Let's try to make an concerted effort to understand ZEV credits. I will start with a link and a few comments about California only. Please leave emotions at the door and try to provide links and reason instead. Thanks in advance. Here is what I found http://www.arb.ca.gov/msprog/zevprog/factsheets/zev_tutorial.pdf The document is called tutorial but it is quite long and I fail to find proper definitions. Some help to better understand this would be much appreciated. What I understand: 1. Pages 46, 66 -> Model S gets 5 credits (both 85 kWh and 60 kWh) 2. Page 38 -> For a large car seller (> 60k / y), it needs 12% of the number of cars as credits in 2013, 2014 3. Pages 50, 51 -> Only 0.93% x sales have to be credits from ZEV (other 11.07% may come from hybrids etc.) 4. Pages 93, 94 -> $5000 penalty per credit not produced. Questions: Q1. Page 69 - does that mean that they get a 50% reduction until 2015? Partial conclusions: in the best of worlds, Tesla will get $25k ZEV credit for each Model S sold in California (a bit less for the rare 40 kWh version). But this is a theoretical maximum and as in any market, prices vary. If for example, manufacturers know that by the end of the year more credits than necessary will be produced, they will not pay a high price even in January. Now we have see how many manufacturers sell more than 60k cars / year in the state and what is the total.