Whenever I write about electric vehicles, I receive emails from EV enthusiasts advising me to “educate yourself” about EVs, and challenging me to explain why Tesla is so successful if EVs are so awful.
As I’ve often stated, I would have no quarrel with Tesla (or any other EV) as a luxury/boutique product for the affluent, if leftists weren’t trying to outlaw internal combustion cars for the rest of us.
But since I’ve been challenged to “educate myself” about Tesla’s success, I’ve taken a deeper look, and what I see is Tesla pulling in about $12,000 per unit from sources other than their paying customers, all due to market distorting forces imposed by government dictates.
By being all-electric, Tesla earns various government credits for exceeding arbitrary thresholds on carbon emissions and EV sales. These arbitrary thresholds are set by the climate communists that control California and other left-wing governments. Other auto manufacturers who don’t sell many EVs can be fined or prohibited from doing business in those locales for not meeting those thresholds. So instead, they are paying Tesla for its excess credits to remain compliant with the laws of those states.
How much is Tesla earning this way? There are two kinds of credits Tesla is selling:
- ZEV (Zero Emissions Vehicle) Credits
- Carbon Credits
Teslas also qualify for $7,500 of federal tax credits for each unit sold. Here is how it adds up:
ZEV Credits = approx. $3,500 per Tesla sold
Carbon Credits = approx. $1,350 per Tesla sold
US EV Tax Credit = $7,500 per vehicle sold
This totals up to $12,350 per unit!
So, above and beyond the cash that comes from the Tesla customer who buys a new EV, Tesla will also receive an additional $12k from other manufacturers and from your tax dollars.
What this really means is that when you buy your preferred mass-market gas-powered vehicle, even in a sane state like Tennessee, part of the price you pay is the vigorish that will flow to Tesla to allow your car’s manufacturer to continue to sell ICE (internal combustion engine) vehicles in California and similar states.
And as for that $7,500 of federal tax credit, the next time some phony ”budget hawk” in a think tank or in Congress starts to talk about “cutting entitlements” due to the budget deficit, please tell him to first stop sending my tax money to Elon Musk and his affluent customers, then maybe we can talk about entitlements.
Before I continue with my rant, here a few quick links supporting my figures.
Tesla Carbon Credit Sales Reach Record $1.78 Billion in 2022
Tesla sold 1.31 million new cars in 2022, so this $1.78 billion in carbon credit sales equals about $1,350 per unit.
The $3,500 per unit for ZEV credits comes from this article in Teslarati, quoting Automotive News.
Tesla booked about $2.1 billion in revenue from credit sales in 2021 and Q1 2022. And while the value of a ZEV credit could be flexible depending on demand, it appeared that Tesla averaged about $3,500 each, according to Auto News.
These are the electric vehicles that qualify for a $7,500 tax credit
Now back to my rant…
Those who argue that all other manufacturers can do exactly what Tesla is doing are wrong. That $12k per unit evaporates if/when all vehicles are electric, since there would not be an ICE manufacturer needing to buy such credits. Nor would the government need to keep paying car buyers $7,500 per unit to buy EVs once there is no longer the preferable alternative of an ICE car.
In addition, the threshold for EV market share is rising in those communist states, thus reducing the ability to generate future credits for exceeding it.
California is raising the minimum market share of EVs to 35% by 2026, 68% by 2030, and to 100% by 2035, which means that Tesla’s EV credits are going away.
To ensure enforcement, state officials could penalize manufacturers that don’t meet their yearly percentages with hefty fines of $20,000 for every car they fail to produce in a given year, according to air board staff. Automakers that fail to meet those requirements would need to get credits from another manufacturer that already met their targets.
That $20k per unit fine paid to the state of California is going to be spread over gas-powered vehicles sold in the rest of the country, driving up the price in all 50 states. This will further distort the marketplace, and make reliable transportation even less obtainable for the poor.
It is exasperating to hear anyone claim that Tesla is a free market success story. No, Tesla is a niche product that has obtained unprecedented regulatory favor. Other businesses (e.g. ICE car manufacturers) who do not even want to compete in Tesla’s line of business (EVs) are forced to pay millions of dollars to Tesla for the privilege of not competing with Tesla. That’s what EV fanboys call a “market economy.”
Gov. Brian Kemp’s Rivian Boondoggle Keeps Looking Worse
Since we’re on the topic of EVs today, let’s take a quick look at Rivian, the EV startup that seduced Governor Brian Kemp into the biggest tax giveaway in Georgia history.
Things are not looking good for Rivian.
A few years ago, the fawning media coverage of Rivian focused on its tens of thousands of pre-orders.
Rivian Faces an Insurmountable Wall of Electric Truck Pre-Orders [12/31/2021]
While the company has over 70,000 R1T pre-orders on its plate, customers only pay a $1,000 refundable deposit to reserve their vehicle. And that brings us to Rivian’s second, very big problem; it can’t make cars fast enough.
That word “refundable” is kind of important.
The pre-orders have apparently bailed, because Rivian is now begging potential customers to come to its Illinois car factory and buy an EV on the spot. No wait.
Saturday, June 17, Rivian is opening the doors of its service center in Normal, Illinois to the public for a “Same Day Delivery Sales Event.” The event will take place all day to entice prospective Rivian customers to come check out the space and hopefully take delivery of a new R1T.
If there were a backlog of pre-orders to fill, Rivian wouldn’t be trying to get people to come the factory and make these trucks go away.
And if the Illinois plant is already producing more Rivians than customers will buy, there will not be a new plant in Georgia. Sorry, Governor Kemp. You’ve been had.
Here’s another possible way to make a Rivian go away…plug it into a charger.
Rivian R1T EV Pickup Combusts at Electrify America Charging Station [Motor Trend – 6/06/2023]
In addition, Rivian’s imploding stock is being removed from the Nasdaq 100 index.
Commenter “dhmosquito” provided this helpful photo of the quickest way for a Rivian to travel across Wyoming. It might be the safest way too.
[buck.throckmorton at protonmail dot com]