When total number of cars sold increases 8% and green cars sold increases 35%, the probability that the ZEV (all metals combined) will be saturated increases as well
June green-car sales jump 35% over 2012 numbers
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Could Tesla have underestimated ZEV/CARB credits for Q2?
- Thread starter jeff_adams
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When total number of cars sold increases 8% and green cars sold increases 35%, the probability that the ZEV (all metals combined) will be saturated increases as well
June green-car sales jump 35% over 2012 numbers
stopcrazypp
Well-Known Member
Nissan has never considered selling credits (banking them for now). But a recent interview did have someone from Nissan comment they might look into it.
I think it has to do with the fact they are relatively weak in the other non-ZEV credits (they don't have much hybrids or PHEVs), so banking credits is a safer bet for them right now.
stopcrazypp
Well-Known Member
A couple of points:
1) diesels need to be excluded and CNG included from those numbers.
2) a large portion of that 35% is going to be in California and CA sales outpace US sales (with the green car sales contributing)
For example for last quarter from the cncda link posted previously:
US sales up 7.2% (includes fleets; excluding fleets probably closer to 8%)
CA retail sales up 13.9%
Hybrid+EV retail sales up 14.6%
http://www.cncda.org/secure/GetFile.aspx?ID=2500
EVNow
Well-Known Member
For Nissan it is probably a combination of various factors
- Their estimate of future Leaf sales
- Do they even want to help out their arch rivals like Toyota & Honda by reducing the price of credits
- Do they look at Tesla as a long term competitor and want to reduce the money they can make off of credits
- Do they need to meet some short term Leaf profitability goals ( they may also do this by internally selling credits to the ICE divisions)
BTW, even though this won't come into picture in Q2, we have to wonder what new EVs coming into the market will do. Specifically BMW i3 or Mitsu Outlander PHEV. My guess is BMW wants to sell enough i3s to cover their entire ZEV needs. If Outlander PHEV is a big hit, as some of us expect it to be, we may be looking at thousands of them sold every month and it could dilute the market.
A question on the counting rule:
In states where Tesla doesn't have a dealer's licence (e.g. Texas), the sale technically occurs in California. Does this sale generate ZEV credits based on the point of sale or point of registration?
In states where Tesla doesn't have a dealer's licence (e.g. Texas), the sale technically occurs in California. Does this sale generate ZEV credits based on the point of sale or point of registration?
I've seem them use the words "delivered for sale in CA or other CARB state", so I think it's only sales to CARB customers. Using dealers the company has no control so it's only fair it stops where they deliver to.
http://www.sec.gov/Archives/edgar/data/1318605/000119312510068933/dex1032.htm has sold and placed into service in ...
stopcrazypp
Well-Known Member
Page 13:
"The vehicle must be delivered for sale and placed in service in a Section 177 state or in California in order to earn the total credit amount."
Page 30:
“Placed in service” means having been sold or leased to an end-user and not to a dealer or other distribution chain entity, and having been individually registered for on-road use by the California DMV.
http://www.arb.ca.gov/msprog/zevprog/zevregs/1962.1_Clean.pdf
Here's the list of the 15 "Section 177" states (Texas is not one of them):
http://transportpolicy.net/index.php?title=US:_Section_177_States
EVNow
Well-Known Member
We have all been assuming Nissan sells 50% of Leafs in CA. Not so anymore. in 2013 it is just 27%. Ofcourse, if we are looking at all the CARB states it is probably a very high %.
Nissan Needs More LEAFs To Catch Up To Demand
Nissan Needs More LEAFs To Catch Up To Demand
erha
Member
Do we know that it will decrease? Are there any good reasons for it to do so, except tesla saying they expect so?
I think it is probable that ZEV revenue could shrink much less than people anticipate. The shareholder letter gives the lower projection based on the assumption that there will be a higher mix of 40 and 60 kwh cars sold. The two events that happened during the quarter not projected were the battery swap presentation and a large number of loaners sold. I'm not sure if this is confirmed, but I think the battery swap presentation bumped the 85 kwh MS into the Type V category earning each car 7 credits. This in combination with the unexpectedly higher rate of loaner cars sold could mean they earned many more credits than expected.
Another important aspect to keep in mind is that Q2 car sales volume in the US (across the big three) was much better than projected. The sales volume bump was especially high with pick-up trucks, which clearly don't generate credits of any kind (ZEV, AT PZEV, or PZEV). This could mean a higher than expected demand for credits from the manufactures.
So this being said, I'm confused because I thought that Tesla already had a surplus of ZEV credits for the rest of 2013. So I thought the limiting reagent for ZEV revenue was the demand from other manufactures. Tesla's Q1 letter, however, reads like the limiting factor would be how many credits they can produce. Maybe someone with deeper understanding can shine light on this.
I believe CapOp presented NJ documents somewhere showing MS already earning highest credits. So, battery swap may not help. More CA sales for sure will.
I believe I read that the ZEV credit calendar ran from September to September. If that is true, then Q2 is the "end of the year" quarter for the automakers. If they are short credits, they need to buy enough to cover this quarter. Since sales were higher than expected, some car makers could be short. Tesla could be making some nice profit this quarter if that is true
I cannot see how this can be the case when Elon has said Q4 will have NO ZEV credits. If the year reset in Sept, he would have expected tons of ZEV selling.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
That is actually how I interpretted it too. Many people mistakenly assumed that he meant that Tesla would get no ZEV credit revenue starting in Q4, but that is not true.
Going back to the Sep to Sep theory, someone else pointed out that it is possible that most manufacturers already estimated how many credits they will need for the year and already bought most everything they needed in previous quarters. Not sure if this makes any logical sense for the companies to act this way, but it is a realistic possibility.
It can make sense if the going rate was cheaper at the beginning of the calendar year. Sort of like buying Christmas supplies after Christmas. Now the manufactures are stuck having to cover at "the seller's rate" because they don't have room to negotiate. The news that sales have exceeded expectations could mean credit shortages that favor Tesla.
IMHO Tesla will always underestimate ZEV and other credits significantly.
One reason is that they don't want to have these considered as a dependable part of their long term margins at each earnings report.
Another is that this is a great opportunity for always beating expectations. The sale of credits remains an Ace in the sleeve of Tesla, and they deliberately strive to underestimate it, so that it only helps on the positive side, and does not reinforce a notion, inside or outside the company, that profits are dependent on these credits.
One reason is that they don't want to have these considered as a dependable part of their long term margins at each earnings report.
Another is that this is a great opportunity for always beating expectations. The sale of credits remains an Ace in the sleeve of Tesla, and they deliberately strive to underestimate it, so that it only helps on the positive side, and does not reinforce a notion, inside or outside the company, that profits are dependent on these credits.
I don't know how Elon's statements could be misinterpreted.
"Yeah, so we’re expecting a decline in the credit revenue for Q2 and then probably fairly significant decline in Q3 and as I said back right now, we’re not expecting anything in Q4."
He's clearly talking about zev credit revenue, and how there will be none in Q4. How can you read anything else in this statement?
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