Norway Set To Review EV Incentives Amid Soaring Sales

"so they can feel green," With 99% of their electricity from hydro it's more than a feeling.

@jmo The problem is that Norway exports most of their oil and gas, much of which is likely burned by dirtier vehicles than if it stayed in Norway. Norwegian politicians also did not consider emissions from production and scrapping, and recent papers suggest that EV manufacturing generates about 50% more greenhouse gases that a comparable gasoline car, which means you need a lot of zero-emission driving to make up the difference. Therefore, on a global lifecycle basis it is very unlikely that Norwegian EV owners are actually any greener than their non-EV driving neighbors who have subsidized their Tesla or Leaf.

Tesla exists due to subsidies. Lots of clever wealthy people have made money from "green" government mandates/subsidies.

@thelaine Please explain which subsides Tesla bases its existence upon. I'll help: 1. The federal loan which was fully repaid years ago? 2. The $7500 federal rebate program, which has 3 times the impact for Leaf and Volt buyers? 3. Carbon credits, of which Nissan sold 664, Tesla 650, and Fiat 235 last year?

@SCE to AUX He just spews cliches, and he doesn't really know. What has kept Tesla afloat is the enormous run-up in its stock price. The company has used that to good effect, using its increased value to borrow cash that it could add to its balance sheet and using it to fund operations. It also benefited enormously from GM's bankruptcy, which proved to an enormous stroke of good luck for Tesla. Sometimes, it pays to be lucky.

@thelaine Which auto companies don't owe their existence to government subsidies? Seriously, has anyone put together a list?

@SCE to AUX Since almost half the Teslas end up here in Norway, I guess our 'subsidies' should be counted too. Over here you can buy the Tesla completely tax-free. On all ICE cars there is tax on weight, engine displacement, and horsepower + 25% VAT. A comparable 5 series or E-class would cost twice as much, meaning Teslas marketshare here would really not exist without incentives. On top of that you get to go free through tollroads (which surround our capital Oslo where most of the cars are sold), and use buslanes, and get free parking and charging many places. In total you end up with a massively powerful (by our standards) luxury car that will cost you less to won each month than a normal family midsize car...

@mcs I would clarify and add: "their continued existence to gov't" and I would answer all of them.

@stingray65 ". Therefore, on a global lifecycle basis it is very unlikely that Norwegian EV owners are actually any greener than their non-EV driving neighbors" That might be true if they got most of their electricity from coal or natural gas. With 99% of their electricity coming from hydro you are totally and completely wrong.

@Zykotec That isn't a subsidy for the OEM. You may as well claim that suppliers of seat belts are subsidized because seat belts are required by law, which creates a market for compliance. Norway provides consumers with substantial incentives to buy EVs. Some automakers take advantage of this but most don't. Tesla's failure to make a profit tells the story. Most automakers have minimized their participation in the EV market because the EVs lose money; they are only building them to the extent necessary to comply with other regulations. Tesla has bet on the EV market and has not been able to turn a profit, at least not thus far. The Norwegians might be better off if they just put the subsidies into mass transit. Let people ride public transport for free, and give them some kind of bonus for using it a lot.

@28-Cars-Later Lots of clever wealthy people have made money from “green” government mandates/subsidies. Carbon credits are mandates. Tesla sells them and makes profit.

@28-Cars-Later Tesla is so profitable that it produced a pre-tax loss of $285 million last year.

@28-Cars-Later Without subsidies and mandates they wouldn't exist.

@Pch101 Tesla's lack of profitability to date is somewhat caused by the amounts of money they spend on R&D, and expanding their company. Don't know for sure, but if they leveled off and just concentration on making their current car(s), they'd probably be a lot closer.

@healthy skeptic You've got this backwards. R&D is not an option in the auto industry, it's mandatory. Furthermore, it's a killer and exactly one of the basic reasons why profitable independent automaking is next to impossible. Even major automakers make efforts to find ways to make their R&D spending efficient because of the nature of this problem. As I'm sure that I've noted to you before, ***Tesla spends too little on R&D.*** Let me repeat that again, in case you missed it: ***Tesla spends too little on R&D.*** If Tesla had a proper R&D budget, then it would be generating even greater losses. Deferring investment is understandable over the short run for a marginal enterprise that is losing money, but it is not sustainable over the long run.

@Pch101 So what's the endgame for Tesla if they are coasting on R&D, buyout from someone with deeper pockets?

@28-Cars-Later The short answer is that Tesla needs a lot more demand coupled with cheaper batteries and/or some other outlet that could generate profit. Perhaps the "Gigafactory" can make the company profitable. The primary benefit of the cars may ultimately be the brand value that can be provided for the batteries, rather than the cars themselves.

@jmo When you get a paper accepted and published in a peer reviewed journal, let me know because I will then you take you seriously.

@SCE to AUX SCE. Tesla makes money on every carbon credit sold. They lose money on everything else. Companies who are forced to purchase carbon credits then pass that tax onto their customers. No subsidies/mandates, no Tesla.

@thelaine You don't grasp the credit concept at all (which doesn't surprise me, but whatever.) To generate EV credits, one must produce electric vehicles. Producing EVs loses money for every OEM that does it. There is a market for Tesla's EV credits because the other OEMs don't want to produce enough EVs to avoid purchasing credits. They don't produce those credits because the cars that produce credits would lose money. Nobody generates a profit selling EV credits. Their pricing reflects the fact that many OEMs would prefer to spend money on credits than on making money-losing electric cars, which would suggest that the credits cost less than those losses. This kind of credit is similar to the cap and trade concept. It is essentially a fine imposed on automakers for not producing enough EVs, except that the amount of the fine is determined by the market. If EVs were profitable, the credits would have no value, since every OEM would be producing enough EVs to avoid buying the credits. Instead, Tesla and Nissan are stuck absorbing the brunt of the losses for the rest of the auto industry.

@thelaine You are a condescending prick, which doesn't surprise me, but whatever. It is a money transfer to Tesla from other manufacturers which allows Tesla to exist.

@thelaine Repeating your lack of knowledge only confirms your lack of knowledge. Wearing your ignorance on your sleeve is a character flaw, not a point of pride. Producing EV credits is a loss generator. There is a good reason why major profitable automakers are not rushing to get into the EV credit production business. This shouldn't be hard to understand. What has kept Tesla afloat is its high stock price. The resulting debt capacity allowed Tesla to lever up with new debt and convertible bonds.

@thelaine Others disagree, Claven. http://www.wsj.com/articles/the-tesla-paradox-1423786534

@thelaine Hiding behind Rupert Murdoch's skirt doesn't really help your cause. Explain to the audience: If the EV credit market is so fantastic, then why aren't major automakers such as Toyota rushing to jump into the EV credit business?

@thelaine Ignore every source you do not approve and make it into a personal attack. Typical. It is a Wall Street Journal writer analyzing Tesla's business model. You respond with an attack on Rupert Murdock because you think you are smarter than the writer and Murdock. You are a spoiled little child.

@thelaine Once again: If the EV credit market is so fantastic, then why aren’t major automakers such as Toyota rushing to jump into the EV credit business? (To make this easy for you, I'm sure that you have no idea what the answer is, even though I have already provided it, so the question can remain strictly rhetorical.)

@thelaine Here you go, dkhead: Business World Columnist Holman Jenkins Jr. on how Elon Musk’s battery-powered car company is propped up by government subsidies. Photo: Getty Images . The world loves an optimist, and fast-growing start-ups often lose money as they focus on capital investment. What makes Tesla different is that the bottom line would have been much worse without $86 million in profits from the sale of government emissions credits. A Barclays analyst told the Journal that the fourth-quarter results were “heavily supported” by the credits. Because it produces only electric cars, Tesla receives excess “credits” for complying with federal fuel-efficiency standards and state zero-emission vehicle (ZEV) mandates, notably in California. Tesla can then hawk its surplus credits to auto makers that fail to meet the government rules. Last year Tesla made a roughly $150 million killing from selling ZEV credits. That’s up from $130 million in 2013, $32 million in 2012, and $3 million in 2011. All told in 2014 Tesla sold about $216 million in credits, equal to about 7% of its auto sales. Those government subsidies come on top of a $7,500 federal tax credit for each electric car sale and state rebates. Nevada and California have also bestowed upward of $1.5 billion in tax breaks on Tesla. A Tesla earnings report last year predicted that revenue from credits would “remain low in the future relative to our automotive sales” though it would “pursue opportunities to monetize ZEV credits.” Such opportunities will abound as California’s ZEV and federal fuel-efficiency mandates grow more stringent. More states are also adopting electric-car mandates. Capitalism needs visionaries, but its reputation suffers when companies worth billions soak middle-class taxpayers for profits. Turn off the taxpayer tap, Mr. Musk. It would earn you more friends for the long haul.

@thelaine One thing that separates the smart folks from the non-so-smart is that the smart people realize that another person's opinion is just that: an opinion. Finding another person who says what you want to hear only shows that (a) there is one other guy who agrees with you and (b) you are too weak-minded to defend your own argument. Again: If the EV credit market is so fantastic, then why aren’t major automakers such as Toyota rushing to jump into the EV credit business? I don't expect you to answer that question, given your track record around here. But your inability to answer it shows that you don't understand the issue at all.

@thelaine Have another beer Cliff.

@thelaine I'm just shocked that Toyota doesn't follow your advice and leap into the EV credit business. If a genius like you can see the profit potential, then why can't they?

@thelaine Norm!!! A Barclays analyst told the Journal that the fourth-quarter results were “heavily supported” by the credits. Because it produces only electric cars, Tesla receives excess “credits” for complying with federal fuel-efficiency standards and state zero-emission vehicle (ZEV) mandates, notably in California. Tesla can then hawk its surplus credits to auto makers that fail to meet the government rules. Last year Tesla made a roughly $150 million killing from selling ZEV credits. That’s up from $130 million in 2013, $32 million in 2012, and $3 million in 2011. All told in 2014 Tesla sold about $216 million in credits, equal to about 7% of its auto sales. Those government subsidies come on top of a $7,500 federal tax credit for each electric car sale and state rebates. Nevada and California have also bestowed upward of $1.5 billion in tax breaks on Tesla.

@thelaine Legitimate car companies aren't jumping into the credit scam because the deck isn't being stacked in their favor. As a crony of the current regime, Elon isn't about to be surprised by a change in CA or Obama policy when executing his business plans. Toyota would face that risk, just as Tesla now is in Norway.

That is another EV myth - that EV's get recharged only at night when the grid is under-utilized. My employer parking lot has several EV recharging stations and they are 100% utilized from 7AM to 6PM every day by people worried about whether they will get home without some more fresh juice in the tanks.