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Thread: ZEV credits

  1. #1
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    ZEV credits

    My understanding of the regulation is that large scale automakers in California have to produce a certain number of vehicles that comply with the standards. If they aren't producing enough, they can buy ZEV credits from a company that produces more than they are required to. Tesla is small enough that they don't need to have any zero emissions vehicles, but since all of the cars are zero emissions, they have a buttload of surplus credits which they sell to other manufacturers. (if this is not correct, please let me know).

    My question is this: would the mission of accelerating the transition to sustainable transportation be better served by holding onto those credits and forcing other automakers to build their own zero emissions vehicles to meet the regulations? Selling the credits means the other car companies can continue to be complacent, but it increases Tesla's ability to work on new vehicles and scale production. From a profit perspective it is brilliant, other companies are handing Tesla parts of their R&D budgets for basically nothing, letting Tesla catapult ahead. But Tesla isn't about profit, the objective here is to convert all those plants building ICE cars to EVs, whether Tesla controls half a percent of the market or half of the market isn't really the point.

    So what really is the best approach to ZEV credits? Should they be sold for cash to increase production and advance the technology, or should they just sit tight with them?

    I guess in the long run the thing that will force the switch completely isn't government regulation, it will be the better efficiency and better driving dynamics of EVs that pushes mass market adoption, so ZEV credits only really have an impact if they manage to jolt companies out of complacency long enough that they realize that they can offer a better product if they drop fossil fuels.

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    Quote Originally Posted by Reykjavik View Post
    My understanding of the regulation is that large scale automakers in California have to produce a certain number of vehicles that comply with the standards. If they aren't producing enough, they can buy ZEV credits from a company that produces more than they are required to. Tesla is small enough that they don't need to have any zero emissions vehicles, but since all of the cars are zero emissions, they have a buttload of surplus credits which they sell to other manufacturers. (if this is not correct, please let me know).

    My question is this: would the mission of accelerating the transition to sustainable transportation be better served by holding onto those credits and forcing other automakers to build their own zero emissions vehicles to meet the regulations? Selling the credits means the other car companies can continue to be complacent, but it increases Tesla's ability to work on new vehicles and scale production. From a profit perspective it is brilliant, other companies are handing Tesla parts of their R&D budgets for basically nothing, letting Tesla catapult ahead. But Tesla isn't about profit, the objective here is to convert all those plants building ICE cars to EVs, whether Tesla controls half a percent of the market or half of the market isn't really the point.

    So what really is the best approach to ZEV credits? Should they be sold for cash to increase production and advance the technology, or should they just sit tight with them?

    I guess in the long run the thing that will force the switch completely isn't government regulation, it will be the better efficiency and better driving dynamics of EVs that pushes mass market adoption, so ZEV credits only really have an impact if they manage to jolt companies out of complacency long enough that they realize that they can offer a better product if they drop fossil fuels.

    Tesla is better off selling the ZEV credits. Your assuming that ZEV credits are hard to reach for automakers when in reality the regulation is pretty soft. And in the end the manufacturers just put out compliance cars sold only in California. When Tesla said that by end of the year, the ZEV credits revenue would disappear. It is because by then all the automakers would already be able to generate all the credits they need themselves. Most of the ZEV credits can be reached just by converting NEV credits for example.

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    Reykjavik, I believe that everything you stated was correct. The ZEV credit system is a double-edged sword. Although it rewards the early risk-takers, it actually slows down the overall introduction rate of EV's when they award multiple credits per car. For every S85 sold, there are seven EV's that don't have to be sold. The Europeans understand this, and are not allowing more than one credit per car (at least last time I checked).

    However, it should all be a moot point soon, as all manufacturers are generating credits in one form or another. In the mean time, it makes sense for Tesla to sell as many as they can as soon as they can while they still have maximum value.

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    I think the ZEV mandate is a good thing for 2 points.

    Along with Tesla's bold action helped to break the mold on ZEV production. Without Tesla, car manufacturers would work even more intensely on having the ZEV mandate revoked and could get backup for that from all kind of sources.

    California slowly expands the ZEV mandate to more manufacturers and raises percentage and quality of required certificates. So they get more and more ZEV vehicles.

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    Why don't they have ZEV credits for real polluters - like 18-wheeler trucks, delivery trucks, dump trucks, cement mixers and more? It seems that auto makers took the hard brunt of ZEV when in fact, one excessive polluting truck can equal perhaps 20 commuter cars.

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    Quote Originally Posted by bonaire View Post
    Why don't they have ZEV credits for real polluters - like 18-wheeler trucks, delivery trucks, dump trucks, cement mixers and more? It seems that auto makers took the hard brunt of ZEV when in fact, one excessive polluting truck can equal perhaps 20 commuter cars.
    Trucks are not being left out, don't worry:

    http://www.arb.ca.gov/msprog/onrdiesel/onrdiesel.htm

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