Posted on 07/02/2015 1:19:55 PM PDT by jazusamo
Its been six years sinceelectric vehiclemanufacturers enjoyed their windfall from U.S. taxpayers via the stimulus, but the thirst for subsidies, and pain from financial losses, have not waned.
The pursuit of government goodiescontinues apace forTesla Motors, even more vigorously after the Los Angeles Timesreported last month that CEO Elon Musk depends on more than $4.9 billion in corporate welfare for his companies, which also include SolarCity and SpaceX.
Teslas quest may more accurately be portrayed as preservation of the golden goose that is Californias zero-emission vehicle (ZEV) credit scheme. The Golden State requires the six largest auto manufacturers to produce a certain percentage of vehicles that are green in other words, electric or to purchase zero-emission credits from companies that do, such as Tesla. According to the Christian Science Monitor , Tesla is the largest seller of ZEV credits, raking in $152 million from those sales last year (and many more prior).
But the parameters of the policy are about to change, with the next highest-selling tier of manufacturers Intermediate Vehicle Makers becoming subject to the ZEV mandate in 2018. Automakers also will need to increase by one percent every year their sales of ZEV-compliant vehicles, as a percentage of overall sales.
Tesla and Musk would be drooling at the prospect of the stricter mandate as a boon to their bottom line. However the regulator that makes the rules for the ZEV program, the California Air Resources Board (CARB), has said it will allow automakers to count more plentiful plug-in hybrids towards their compliance goals. That means less dependence on ZEV credits to meet the standards, and even worse, those companies could sell the credits themselves in competition with Tesla based on the amount of plug-ins they produce.
The mandate is already far too weak, complained Diarmuid O'Connell, Teslas vice president of business development, to Automotive News earlier this month.
Tesla appears to be isolated against its fellow manufacturers in lobbying for the stricter mandate, which isnt making it any friends in the industry.
No one agrees that there is a surplus of credits, said an executive from a rival company to Automotive News. All they care about is protecting their market to sell credits.
Tesla is also losing another mechanism upon which California allowed the company to take advantage of ZEV credits. The CARB allocated credits for the ability for Model S owners to swap out batteries quickly to theoretically refuel, but it was based only upon a Tesla demonstration that showed it was possible not by actually putting it into practice. Tesla finally did set up a battery-swap station halfway between San Francisco and Los Angeles off of Interstate 5 pretty useless for Model S owners in either city. Now Musk is citing the lack of interest and sounds like he will drop the program , but its really due to the fact that California wont subsidize it any more.
The reduction in dependence on Tesla for ZEV credits will disrupt one of its cash streams, which it desperately needs (despite Musks claim that its not a big deal). The Wall Street Journal reported that the company recently took out an additional $750 million in credit capacity, and the quarterly losses only keep growing.
Financial hits on electric vehicles are also becoming an issue for Nissan, which was given a $1.4 billion loan guarantee from the stimulus for green car production. As leases for the first-generation models of the all-electric Leaf are expiring, the Japanese automaker is offering up to $7,000 to customers as an enticement for them to keep their depleted-battery models. The company reportedly is anticipating its next model, which will feature a longer-range battery (105 miles! But thats what they said the original Leaf would have!), so they obvious dont want the original turkeys stuck back in their inventory.
Worse, Nissan which saw Leaf sales drop by one-third in May from a year ago expects an even greater decline in demand when Georgia eliminates its $5,000 tax credit for electric vehicle purchases, effective July 1. According to an Automotive News report, Nissan identified Atlanta as its hottest market, but now dealers in the area fear the worst. A sales manager in Kennesaw, northwest of Atlanta, said he expects monthly Leaf sales to drop to single digits, from about 100 now.
Its going to drop like a cinder block off the side of a boat, he told Automotive News.
That tends to happen when youre in the government subsidy-sucking business, where other peoples money eventually runs out.
Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes CarolinaPlottHound.com , an aggregator of North Carolina news.
If it’s a good idea, it can stand on itself and does not need subsidies.
I currently drive a 2015 Honda Fit EX hatchback, and thanks to the very modern drivetrain with direct fuel injection, I've seen 42 mpg on steady freeway driving at 65 mph. And unlike the economy cars from the 1980's that can do over 40 mpg, my Honda Fit has the safety features that are truly first class.
Exactly...Subsidies and tax credits on EV’s have cost taxpayers hundreds of millions, it’s past time they all be done away with and let the products and technology sell themselves.
Lots of cutting going on in the states these days. Its not enough but its something.
Cronyism: it's bad policy but good entertainment.
They also need to kill the subsidies for all these solar panels going on roofs these days.
Amen to that.
The Golden State requires the six largest auto manufacturers to produce a certain percentage of vehicles that are green
I have often said, if these CEO’s had any balls they would get together and tell California to pound sand and stop selling cars in California PERIOD.
this law would be repealed overnight!
I second that. Plus the selling of CARB credits is nothing more than a scam in my view, and a scam that Musk has cashed in on.
Personally I don’t have a problem with Musk’s tax credits on SpaceX.
He’s not getting anything that Boeing, LockMart, or other space-related businesses are getting.
At least it’s something more worthwhile than solar panels that may not ever pay back their real costs.
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