LA Times article regarding ZEV credits - Somewhat misleading

mcornwell said:

Tesla drives California environmental credits to the bank - latimes.com

Opening paragraph:






They really make it sound like $45K for each car comes from the government, which is very misleading. Also, that $35,000 number seems high, I thought the credits sold to other manufacturers was much lower?

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They are wrong for a lot of reasons. They are just going off of a very wrong Wall St analyst who recently had a notice that Tesla could make $250m from credits this year.

Firstly, the $25k cited by the Times relies on an incorrect interpretation of the rule. If the Model S was capable of fast charging they would get 5 credits. They know the Model S uses a SuperCharger, so they think it must qualify, but the SuperCharger is too slow. So Model S actually gets 4 credits, notionally worth $20k.

But beyond that, Tesla is generating too many credits. They simply wont be able to sell them all this year. Starting in 2015 that changes, and Tesla could make huge amounts of money if auto makers don't come out with higher volume EV's. But for now, there is a limit, and it's unlikely that automakers will buy ZEV credits from Tesla right now just to bank them for 2015, when they can just wait and see how many they actually need.

Another issue with the Times story is that it stated that the ZEV rule is active through 2025. It's not anymore. California recently abandoned it in favor of the EPA rules from 2018-2025. So the ZEV mandate is only active until 2017. Once that ends, most credit income will be EPA GHG credits and NHTSA CAFE credits. Those are decent money right now, and might be extremely lucrative in the future if the carbon market takes off.

Tesla will make a lot of money from credits, but there is a lot of guesswork and hyperbole right now, as well as some demonstrably wrong information. Most of these folks don't know the regulations even as well as I do, and I can assure you that I only scanned through the 1,500 pages of rulemaking. Likely only a few professionals and regulators in the entire world really know whats going on, and none of those folks are writing stories for the LA Times.

CapitalistOppressor said:

Most of these folks don't know the regulations even as well as I do, and I can assure you that I only scanned through the 1,500 pages of rulemaking. Likely only a few professionals and regulators in the entire world really know whats going on, and none of those folks are writing stories for the LA Times.

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Maybe they are buying TSLA stock?

I hope this credit thing doesn't become a big political drama that reflects negatively on Tesla.

But just to add one thing, it's absolutely true that the major automakers will be subsidizing Tesla in a very big way. They are probably just now figuring that out (along with a lot of other people) and are flipping out.

Up until now automakers have been slow walking their EV development to do minimum compliance cars (that nobody would want) in the hope that the ZEV credit markets would not have enough liquidity and California would have to abrogate the rule just like they did the last time they tried in the early 2000's.

Unfortunately, everyone assumed Tesla would die and apparently did not think of the implications of it's being successful. And the implications are that Tesla can single handedly satisfy demand on the ZEV credit markets (there are actually 2 using the California rules).

So instead of being able to convince CARB to withdraw the 2015-2017 rule (along with the already withdrawn 2018 rule) they are now faced with a working market which might convince CARB to reinstitute the 2018-2025 rules which they had abandoned because they thought it was going to be unworkable.

This is all going to be extremely disruptive as the auto industry scrambles. And in the mean time Tesla is also going to be the primary seller on the new GHG and CAFE markets which will run at least through 2025. Those markets aren't quite as lucrative as the ZEV requirement yet (though they well could be based on carbon prices just a few years ago), but its becoming clear that every traditional automaker is going to be writing Tesla huge checks for the next decade plus unless they make a major effort to meet the requirements.

Well, I see oil as being de facto subsidized as oil companies are not charged with cleaning up the mess that their business produces (CO2).
So in a way the energy source of combustion engines are also subsidized and that of course again amounts to a subsidized price of owning an ICE car if you calculate its price over its lifetime (as you should).
I haven't calculated how this subsidy compares though.

JohnLuck said:

Well, I see oil as being de facto subsidized as oil companies are not charged with cleaning up the mess that their business produces (CO2).
So in a way the energy source of combustion engines are also subsidized and that of course again amounts to a subsidized price of owning an ICE car if you calculate its price over its lifetime (as you should).
I haven't calculated how this subsidy compares though.

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You and your family make a mess as well. Every single day you and your family exhale CO2.

I trust you are ready to pay your fair share of the sin tax as well.
Especially if you exercise and exhale more than your fair share of CO2 than me thats when you need to pay double. Yu will be called a gross polluter.

Actually, families should be limited to one pet a d one child. After all, we need to save the planet and all of this excess CO2 exhaling isn't really needed.

Maybe we should all carry breathing canisters so that this poisonous CO2 can be immediately sequestered and stored safely.

A minor inconvenience considering that it will save e planet.

I also support heavy restrictions to any kind of travel. After all, we really don't need to go on far away vacations and sitting in on a bench public park with our canisters is just as relaxing.

When it come to the business of saving the planet from poisonous CO2 one can never be too careful.

Maybe we shouldn't allow any. Humans outdoors. This way all CO2 can be scrubbed in a controlled environment. Think about the money we could save and the overall CO2 transportation reduction.

Saving the planet from CO2 must be our top priority.

Think about the children.

Kaivball said:

You and your family make a mess as well. Every single day you and your family exhale CO2.

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Sorry, that's utter bullshit: You can only exhale what you have consumed before and which has been taken out of the atmosphere beforehand (e.g. by plants).

Full quite from the EPA:

No. Human respiration of carbon dioxide (CO2) does not contribute to the build-up of CO2 in the atmosphere. This is because the amount of CO2 people exhale cannot be greater than the amount of carbon they put into their bodies by eating plants, or by eating animals that eat plants. Plants take up carbon dioxide from the atmosphere through photosynthesis. So the carbon dioxide that humans and other animals exhale is simply returning the carbon dioxide that was briefly sequestered in plants to the atmosphere. Roughly the same amount of CO2 that humans exhale will then be taken up by plants to start the cycle again. To learn more about the carbon cycle visit:http://www.epa.gov/climatechange/kids/basics/today/carbon-dioxide.html and the carbon dioxide section of http://www.epa.gov/climatechange/science/causes.html.To learn more about sources of CO2, visit the CO2 Emissions page.

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For the same reason burning wood is ok, while burning oil (= setting carbon free which would be trapped otherwise) is not - at least from a carbon perspective.

Please please people - let's not feed the crazy out there: There were politicians who suggested a carbon tax for bikers with exactly these kinds of wrong arguments.

SebastianR said:

Sorry, that's utter bullshit: You can only exhale what you have consumed before and which has been taken out of the atmosphere beforehand (e.g. by plants).

Full quite from the EPA:



For the same reason burning wood is ok, while burning oil (= setting carbon free which would be trapped otherwise) is not - at least from a carbon perspective.

Please please people - let's not feed the crazy out there: There were politicians who suggested a carbon tax for bikers with exactly these kinds of wrong arguments.

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+1 Facts are awesome.

Sebastian wins

I didn't realize we could say "bullshit" here. I'll have to try it more often.

CapitalistOppressor said:

I didn't realize we could say "bullshit" here. I'll have to try it more often.

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Sorry for that. The rest I stand by ;-)

CapitalistOppressor said:

I didn't realize we could say "bullshit" here. I'll have to try it more often.

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He meant fertilizer in an eco thread so I guess it's ok.

CapitalistOppressor said:

......... If the Model S was capable of fast charging they would get 5 credits. They know the Model S uses a SuperCharger, so they think it must qualify, but the SuperCharger is too slow. So Model S actually gets 4 credits, notionally worth $20k......

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Tesla has demonstrated a fast battery swap in a production Model S to the ARB in order to get extra ZEV credits. They used a "pit crew" of skilled technicians for the demo, to prove what would be possible if an automated system was developed.

GSP