Tesla Motors is expected to release quarterly earnings figures within the next few days, and the Silicon Valley automaker is thought to have attained profitability for the first time ever. As it turns out, a good bit of that profit will reportedly come from the State of California.

According to an article from the LA Times, Tesla, which is reportedly on pace to sell 20,000 vehicles in 2013, receives as much as $35,000 in environmental credits from California for each Model S it sells. These credits can then be sold to other automakers that do business in the state but don't sell zero-emission vehicles of their own. Some experts believe Tesla could earn up to $250 million from such ZEV credits.

While profits from ZEV credits equals good news for Tesla, some experts and rival automakers aren't very pleased with California's strong-arm tactics when it comes to the sales of electric vehicles. "At the end of the day, other carmakers are subsidizing Tesla," said Thilo Koslowski, an analyst at Gartner Inc.

Mary Nichols, chairwoman of the California Air Resources Board, counters by saying, "We are in the air pollution business, not the car business... There is some jealously of Tesla going on here." Check out the entire article from the LA Times here, it's an interesting look into the inner-workings of the business side of the eco-friendly automotive marketplace.


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  • 220 Comments
      Street King
      • 1 Year Ago
      Well that explains the $199 lease electric Fiat 500\'s.
        GasMan
        • 1 Year Ago
        @Street King
        It also explains why they are only sold in California. I would buy one for $199 a month but I can't get that deal.
        Nick Kordich
        • 1 Year Ago
        @Street King
        Bingo. They're called "compliance cars" because they bring the manufacturer into compliance with CARB's requirement. A Type 1.5 battery EV with a range of 75-100 miles is worth 2.5 credits, which would offset up to $12,500 in fines for not producing zero-emissions vehicles. Or Fiat could have bought credits (probably for a lot less) from Tesla or Nissan, who have surplus credits for sale because of the electric cars they made.
      Rob Mahrt
      • 1 Year Ago
      I believe it is widely understood that the value of vehicle credits, even today, has dropped greatly. It is thought that this past quarter they may have earned some value from them, but not nearly the amount that was seen in the recent past, which is probably what the LA times research is based off of. By the earnings for the current quarter, or next quarter, the amount of vehicle credits is expected to be very low. But, it worked out very well for Tesla as the value of these credits slowly declined while they perfected their production and slowly increased gross margin.
        Rotation
        • 1 Year Ago
        @Rob Mahrt
        It is however annoying that Tesla doesn't break out their credits business separately. They file them under "auto sales".
        Rob Mahrt
        • 1 Year Ago
        @Rob Mahrt
        I do not agree with the general sentiment of John Peterson, a frequent basher of Tesla for years on popular investment site seeking alpha, but on the vehicle credit front alone, I think there may be truth: http://seekingalpha.com/article/1370771-tesla-s-q1-earnings-an-epic-april-fools-prank
      m_2012
      • 1 Year Ago
      Good for them to take advantage of every opportunity given to them. Automakers get paid to make EV's, automakers pay to make ICE's. Simple. When were they going bankrupt again? Profit, full production rate, stock climbing, new performance options, and paying off their loan.
      Kevin Potts
      • 1 Year Ago
      So oil companies get billions of dollars in subsidies, all while polluting the earth. Tesla "could" earn up to 250 million for selling 20,000 zero-emission vehicles. Prospective...use it.
      Avinash Machado
      • 1 Year Ago
      Does the Volt also get such credits in California?
        pmpjunkie01
        • 1 Year Ago
        @Avinash Machado
        Yes.
        Rotation
        • 1 Year Ago
        @Avinash Machado
        Not as many, but yes. PZEVs, AT hPZEVs (plug-ins with less than 10 miles all electric range), TZEVs (plug-ins with at least 10 miles all electric range) and ZEVs all earn credits.
      ammca66564
      • 1 Year Ago
      Because California definitely has $250M to throw away. California doesn't have any financial problems to speak of.
        PeterScott
        • 1 Year Ago
        @ammca66564
        California is not giving any money to Tesla. These are just clean-air credits. After that it is all speculation how much Tesla can sell these credits for to other manufacturers who will have the choice of building their own EVs for buying credits from Tesla.
        waetherman
        • 1 Year Ago
        @ammca66564
        California isn't paying Tesla. They have created a system that forces car companies to produce less polluting vehicles. If they don't produce the vehicles themselves they have to "buy" the equivalent credits from others that don't pollute.
        Rotation
        • 1 Year Ago
        @ammca66564
        California doesn't pay for the credits. California awards them to Tesla for producing clean cars. Then if Tesla wants money instead of credits, they sell the credits to other automakers who don't sell enough clean cars to cover the requirements, they have to buy credits on the open market. Tesla thus sells their credits to those other automakers. The value of the credits is not fixed. If other makers are angry they are subsidizing Tesla too much and paying too much for credits, the can make clean cars too and then they don't have to pay Tesla.
          Rotation
          • 1 Year Ago
          @Rotation
          No PJ Malloy: If they just kept them, they would get no money. there is no money from the government for this. The government only issues credits. Any company can buy carbon credits, but they buy them from other companies, not the government. tinted up: That's a very cynical way of putting it, but yes. That's the theory behind regulation in general. If what a company does is deemed a net negative for society, the government may force them to do it less or not do it at all.
          raktmn
          • 1 Year Ago
          @Rotation
          Tinted up -- Not, you've got your concept of rights upside down. California is saying that people have a constitutional right to breath sufficiently clean air such that they aren't caused health problems by others. This constitutional right has been upheld over 3 dozen times in separate US Supreme Court rulings as a distinct constitutional right of the people. Companies have the PRIVILEGE to build cars as long as their product does not violate other's constitution right when their cars are used for their intended purposes. Car drivers have the PRIVILEGE to drive their cars up until the point where they violate the constitutional rights of others. Laws such as this, and all the CARB pollution regulations derive their legal authority out putting limits on the privilege of building cars that are known to pollute and harm others with their pollution. Why did you have a problem with this? What is it about the US constitution that you don't understand?
        purrpullberra
        • 1 Year Ago
        @ammca66564
        Cali benefits from all the jobs and the taxes. The calculation isn't simply that Cali loses $250 million. It's more complicated than that. I'm curious if Cali gives benefits of this kind to any other companies. That could help put this into perspective.
          Rob Mahrt
          • 1 Year Ago
          @purrpullberra
          I am pretty sure they are direct payments from other auto manufacturers to Tesla, not from the State to Tesla... no?
      purrpullberra
      • 1 Year Ago
      Oil companies and car manufacturers have lobbied and maneuvered to take advantage of different aspects of applicable laws. Why is it that anyone would give Tesla any crap for doing the same thing. That kind of anger and jealousy comes from ignorance. The government has a strong vested interest in getting the country off of polluting and wasteful fuel. If there was ever a good reason to give oil companies tax breaks or other financial incentives there are MUCH BETTER reasons to do the same for a company like Tesla today. There is no reasoning with anti-Tesla people or anti-environmentalists and acknowledging that fact is of paramount importance to the ultimate success of the country. In order for the US to advance 'doing the right thing' simply must be forced on the idiots who can't comprehend well enough to behave properly on their own. In an age where FOXNEWS is watched and believed by the people it who tune in those of us who aren't being turned into tools of our own destruction must forge ahead and continue to force progress on the dum-dums. More power to Tesla to forge the future to the dismay of the mal-educated masses all over the country!!! Subsidize your better all other automakers!!! WAAAAAA WAAAAAAA cry the 'conservatives'. THIS VIOLATES OUR DOUBLE STANDARDS!!!! WAAAAAA !!!!
        Johnny Trailerpark
        • 1 Year Ago
        @purrpullberra
        Right on!
        pghcc2006
        • 1 Year Ago
        @purrpullberra
        "In order for the US to advance 'doing the right thing' simply must be forced on the idiots who can't comprehend well enough to behave properly on their own." You arrogant self-righteous authoritarian scum. I love how filth like you and other vermin on the left will call those of us on the right fascist but hold no issue in holding views such as these.
          purrpullberra
          • 1 Year Ago
          @pghcc2006
          Fascists on the right want to force their world view onto others. 'Fascists' on the left want to move ahead with progress despite the dum-dums. I'd never force an EV on an 'conservative' but I will force EV's through government policy which idiot dum-dums like you can ignore or rail against. Forcing 'conservatives' to deal with Tesla is nothing compared to how 'conservatives' belittle the disadvantaged (welfare queens, welfare President) or how 'conservatives' hail Rush for calling a coed a slut on the air for days without apology or how 'conservatives' use loser-bait like gay marriage to frighten the losers to vote for a failure coke-head president bush. On my worst days, at my very worst I am a GOD compared to any 'conservative'. So if I am scum you aren't even a life form. Simple as that.
          purrpullberra
          • 1 Year Ago
          @pghcc2006
          It's OK to be scared of people who are better and smarter than you pghcc2006 IQ=55. I know that's what your problem is, the whole of your problem, being scared. But the Trix rabbit cares for you. Or is that Jesus? I forget which made up crap you believe in. You have no clue what self-righteousness comes from being right since it's not in your experience, actual or pretend. So to make it easiest on yourself, and what else would you do, go back in your pretend world where Romney wins and folks like you aren't complete losers. Leave the progress into the future for those big boys and girls who can deal with reality. I'm surprised but I accept your love for what I do.
          EZEE
          • 1 Year Ago
          @pghcc2006
          The coed slut wanted us to pay for her to have sex, even though she was going to a college that cost $50,000 a year, and knew ahead of time they didn\'t pay for things like birth control. So...we are now forced to pay rich kids to have sex? You are right - she wasn\'t a slut - she was a *****.
      sinistro79
      • 1 Year Ago
      Tesla's "Californian" success come at a time when the education system in CA is ranked 47th in the nation. Coincidence? You decide.
        Joeviocoe
        • 1 Year Ago
        @sinistro79
        His point is he likes to bend the truth to fit his Republican "War on..." California because they are the biggest blue state target. He was taught to spin the truth by watching lots of Fox News propaganda. California's educational "Spending"... ranks as the 47th in the nation. As in, they spend the most per student. The state's actual educational ranking is below average at a "C" (or ranking of 30)... but that wouldn't have been so dramatic an attack against liberals. Would it?
        Aaron
        • 1 Year Ago
        @sinistro79
        Nice misrepresentation of the facts. https://en.wikipedia.org/wiki/Education_in_California
        Spec
        • 1 Year Ago
        @sinistro79
        What exactly is your point here? A bunch of elementary school students earned $100K so they could buy Tesla Model S cars?
      sloturbo
      • 1 Year Ago
      And the green folks talk about oil subsidies. $250M in one year for 20k cars.
        PeterScott
        • 1 Year Ago
        @sloturbo
        At least the "green folks" mostly know what they are talking about instead of flying off the handle, and expressing clueless outrage over something that isn't actually happening. There is no $250M subsidy. There is a requirement to build zero emission cars. When you build one you get a credit that can be used to offset your emission producing cars. Tesla doesn't build emission producing cars, so they will have excess EV production credits. It can sell these credits for whatever the market will bear to a company that needs them. This is not taxpayer money, it is Toyota money if they don't build enough EVs and need to buy some credits.
          clquake
          • 1 Year Ago
          @PeterScott
          It's only a subsidy from other car makers, who have the option to produce ev's of their own.
          JakeY
          • 1 Year Ago
          @PeterScott
          "Yes, JakeY, it does amount to a subsidy. In the same context as oil subsidies. " Okay, I'm going to put another way. When sloturbo says "oil subsidies" and when the "green folks" he refers to says "oil subsidies" they mean the $2-4 billion per year in tax credits/deductions that the oil industry gets. And when 99% of people say "subsidy" they mean grants/loans/rebates/tax credits/tax deductions. I am willing to bet if you asked sloturbo, he probably though this was a tax credit for Tesla. They almost never mean other oil favorable policies that may reduce costs or increase earnings for the oil industry. When you include those, that amounts to about $10 billion per year (according to OECD). When you also include costs of defending pipelines/shipping lanes that amounts to $50 billion. Those figures are almost never used in the context of "subsidies" but rather usually put under "externalities". And even those figures actually cost the government something. In this case, this policy doesn't cost the CA government anything except perhaps lost penalty money (about $5000 per credit). This is why I brought up the biofuel targets/requirements, since they are a close analogy to the ZEV program (both require a certain percentage of product).
          JakeY
          • 1 Year Ago
          @PeterScott
          @Rotation "This does amount to a subsidy." Not really, at the very least not in the same context as "oil subsidies". That only refers to government expenditure or tax deductions. The CA government is not giving Tesla a tax credit or tax subsidy. This is more like a missed penalty/fine and I don't believe any analysis of oil subsidies factor that in. A close analogy is the penalty oil companies pay for missing biofuel targets. Those are never counted as "subsidies" for biofuel, only the actual biofuel tax credit.
          Rotation
          • 1 Year Ago
          @PeterScott
          This does amount to a subsidy. The amount may vary, but it certainly is a subsidy which goes to anyone who makes clean vehicles. Since Tesla makes a lot of clean vehicles and only clean vehicles, that means they are getting a substantial subsidy.
          Pj Taintz
          • 1 Year Ago
          @PeterScott
          looks like autoblog green invaded today. everything that is common sense is voted down and anything protecting greenies is modded up....
          Rotation
          • 1 Year Ago
          @PeterScott
          Yes, JakeY, it does amount to a subsidy. In the same context as oil subsidies. Tesla is receiving money from other sources due to government regulation. This allows them to reduce the sales price at the same profit level per unit. And this increases sales. This isn't like a penalty. It isn't just that Tesla isn't paying penalties, it is that they are receiving money.
          Rotation
          • 1 Year Ago
          @PeterScott
          clquake: Yes, you're right, other car companies could produce EVs too. As I said, the subsidy goes to anyone who makes clean vehicles, not just Tesla. Other car companies could make their own EVs too, those EVs would also be subsidized by the credit system, it's just that the subsidy transfer would be within one company instead of between two.
        sloturbo
        • 1 Year Ago
        @sloturbo
        "Tesla gets to sell the credits to other automakers that need them to satisfy tough California regulations." If they get money from the government for every car produced, and use that cash for their own welfare, then whether you call it a subsidy or an incentive they are getting an unfair advantage in the market place.
      Grendal
      • 1 Year Ago
      Let's be clear that this is what the automakers asked for. California has said they must make less polluting cars. And keep in mind that you, as a taxpayer, are already paying for the results of the pollution that those cars are creating in many ways. The carmakers still want to make large polluting SUV's and smaller but big engine fun sporty cars that also pollute a lot. The compromise is that automakers must make offsetting small non-polluting cars that don't sell as well to balance those large polluting cars. Tesla creates a very sporty non-polluting car that is selling like gangbusters and has the opportunity to sell those credits off to the larger manufacturers so they can continue to make the cars that they like. No one is stopping those manufacturers from not buying the credits. Now because they didn't want to make the cars that Tesla is successfully making they are whining. Well they probably should have made a better effort to make a real EV like Tesla has done.
        Scr
        • 1 Year Ago
        @Grendal
        It still pollutes a great deal, just not out of its own tailpipe.
          Dave D
          • 1 Year Ago
          @Scr
          1) When are you guys going to grow up and use real sources to get your facts? They do not pollute "a great deal". Hell, a lion's share of these cars have been sold on the West coast and their energy mix is much better than the average in the US and even in other areas of the US they are better than an ICE vehicle. 2) Some of us care about reducing foreign oil purchase as much as, or even more than, the pollution component. Every dollar spent on NG to produce electricity is another dollar that stays in the US economy. 3) Aren't you just tired of being a whiney little twit?
          clquake
          • 1 Year Ago
          @Scr
          If you're going to include the building and fueling processes, then you need to do the same for ICE powered cars, so it's a more accurate comparison.
          William Flesher
          • 1 Year Ago
          @Scr
          That really depends on the buyer, and the location. EV forums are filled with users who charge their EVs with PV solar panels. Still more users live in areas that make heavy use of wind or hydro power. Most utility companies here in the Pacific Northwest offer electricity from renewables only, at rates slightly above traditional sources. It is no surprise that EV's sell best in the areas that have invested heavily in green energy and charging infrastructure.
        Pj Taintz
        • 1 Year Ago
        @Grendal
        you make that statement as if we are at the mercy of the car companies. we are not, there are many options out there. The car companies would not be producing these "poluting machines" if we didnt want them! dont blame the companies for making products people want, blame the people who keep buying them
          Grendal
          • 1 Year Ago
          @Pj Taintz
          There is little noticable pollution emanating from each car. You can't personally tell the difference in pollution between a Hummer and a Yaris. The overall effect of millions of those cars are noticable and does have a lerger impact. A state like California has a vested interst in protecting its environment for the good of its citizens. Sometimes a government needs to protect people from themselves by looking at the larger overall picture that doesn't necessarily impact an individual citizen.
      Ken
      • 1 Year Ago
      Just let Tesla fail - stop throwing good money after bad...
        tump
        • 1 Year Ago
        @Ken
        If they're aiming to fail, they should probably start losing money soon before it's too late!
      www.AmishStories.net
      Sure lets all follow California\'s lead, right to bankruptcy. Hard to believe that state is even part of the union with its out of control over- spending and polices, Scotty beam me up its time for me to find the America I once believed in! Richard
        Spec
        • 1 Year Ago
        @www.AmishStories.net
        Hey Jebediah, California has a budget surplus. Go back to churning your butter.
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