By on August 30, 2013

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Tesla recently released financial figures that the company says demonstrate profitability. According to Automotive News, analysts have pointed out that some of Tesla’s revenue comes not from selling cars but rather by selling zero-emission credits to other car companies that want to do business under California’s clean-air regulations. If they want to sell cars in California, companies have to comply by either producing ZEVs or by obtaining credits from companies that make those vehicles. Now Nissan Motor Co, whose Leaf is the best selling electric car of all time, has joined Tesla in selling those credits. Tesla was able to sell those credits because they only make electric vehicles. Makers of conventional cars and trucks buy the credits to theoretically offset the pollution caused by those cars. Since Tesla has no such conventionally polluting cars to offset, they can sell their credits. Nissan executive VP Andy Palmer told reporters earlier this week that at this point Nissan has sold enough Leafs to cover its own needs to comply with the California Air Resources Board‘s rules and will now start selling surplus credits to other automakers. “We’ve got carbon credits to sell, and we’re selling them — California ZEV credits.” No details were forthcoming on time, price or to whom Nissan will sell their credits.

In the first half of 2013, Tesla brought in $119 million, or 12 percent of its revenue, from ZEV credit sales. Each Tesla Model S accrues as many as seven ZEV credits for the EV startup. Each Leaf sold in California and the other states that participate in CARB’s program, earns 3 credits. CARB has no say in how much a company can charge for the credits and their customers do not have to be disclosed.

“While Nissan has been approached by other automakers regarding emission-credit transactions, these discussions and the outcome of any transactions is held in strict confidence by all involved parties,” David Reuter, a spokesman Nissan, said.

Since the end of 2010 when it went on sale, Nissan has sold about 75,000 leafs around the world, with California being one of its biggest markets, and it expects to sell at least 20,000 in the U.S. this year, about double what it sold in 2012.

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35 Comments on “Nissan to Start Selling California ZEV Credits, Joining Tesla...”


  • avatar
    SCE to AUX (formerly gslippy)

    Voodoo economics.

    • 0 avatar
      thelaine

      Tesla didn’t generate a profit by selling sexy cars, but rather by selling sleazy emissions “credits,” mandated by the state of California’s electric vehicle requirements. The competition, like Honda, doesn’t have a mass market plug-in to meet the mandate and therefore must buy the credits from Tesla, the only company that does. The bill for last quarter was $68 million. Absent this shakedown of potential car buyers, Tesla would have lost $57 million, or $11,400 per car. As the company sold 5,000 cars in the quarter, though, $13,600 per car was paid by other manufacturers, who are going to pass at least some of that cost on to buyers of their products. Folks in the new car market are likely paying a bit more than simply the direct tax subsidy.

      http://www.forbes.com/sites/patrickmichaels/2013/05/27/if-tesla-would-stop-selling-cars-wed-all-save-some-money/

  • avatar
    Scoutdude

    “CARB has no say in how much a company can charge for the credits and their customers do not have to be disclosed.”

    The last part of this confuses me. Sure I understand that they can’t regulate what the credits can be sold for but for them to accept a credit from another mfg wouldn’t they want to verify the source of the credit. I can’t see them accepting a mfg saying, “yeah our cars don’t meet the standards so we bought some credits from an undisclosed source so we are in compliance”

    • 0 avatar
      crm114

      Maybe CARB gives out a fancy token for each credit, like at Chuck E. Cheese.

    • 0 avatar
      Pch101

      The idea of a credit is to create a market mechanism that sets a price on compliance.

      The government could simply order a company to sell X number of zero-emissions vehicles, and then penalize them with a fine for failing to comply. The credit allows the marketplace to determine what the penalty will be, instead of fixing the price in advance.

      The theory is that a credit will motivate some businesses to produce credits that it can sell, which in this case means that companies would build EVs that they might not build if it wasn’t for the credit. Theoretically, that should spur more innovation than would a system that was based strictly on assessing fines and penalties for non-compliance. The state doesn’t really want to charge fines; it wants EVs to get on the roads, by whatever means.

      (I personally don’t agree with this specific policy, but that is the general theory behind credit programs such as this.)

    • 0 avatar
      mklrivpwner

      Signing the back of a check is not the same as disclosing to the public. While there are means of verifying the source (ie serial number), neither company has to say who the other one is, or how much they paid.

  • avatar
    The Heisenberg Cartel

    Blah blah corporate welfare blah blah Obamanomics blah blah Obamalectric vehicles blah blah I hate EVs blah blah guns and shit

    There I just summed up 90% of the upcoming replies!!!1

  • avatar
    thelaine

    The dirty little secret of Tesla’s profitability. More tax breaks for billionaires. Thank you, California taxpayers.

  • avatar
    Ron

    Californua taxpayers don’t pay a single red cent — companies buying the credits pay.

    • 0 avatar
      thelaine

      First, there’s the $7500 taxback bonus that every buyer gets and every taxpayer pays. Then there are generous state subsidies ($2500 in California, $4000 in Illinois—the bluer the state, the more the taxpayers get gouged), all paid to people forking out $63K (plus taxes) for the base version, to roughly $100K for the really quick one.

    • 0 avatar
      mklrivpwner

      Companies pay for the credits. Then, based on their profits and losses (…Paying for credits…), they raise of lower the price of their products. Then they blame CAFE regulations, you get angry at the government and the companies pocket your tax dollars in the form of an inflated bill of sale.

  • avatar
    Ron

    California taxpayers don’t pay a single red cent — companies buying the credits pay.

    • 0 avatar
      thelaine

      First, there’s the $7500 taxback bonus that every buyer gets and every taxpayer pays. Then there are generous state subsidies ($2500 in California, $4000 in Illinois—the bluer the state, the more the taxpayers get gouged), all paid to people forking out $63K (plus taxes) for the base version, to roughly $100K for the really quick one.

  • avatar
    HerrKaLeun

    Ironically those Teslas don’t offset any oil consumption since those are toys for rich people who still keep their Porsche and BMW for daily driving.

    Maybe I buy stock in coal mining since the electric utilities will like that EV business a lot.

    those credits are like the Nigerian prince who sends me emails asking for help tranferring his inheeritance. Even private people can buy carbon credits (if you feel bad about your last plane trip) and pay someone to “offset”. Obvioulsy there is no verification what that offsetting actually is, or if it even happens. But it makes stupid people feel good about themselves… so it seems worth the money.

    • 0 avatar
      thelaine

      Truth. Plus giant houses, vacations around the world etc. They are sucking down more energy than 100 middle class people. More power to them. Livin’ the dream. I just can’t get used to subsidizing them. Elon knows a gravy train when he sees one though. Got to hand it to him. California forces Honda to pay Elon to make cars for rich people, whose purchase is then subsidized by taxpayers. Wow.

    • 0 avatar
      Scoutdude

      A large percentage of Tesla drivers do use them for their every day transportation as their 200+mi range is enough for 99% of the use that 99% of the population needs. So yeah it does eliminate the oil consumption.

      Not all Tesla owners are uber rich, there is a guy with one in my neighboor hood and it is his families primary car. It replaced a Leaf as he is a techie that likes EVs and also has some home built EVs in his fleet. Of course he certainly isn’t poor, the value of houses in my neighborhood start around the average price of a home in our area to slightly more.

      Honda does have their own cars so they don’t have to purchase credits any more, they just have to have give away leases on the FIT EV and limit the sale of the introduced early 2014 Accord PHEV to sale in CA and NY.

      • 0 avatar
        HerrKaLeun

        This one neighbor doesn’t represent 99% of the Tesla owners. Most likley don’t have them as daily drivers. I’m fine whne he can afford the car, good for him. But i somehow pay a higher price for a car becasue Tesla susbidized his with the credits my car company was forced to purchase.

        Tesla advertises 4.2 s for 0-60, so no This is not a family car and the price tag is not for normal people (people that actually pay taxes)

    • 0 avatar
      SCE to AUX (formerly gslippy)

      This article is about Nissan, but somehow the class envy came out for Tesla.

      I’ve been driving my Leaf daily for 11 months now. My ‘Porsche’ is a Kia Sedona, and my ‘BMW’ is a 12-year-old Hyundai Elantra. Since I’m unable to drive two cars at once, the Leaf has to schlep me around while others in the family drive the gas-burners.

      If you live in the US, I wouldn’t count on coal as an investment – Obama has it targeted for elimination. The liberals seem to like solar, though.

      • 0 avatar
        thelaine

        If complaining about tax and regulatory policies that subsidize wealthy car buyers out of the pockets of everyone else is class envy, you got me, formerly gslip.

        • 0 avatar
          SCE to AUX (formerly gslippy)

          I didn’t link EV rebate policies with class envy. I don’t even support such policies.

          I’m objecting to the characterization of EV buyers in general and Tesla buyers in particular as ‘rich’, when any number of people who spend as much on a loaded F-350 are never demonized that way.

          • 0 avatar
            thelaine

            I know you don’t support that stuff, and I agree with you about EV buyers. However, Tesla buyers? C’mon man! They are going to be wealthy as a group, I would be willing to bet you on that one. Nevertheless, I would not demonize them for having money. That is stupid. More power to ‘em. I have never met anyone who did not want to have more money. The idea that they should be supported by tax dollars because they are supposedly saving energy or helping the environment is where some of us begin to part company. The wealthier you are, the more energy you use, and Tesla buyers are wealthier than most.

          • 0 avatar
            BrianL

            SCE to AUX,
            I think the demonizing comes from the tax credit. People who buy a loaded F-350 didn’t do it with my tax dollars (hopefully). And you have to make a decent amount of money to get the full benefit of the tax credit, unless that has changed.

        • 0 avatar
          Pch101

          “If complaining about tax and regulatory policies that subsidize wealthy car buyers…”

          The tax credits don’t subsidize the car buyers, wealthy or otherwise. They subsidize the manufacturer.

          Tesla charges higher prices than it would if there were no credits. The buyer overpays, then gets a rebate on the overpayment. Tesla gets the benefit of that overpayment.

          • 0 avatar
            BrianL

            Depends on how you look at it and your definition of wealthy. But, my understanding is that you need to have a tax liability of $7500 or more at the Federal Level to get the money back. If you have less than that, you don’t get all of the money back.

            I agree that it probably wouldn’t be this high if the credits didn’t exist, but these credits are for people who make a good amount of money.

          • 0 avatar
            darkwing

            Apparently the difference between “tax cuts for fat cats” and, ahem, “subsidies” is the green-ness of the target. Who knew?

          • 0 avatar
            Pch101

            It would be much easier for you to comprehend these concepts if you would understand it as a basic economic point.

            I’ve used this analogy elsewhere, which hopefully helps with the understanding the economics at work here.

            Let’s apply a similar example to something other than cars. Let’s suppose that the going rate for a six-pack of your favorite beer is $6.

            Now the brewer of your favorite beer decides to start brewing it in an environmentally sensitive green brewery, which qualifies it for a tax credit of $4 for every six-pack that is sold.

            If the company keeps selling that beer for $6, then the benefit goes to the customer. The $6 beer is now being sold at a net cost to the consumer of $2 (you pays $6, then get a $4 refund on your tax return). The benefit goes to the customer, who gets to pay a lower price.

            But if the brewer jacks up the price to $10, then the net price to the consumer remains at $6. The extra four bucks is really going to the brewer, not to the beer drinker because the beer is now priced above market.

            None of this has anything do with whether you like or dislike Tesla, or like or dislike subsidies. It has absolutely nothing to do with whether you are right-wing or left-wing.

            It simply explains who gets the benefit of the subsidy. And in this case, Tesla charges above-market prices, which means that the benefit goes to the company. The tax credit only makes up for the excess payment; it doesn’t save the customer any money on a net basis.

          • 0 avatar
            darkwing

            My fundamental objection, of course, is to the policy in general. Hence your sanctimonious hand-waving, to try to falsely cast it as a partisan or educational issue. Pointing out the hypocrisy of you redistributionists is merely a bit of fun.

        • 0 avatar
          thelaine

          I comprehend that my money is being taken from my pocket and redistributed to people much wealthier than me. Rich car buyers or Elon Musk. Whatever. Who gives a sh*t?

          • 0 avatar
            Pch101

            “Rich car buyers or Elon Musk. Whatever. Who gives a sh*t?”

            Apparently, you do, as you’re the one who is complaining about “tax and regulatory policies that subsidize wealthy car buyers.”

            Which is fine, except that they don’t.

            “My fundamental objection, of course, is to the policy in general.”

            If you’re going to object to the policy, then it would help you to understand how it works. The point of the credit is to reduce Tesla’s losses, not to make things cheap for Tesla’s customers who obviously aren’t getting bargain prices.

            (And in case you were too busy to notice, I also happen to oppose this particular policy in this instance. I somehow manage to object to such things without being motivated by hatred for the enviromental movement or the government.)

          • 0 avatar
            thelaine

            You haven’t proven it, you’ve simply asserted it. Whatever. It doesn’t really matter how the privileged are dividing the money they have taken from me so they can run their companies and drive their exclusive cars. No, I did not take the time to discover your opinion on the issue.

            I did notice, however, the completely unsupported smear on other people’s motivation for their position on the issue, which is characteristic of your style of argument. It often ends up coming down to this for you. This is why I usually avoid responding to you. In the end, you believe people who oppose your positions are motivated by some sort of “hatred,” rather than a legitimate difference of opinion or philosophy.

            Some people simply have very different views of the appropriate size and role of government. Some people think the government should be limited and get upset when they believe it has become too large and powerful or exceeded what they believe to be its proper role. People holding these views don’t “hate government.” Like-minded people participated in the founding of our government. They like government just fine. They just want to keep it under control.

            I have seen you make this accusation before. I believe you are projecting. I have seen the spitting venom. You are the psych major though, so I assume you know better than me, or at least believe you do.


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