CONGRATULATIONS!! Some Rich Californian Thanks You For Helping Pay For His New Tesla

Now the Tesla is a sweet looking car with some impressive stats.  Perhaps not as good as advertised, see this posting, but still right up there with the best.
 And while you may not be able to afford one—early models went for over $109,000 and the new S model goes for about $70,000—some people, wealthy ones anyway, are buying them.  Tesla sold an estimated 9,650 S models by the end of April this year. Things are going so well that Tesla made a profit in the first quarter.
Lets look at the Wall Street Journal (WSJ) breakdown of what was the cause of this big first quarter:
“Rarely noted is how much this profit is a function of government subsidy and coercion. So let’s take apart Tesla by the numbers, if only to give our reader-taxpayers a better sense of what they’ve paid to make Tesla’s owners rich.
In 2009 the company received a $465 million Obama loan guarantee, supplemented last year by a $10 million grant from the California Energy Commission.
That money has underwritten Tesla’s engineering and manufacturing, but federal and state governments also subsidize the purchase of Tesla products. Any U.S. buyer of a Tesla car qualifies for a $7,500 federal tax credit, while states like Colorado throw in up to $6,000 more in state income-tax credits. Taxpayers pay first so Tesla can build the cars and again to help the wealthy buy them”
These incentives are supplemented by a scheme akin to the Carbon Trading which has been such a dismal failure in Europe.  This scheme is called “zero-emissions credits” and without these “credits” Tesla would not have made the reported profit.   The WSJ describes it as follows:
“Tesla’s biggest windfall has been the cash payments it extracts from rival car makers (and their customers), via its sale of zero-emission credits. A number of states including California require that traditional car makers reach certain production quotas of zero-emission vehicles—or to purchase credits if they cannot. Tesla is a main supplier.
A Morgan Stanley MS +0.41% report in April said Tesla made $40.5 million on credits in 2012, and that it could collect $250 million in 2013. Tesla acknowledged in a recent SEC filing that emissions credit sales hit $85 million in 2013’s first quarter alone—15% of its revenue, and the only reason it made a profit.
Take away the credits and Tesla lost $53 million in the first quarter, or $10,000 per car sold. California’s zero-emission credits provided $67.9 million to the company in the first quarter, and the combination of that state’s credits and federal and local incentives can add up to $45,000 per Tesla sold, according to an analysis by the Los Angeles Times.
One irony is that rival car makers—even those making electric hybrids or gasoline subcompacts—don’t get the same benefit from zero-emissions mandates. “ 
The WSJ sums it up nicely:
Why should middle-class taxpayers whose incomes are falling still pay to subsidize the purchase of cars that only the affluent can afford, and then partly as a gesture of their superior environmental virtue? When does the rest of America get its return on Tesla’s profits?

2 responses to “CONGRATULATIONS!! Some Rich Californian Thanks You For Helping Pay For His New Tesla

  1. Pingback: These items caught my eye – 28 May 2013 | grumpydenier

  2. Pingback: May 2013 EV Sales Update and Price-Cutting Is The New Normal | Climate Change Sanity

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