Tesla Could Receive $250 Million in California Environmental Credits This Year
May 7, 2013 10:30 AM
comment(s) - last by
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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RE: Subsidizing luxury
5/7/2013 5:31:25 PM
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
5/8/2013 8:12:31 AM
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
5/8/2013 9:34:14 AM
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
5/8/2013 12:04:46 PM
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.
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