TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker or making a Paypal contribution here: paypal.me/SupportTMC

ZEV credits for 2014 +

Discussion in 'TSLA Investor Discussions' started by Nixx, Jul 26, 2013.

  1. Nixx

    Nixx Member

    Joined:
    Nov 28, 2012
    Messages:
    57
    Location:
    Saskatchewan
    Does anyone have the details of ZEV credits in the future?

    Elon said in the last conference call that Q4 will have no ZEV revenue. I assume this is because the market will be saturated at that point?

    I recall something about government ZEV requirements going up in the future. So, in 2014 should we expect a huge bump in ZEV selling? Especially in Q1 since Tesla will have a bunch of excess credits from 2013?

    Elon said in Q1 conference call:

    "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. That’s our – I mean, it might be some ZEV credit revenue in Q4, but we’re not accounting on it. I don’t have – I can’t give anymore precision than that at this time."
     
  2. deonb

    deonb Active Member

    Joined:
    Mar 4, 2013
    Messages:
    3,020
    Location:
    Redmond, WA
    Couldn't have said it better myself.
     
  3. sleepyhead

    sleepyhead Active Member

    Joined:
    May 31, 2013
    Messages:
    1,915
    Location:
    Texas
    I think that Elon is a little too naive (for lack of better word), since he assumed that all of the other auto manufacturers would see Tesla's success and quickly build their own EV's. But it is taking them a lot longer than expected and we might see some credits sell afterall.
     
  4. Nixx

    Nixx Member

    Joined:
    Nov 28, 2012
    Messages:
    57
    Location:
    Saskatchewan
    So, you believe that the other manufacturers will attempt to get their own credits, which is why the Q4 prediction is for zero zev revenue? I was under the impression that the market would simply be saturated (ie, Tesla sold all that they can sell for 2013 and no other manufacturers need them), but I suppose that line of reasoning is a bit off since the competition wouldn't be buying credits in Q3 to satisfy the requirements in Q4.
     
  5. sleepyhead

    sleepyhead Active Member

    Joined:
    May 31, 2013
    Messages:
    1,915
    Location:
    Texas
    I really don't know. All I know is that the ZEV requirement is not going away, so the only logical reason for Tesla to not make any money from Q4 going forward is if all of the other manufacturers meet their own goals in house. Otherwise revenue should continue flowing into Tesla. Unless manufacturers buy their credits upfront for the whole year of course which would mean huge ZEV credit income in Q1 again next year. I think that credit saturation due to new hydrid/EV vehicle popularity will be the culprit though.

    I think that Elon knows that ZEV credits are not something that you can count on and he is overly pessimistic (on purpose) so that ZEV can only surprise us to the upside. He is also trying to let the market know that TSLA does not need to rely on ZEV credits to stay afloat and to prosper. ZEV is just a bonus payment to TSLA to make the stock even more attractive.
     
  6. jaanton

    jaanton Roadster NA #1026

    Joined:
    Jun 25, 2010
    Messages:
    312
    Location:
    Oakland, CA
    I think that ego is the problem with other manufacturers. Consider the Audi R8 e-tron which was going to be built but it didn't have the performance to match Tesla and was cancelled. The idea that building EV's is easy is still widespread. No established manufacturer wants to be shown lacking against Tesla when they do come out with their EVs. Either they go after a different slice of the market, i.e. Leaf, Volt, Prius or really match Tesla. Oddly enough I think GM may be closest with the Cadillac that's coming out. Yet to be seen how well that will work out for them. I don't know enough about the BMW i7 to say about it, I suspect there may be problems.

    Being shown up by Tesla just legitimizes it more. Don't want that do we?

     
  7. vfx

    vfx Well-Known Member

    Joined:
    Aug 18, 2006
    Messages:
    14,792
    Location:
    CA CA
    I too have had the inside chuckle when thinking that Tesla made their cars "too good".

    Try explaining that one to the layman on the street asking about your car.
     
  8. brianman

    brianman Burrito Founder

    Joined:
    Nov 10, 2011
    Messages:
    15,487
    It's an interesting thing for sure.

    (1) On the one hand, it shows that EVs can start at awesome.
    (2) On the other hand, it's apparently intimidating to other manufacturers because they seem unable or unwilling to up their game to match.

    (1) supports the Elon's stated mission, while (2) doesn't
     
  9. nwdiver

    nwdiver Active Member

    Joined:
    Feb 17, 2013
    Messages:
    2,400
    Location:
    United States
    I'm still of the mind that the major ICE makers are effectively stuck between a rock and a hard place. Being they have to choose between contributing to the death of ICE and being left behind in the EV revolution. Elon had to take up the banner of producing a "compelling" EV for a reason. Every EV any ICE manufacturer has produced has been "hobbled" in some way. Look at the i3... there's no reason BMW couldn't give it the same aesthetic appeal of it's 3-series cousin. Their heart still isn't in it like Teslas is. Until that time they will not produce EVs at volume. They don't want ICE to die.
     
  10. vfx

    vfx Well-Known Member

    Joined:
    Aug 18, 2006
    Messages:
    14,792
    Location:
    CA CA
    (all Caps) Thaaank you!
     
  11. Acmykguy

    Acmykguy Member

    Joined:
    Jul 12, 2013
    Messages:
    144
    Location:
    Sycamore, Illinois, United States
    However GM reported great sales numbers which would mean they need more credits not less or any. The more cars sold the greater the number of credits needed. At let that s how I read the law. That said he may have said that assuming flat or same year over year sales. That would mean then less credits in Q2. However sales are up. Thoughts?
     
  12. fjm9898

    fjm9898 Member

    Joined:
    May 8, 2013
    Messages:
    739
    Location:
    Washington State
    GM is also selling the Volt, and in decent numbers, so that helps them massively.
    The real player on this would be Ford and the huge numbers on the F150 would put a demand in for credits.
    ZEV credit money will always fall as everyone is putting out hybrids and EVs. Ford is just behind the ball.
    Yes i think Elon sand bagged ZEV money guidance for the year but it will turn into 0 as time goes on.
     
  13. blakegallagher

    Joined:
    Jul 21, 2012
    Messages:
    935
    Location:
    South Texas

    I dont think it will go to 0 .... at least not for long.
    Cap Op did a great write up ... I think in 2015 or 2016 there is a huge jump in requirements at which point most of the big players will be in big trouble with regard to ZEV credits .... the good news is TSLA will have tens or hundreds of thousands of these credits banked by then :) .... I just hope they dont get the laws changed. Before they were going to get them changed because there were no credits available ... I think in the short term they will try to get them changed because it is "unfair" how much better TSLA is doing then everybody else :)
     
  14. woof

    woof Model S #P683 Blue 85 kWh

    Joined:
    Apr 30, 2009
    Messages:
    1,149
    I'm not convinced BMW's heart isn't in it...they may have gone a bit overboard in fact. With the 'i' sub-brand being the first of the super lightweight carbon fiber/plastic construction, BMW has invested a lot in a new designs and techniques. The 'i8' has the super car aesthetic appeal (with the super car price), but isn't a pure BEV. The 'i3' went too far the other way trying to be inexpensive (and missed) with too small a battery and the odd aero looks.

    So I think their heart IS in it, I just think they over thought it and went too far to the extremes and fouled out to left and then to the right. Perhaps the next iteration will hit it squarely up the middle.

    Imagine the mashup of the i-series light weight construction with a Tesla drive train.
     
  15. blakegallagher

    Joined:
    Jul 21, 2012
    Messages:
    935
    Location:
    South Texas
    "We have also gained conviction that at least $65MM-$70MM of annualized
    Regulatory Credit revenue is sustainable over the medium-term. Essentially
    the non-ZEV credits they received in Q1 ($17MM) should be steady. And,
    although we agree the ZEV Credits will come down significantly, we believe
    that it’s very unlikely that they will completely go away given increasing
    requirements over the next several years
    ."


    Quote from Deutsche Bank Securities Inc.

    They agree with me :)
     
  16. renim

    renim Member

    Joined:
    Apr 6, 2013
    Messages:
    449
    Location:
    Oz
    BMW spent serious money on the i3 but its easy to demonstrate why their heart is not 'in it' and that is by comparing it to the volt.
    seriously, GM designed the volt as best they could, and left the politics for later.
    BMW made a vehicle with a gas tank even smaller than its batteries!
    at least they could offer an i3 with a normal gas tank, and allow the combustion motor to recharge the battery along the highway trips. (like Prius/Energi charge depleting style or GM Volt mountain mode). Right now its just a limp home emergency generator type of thing to satisfy City governments etc.
    (and perhaps if an i3 was driven purely on gasoline, its motorbike motor might have reliability issues)
     
  17. MartinAustin

    MartinAustin Active Member

    Joined:
    Jul 21, 2013
    Messages:
    1,444
    Location:
    Austin, Texas USA
    Tesla are hoping to run their business profitably without ZEV credits, and are aiming all their processes and spending towards that goal. Reason is because... it's the right thing to do. ZEV credits are only generated inside the USA. As Tesla sell more and more cars elsewhere, eventually non-USA production should outnumber domestic production, so it's a really bad idea to be depending on them inside your busines model in any way. And as several people have pointed out, all it takes is for a governmental mindset change to occur and ZEV credits could change significantly.

    I guess us stockholders should wish for no-one else to make electric cars, because then Tesla will get a bunch of ZEV credit money => profits are higher! The "common good" thinking would be wishing for more companies to be making electric cars though, because really, that's ultimately where we need to be.
     
  18. CapitalistOppressor

    CapitalistOppressor Active Member

    Joined:
    Jun 18, 2012
    Messages:
    1,621
    I obviously agree with most of what they said. However, GHG/CAFE revenue should increase substantially now that the Feds have raised the social cost of carbon (which underlies the market for these credits) from ~$21 to ~$36. So we should expect to see a ~70% increase in non-ZEV regulatory revenue, with an implied annual income closer to ~$115 million. That change only took effect a few months ago, so its not clear we will see the results of this in 2013 (we might), but I'd be a bit surprised if we don't see it in 2014.
     

Share This Page