicles would be driven 
significantly less than conventional vehicles. In support of this 
assertion, Czinger states that the 21C vehicles will cost more than $2 
million and will likely be purchased as collectors' items and be well 
cared for throughout their life. Czinger also provided mileage data 
from other hypercars demonstrating an average of 266 miles traveled per 
year. NHTSA agrees that it is appropriate to compare the 21C to other 
hypercars when considering the likely use of the vehicles. For this 
reason, NHTSA believes that Czinger's projection that the vehicles will 
be driven, on average, 350 miles a year is reasonable. NHTSA also 
agrees that limited use on public roads would minimize the risks 
associated with granting the exemption. Czinger estimates that it will 
only produce 55 vehicles for the U.S. market over the exemption period. 
While not impacting the safety of the use of individual vehicles, the 
limited production run of the vehicle would minimize the overall safety 
impact of granting the exemption.
    Overall, NHTSA has considered the safety risks associated with 
Czinger's exemption request and believes that the safety impacts of 
granting the request would be minimal given the limited nature of the 
exemption, the limited number of vehicles affected, the expected 
limited use of the vehicles, and Czinger's commitment to inspect the 
windshields frequently and replace abraded windshields free of charge.
    We now turn to Czinger's last two assertions supporting its 
argument that granting the petition is in the public interest. Czinger 
states that the denial of the exemption request could have a negative 
effect on U.S. employment and that the 21C's innovative technology is a 
benefit to the public. The information Czinger submitted indicating 
that it would face financial failure if the exemption were denied also 
supports Czinger's assertion that denying the petition would have a 
negative impact on U.S. employment, not just on Czinger's 35 employees, 
but also on its U.S. suppliers. In support of its assertion that the 
21C's innovative technology is a benefit to the public, Czinger notes 
that the 21C uses Additive Manufacturing technology, weight-saving 
technology, advanced hybrid drivetrain technology, and innovative crash 
protection technology. NHTSA agrees that both of these points weigh in 
favor of granting Czinger's petition.
    Based on the information Czinger provided, NHTSA believes that, on 
balance, given the criteria for an economic hardship exemption, the 
limited nature of the exemption, the limited number of vehicles 
affected, the expected limited use of the vehicles, and Czinger's 
commitment to inspect the windshields frequently and replace abraded 
windshields free of charge, granting Czinger's petition is in the 
public interest and consistent with the Safety Act. NHTSA believes that 
the exemption will have minimal impact on motor vehicle safety due to 
the limited number of vehicles affected and the mitigating factors that 
reduce the safety risks associated with the requested exemption. NHTSA 
also finds that granting Czinger's exemption request will help a start-
up company manufacture vehicles in the U.S., creating U.S. 
manufacturing jobs while also supporting development of innovative 
manufacturing processes in the automotive sector and affording 
consumers a wider variety of motor vehicle choices.
    Number of Exempt Vehicles. The statutory cap for exemptions for 
low-volume manufacturers seeking a substantial hardship exemption 
requires that the manufacturer must have an annual world-wide 
production of 10,000 vehicles or less. Czinger originally petitioned 
for an exemption of up to 55 vehicles over the exemption period. 
However, in supplemental information submitted in January 2023, Czinger 
noted that it intended to produce up to 110 vehicles during the three-
year exemption period, a substantial portion of which Czinger estimates 
will be exported to other countries. This falls well below the 
statutory cap, and NHTSA is granting the exemption for the entire 
estimated production of the 21C during the exemption period, for a 
total of 110 vehicles that may be manufactured and sold under the 
exemption.
    Effective Date of the Exemption. In correspondence from April 5, 
2023, Czinger requested that, if granted, its exemption begin on August 
1, 2023. NHTSA is granting this request.

V. Conclusion

    In consideration of the foregoing, we conclude that compliance with 
the abrasion resistance requirements for windshields in FMVSS No. 205 
would cause substantial economic hardship to a manufacturer that has 
tried in good faith to comply with the standard. We further conclude 
that granting an exemption from this requirement would be in the public 
interest and consistent with the Safety Act.
    In accordance with 49 U.S.C. 30113(b)(3)(B)(i), the Czinger 21C is 
granted NHTSA Temporary Exemption No. EX 23-01, from the abrasion 
resistance requirements for AS-1 glazing to be used in the 21C's 
windshield for up to 110 vehicles produced over the exemption period.

[[Page 34926]]

This exemption is effective from August 1, 2023 until July 31, 2026.
    As explained above, the grant of this exemption is subject to the 
following conditions.
    1. Czinger shall provide inspections of the windshield glazing of 
each 21C produced under this exemption, free of charge, at least once 
every six months during the service life of the vehicle.
    2. Czinger shall replace, free of charge, the windshield of any 
exempted 21C vehicle produced under this exemption if the windshield 
becomes abraded due to normal wear and tear such that the abrasion 
noticeably impairs driver visibility.
    3. Czinger shall report to NHTSA any instances in which it replaced 
a windshield on a 21C exempted vehicle that had become abraded due to 
normal use. Such report shall be made no later than 30 calendar days 
after such replacement.
    4. The label required to be affixed pursuant to 49 CFR 555.9 must 
read in relevant part, ``except for the abrasion resistance 
requirements for windshields in Standard No. 205, Glazing materials, 
exempted pursuant to NHTSA Exemption No. EX 23-01.''
    Authority: 49 U.S.C. 30113 and 49 U.S.C. 30166; delegations of 
authority at 49 CFR 1.95 and 49 CFR 501.4.

    Issued in Washington, DC, under authority delegated in 49 CFR 
1.95 and 501.4.
Sophie Shulman,
Deputy Administrator.
[FR Doc. 2023-11453 Filed 5-30-23; 8:45 am]
BILLING CODE 4910-59-P