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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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.

"Google fired a shot heard 'round the world, and now a second American company has answered the call to defend the rights of the Chinese people." -- Rep. Christopher H. Smith (R-N.J.)

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