Could the California Air Resources Board (CARB) be taking a $55-million bite out of Tesla Motors' profits? The state regulator, which grants zero-emission vehicle (ZEV) credits for automakers making plug-in vehicles, is planning to reduce the number of credits generated by each Model S battery-electric sedan from seven to four, Bloomberg News reports. That means the California-based automaker will have fewer credits to sell to big buyers such as General Motors and Chrysler, who don't make enough ZEVs on their own to comply with state mandates.

While the selling price for these credits isn't disclosed (they're private transactions), the market was a lucrative one for Tesla, which generated $129.8 million in revenue from California zero-emissions credit sales and about another $65 million selling US Corporate Average Fuel Economy (CAFE) credits last year. All told, California and federal zero-emissions credit sales accounted for about 10 percent of Tesla's sales last year. A Tesla representative didn't immediately respond to a request from AutoblogGreen for comment.

This issue first came up last year when CARB hinted that it wouldn't give Tesla credit for having a battery-swapping option as it's method for quick-fueling compliance. Tesla, which appears to have been preparing for just this scenario, has been collecting revenue on credits since 2010 and achieved its first-ever profitable quarter in the first quarter of 2013 because of such credits.

While the maximum number of zero-emissions credits a vehicle could garner was increased from seven to nine in the new rules, Tesla can't take advantage of that because it meets neither of the most stringent criteria: that the car in question is rated to go more than 300 miles on a full tank or battery and be able to be "filled up" (or fully charged, in this case) within 15 minutes. Those are more hydrogen fuel-cell-like targets, but Tesla has the EVs that come closest to meeting them.


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  • 66 Comments
      danfred311
      • 8 Months Ago
      More or less academic as I think the other carmakers will go out of their way not to pay tesla now. Their stupidity is why Tesla isn't flirting with bankruptcy. That 60million dollars ZEV credits in Q1 of 2013 made a HUGE difference. Instead of being yet another 50-100m loss quarter, Tesla appeared to be barely profitable, the stock exploded and tesla was given a cool billion dollars from the stock market to wash away all their losses. The difference can hardly be overstated and all thanks to the stupidity of the old garde. They created their own monster :) despite Tesla's poor business skills.
      Joeviocoe
      • 8 Months Ago
      --"sales rates and that will limit total FCV credits" Yeah... but if automakers get the same amount of credits, for producing and selling fewer cars... what is the incentive for automakers? Yep... to divert R&D from EVs to FCVs. More bang for the buck. It actually slows down the move toward zero emissions this way. --"since when is driving 2.4x as many miles more green anyway?" 12,000 miles/yr is an American average for a primary vehicle. Meant for someone with a commute and errands and some recreation. While the 5,000 miles/yr driver likely has a second car which does the bulk of the miles. If that car is running on gasoline... that is not greener.
      itsme38269
      • 8 Months Ago
      The calculation is really quite silly. Clearly the Model S charges faster than any other car, at 120kW. The only reason it doesn't "fill up" quicker is because the battery is much larger. And my friend's F-cell Mercedes, if it's a hot or cold day, fills up slower on a mile-per-minute basis than the Model S does, given the difficulty of fueling with hydrogen when the temperature isn't exactly right.
        Dave
        • 8 Months Ago
        @itsme38269
        Fortunately, researchers are improving hydrogen fueling technology with respect to varying temperature: http://www.honda.com/newsandviews/article.aspx?id=7635-en And, while fast charging is an advantage to a Tesla buyer, it is a disadvantage to the power grid. Slow charging tends to occur during the night (off peak), while fast charging tends to happen during the day. If anything, it would make more sense for California to discourage fast charging of BEVs, not to encourage it.
          Joeviocoe
          • 8 Months Ago
          @Dave
          Swap stations will be co-located with Superchargers... and might eventually be solar power. Either way, Solar or grid power... their will likely be some stationary battery buffers eventually.
          Dave
          • 8 Months Ago
          @Dave
          I suppose this begs the question of what time of day swappable battery packs would charge. One tends to a assume that a battery swapping station would charge its packs during off peak hours as much as possible.
      Jim1961
      • 8 Months Ago
      Tesla is increasing it's profitability without ZEV credits according to this article: http://www.forbes.com/sites/markrogowsky/2014/02/20/bear-clawed-how-tesla-keeps-crushing-the-naysayers/
      Joeviocoe
      • 8 Months Ago
      Well... Hydrogen lobbyists have done it. They were behind the original language of the ZEV credits that CARB made official. They were trying to give FCVs an advantage in the marketplace by allowing a 300 mile FCV, 7 credits.... while including a stipulation that a BEV must refuel in 15 minutes... just below what they knew was possible with fast chargers. http://www.arb.ca.gov/msprog/levprog/cleandoc/clean_2009_my_hev_tps_12-09.pdf
        Grendal
        • 8 Months Ago
        @Joeviocoe
        CARB is a political entity that is heavily influenced by politics and lobbyists.
          Rotation
          • 8 Months Ago
          @Grendal
          Oh come on. Where does that come from? Are you turning into 2wm? CARB spends a ton of time measuring what is in the air and taking a scientific tact to figuring out where to spend money to improve it. These same people were going to roll out "cool cars" until there was too much outcry. These same people drove the construction industry nuts by making expensive construction equipment illegal in California. Don't fall into the 2wm trap of disparaging those who you disagree with. You only sell yourself short by not taking your opponent seriously. Just because you don't like or understand what they are doing doesn't mean they are shills or mentally defective.
          Joeviocoe
          • 8 Months Ago
          @Grendal
          CARB has had great intentions. And they have done good work over the decades. But like any institution... it has gotten very reliant on old ideas and set in their ways. They have had too much manipulation from industry and since the electric vehicle lobby has been so weak over the last decade, and the Hydrogen lobby so strong... they are now in bed with the idea the Hydrogen is the ultimate way forward for transportation. I think that will eventually change... but they've got lobbyists in their ears, and writing their proposals for them.
          Grendal
          • 8 Months Ago
          @Grendal
          I've never liked CARB. They may have done some good things that I am unaware of, but I'm aware of a few politically manipulated things that I am not happy with. I will admit I am not well educated on their history. I will research and see what I find.
          Joeviocoe
          • 8 Months Ago
          @Grendal
          The links between CARB and the Hydrogen lobby is undeniable. Far back as the original ZEV mandate and when Lloyd was chairman of CARB.
        Joeviocoe
        • 8 Months Ago
        @Joeviocoe
        That being said... I think Tesla does indeed need to "earn" those extra credits by installing swap stations. Hopefully losing this now, will give Elon some incentive to push forward on that. My opinion is that both FCVs and BEVs should be given an equal number of ZEV credits based on number of vehicles sold... with nothing "extra" given to what CARB "thinks" might reduce emissions. A 300 mile FCV that can refuel in 10 minutes, but can ONLY refuel in Los Angeles... actually displaces LESS emissions and oil consumption, than a 300 mile EV with nationwide network of fast chargers. This is confirmed by the millions of EV miles that have already been enabled by Superchargers alone. Just like a PHEV with 38 miles AER, unintuitively, gets more EV miles every year, than a 80 mile BEV. A BEV with a decent fast charger infrastructure, will drive more Zero Emission miles than a FCV with a localized H2 infrastructure. Bottom line / end of rant: ZEV credit should be equal, and let the number of sales be the deciding factor, not some Hydrogen lobbyist making assumptions about consumer demand.
      Joeviocoe
      • 8 Months Ago
      The 2014 version of Tesla’s car is a Type III ZEV and earns four credits, Dave Clegern, a spokesman for the agency, said yesterday in an e-mail. “Right now it looks as though it will continue to be Type III ZEV until it demonstrates fast refueling,” he said. Translation... get your swap stations installed. Now, shouldn't any FCV that wants to claim type IV,V... also need to demonstrate a minimum number of H2 stations throughout the US? After all, a Tesla with home charging, public L2 charging, and Supercharging across the US... is much more usable than a FCV with 9 H2 stations only in the Los Angeles area.
      Jesse Gurr
      • 8 Months Ago
      I guess nobody read the actual language that will be changing. Here it is: "Documentation of fast refueling mileage and events a. For each specific model year vehicle ZEV type for which a manufacturer claims fast refueling credits, the manufacturer must submit documentation of total fleet miles attributed to fast refueling use in a 12 consecutive month period and total fleet miles in the same 12 month period. b. To support a manufactuer’s claimed number of miles attributed to fast refueling, that manufacturer must provide documentation of each fast refueling event. For each refueling event, the manufacturer must provide documentation of the date of refueling, street address of the refueling facility used, and vehicle identification number of the vehicle refueled. Fast refueling credit applicants shall retain this documentation for a minimum of three years from the date it was created and provide the documentation to ARB staff upon request within 3 business days. A-3 Date of Release: September 4, 2013; 45-day Notice Version Date of Hearing: October 24-25, 2013 Date of 15 day notice period: 2. Calculation of fast refueling credits Fast refueling credits shall be calculated as follows: Fast refueling miles / total miles = M 4 credits = ZEV credit per each Type III ZEV 4 + (M) x (1 credit) = ZEV credit per each Type IV ZEV 4 + (M) x (5 credits) = ZEV credit per each Type V ZEV "
        Joeviocoe
        • 8 Months Ago
        @Jesse Gurr
        Jesse... thank you so much. I thought they just passed the proposed changes which flat out excluded BEVs. Very good to know they put thought into this.
        Jesse Gurr
        • 8 Months Ago
        @Jesse Gurr
        So the new rules are based on miles driven from fast refueling. The more miles driven from battery swapping, the more points you get. I guess at the end of the year, Tesla will have to provide total miles driven by Teslas and miles driven from battery swaps(fast refueling). According to the equation, if 10% of miles driven were from battery swapping then each car in the fleet would get an extra 0.5 credits since each tesla is a 300 mile type V ZEV, for a total of 4 + 0.5 = 4.5 That is hardly making it worth doing almost, unless Tesla can get everybody doing battery swaps... And fix this commenting system already!
        Rotation
        • 8 Months Ago
        @Jesse Gurr
        This is fantastic. This is similar to what I suggested below, give the additional credits out in proportion to the availability of swapping instead of just giving full credits for the mere existence of swapping. In this case it is proportional to the amount of swapping actually employed, not just the availability.
      Rotation
      • 8 Months Ago
      Even if Tesla demos swapping, their credit boost for this should be limited by the customer impact of swapping. They shouldn't be able to build a single swap station and then get full credits. I would say weight the credits given by the amount of population served by swapping. So in California, if battery swapping stations are within 180 miles (a reasonable range) of X% of the population of California, then they should receive X/100 * (swap credit value) + (100-X)/100 * (non-swap credit value) credits per car. Then they have incentive to build swap stations, and have incentive to build more after the first one to serve more customers with swapping. Disclaimer: To be honest I'm not a fan of swapping given the free Supercharger alternative.
        jeff
        • 8 Months Ago
        @Rotation
        How about if they build as many swap station as Hydrogen stations... Whould that work???
          paulwesterberg
          • 8 Months Ago
          @jeff
          No, most people would still charge at home because it the most convenient and you are doing other things - eating, sleeping, internet, etc so you are not really waiting for the car to charge.
        Joeviocoe
        • 8 Months Ago
        @Rotation
        Agreed... Infrastructure is something that is often hit or miss. A single swap station is really worthless... a bridge to nowhere. A believe Musk plans on a test route (2 or more swapstations) between LA and SF some time by summer. We will see. But CARB would never allow that language in the ZEV credit.... as that would force H2 providers to build more stations to earn their ZEV credits. Hydrogen lobbyist want a distinct advantage... which means, they want full 9 credits, for every FCV sold... regardless of whether it is driven in Los Angeles or not.
          Rotation
          • 8 Months Ago
          @Joeviocoe
          Good point. I hadn't realized the implications of my formula since the last time I had revised it. Yeah, the FCV makers would want to be able to sell cars in LA that would never leave LA and still get full credits for them even though Tahoe has no hydrogen stations. Note above that Jesse Gurr pointed out CARB actually adopted a system based upon usage of swapping. This really kind of puts the kibosh on optional swapping since most miles driven on EVs will be from AC charging at home, even if all superchargers were replaced with swap stations, Tesla still couldn't get more than 10 or 20% of the fast fill credits for their cars. I think crediting based upon usage is fair. Although it will favor FCVs because they always fast fill, you can't fill an FCV at home.a I like filling my EV at home. I'll miss that if FCV really takes off.
      Rotation
      • 8 Months Ago
      Joevicoe: What you describe is the same thing that lead to the Model S. Tesla could get more credits by making fewer cars if the car was more capable. So they did so. Does this slow down the move to zero emissions? That's a tougher question. The idea of these regulations is to reward cars which the broad public would accept more readily (due to fewer limitations and better suitability to their current usage model) because if companies make them, they may sell at a higher rate because you don't have to get into an "EV state of mind" to fit them into your lifestyle. And I think that the Model S has shown that CARB was right. And if people buy a lot of FCVs in an area, more hydrogen stations will be built near there, expanding the circle and presumably leading to more sales of ZEVs. Many people bought the Model S who would never have bought a LEAF. They would have bought an S-class if they didn't get a Model S. So they have pushed ZE forward in their own way. And I think that a 300 mile, quick refueling FCV could do so also. Witness the Top Gear piece on FCVs. This is a group of "gearheads" who express a willingness to accept FCVs. I understand where you are coming from, but I think that rewarding companies for their customers driving more is fraught with peril.
      Spec
      • 8 Months Ago
      This whole fill-up in 15 minutes gets you more credits is stupid. That is merely perpetuating the old gasoline station model. That is not very important when you can have a car that you can wake-up to a full tank every morning without ever going to gas stations. ~97% of the time, that is all you need.
      Joeviocoe
      • 8 Months Ago
      2. Calculation of fast refueling credits Fast refueling credits shall be calculated as follows: Fast refueling miles / total miles = M 4 credits = ZEV credit per each Type III ZEV 4 + (M) x (1 credit) = ZEV credit per each Type IV ZEV 4 + (M) x (5 credits) = ZEV credit per each Type V ZEV " -Jesse ------------------------ But... I am still not happy about the Hydrogen lobbyists getting this: Fast refueling miles / total miles = M Since ALL FCV miles will be 'fast refueling' miles... M = 1 So for example: A 12,000 mile/yr Tesla that parks on the street, and uses 50% Supercharging and 50% swap station exclusively... ... would get fewer credits than a 5,000 mile/yr FCV that only gets driven on the weekend, and only around LA. This is a compromise. But it still favors FCVs unfairly. 'M' should NOT be a ratio. It should be an absolute value based on the fast refueling miles. Tesla would not earn more credits... but FCVs would be given a fair amount... and NOT given extra just because they're limited to one fueling option. Bottom line... LACK of fueling options should NOT be given an incentive.
        Rotation
        • 8 Months Ago
        @Joeviocoe
        FCVs will indeed get M = 1. But no matter what the formula, the fact is that people aren't going to buy FCVs if they don't live near a hydrogen station. This will lower sales rates and that will limit total FCV credits. So I wouldn't sweat it so much. You're right about the Tesla versus FCV, but hey, since when is driving 2.4x as many miles more green anyway?
      JakeY
      • 8 Months Ago
      "Tesla can't take advantage of that because it meets neither of the most stringent criteria: that the car in question is rated to go more than 300 miles on a full tank or battery and be able to be "filled up" (or fully charged, in this case) within 15 minutes" That's actually wrong. The "300 miles" is only under the UDDS cycle (as it was before) and the Model S gets 320 miles on the older 2 cycle test, meaning Tesla qualifies under this criteria. What has changed is the fast refueling portion. Now there's a formula to determine the amount of "fast refuel" miles. This is essentially to penalize non-fuel cell cars that don't "fast refuel" all the time.
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