Print 53 comment(s) - last by Schrag4.. on May 8 at 12:04 PM

No other automaker is receiving what California is giving Tesla

Tesla's financial standings have climbed out of the red largely due to the state of California's environmental credits, which could add another $250 million to the automaker's bank account. 

The state of California has set up a system of Zero Emission Vehicle credits, which aims to push the adoption of electric vehicles by offering federal and state incentives to both automakers and consumers.

Under this system, Tesla can receive about $35,000 - $45,000 extra on each sale of its Model S sedan. Wall Street analysts predict that these credits (which can be sold to automakers that don't produce EVs) could send as much as $250 million to Tesla this year. 

This goes to show the importance of clean vehicles to the state. Its Air Resources Board wants electric vehicles to make up 15 percent of new car sales by 2025. Currently, they make up less than 1 percent.

Many automakers have fought California on its strict environmental regulations, saying that they want to create green vehicles on their own terms without being bullied by regulators. However, Tesla has managed to meet California's standards and is benefitting significantly from it.

In fact, these environmental credits are a large reason as to why Tesla will be able to announce a profitable quarter come Wednesday for the first time.

"We are in the air pollution business, not the car business," said Mary Nichols, chairwoman of the Air Resources Board, which has broad control over environmental policy in California. "There is some jealously of Tesla going on here."

Tesla has come a long way to get where it is now. After problems in the past like Model S shipment delays, a run-in with a poor review from The New York Times, and a production delay of the Model X, Tesla managed to get up and dust itself off.

Tesla began shipping 500 Model S' a week in March, exceeding the sales outlook of 4,500 posted in the February shareholder letter. 

It later announced that the company would be able to pay off its $465 million government loan within five years, and that this current quarter would be its first profitable one
Tesla is looking to keep that momentum, as well. Tesla CEO Elon Musk has been fighting for a Texas electric vehicle sales bill (House Bill 3351), which would allow distributors and manufacturers of electric vehicles only to sell directly to customers without the use of dealerships. Musk called this bill a matter of "life or death" for Tesla. 

Source: The Los Angeles Times

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By Jeffk464 on 5/7/2013 11:01:30 AM , Rating: 2
It brings me great joy not to have to pay California taxes anymore. They keep putting in all kinds of new programs and ripping off joe blow citizen to pay for it.

By Jeffk464 on 5/7/2013 11:02:57 AM , Rating: 2
Yup, add another 250 million to testla's bottom line and subtract 250 million from your average Californian's bank account.

By HopJokey on 5/7/2013 11:34:56 AM , Rating: 4
subtract 250 million from your average Californian's bank account.

I'm pretty sure this won't subtract 250 million dollars from the average Californian's bank account.

By Jeffk464 on 5/7/2013 11:36:48 AM , Rating: 1
No, the cost gets distributed obviously.

By ipay on 5/8/2013 9:47:02 AM , Rating: 2
Oh nooes! That's socialism!

By boeush on 5/7/2013 11:41:18 AM , Rating: 3
TESLA Motors employs ~3000 Californians (many of them quite highly paid), is growing rapidly, and contributing to development of high technology and clean-air vehicles that will continue paying dividends to California for many decades to come.

TESLA had 2012 revenues of >400 $million, while spending >800 $million. That money is circulating within California's economy. As TESLA grows its revenues, more and more of that money will be coming into the state, from out-of-state customers.

Short-sighted analyses invariably miss long-term strategic benefits.

By Spuke on 5/7/2013 11:50:19 AM , Rating: 2
Short-sighted analyses invariably miss long-term strategic benefits.
My roads are still sh!t. Ignorance is bliss.

By boeush on 5/7/2013 12:17:38 PM , Rating: 2
My roads are pretty decent and slowly getting better in most places, with only a couple of (admittedly egregious) exceptions, and there's road construction and highway expansion going on everywhere I look (and I do live in CA, specifically SF Bay Area.)

OTOH, I heard it was going to rain up in the Sierras tonight...

By Spuke on 5/7/2013 12:25:46 PM , Rating: 2
Well ALL of SoCal roads are crap. Ever been to AZ, they've probably repaved their entire freeway system 6 times in the 15 years I've lived in CA. I can't remember the last time I saw a freshly paved road in CA. Seems like we aren't "getting our fair share" down here.

By lelias2k on 5/7/2013 12:43:51 PM , Rating: 2
Careful when using absolutes. I've lived in San Diego for 11 years (2001-12) and have seen an enormous amount of work done to the roads. Most of it was expansion, but there was a lot of repaving done too.

Also, it is hard comparing a state with almost 40 million people in it to one with less than 7 million. You have almost six times more people living in California in an area less than 50% bigger. So that creates a whole new set of challenges.

Could things be better? They always can! But they are not as bad as you're making they sound. I lived in Georgia before and travelled throughout the US and the world, and I still love California.

By Spuke on 5/7/2013 1:20:36 PM , Rating: 2
So that creates a whole new set of challenges.
Excuses, excuses. Since we have 6 times more people, we should have 6 times more money to fix these damn roads with especially with the revenues the state is pulling in. Seriously, where are these freshly paved roads? I haven't been to SF for 10 years so you got me there but I visit SD at least once a year and the roads are crap there too. Temecula crap, LA crap, Palm Springs crap, Bakersfield crap, Santa Clarita crap, The Valley crap. All crap. AZ just finished up a major expansion to the 17. God it's like driving on a pillow. Not the pissed off, recently clipped, bull ride that CA's sucky roads are.

By yomamafor1 on 5/8/2013 10:59:37 AM , Rating: 2
First of all, 6 times more people = 6 times more money is just bad math. It depends on income distribution, % of tax, % of employment, and number of tax breaks.

Secondly, fresh paved roads? How about 680 South from Dublin to Fremont? How about 880 from Fremont to San Jose? How about 101 from San Jose to San Francisco?

Just because you don't see it, doesn't meant it doesn't exist.

By lelias2k on 5/8/2013 11:21:58 AM , Rating: 2
Excuses? Are you kidding me? Do you have any idea how different it is for a road to support a 16-wheeler passing by at 60 mph than one that stops and go constantly? The amount of deterioration that the latter causes demands that the road be much stronger, and the traffic around CA is ridiculous. Plus, CA has about 50% more cars per capita than AZ, which translates to more vehicles on the road (it has about 10 times more cars than AZ), which translates to faster deterioration.

Also, CA, in case you haven't heard, is prone to earthquakes. That can't be good for the pavement, can it?

Finally, as I said, most of the work has been towards expansion. Look at the 15 now and look 10 years ago. The 5-805 merge. The 56 is finished, the 125 too. If you haven't noticed, you're either blind or just fooling yourself.

By BRB29 on 5/8/2013 11:24:04 AM , Rating: 2
It's not excuses. The cost of repaving high traffic roads is exponentially greater. They have to make a temporary road if possible to do a reroute and expand a lane or two. That's the problem with higher pop density. They also have to deal with much more complexity of telecommunications lines and whatever is buried. They have to work mostly at night.

In a low pop density area. They can just shut down the road and wouldn't cause any problem.

Subsidizing luxury
By Schrag4 on 5/7/2013 12:30:46 PM , Rating: 2
We shouldn't be subsidizing luxury vehicles. If you look at my posting history, you'll see that I'm generally against handouts for poor, able-bodied people, but it makes even less sense to subsidize a vehicle that the average family cannot reasonably afford. My definition of "reasonably afford" is different than most of America, by the way. I don't think it's reasonable to buy a $30k vehicle if you make $60k per year, and I know many won't agree with me.

RE: Subsidizing luxury
By lelias2k on 5/7/2013 12:48:17 PM , Rating: 2
Sure, but it's OK to give 20-60 billion annually to the oil companies, which are some of the biggest and most profitable in the world, right?

RE: Subsidizing luxury
By Spuke on 5/7/2013 1:25:10 PM , Rating: 1
Sure, but it's OK to give 20-60 billion annually to the oil companies, which are some of the biggest and most profitable in the world, right?
Who cares! WE are talking about GIVING money to the wealthy so they can buy luxury cars with it. They don't need the help! Let them buy their own damn cars with their own damn money. Personally, I'd like to have some friggin roads fixed. At least that benefits everyone.

RE: Subsidizing luxury
By Pirks on 5/7/2013 3:34:12 PM , Rating: 2
offtopic: why are you so much against VW cars? I've seen you bashing them in in another thread

RE: Subsidizing luxury
By Spuke on 5/7/2013 3:48:12 PM , Rating: 2
offtopic: why are you so much against VW cars? I've seen you bashing them in in another thread
I actually LIKE VW's and would own one or more if they weren't so terrible in reliability. I owned a Golf a LONG time ago and it was fine so no personal bias but the numbers (and the anecdotal complaints) speak for themselves. I will say they and Audi have gotten much better.

RE: Subsidizing luxury
By ipay on 5/8/2013 9:55:46 AM , Rating: 2
It's the other way around.
The old VW bettle was so "good" and reliable that didn't need much fixing, and if it did, the average (more informed) Joe could repair it right away.

But it's difficult to grow a company with this kind of product.
So, there was a need to find the thin, optimized, line between the cars reliability (the graceful degradation of its parts) and the old costumers need to buy a new car of the same brand.

RE: Subsidizing luxury
By lelias2k on 5/8/2013 11:25:53 AM , Rating: 2
How is that different than giving money to the biggest, most profitable companies in the world?

Do you think they distribute this among all? No, it ends up in the pockets of the already rich.

So you can cry all you want, but we give much more money to THOSE rich people than the ones who are actually supporting a technology that has the potential to bring many benefits to our world.

RE: Subsidizing luxury
By Schrag4 on 5/7/2013 5:31:25 PM , Rating: 2
Well, since you brought up oil companies, they don't get subsidies, they get tax deductions just like every other business. These deductions are tied to operating costs such as purchases and repairs to equipment, and more. It's not any different than someone working from home and deducting the cost of their office equipment and internet connection from their taxable income. Are you saying you don't think any business should get to take these deductions?

Let's put it another way. If luxury EV companies didn't get 35k per car, they'd have to pass that on to their customers, the people that makes well more than the national average (nothing wrong with that). If you oil companies didn't get these deductions (that everyone else got), they'd have to pass that on to their customers, pretty much everyone, impacting the poor more than it would impact anyone else.

RE: Subsidizing luxury
By wordsworm on 5/8/2013 8:12:31 AM , Rating: 2
Oil companies also have a big army that they use to seize oil assets from other countries. How much did the war in Iraq cost? That's a subsidy.

RE: Subsidizing luxury
By Paj on 5/8/2013 9:34:14 AM , Rating: 2
Energy companies get massive tax incentives, some of them (in the case of oil and coal) dating back to the 19th century. They get tax breaks when a well runs dry, tax breaks on exploration, tax breaks on drilling costs.

Wahtever you call them, a subsidy/tax/break/incentive is intended to spur development of a particular industry. Oil and as receive far more than any alternative energy sources do (estimated at 2.5% of global GDP), despite the right's claims of a global consipracy to make renewable energy companies obscenely rich.

In fact its so out of hand that major NGOs - IMF, World Bank, IEA, OECD, G20 - recommend slashing the use of subsidies to the industry, due to the distortions they create.

RE: Subsidizing luxury
By Schrag4 on 5/8/2013 12:04:46 PM , Rating: 2
I've already explained what those tax incentives are. They're deductions for operating costs, not different than if a company was forced to move out of a dying market into a thriving one (their "well running dry"). Every business enjoys them, including my wife who works from home. Are you suggesting that we do away with all tax deductions related to operating costs?

As to your calling these deductions "massive," and your pointing out that oil companies receive more than any alternative energy source, you do realize that alternative energy sources represent a much smaller share of the market, right? Let me give an analogy. Let's say you had 100 people. 90 of them were given 1 dollar each and 10 of them were given 5 dollars each. What you're doing is complaining that the 10 people only got a total of 50 dollars while the 90 people got a total of 90 dollars.

By Mint on 5/7/2013 11:11:23 AM , Rating: 2
If EVs got $35k per sale, Nissan could make a profit by selling the Leaf for free.

At this point I'm calling BS. It's probably some fixed amount CA promised ages ago to get the plant built here, and then divided over current sales. Many states do that for auto plants. It's sort of like how the Volt was alleged to cost $250k each by dividing R&D over sales in 2011.

Don't you mean "profit"
By StanO360 on 5/7/2013 12:31:07 PM , Rating: 2
Most people think of profit as a business making a product and selling it for more than it cost to make. This is the equivalent of people that don't earn anything getting a tax credit calling it "getting my tax money back".

Corporate welfare

gov't makes you profitable
By rsmech on 5/7/2013 11:26:36 PM , Rating: 2
We are in the air pollution business, not the car business,"quote>

At first I thought this was a quote from Tesla. After all they are in the "credits trading business first and automaker 2nd. If you want to make money just license golf carts for the roads in CA and you'll get rich. Even if you bought them all yourself the "credits" would more than pay you back. Only in America.

Air pollution?
By Masospaghetti on 5/7/13, Rating: -1
RE: Air pollution?
By Guspaz on 5/7/2013 11:03:01 AM , Rating: 5
Umm, no, internal combustion engines are not zero-emission. That's a ridiculous assertion.

RE: Air pollution?
By nafhan on 5/7/2013 11:29:08 AM , Rating: 3
"Pollutants" and emissions are two different things.

Whether or not the OP is correct boils down to how you define pollutants. If you define pollutants as stuff that's directly harmful, then he's pretty close to correct. You seem to be defining it as "zero-emission", which is also reasonable. You defining things differently doesn't make him wrong, though.

RE: Air pollution?
By BRB29 on 5/7/2013 1:06:55 PM , Rating: 2
If you change the composition of air then you are polluting. All air breathing species rely on the air to provide a certain % of oxygen, hydrogen, etc...
When that is changed then it becomes harmful. Anything harmful to the environment that our biological needs requires is considered pollution.
So he is right, any emission is pretty much pollution but we are more tolerable towards certain things as it is less harmful to us. We are also much more tolerable on gases that will deteriorate/decay or recycle naturally.

RE: Air pollution?
By nafhan on 5/7/2013 6:33:51 PM , Rating: 2
Any definition of pollution I've seen includes something about "harming" (and maybe the word "artificial") - respiration doesn't generally fall into that category.

In fact, it sounds like you're confusing "change" with "pollute". Following your logic, all natural living and non-living processes are "pollution", and the only way to stop pollution would be to somehow stop all change from occurring.

RE: Air pollution?
By BRB29 on 5/8/2013 11:30:49 AM , Rating: 2
When that is changed then it becomes harmful. Anything harmful to the environment that our biological needs requires is considered pollution.

I quoted my own comment because it seems like you forgot to actually read it.

Let me put it this way for you. If we somehow managed to pump the air to fill it with 10% helium. Helium is not considered a pollutant right now, but in large quantity it is.

Yes all life forms are in a way polluting but they cancel each other out. Carbon dioxide is release from animals while plants and plankton absorb it and release oxygen. If Carbon dioxide production vastly outpace absorption and oxygen production then CO2 would then become a pollution.

RE: Air pollution?
By tanjali on 5/7/2013 11:06:21 AM , Rating: 5
So would you turn on the new ICE zero pollutants car and lay down under muffler and breathe exhaust?,
Just to prove your point.

RE: Air pollution?
By tlonj on 5/7/2013 11:09:13 AM , Rating: 2
Would you suck on a cigarette?

RE: Air pollution?
By Jeffk464 on 5/7/2013 11:35:23 AM , Rating: 3
You really don't have to get to zero level of pollution. You need to get down to a level where your air quality in a given area is healthy most of the year. Granted that varies a lot based on local conditions, obviously in LA air pollution tends to get trapped. But even in LA now air quality is considered to be within healthy levels most of the year, a big improvement from 20 years ago. Cars have gotten clean enough that to improve things now they are going after lawn mowers, ships at the port, tractor trailers, etc.

RE: Air pollution?
By StanO360 on 5/7/2013 12:29:07 PM , Rating: 2
More than most of the year, when I was a kid in Arcadia (abutted to the San Gabriel Mountains) we could not see the mountains on some summer days, we would not have PE 5-10 a year. Now it's almost never.

Now they're going after things that don't matter a whole lot, because they have nothing else to do. They drove the furniture business out of LA (haven't got that thank you card from Mexico yet . . .waiting). CARB keeps a lot of business from coming to CA.

RE: Air pollution?
By lelias2k on 5/7/2013 12:29:15 PM , Rating: 2
So, you're basically saying "let's just aim for good enough instead of the best we can be"?

Pollution is not healthy, no matter at what levels. If we can achieve zero pollution, why wouldn't we strive for it?

RE: Air pollution?
By Stuka on 5/7/2013 12:47:36 PM , Rating: 1
If you are asking that question and own a petrol car, you are an nimby-imbecile.

When a nearly bankrupt state is handing out taxpayer money... then yes, absolutely good enough is good enough.

If sky were the limit, why even give me a paycheck? Just let me put in my 40 hours, pick up food at the government store and return to my state housing.

RE: Air pollution?
By BRB29 on 5/7/2013 1:13:54 PM , Rating: 2
Calling someone an imbecile and not realizing your lack of knowledge.

A tax credit for pollution is not a hand out. All that does is save them on indirect expense. If the government was handing them money it would be called a grant.
California sees growth potential in Tesla. They are merely helping them pass their start up hurdle in this new expanding market. California gets hundreds of millions or billions more from taxes for all the employees and connected businesses.

If you cry about this then I don't know what you will think when you find out North Carolina gave Apple $400mil a few years back in tax credit to open a data center.

RE: Air pollution?
By lelias2k on 5/8/2013 11:35:13 AM , Rating: 2
I might be an imbecile, but at least I'm not short-sighted. ;)

RE: Air pollution?
By Solandri on 5/7/2013 4:34:36 PM , Rating: 2
So, you're basically saying "let's just aim for good enough instead of the best we can be"?

Pollution is not healthy, no matter at what levels. If we can achieve zero pollution, why wouldn't we strive for it?

Because everything has a cost. If I'm shopping for a car, why should I settle for good enough when I can get the best? I could get a $300,000 Ferrari. Sure I'd have to get two extra jobs and live on just 4 hours sleep a night, but why shouldn't I strive for the best?

Once you factor in cost, "the best we can be" is almost never the optimal choice. "Good enough" usually is. For government regulations in particular, the benefit of said regulations has to be worth the cost. The benefit of the cleaner air from having 15% EVs by 2025 has to be worth the additional cost of those EVs over regular ICE vehicles. Otherwise it's a waste of money and resources.

If the EVs cost $100,000 more than an ICE, it's probably not worth it. If the EVs cost $1 more, then it's probably worth it. with EVs costing about $10,000 more, one needs to make a case justifying that the benefit is worth the cost.

RE: Air pollution?
By Spuke on 5/7/2013 4:59:06 PM , Rating: 2
Otherwise it's a waste of money and resources.
I don't think this as a consideration at all when it comes to the CA government. These people appear to operate purely on "feel good" and "should be". If the CA gov were even remotely logical, half of these discussions would not exist. My main problem is we don't have the money to offer these credits currently. My roads jacked up and my money is being spent on pie in the sky initiatives. There would be a time where I wouldn't have a problem with this. When you're broke isn't the time.

RE: Air pollution?
By Huacanacha on 5/7/2013 2:00:00 PM , Rating: 2
Agreed. The lower the level of pollution the better, but to try to reduce pollution to zero would be ruinous and likely impossible. However I would argue we need to aim for 'healthy ALL year round' and 'very healthy MOST of the time'... or alternatively, as healthy as possible to the point of diminishing returns. The way you stated it, 'healthy for most of the year', implies there are unsafe levels of pollution at times!

This is the intent of these regulations from what I can see. They are aiming for a small percentage of vehicles to be pollution free which will lower the total pool of pollutant emissions. Depending on the type of electricity generation, even the 'emission free' vehicles may just be moving the emissions upstream to the power plants and supply chain needed to support power generation. But for the intent of reducing localized pollution having more zero emission vehicles will clearly help.

RE: Air pollution?
By Jeffk464 on 5/7/2013 6:13:09 PM , Rating: 2
I wouldn't disagree with you on your goal. Sometimes you can get odd atmospheric conditions that can cause a high build up of air pollution. I guess it depends on how frequent that is.

RE: Air pollution?
By Masospaghetti on 5/7/2013 11:41:32 AM , Rating: 2
I wouldn't because the carbon monoxide would kill you. However, carbon monoxide doesn't accumulate in the atmosphere and thus shouldn't be considered an air pollutant.

RE: Air pollution?
By Jeffk464 on 5/7/2013 6:11:17 PM , Rating: 2
Having a lot of carbon monoxide in your exhaust is a sign that you are not getting an efficient burn however. If you want to maximize efficiency you will basically end up reducing carbon monoxide.

RE: Air pollution?
By Philippine Mango on 5/7/2013 2:30:43 PM , Rating: 2
I might... No seriously on cold start of my Volvo S60, I put an indoor CO meter at the exhaust pipe and it was registering like 200PPM but then after about 15 seconds of idling, the CO meter dropped to a 0 reading indicating that it was safe. Could not believe what I was seeing when I tried that out. Oh and for a bit of irony, I brought that same CO meter when I was going to buy a car on craigslist to check out the car's emissions, but we met in a parking lot and before I could put the meter to the car's tail pipe, it was detecting a background CO of 200PPM, making the test impossible! The outdoor air in some areas is more dirty than the tailpipe of some cars!

RE: Air pollution?
By Flunk on 5/7/2013 11:37:30 AM , Rating: 2
If combined with the Emissions from power generation it's fully possible that a Tesla emits more harmful pollutants than some models of ICE vehicle. If the energy is from Coal generation then it's pretty much guaranteed to be significantly worse, solar, wind and nuclear would be lower but nuclear has other issues.

RE: Air pollution?
By boeush on 5/7/2013 11:45:32 AM , Rating: 2
California (where the above-referenced "lady" is from) gets almost none of its electricity from coal:

RE: Air pollution?
By CharonPDX on 5/7/2013 11:56:53 AM , Rating: 2
Sorry, that's been fully debunked. An electric car, even if powered 100% by coal-fired power plants, is STILL cleaner than a Prius. And you can make an EV even cleaner by switching the electricity generation source, something you can't do with a conventional gas-powered car (you can switch to an Ethanol bend; and if you have a Flex Fuel vehicle, you can even switch to a higher-percent blend, but not with the vast majority of conventional gas cars. You *CAN* do it with a diesel, by switching to biodiesel or "greasel".)

So where I am, about 30% of my electricity comes from coal. But I can pay my electricity company a little extra to get 100% renewable. Thus, by paying $5 more a month, my EV becomes completely "green." Still way less than I'd pay in gas.

RE: Air pollution?
By lelias2k on 5/7/2013 12:33:15 PM , Rating: 2
I would be surprised if Tesla were getting more "dirty" energy than any other car maker, percentage-wise.

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