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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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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
quote:
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
quote:
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.


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