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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 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.


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