As Tesla Motors showed last month, it takes as little as 90 seconds to swap out a battery on a Model S electric vehicle. Unfortunately for the California-based automaker, it could take as little as 90 days for the state to shelve a law that made such battery-swapping capabilities a profitable exercise for Tesla. The California Air Resources Board (CARB), which is heading the efforts to provide incentives for automakers to make zero-emissions vehicles for the most populous US state, may rejigger its rules to disallow automakers from getting zero-emissions vehicle (ZEV) for offering battery-swapping, Green Car Reports says.

Battery-swapping qualifies for the ZEV credits because it allows a type of rapid "refueling" of an electric vehicle, similar to filling up a tank with H2 for a hydrogen fuel-cell vehicle. Forward-thinking automakers can sell these credits to automakers who need them, generating revenue. Such sales helped Tesla achieve its first profitable quarter during the Q1 of 2013. CARB will publish its proposed rule changes in early September, after which there will be a 45-day comment period before anything's decided.

Tesla, which first said the Model S was designed to allow battery-swapping in 2009, demonstrated them last month at the Tesla Design Studio in Southern California (we've provided the video again below). The automaker planned to build battery-swapping stations near its especially busy Supercharger fast-charging station locations and is not saying whether CARB's potential rule change will cause the company to ditch its battery-swapping plans. There are more details over on Green Car Reports.


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  • 43 Comments
      paulwesterberg
      • 1 Year Ago
      Does this mean that hydrogen vehicles will qualify for less credits? The entrenched auto makers must be lobbying carb to cancel these credits because they are too far behind Tesla.
        2 wheeled menace
        • 1 Year Ago
        @paulwesterberg
        Well, these credits do come from taxes that the entrenched automakers pay. Of course they would be against them. I like Tesla, but they are propped up by a government program that they are the major, and maybe only beneficiary of. Most automakers are the losers.
          JakeY
          • 1 Year Ago
          @2 wheeled menace
          "Well, these credits do come from taxes that the entrenched automakers pay." Not sure what you mean by this? Automakers get awarded credits based on volume of EVs sold and their minimum credit requirements are also based on their volume. It has nothing to do with taxes.
          Rotation
          • 1 Year Ago
          @2 wheeled menace
          JakeY: The emissions credit system is a tax system. Yes, the revenues don't go to the government. But the system is designed to discourage the sales of more emitting vehicles by making them more expensive than they otherwise would be (a tax) and encourage the sales of less emitting vehicles by making them cheaper (a subsidy).
          Rotation
          • 1 Year Ago
          @2 wheeled menace
          JakeY: All taxes are just compulsory money redistribution schemes. The government doesn't keep tax revenues, they give them to someone else. This one just works a little bit differently. The reason why "carbon credit" and "carbon tax" are separate terms is purely political renaming. Taxes are unpopular so they don't call carbon taxes (whether coupon trading or straight taxation) taxes. You can call it a tariff if you want to. But either way, it's a tax because of the reasons I state above.
          JakeY
          • 1 Year Ago
          @2 wheeled menace
          @Rotation We had a similar argument over the definition of subsidy, but in this case, I don't think there is any leeway to interpret "tax". A tax must end up with contribution to the government in one way or the other (either monetarily or through labor). This is not a tax. There's reason why "carbon credit" and "carbon tax" are separate terms.
        Spec
        • 1 Year Ago
        @paulwesterberg
        Yeah, I'm a bit worried about the automakers gearing up for another big push to kill the CARB rules. Ford and Chrysler will complain about losing money on the Ford Focus Electric and Fiat 500e, respectively. But I think the success of Tesla will make it harder for them to do since they have proved that it is possible to sell EVs that people want and are even profitable.
          Spec
          • 1 Year Ago
          @Spec
          I have no clue what Tesla's profits will be. I'd guess around break-even . . . maybe a little profit, maybe a little loss. But I have no clue.
          raktmn
          • 1 Year Ago
          @Spec
          I'm predicting 2 different sets of numbers. GAAP will show a loss, and non-GAAP will advise that operations were profitable. Tesla has had a number of 1-time charges they have to account for that will make things appear worse than they actually are. (This is actually why companies offer both GAAP and non-GAAP numbers, to help provide more accurate guidance with things like one-time charges excluded) One-time charges include the costs for opening new supercharger and dealership locations (esp. overseas). There will also be some one-time income stream delays. This includes costs associated with building cars in the latest quarter, that won't be booked as sales until next quarter when they are delivered overseas. This gap in time will show up in the books as a loss, even though these cars are already effectively sold. In quarters after this, cars built for delivery in a future quarter will be balanced by booking sales of cars built last quarter, so this extra cost of starting up a pipeline will even out over time until it no longer lowers quarterly profits. Another possible income stream delay is longer in term, where Tesla might not be able to book the full sales price of cars considered to be "leased". It will be interesting to see how this is handled. Just my gut feeling based upon advisement from Tesla in previous SEC papers and press announcements. The 2 wildcards are whether Tesla achieves 25% gross margin for a significant number of cars delivered last quarter, and how much Tesla decided to put into R&D for future models once they received that huge $1 Billion in funding.
          Letstakeawalk
          • 1 Year Ago
          @Spec
          What do you predict Tesla's profits will be in the second quarter?
          JakeY
          • 1 Year Ago
          @Spec
          They are already complaining to the EPA, but I don't think they'll try a lawsuit again this time: http://green.autoblog.com/2013/03/18/automakers-epa-highly-unlikely-california-zev-mandate/ Their specific EVs might not do that well, but they can't really argue there's no market for EVs in general because the market is growing quite rapidly.
        Rotation
        • 1 Year Ago
        @paulwesterberg
        No. Hydrogen refilling would not be affected.
          Joeviocoe
          • 1 Year Ago
          @Rotation
          And now we see the true power behind California's Air Resources Board.
        JakeY
        • 1 Year Ago
        @paulwesterberg
        They aren't canceling the fast refueling bonus completely so this will only disqualify battery swapping as fast refueling, but hydrogen vehicles can continue to get the extra credits. The way things are going, Tesla might not need the extra ZEV credits (depends on the market demand for it) but it does serve eliminate the only regulatory incentive to pursue battery swapping.
      hrlydaveson
      • 1 Year Ago
      Typical CA government BS. These money grubbing crooks are getting away with ripping us off from every angle. No wonder business are moving to other states. Lose your party lines, that is the only way to get back what has been stolen.
      2 wheeled menace
      • 1 Year Ago
      Kinda sad that government holds the strings on their business model.
        Joeviocoe
        • 1 Year Ago
        @2 wheeled menace
        It really is. And it is even sadder... that industry is pulling the strings of government here. Just like state laws, that are written with the "help" of lobbyists from the Automobile Dealer Associations... CARB rules are written with the "help" of Hydrogen Lobbyists.
          2 wheeled menace
          • 1 Year Ago
          @Joeviocoe
          Preaching to the choir, man. Crony capitalism drives me bonkers.
      Joeviocoe
      • 1 Year Ago
      It was the Hydrogen Lobbyists writing the CARB ZEV credit language in the first place... that decided that extra credits should be given to vehicles that could 'refuel' in under 15 minutes. It was MEANT to give FCVs more credits than BEVs... and thus a distinct advantage... and thus more automakers would focus on making FCVs. But Tesla showed them, ... and now they are all butt hurt. CARB should only give credit based on WTW emissions per mile.... and NOT on convenience for the consumer... SALES will favor whatever is more convenient. BEVs don't need to 'refuel' in under 15 minutes in order to sell. CARB should not be trying to pick FCVs as a winner.
        Joeviocoe
        • 1 Year Ago
        @Joeviocoe
        The credits will become equal in 2018 regardless of 'refuel' time. It think Hydrogen is worried that they've lost their 3 ZEV credit advantage to Tesla. Each FCV was supposed to get nearly double the ZEV credits of each BEV.... now, that may not happen since Tesla has proved otherwise.
      Rob Mahrt
      • 1 Year Ago
      Hmm not really sure I understand. What is the benefit of not allowing ZEV credits for swapping...? Like, what is the reason behind the change of heart?
        Joeviocoe
        • 1 Year Ago
        @Rob Mahrt
        The benefit is to allow Hydrogen FCVs to keep their unfair advantage. The reason why many automakers are giving serious lip service to building FCVs, is because CARB gives nearly twice as many ZEV credits for each FCV sold.
      Rotation
      • 1 Year Ago
      Hurt Tesla? More like not help them. If Tesla builds these stations they can claim more credits for their cars despite the cars being no different than before. And despite the fact that very few customers will ever use the capability or even be near enough to a swap station to use it! As long as swap stations are not commonly available to most of their customers, they should not count toward increasing credits for a vehicle. The idea of the credits system is to get more EVs made and more capable EVs made than would happen without any kind of similar push. Allowing Tesla to earn more credits means less demand (or need) for credits from other companies which means fewer EVs made. And it likely will not lead to any additional Tesla Model S's sold. Don't count swapping, CARB. I implore you.
        Joeviocoe
        • 1 Year Ago
        @Rotation
        Rotation... I very much agree with you. CARB should NOT count swapping. But neither should they count H2 refueling time as extra credit. This was all set to be done,.... in Model Year 2018 anyway.
          Rotation
          • 1 Year Ago
          @Joeviocoe
          Why shouldn't they count H2 refueling time? Unless only a few H2 stations are fast and the rest are slow, I can't see why not. If someone buys an H2 car, presumably they fill it at H2 stations. If those H2 stations are fast, then they are getting the rapid refill advantage that the credit was designed for. SImply offering an H2 car doesn't earn any credits, the car has to be bought (or leased), so I don't see much of a scam opportunity here. This is of course assuming the H2 car is a fuel cell car and doesn't just burn the H2. I wouldn't count burning H2 as zero emissions (nor would I could NGVs, I'd put them in the next category down, with EREVs).
      Ryan
      • 1 Year Ago
      The only people I see using the Tesla battery swapping stations are multimillionaires who don't care about money. I still think we should focus more on reducing the costs of DC quick chargers than battery swaps or hydrogen.
        František Kubiš
        • 1 Year Ago
        @Ryan
        so you think you have to be multimillionaire to be able spend $60-80 for battery swap? interesting...
      Keef Wivaneff
      • 10 Months Ago
      Stage magician-ship. The battery packs are dummies. The car has a small battery hidden inside that can easily move the car on and off stage. A real world battery swap take 3.5 hours . and needs obstructions to be removed, the heavy cabling to be disconnected and re-connected and the glycol cooling system This is a sleazy charade to gain the extra ZEV credits needed to top up the loss making company and to allow Elon to trouser another $75M. WHERE ARE the battery swap stations? Coming real soon I expect. What a LOAD OF OLD BOLLOCKS!
      Grendal
      • 1 Year Ago
      This is just extra money for Tesla, not critical funds. Granted the ZEV credits allowed them to reach profit last quarter but they are still improving and streamlining their line to create needed profit margins. Tesla was never supposed to reach positive profit until Q4 of 2013. By late next year they are supposed to be working so well that they can double their current production numbers. As far as I'm concerned Tesla can slow track their battery swap plans anyway. I didn't see a high demand for it and it was going to be very costly. In PR terms it was nice to prove that it can be done. If they needed a few to get a bunch more ZEV credits it might have been financially worth the effort. Without the credits, focus on the Superchargers instead.
      bluepongo1
      • 1 Year Ago
      http://www.wired.com/autopia/2013/07/tesla-plant-video/ <&> http://www.technologyreview.com/news/516876/forget-battery-swapping-tesla-aims-to-charge-electric-cars-in-five-minutes <&> http:motherboard.vice.com/blog/3d-printing-with-graphene-is-coming-and-it-will-power-the-future <&> http://motherboard.vice.com/blog/oil-disasters-you-can-see-from-space
      Dave
      • 1 Year Ago
      Battery swapping is like E85. The cars will be able to use it. But there will be almost no stations available. So its kinda ridiculous to give credit for it.
        Dave
        • 1 Year Ago
        @Dave
        Or perhaps CARB came up with the same conclusion that I did: "These stations will be few and far between. So, you will have to drive out of your way for them and you will not get to them at the exact moment that your pack runs dry. So there is a very good chance that you will only make ~150 miles of progress for the price of the battery swap. If you're lucky, you'll get 200. So, you're paying anywhere from 30 cents per mile ($60 / 200) to 53 cents per mile ($80 / 150) At $4 per gallon, that is equivalent to a car getting between 7.5 and 13.5 mpg."
          Dave
          • 1 Year Ago
          @Dave
          "At $4 per gallon, that is equivalent to a car getting between 7.5 and 13.5 mpg." Of course, we probably should compare the price to an untaxed gallon of gasoline at $4.02 minus $.67 = $3.35, at which this is equivalent to a car getting between 6.3 and 11.2 mpg. http://www.californiagasprices.com/Prices_nationally.aspx http://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_States
          Joeviocoe
          • 1 Year Ago
          @Dave
          E85? Same argument for Hydrogen infrastructure Whenever you give credits for something that may or may not be utilized, it's a bad idea. It was the Hydrogen Lobbyists writing the CARB ZEV credit language in the first place... that decided that extra credits should be given to vehicles that could 'refuel' in under 15 minutes. It was MEANT to give FCVs more credits than BEVs... and thus a distinct advantage... and thus more automakers would focus on making FCVs. But Tesla showed them, ... and now they are all butt hurt.
        JakeY
        • 1 Year Ago
        @Dave
        Then add a condition for minimum station count to qualify for a credit. But I suspect this will not be added because station count for hydrogen cars are extremely low in the first place (even with the government funding more than half the cost to build them, while swap stations get zero dollars from the government). But like Joe said, the provision is clearly written for FCVs in the first place. I'm pretty sure I saw that actually written in one of the CARB comments. Battery swapping just threw a monkey wrench into that plan. They should have just written explicitly that only FCVs get awarded the extra credits then they would not have had to change it, but I guess that would have brought accusations of picking a winner. But with this explicit exclusion of battery swapping, the same accusations would be leveled at CARB.
      m_2012
      • 1 Year Ago
      I could see Tesla not offering battery swapping now to ensure they get the credits they are entitled to and worked for. They play by the rules and the rules get changed when they can actually prove its a viable option. The government just keeps dangling that carrot. I say just skip the swapping and build more superchargers.
        raktmn
        • 1 Year Ago
        @m_2012
        Yea, or just offer battery swapping at existing Tesla service centers.
        Letstakeawalk
        • 1 Year Ago
        @m_2012
        It was part of the bet that Musk made - the car *had* to have a swappable battery... now that I think about it, he didn't really hit the price target. http://www.treehugger.com/cars/teslas-elon-musk-bets-1-million-for-charity-that-model-s-will-be-ready-on-time.html
          František Kubiš
          • 1 Year Ago
          @Letstakeawalk
          well, you could buy it for that price if you wanted, so I think he hit it. They changed the pricing several times, but after 2012.
        Joseph Wallace
        • 1 Year Ago
        @m_2012
        I absolutely agree, battery swapping is just a good headline. I would not want anyone to touch my 85kwh battery. More superchargers is the better way to go.
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