Tesla Disputes the Importance of ZEV Credit Income

Zach McDonald · Zach McDonald · 1 year ago

Tesla Motors has always shown a certain proclivity for engaging its critics. Yesterday, the electric carmaker fired back at an article by former executive Darryl Siry, which alleged that Tesla stands to lose 25 percent of its profit margin on its forthcoming Model S thanks to a forecasted decline in value of Zero Emissions Vehicle credits.

The credits are awarded for the sale of electric vehicles in California and 12 other states, which mandate that all carmakers sell a certain number of EVs each year. Obviously, no major automaker has yet been able to earn ZEV credits on its own, so the credits have come to be worth an estimated $5,000 each to small startups like Tesla, as they're traded to larger companies. Siry wrote that Tesla was depending on ZEV credit trading for 50 percent of its projected bottom line, a claim that Tesla strongly denies.

In a response post on Wired.com, Tesla accused Siry of "conveniently ignoring" several widely available facts about the story and incorrectly quoting its Finance Vice President. "Tesla is not dependent on ZEV credit income," says the company. "In the most recent publicly filed quarter, we generated only $0.5 million of ZEV credit income—which represented a mere 13% of our gross margin. We think many readers might have drawn a different conclusion about our dependence had both facts been presented."

Tesla didn't dispute that it stands to lose a source of income once tens of thousands of new plug-ins hit the market later this year (significantly limiting the scarcity of the credits and driving prices down.) But it's difficult to imagine that Tesla and other startups haven't known about and been planning for this situation for years.

On a separate note, Barron's provides a rundown of how Wall Street analysts view Tesla's prospects. The consensus from Deutsche Bank, J.P. Morgan, and Goldman Sachs is that Tesla is fairly valued at its current stock price of about $20. Morgan Stanley is more sanguine, looking ahead two years to when Tesla delivers the Model S. "If many things go right, we can see a path to $100 per share," said Morgan Stanley's Joshua Paradise.

Comments

· Brad Berman · 1 year ago

Tesla's rebuttal of Siry's analysis was contradicted by their own bankers' research report which was released yesterday.

http://www.darrylsiry.com/2010/08/morgan-stanley-contradicts-tesla.html

· ex-EV1 driver · 1 year ago

If they're going to be sustainable, they will have to work without ZEV credits eventually. The only issue I see is how long they can use this 'free money' to reduce the amount of initial funding they need to raise.

· Anonymous (not verified) · 1 year ago

I like Tesla, but there's nothing sustainable about cars. The plastic they're made of, the fuel they require, and the roads that they drive on are all made of hydrocarbons (read: oil). It's a step in the right direction to make hybrids, but elimination of personal automobile ownership is the only truly sustainable option.

· ex-EV1 driver · 1 year ago

Anonymous,
There are different kinds of sustainability. I was referring to Tesla becoming a sustainable business.
I'll disagree with you that eliminating the personal automobile is necessary for sustainability though. I'm not even convinced that the alternatives (mass transit or hunting, gathering, and huddling in caves at night) has less environmental impact than personal automobiles.
I agree that the use of disposable hydrocarbons and mined materials (read: cement and metals) for roads and vehicles as they are today aren't completely sustainable but I can see more sustainable alternatives to these things that are just not as economically viable or comfortable (cobblestones anyone?).
The Tesla and other EVs can run off of sunshine or wind. Solar and Wind energy collection can be made using solar or other sustainable energy sources - at least until the sun runs out.

· Bob P (not verified) · 1 year ago

Whoever wrote that "elimination of personal automobile ownership is the only truly sustainable option" is someone that any reasonable person would label a "fringe lunatic". There is simply no way to change this in ANY version of the future that I can forsee. Maybe I just don't have "the vision", but then again, I think THAT vision is one that was created thanks to the help of modern chemistry.

As far as I'm concerned the problem we're facing is: 1) We, as a race, want to limit CO2 emissions (forget what side of the fence you're on regarding global warming for the minute) 2) We, as a country, want to rid ourselves of dependence on foreign oil. 3) We, as a species, want to find a CLEAN energy source that has a limited potential for pollution (e.g. no more oil spills, gas explosions, etc).

I don't think ANYONE (in the US) would argue with any of those goals and most of the world won't argue with ANY of them (forget the mid-east - they can drown in their oil once we don't need it anymore, especially after they way they've treated us).

Solar Energy is definitely one that we need to use, however, as a species we should be careful not to put all our eggs in one basket. Wind energy sounds nice, but, have we REALLY done a true environmental impact on how this can affect the planet globally, or local wind patterns, or just the local impacts of erecting these structures? Please don't think I'm against it, I just want to be more confident that what we're doing is a GOOD thing and not more destructive than what we already have. Nuclear power - I DO think we should initiate a breeder reactor program. We had one back in the 70's but it was canceled, at least in part due to big oil's pressure on the gov't NOT to reduce our dependence on oil and fossil fuels!!! In fact, Nuclear power could easily solve MANY of our problems for many years to come, but again - I think we should not put all our eggs in one basket.

While the sun itself can easily provide all the energy we need, what if the earth does get hit by a decent size rock and we enter what is typically called a "nuclear winter" - that is - the sun is blocked out for an extended period of time as in potentially YEARS!!! All the solar cells in the world won't help us then. One source of energy that we'd have left to tap is one that's sitting right beneath us right now - GEOTHERMAL.

GEOTHERMAL is one energy source that can be run 24x7, day or night, rain or shine, summer or winter, wind or no wind. It doesn't pollute, doesn't have any negative connotations associated with it, doesn't have the risk of accidents that Nuclear plants do (even though they are very, very, very small)... So.... Why haven't people recognized this fact? Why don't we construct MANY MORE Geothermal plants?

In the worst of times and in the case of a real disaster, the two power sources that I don't see giving up the ghost are Geothermal and Nuclear. I believe THESE TWO should form the axis of our power distribution, and them SUPPLEMENT them with other technologies available to help with peak loads, or simply to keep extra capacity ready for emergency needs.

· ex-EV1 driver · 1 year ago

Bob P,
I'd like to add to your broad, big picture of our energy system by pointing out that electric vehicles are a means of taking advantage of the diverse assortment of energy sources you mention since all can be put onto the grid at their sources and taken from it at their destinations.
Sure, Plug-In vehicles aren't perfect but they do solve a lot of problems and, in reality aren't less convenient than oil based transportation methods.

· America1st (not verified) · 1 year ago

ZEV credits are for startups to do one thing well, ramp up. As economices of scale move, the credits become less of a factor in pricing. Ideally, as the prices come down along with the credits, the price stays relatively the same. Personally, we subsidize Exxon to the tune of $15 billion per year, we could buy every American looking for a car in any one year with that subsidy. Oil is a loser for America. Tesla, American-made, American-FUELED. Chevy Volt - American-made, American-FUELED.

Dear Middle-East - F@%% Off.

Add comment

·

The content of this field is kept private and will not be shown publicly.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.

All Discussions

Good-Natured Misinformation About Electric Cars More Damaging Than Attacks

Article · 25 comments

Brad Berman says:
PluginCars.com has done a lot of reporting about direct anti-electric-car venom. EV-Haters, YouTube ranters and...

Kansas Representative Pitches 1 Cent Per Kilowatt-Hour Tax on Plug-in Vehicles

Article · 11 comments

Brad Berman says:
Officials in Kansas are concerned that if too many of the state's residents switch to electric or plug-in hybrid...

Tesla Video: Model S Will Be Best Sedan on the Planet

Tesla Model S Article · 31 comments

Brad Berman says:
In a new promotional video released today by Tesla Motors, the company confirms that it will introduce the Model S...

2012 Toyota Prius Plug-in Hybrid Set at 95 MPGe

Toyota Prius Plug-in Hybrid Article · 19 comments

Eric Loveday says:
Toyota will reportedly update its fuel economy figures for the 2012 Prius Plug-in Hybrid ahead of the vehicle's March...

Electric Car Owners Poised for Bottom-Up Movement in 2012

Article · 37 comments

Brad Berman says:
As the end of 2011 approaches—painful or not—we need to take a step back and start assessing the successes and failures...

What It Takes to Get 100 Miles of Range in My Electric Car

Nissan LEAF Article · 21 comments

Brad Berman says:
After driving my all-electric Nissan LEAF like a madman for the past few months, I decided to see how far I could go...

Mitsubishi to Launch Electric Mini Truck in 2012

Article · 8 comments

Eric Loveday says:
According to Reuters, Mitsubishi Motors is developing an electric mini truck, potentially its third vehicle in an...

LEAF Owner Denied Charge at Local Nissan Dealership

Nissan LEAF Article · 82 comments

Zach McDonald says:
This week, contributors at MyNissanLeaf Forum expressed mild outrage over an incident involving a LEAF owner and staff...

Plug-in Car Sales Get Off to Slow Start in 2012

Chevy Volt Article · 33 comments

Eric Loveday says:
January was not a strong month for plug-in vehicle sales in the US. Nissan reported sales of the all-electric LEAF at...

ECOtality: Electric Car Charging Leader Admits to Falling Behind

Article · 22 comments

Jim Motavalli says:
With major government grants and retail partners, ECOtality is a big player in the charging space. It's Level 2 Blink...