Forums

Total FUD. Where to begin?

Total FUD. Where to begin?

http://news.investors.com/012615-736307-tesla-depends-on-government-subs...

Let's just start with the fact that all automakers can make cars that get their customers a $7,500 tax credit, not just Tesla. The Volt gets it, the Leaf gets it and others. Up to 200k cars worth.

All other automakers could earn ZEV credits if they were willing to meet emissions goals. It is confidential information what price Tesla gets for the ZEV credits that are bought by other automakers that fail to meet goals.

The absurdity of this article makes me want to pull my hair out.

Svenssons | 26. Januar 2015

He,John Merline, is educated in Michigan...

Rocky_H | 27. Januar 2015

I don't see it mentioned often enough in response to the critique on ZEV credits. ZEV credits issued to Tesla would just be pieces of paper, sitting there, not worth anything if the other car companies were willing to actually produce and sell enough of their own clean vehicles to earn their own ZEV credits.

People refer to them as if they are money given, and it needs to be stressed that it's just other companies not wanting to comply with the clean air regulations and buying their way out of them that even brings money into the picture at all.

renwo S alset | 27. Januar 2015

My other favorites are Bidness and Seeking Alpha for insightful, intelligent analysis.

Red Sage ca us | 27. Januar 2015

Captain_Zap & Rocky_H: +1 UP! Precisely.

Red Sage ca us | 27. Januar 2015

Here's what I posted there:

John Merline... Interesting. So you posted this... why? Click bait, perhaps?

Who gives a flying [FLOCK] what Phil Kerpen wrote -- somewhere else? What is your opinion? What is your outlook? Where is your evidence? What is your position?

Do you agree with Mr. Kerpen? If so, WHY?

In fact, in the interest of journalistic integrity, it would be nice to see your progression through the full gambit of: WHO, WHAT, WHERE, WHEN, HOW, and WHY... you wrote this piece of filth.

"In fact, he says, the company wouldn't last long without massive government subsidies."

Did he, or you for that matter, actually call out these so-called 'massive' subsidies? Show me one. Go ahead. I'll wait.

See... The problem is... THERE AREN'T ANY.

Let's get down to brass tacks, shall we? A SUBSIDY IS MONEY GIVEN DIRECTLY TO A CORPORATE ENTITY BY THE GOVERNMENT WITH NO NEED TO REPAY. Tesla Motors has received exactly ZERO of these.

Under a $25,000,000,000 program funded by the Federal Government to aid the development of alternative fuel vehicles.... Ford Motor Co received a $5.9 Billion loan guarantee -- that they haven't paid back. Nissan received a $2.9 Billion loan guarantee -- that they haven't paid back. Tesla Motors received around $465,000,000 -- and paid it back around 18 months ago, with interest, NINE YEARS EARLY. Less than half a billion dollars -- nowhere near as MASSIVE as what Nissan and Ford received under the SAME program.

"...Tesla buyers get a $7,500 federal tax credit, plus a $2,500 rebate from several states."

You forgot the words 'up to'... The Federal EV Tax Credit is NOT a REFUND and NOT ONE DIME OF IT goes to Tesla Motors. It is basically a means by which people can reduce their tax exposure -- that's it. If your tax exposure is less than $7,500 you don't get the full amount. Further, once Tesla Motors has sold 200,000 units in the United States of America, the Federal Tax Credit begins to fade away. It will lessen each quarter thereafter until it goes to ZERO. Because of this, NO VEHICLES SOLD BY TESLA MOTORS WILL BE ELIGIBLE BEYOND 2017, assuming expected sales targets are met.

Some states offer a baseline minimum rebate, others offer tax credits, some are small amounts, others are rather generous. None of them are guaranteed. Most are first come, first served, until available funds run out. The Great State of Texas has such an EV program, but it is only open to vehicles that were sold in the state through an 'independent franchised dealership'. Since Tesla Motors doesn't use franchises, NONE of their cars sold to owners in Texas get that state's EV rebate. The Great State of Georgia only allows up to 150 buyers for each manufacturer's EVs to get their rebate before it dries up.

"A Tesla Model S, for example, gets four credits for each one that moves off the lot, which Tesla then sells -- at $5,000 apiece -- to other car companies that can't meet the state's zero-emissions sales mandate."

This is utter [BOLSHEVIK]. ZEV Credits are available to EVERY automobile manufacturer that offers eligible vehicles in the eight CARB states -- not just California. ZEV Credits existed long before Tesla Motors was founded. They came about as a means by which companies could offset their $5,000 per unit PENALTY for NOT meeting the EPA's Corporate Average Fuel Economy (CAFE) standards, while simultaneously rewarding companies for building vehicles that did NOT contribute to poor air quality in urban areas. Any company that actually pays $5,000 for a ZEV Credit is an IDIOT, because that is EQUIVALENT TO the amount they would have been FINED ANYWAY. Because of that FACT ZEV Credits are typically sold for LESS THAN $4,000 each, and often as low as $2,500. If other companies improve their own CAFE numbers by building their own ZEVs, then they won't need to buy ZEV Credits from Tesla Motors or anyone else.

Grinnin'.VA | 27. Januar 2015

@ Red Sage ca us | January 27, 2015

John Merline... Interesting. So you posted this... why? Click bait, perhaps? ...

Give them hell, Red!
BTW, I agree with you.

Go Tesla!

Rocky_H | 27. Januar 2015

I about blew a gasket when he said "other car companies that can't meet..." Oh, it's not "can't". It's "do not WANT to meet". The frequent counter argument from the car companies is that they can't sell more because people don't want to buy enough of them. But the counter-counter argument to that is that you're doing that to yourselves because you haven't tried making a nicer longer range electric car that more people might want.

buddyroe | 27. Januar 2015

Yea, I got a little carried away posting on that article too. I'm 9Awesomeb in the comments section. Defending Tesla every chance I get.

I'd like to slap a know on Marygood's head!

Brian H | 28. Januar 2015

Note that the ZEV credits are only worth anything because the gubmint is gonna ding ya if you don't make any. So pay or credit, money is ending up in their coffers by fiat.

Rocky_H | 28. Januar 2015

@Brian H: Wow, no. That's like saying my homeowners' association pays the guy who mows my lawn. That's not correct at all. They have rules that if I just let my lawn go and grow ragged and 5 feet high that I will have a penalty. I could mow it myself to keep clear of that penalty, but I don't want to. I pay someone else to do it for me, but the homeowners' association isn't paying him. Jeez, you're making that same mistake in logic as most of those article authors.

Red Sage ca us | 28. Januar 2015

Rocky_H: +1 UP! I love the analogy. Thanks. I think I'll file that away for future use.

Would you need a nickel in payment each time I spring it on my Facebook Friends? Or would an internet cookie do?

;-)

Rocky_H | 28. Januar 2015

@Red, unlike Elon Musk, I actually like oatmeal raisin cookies, so I will take those in browser form.

Boukman | 28. Januar 2015

My guess is another guy trying to short Tesla's stock...Now does anyone knows where to see Tesla's annual report? I'd like to check the statement:

"It's not as though Tesla is pretending otherwise. It says right in the company's 2014 annual report that its growth "depends in part on the availability and amounts of government subsidies and economic incentives."

for myself...

Brian H | 28. Januar 2015

Rocky;
Wrong; the fee is a cost of manufacture only by government decision. ZEV credit relief has value only because of that artificial add-on. Whether you think that's a good idea doesn't change that basic accounting fact.

milesbb | 28. Januar 2015

Tesla is doing businesses in the market they were given. They are making a car that qualifies for buyer incentives. So does Ford, Fiat, GM, VW, Mercedes, Nissan, BMW, and Toyota. Why is successfully competing against these companies not a model of free-market capitalism?

The incentives were offered to reduce emissions. Tesla's are reducing more emissions then all of the other company cars that qualifying for the $7500. Tesla's complying with the intent of the law not just the letter of the law, like the other manufactures do. Tesla's are not just compliance cars. The government is getting greater emission reduction from Tesla's then from the other Mfg's for the incentives offered. They are replacing large cars that would be putting out significantly more emissions and putting more miles per year on the cars. The other mfg's are replacing small compact cars that are not driven far. The other Mfg's should be at risk, regulations are likely to change so that the compliance cars get lower incentives, not penalize cars that meet the intent of the regulation.

Tesla's are being exported in significant numbers. They are qualifying for incentives in other countries that value low emissions. Does the Author think qualifying for incentives offered around the world is "hardly a model of free-market capitalism". Seeing sales opportunity and satisfying it is exactly what free-market capitalism is all about. Tesla is such a company. Allow Tesla to market in the US as they determine. Free capitalism is what Americans believe in. Get the legislation payola out of the pictures and the answer is obvious.

Brian H | 29. Januar 2015

milesbb;
Good post.

But it would be more coherent if you stopped using apostrophes for plurals. Abbreviations and possessives only (for nouns).

SamO | 29. Januar 2015

@Brian H,

You people that enjoy tailpipe emissions please go into your garage, close the door and breath deeply for 1 hour.

If you manufacture a car that burns dirty polluting fuel, you must also build clean non-tailpipe polluting cars OR pay someone else to build them for you OR pay to dirty the air consequence free.

You wrote "the fee is a cost of manufacture only by government decision."

Wrong.

The credit is a pollution tax, plain and simple.

Why is this so hard for you to understand?

RanjitC | 29. Januar 2015

@SamO
Does the government take my pollution tax and "depollute" the air/ground/water? No it is a government decision to penalize companies that build polluting vehicles thereby incentivising (is that a word) companies that don't.

Grinnin'.VA | 29. Januar 2015

@ SamO | January 29, 2015

The credit is a pollution tax, plain and simple.

Why is this so hard for you to understand?

Very well put.

Red Sage ca us | 29. Januar 2015

milesbb: +100 UP! Excellent post! Good job.

buddyroe | 29. Januar 2015

SAMo - you people that bake with an oven, go pre-heat it to 400 degrees and stick your head in it for 1 hour.

That's about as relevant as your hour in the garage command. There are tons of things that are good, but dangerous. Go drink some lithium ion for example. I could go on forever. It's just ridiculous.

bigd | 29. Januar 2015

buddyroe +1 UP!

Remnant | 29. Januar 2015

People have a natural need and drive for trade, free or not. They trade what they can. They adjust to constraints, whether natural or man-made. In captivity, they might exchange onerous labor for cigarettes or for some clandestine item, such as a knife. To blame them traders for the constraints they operate under would be absurd.

The ZEV credits were born out of government-created constraints, not by Tesla. They result from a less-than-cogent blend of income taxation and its use for policy. The blame for this belongs with our ancestors for allowing such laws to pass and to our current voters for not forcing the lawmakers to repeal them.

True, subsidies, punitive taxes, monopolies, and regulations that steer industrial production in directions preferred by social engineers, moneyed interests, and politicians make us less free than we could be. We are no longer the bright star of untainted entrepreneurial capitalism, but only a crippled derivative.

Don't blame Tesla for it though!

SamO | 30. Januar 2015

@RanjitC,

"Does the government take my pollution tax and "depollute" the air/ground/water? No it is a government decision to penalize companies that build polluting vehicles thereby incentivising (is that a word) companies that don't."

YES THEY DO. Thanks for asking.

When Ford Motors builds lots of dirty polluting cars, they MUST build clean cars too. If they don't then they must buy the pollution credits.

When Tesla builds lots of clean cars, they earn lots of pollution credits (ZEV). They can monetize those credits (sell) since they ONLY build clean cars. They take those funds and build MORE charging infrastructure and more battery factories.

Thus, the FREE MARKET cleans up the pollution. So simple.

_________

@ buddyroe,

Many people on this board have claimed that tailpipe emissions are not pollution.

This "suggestion" is to cure them of that fallacious thinking. Tailpipe emissions are toxic, plain and simple. I'm sure you aren't disagreeing with that obvious point, right?

Brian H | 31. Januar 2015

Part of the emissions are toxic; converters convert as much as possible of that portion to CO2 and water, which are not.

Mel. | 31. Januar 2015

That is why so many of us dislike trucks that are not required to have converters. They also stink.

Red Sage ca us | 31. Januar 2015

Good thing that platinum is so plentiful. Oh... Wait...

Rocky_H | 02. Februar 2015

@Brian H, apparently I need to clear this up. You had two statements, and I thought it was really obvious which one I was responding to, but you apparently thought it was the other one.

Your original:
"(1)Note that the ZEV credits are only worth anything because the gubmint is gonna ding ya if you don't make any. (2)So pay or credit, money is ending up in their coffers by fiat."

So point 1 is that ZEV is a government obligation. I agree. Point 2 is that you said that means the money ends up in Tesla's coffers. I disagree, and that's what my response was about.

Companies can choose how they want to deal with the regulations they are faced with. Many companies in many industries have regulations they have to comply with, and a lot of them choose to not comply, make more profit that way, and then just pay the fines when they are caught. That is one choice. Others go ahead and comply with the regulations, which costs them some profit internally. That is another option. Others may choose to pay outside contractors to handle it. That is another option. So it is the car companies that are deciding where they want to spend that money, not the government.

So you insisting as a "basic accounting fact" that the government regulation means that the money goes TO TESLA is what is blatantly wrong and was what I was disagreeing with.

Brian H | 02. Februar 2015

"Their" refers to the government, not Tesla. Keep your pronouns straight. It's important.

Rocky_H | 02. Februar 2015

Yes, it is important, so when the point of the article was saying that the ZEV credit money goes to Tesla, and you said the money goes in "their coffers", that seemed to be what you were saying as well.

Red Sage ca us | 02. Februar 2015

Brian H wrote earlier, "So pay or credit, money is ending up in their coffers by fiat."

Brian H later clarified (?), "'Their' refers to the government, not Tesla."

Money that purchases ZEV Credits from Tesla Motors (or anyone else) does not go to the government. Those funds go to the seller. The way the original sentence read makes it seem that Tesla Motors would act as a tax collector on behalf of the government. That is not the case. Again, unless someone asks to buy them, ZEV Credits have no guaranteed monetary value whatsoever.

Brian H | 03. Februar 2015

Start with the fines for not producing ZEV cars. That is a flow to the government. You can avoid paying by buying credits from companies that earn ZEV exemptions, which benefits those companies a fraction of the avoided penalty amounts, but the main cash flow is still fines and fees paid by non-ZEV manufacturers. To the government.

Rocky_H | 03. Februar 2015

How about starting with the regulation to produce clean emissions cars, rather than pretending the fines come first? It would be kind of like when auto makers were required to start using catalytic converters. They could choose to build their own, buy them from others, or just not do it and get fined.

SamO | 03. Februar 2015

@Rocky_H,

You beat me to it. How about we start with pollution. Once you determine there is an unpriced externality, the market or the government must intervene.

This is one of the LEAST intrusive forms of government intervention, allowing the market to decide whether to pollute, pay the fine or develop an non polluting alternative.

Libertarian Economics 101

Brian H | 04. Februar 2015

Re-pricing by adding government surcharges is BS, as it does nothing to pay for the "externality".

SamO | 04. Februar 2015

1. Adding a "government surcharge" is laughably stupid way to describe a mechanism for making people pay to pollute. And isn't the actual mechanism.

2. Of course, ZEV credits, by themselves, cannot "pay for the externality". No one claimed such.

3. It "allows the market to decide whether to pollute, pay the fine or develop an non polluting alternative."

I'd be thrilled if the government charged $1,000 (tacked onto the price of a car) for pollution paid directly to the EPA for emission cleanup.

I'd be thrilled if the government forbade automobile makers from producing polluting, killing, products.

Tesla would be the largest carmaker in the world and the passenger pickup truck would go extinct.

But ZEV credits is the mechanism in place since 1990.

"As first enacted in 1990, the ZEV regulation required that two percent of vehicles for sale in California in 1998 and ten percent of vehicles for sale in California in 2003 be zero emission vehicles, such as hydrogen fuel cell and battery electric vehicles. In 1996, DUE TO PRESSURE FROM AUTO COMPANIES and concerns about the state of technology, CARB eliminated the intermediate 1998 requirement, but kept the 2003 target of 10 percent zero-emission vehicles in place. CARB also allowed credits for partial zero emission vehicle (PZEV) credits for vehicles that were not 100 percent electric (e.g., hybrid electric vehicles). Soon afterwards, many of the auto companies introduced battery electric vehicles (BEV), including the GM EV1, Toyota EV RAV4, Ford Electric Ranger, and the Nissan Altra."

http://www.ucsusa.org/clean_vehicles/smart-transportation-solutions/adva...

The automakers created this Frankenstein system (Not Tesla Motors) so please don't blame "the gubmint" for their problems. They've been fighting emissions controls for a very long time and they deserve to pay TM $millions if they can't build clean cars themselves.

Red Sage ca us | 04. Februar 2015

Brian H: Thanks for the clarification. That is what I hoped you meant. That is why I didn't bring it up at first.

Rocky_H & SamO: Precisely.