Half of Teslas Q2 Profit Came from Your Taxes
jalopnik.com
jalopnik.com
> A truly wild amount of Tesla’s second-quarter profit – over half of it, in fact – was attributed to the sale of these credits to rival automakers that use them to meet emissions rules, the Wall Street Journal reports. Sure, the money – which is pure profit – isn’t technically a subsidy, but Tesla is still very much benefitting from government programs that are aimed at aiding the development of electric vehicles.
correct me if I am wrong, but there is a difference between tax payer money going for something then a company purchasing credits from another company to meet regulatory standards
I assume Tesla is not the only one, but probably a very big recipient?
To kind of make it simple: the government has a target for emissions for an automaker. Your cars can only release N parts per million (ppm) of carbon or other gasses into the atmosphere. In order to incentivize manufacturers to meet these goals, the government will essentially pay you to come under. There are likely also penalties for exceeding the target by so much. And you can then use the penalties to pay the credits. Blah, blah, blah.
Ford, Toyota, Honda, etc are all over by some amount. Tesla on the other hand is way under. So since the entire automotive industry is under the target, and that's ultimately what we want, the government allows these credits to be bought and sold. So the manufacturers who are over buy credits from companies who are under.
And since Teslas produce a negligible amount of emissions (if any, but I'll hedge for safety's sake), they have a lot of credits. So much, that it's apparently enough to be half of their profit for the quarter even though sales are not great at the moment.
Tesla cannot continue this indefinitely. As they sell fewer cars, they will get fewer credits. Combine that with the other manufacturers making their own EVs. If Ford is under target because sales of the MustangE and Lightning F150 (that's what they're called, right?) brings them under target, then they don't even need to buy Tesla's credits.
So Tesla is going to be hit twice by every other car manufacturer. Every Chevy Bolt purchased is another Tesla not being bought. And every Chevy Bolt bought is another credit Chevy doesn't need to buy.
And that's kind of the best case scenario.
My first (probably naive) reaction is: Doesn't this set up a poor incentive? Why should the "dirty" manufacturers change their ways if they can just buy their way out of trouble and not seriously invest in EVs? Who sets the price on these credits? If they're cheap enough, the gas car manufacturers can just buy them forever?
But if Tesla goes under, there would be no one to buy those credits from. Manufacturers would have to either find another source or find ways to come under the target.
In fact, it’s a net lose because Tesla is so inefficient at building cars (many employees == much CO2) and the battery materials are an environmental disaster to extract.
I wish Tesla would not engage in this dirty practice.
I’m missing the irony; perhaps it is participating in a program with which one disagrees?
If anything, Tesla is the best domestic automaker to operate without consumer subsidies. On the other hand, I understand that Tesla makes a material sum from selling non-pollution credits to other manufacturers, which aren’t a direct subsidy but act similarly.