Tesla Could Receive $250 Million in California Environmental Credits This Year
May 7, 2013 10:30 AM
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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.
The Los Angeles Times
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Don't you mean "profit"
5/7/2013 12:31:07 PM
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".
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