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Green Car Credits - Gives Automakers New Ways to Cash In
- Thread starter bonnie
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- Electric Vehicles
I have mixed feelings about this. On the one hand, I want Tesla to make a profit. But on the other hand, selling credits enables other car makers to sell more stinkers. If I was writing the law, selling credits would not be allowed. And concepts like cap and trade would not be allowed. Every company would have to meet stringent emissions limits, period. Rather than fines for failure to comply, there would be jail time. Companies happily pay the fines, then write them off as a cost of doing business, and deduct the fines from their income before taxes. The executives laugh all the way to the bank and there is no incentive to stay within the limits. Jail time would hit the people making the decisions.
But the companies that buy credits will fold that cost into their ICE offerings, leveling the playing field.
Not sure that would stop companies like Tesla from moving forward. If the price of EVs come down, and the technology advances enough, EVs will become very good (and economical) alternatives to gas cars forcing those same companies to either make even more fuel efficient vehicles or EVs themselves.
In any case, I don't see it as a zero-sum game. EVs and ICEs can co-exist. At some point one technology will win over the other -- it doesn't have to be a battle.
If TM did sell all the credits they could, under law, what would their profit margin be? Or is this already factored in?
Citizen-T
Active Member
Extremely difficult question to answer. I would think that they assume some number of credits sold per car. So, I think the 25% margin that they advertise includes assumed credit sales.
That's just a guess though.
Factoring in the credits would be difficult I guess because unless I'm mistaken, the credits are only awarded for selling cars in California or any of the other states who follow this model. Surely Calif can't fine Honda for selling non-green cars in Ohio?
They could probably estimate how many vehicles they will sell in appropriate states and calculate from there. Tho that would blur the numbers somewhat. And that never happens in business:tongue:.
Another thought: Does this mean Tesla earn more cash if they deliver the car in California? If so they should encourage factory pickup more!
Also wondering when a certain lawyer who resides in Switzerland will pick up on this and splerge about how EVs are being subsidized by this...
Every good cap and trade system should have a little dwindling engineered in. If you earn 1 credit because you saved 100 units of pollution, you can sell this credit to someone else who is allowed to compensate for 80 units of pollution with it.
From what I read I don't believe that the credits are a fixed price on the open market. The resale price for these credits may go down as more manufacturers ramp up their own EV programs.
SByer
'08 #383
While from an economic and idealistic do-good standpoint, I think a straight carbon tax that follows a 3 year running average of the current best scientific estimate of the additional cost of spewing that carbon into the atmosphere, I think even a simple system with incremental compensatory taxes added slowly over time is doomed politically. Any such incremental system must have an 'end' or nobody would vote for infinitely increasing taxes, and because of that needed end point, would always be tough to try and align with ideal, as the politics at the times when the tax needed to be renewed would stifle any proper continuation.
So, while a cap-and-trade isn't ideal from a science, directness, or honesty standpoint, by adding that little bit of 'free market' indirectness between the target cap and the price of the traded units, allows the cap to be set by an agency, pulling the cost out of the hands of the politicians that would block it. It also allows for interesting things like these credits - I dont think a straight carbon 'credit' would fly, as it would be ripe for the 'subsidy' dogma. And allows for Volker's dwindling, which I think is a good thing. Early movers should get extra credit.
So, while a cap-and-trade isn't ideal from a science, directness, or honesty standpoint, by adding that little bit of 'free market' indirectness between the target cap and the price of the traded units, allows the cap to be set by an agency, pulling the cost out of the hands of the politicians that would block it. It also allows for interesting things like these credits - I dont think a straight carbon 'credit' would fly, as it would be ripe for the 'subsidy' dogma. And allows for Volker's dwindling, which I think is a good thing. Early movers should get extra credit.
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