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ZEV credits
- Thread starter Nicu.Mihalache
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They earned an extra ZEV credit for execution battery swap. I would like to know if they get that extra credit retroactively or if they only get the credit for the most recent quarter. The car always had swap capability. They just demonstrated it in this quarter.
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I did see one reference in the thread above that said the Model S got the battery swap extra credit all along in one state, but California wasn't mentioned.
i've always struggled with this whole concept, especially given the fiduciary duty elon and the rest of tesla management have to TSLA shareholders. any others have thoughts on how this desire to simply advance the advent with electric cars fits with the fiduciary duty to shareholders to maximize shareholder value? at the end of the day, i think that elon would hold his head high in saying that the path they are taking (which i would argue has a very long term view) is indeed in the best interests of shareholders.
i guess another way of describing how they might not desire to be the biggest (which is what i believe you are implying brian) and how that could be in the best interests of shareholders is to say that TSLA cannot be all things to all people, and the best way to maximize value to TSLA shareholders is to become the high end player in EVs (as opposed to the mass-market provider).
any other people have thoughts on this?
surfside
Tesla will benefit from network effects as EVs gain market share. As there are more places to charge, more qualified techs, and more public familiarity with EVs, there will also be more potential buyers for Tesla autos. Therefore Tesla shareholders stand to gain from increasing adoption of EVs provided that Tesla can retain a solid market share.
But we wander far from ZEV credits....
But we wander far from ZEV credits....
ModelS8794
Member
Sure, here's a thought. Being a purpose driven business, and not a profit-dirven business, may very well drive higher shareholder returns.
Watch the first 30 seconds from here for a poignant example, For those who don't recognize him, Steve Jurveston is a VC that was an early investor in Tesla.
Contrary to popular belief, management has no inherent "fiduciary responsibility" to shareholders to maximize profits. A company can have any goals it wants, as handed down by the governance structure where the (majority of) shareholders are on top. So if the Board doesn't like Elon's approach here, they instruct him otherwise or fire him. If the shareholders don't like that the Board accepts this, they replace the Board.
Google is not about making money either, by the way. They want to "organize the world's information", or whatever the exact line is.
Does anyone know how the numbers actually work out for ZEV credits? A recent article claimed Tesla had sold 1311.52 credits and generated 7 credits per vehicle, which would only be 188 vehicles' worth of credits, which makes no sense whatsoever, especially in light of the amounts of money involved. I'm curious as to whether Tesla is now building up masses of unused ZEV credits that will continue to be an asset over time as more manufacturers abandon their compliance cars considering that the R&D is WAY more than simply buying the credits.
ChadS
Last tank of gas: March 2009
Numbers are listed HERE; although a lot of details (like how many credits came from what cars) are missing.
Tesla still has a balance of 276 credits.
It looks like the credits from selling the cars (1 to 7 credits; only partial credits for NEVs and such) have been multiplied by a current NMOG emissions requirement of about .043. That's why the number of sold/saved credits is so small.
Tesla still has a balance of 276 credits.
It looks like the credits from selling the cars (1 to 7 credits; only partial credits for NEVs and such) have been multiplied by a current NMOG emissions requirement of about .043. That's why the number of sold/saved credits is so small.
stopcrazypp
Well-Known Member
That always results in confusion. The 1311.52 number is the g/mi NMOG number. To get the credit number in integers you have to divide by the given year's NMOG number (which is 0.035 for 2010+) which results in 37472 credits for Tesla.
http://www.arb.ca.gov/msprog/zevprog/zevcredits/2012zevcredits.htm
I touched on the NMOG in my previous post:
http://www.teslamotorsclub.com/showthread.php/16221-ZEV-credits?p=328112&viewfull=1#post328112
Also for the purposes of calculation, not all Model S got 7 credits.
During before start of production, Executive Order A-374-0006 on 03/26/2012 gave this classification:
Model S3 - Type III (4 credits)
http://www.arb.ca.gov/msprog/onroad/cert/pcldtmdv/2012/tesla_pc_a3740006_0_z_e.pdf
A-374-0006-2 on 10/12/2012:
Model S3 - Type V (7 credits)
http://www.arb.ca.gov/msprog/onroad/cert/pcldtmdv/2012/tesla_pc_a3740006r2_0_z_e.pdf
A-374-0007 on 12/20/2012:
Model S 85kWh - Type V (7 credits)
Model S 60kWh - Type IV (5 credits)
http://www.arb.ca.gov/msprog/onroad/cert/pcldtmdv/2013/tesla_pc_a3740007_0_z_e.pdf
A-374-0007-1 on 04/29/2013 added:
Model S 40kWh - Type III (4 credits)
http://www.arb.ca.gov/msprog/onroad/cert/pcldtmdv/2013/tesla_pc_a3740007r1_0_e_z.pdf
Right now CARB is considering removing battery swapping as a fast refueling method, which means that will disqualify the Model S for any classification above Type III (4 credits):
http://green.autoblog.com/2013/08/06/tesla-zev-credit-changes-will-alter-profit-musk-confident/
Wouldn't this mean Tesla delivered between 6,300 and 8,500 Model S in Q3? Tesla delivered at least 1000 Model S in Europe, but doesn't receive ZEV credits for its sales in Europe. (I think?)
(37,472/5) = 7,494 + 1,000 = 8,494
(37,472/6) = 6,245 + 1,000 = 7,245
(37,472/7) = 5,353 + 1,000 = 6,353
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TonyWilliams
Active Member
Tesla doesn't receive credit in non-CARB states, and only receives a "traveling" provision from non-California CARB states for California credit, which is why virtually all the compliance cars are sold in California first, then MAYBE some other CARB state.
I doubt any places outside the USA are CARB "states".
http://www.arb.ca.gov/msprog/levprog/cleandoc/clean_2009_my_hev_tps_12-09.pdf
2.4 Requirements for Small Volume Manufacturers and Independent Low Volume Manufacturers.
A small volume manufacturer or an independent low volume manufacturer is not required to meet the percentage ZEV requirements. However, a small volume manufacturer or an independent low volume manufacturer may earn and market credits for the ZEVs or PZEVs it produces and delivers for sale in California.
2.7 Changes in Small Volume, Independent Low Volume, and Intermediate Volume Manufacturer Status.
(a) Increases in California Production Volume. In 2009 and subsequent model years, if a small volume manufacturer’s average California production volume exceeds 4,500 units of new PCs, LDTs, and MDVs based on the average number of vehicles produced and delivered for sale for the three previous consecutive model years, or if an independent low volume manufacturer’s average California production volume exceeds 10,000 units of new PCs, LDTs, and MDVs based on the average number of vehicles produced and delivered for sale for the three previous consecutive model years, the manufacturer shall no longer be treated as a small volume, or independent low volume manufacturer, as applicable, and shall comply with the ZEV requirements for intermediate volume manufacturers, as applicable, beginning with the sixth model year after the last of the three consecutive model years.
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Lots of great links in that post. All the credits will be capped at 3 per car maximum starting in the 2018 model year, including hydrogen cars with 300 mile range and "fast refueling" capabilities.
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Zero Emission Vehicle Credits
Why are credit balances in units of grams/mile Non-Methane Organic Gases (g/mile NMOG)?
When credits are earned they are multiplied by the g/mile NMOG fleet average requirement for the appropriate model year. Please note that in the ZEV Regulation g/mi NMOG is used only as index (which decreases over time)—it is the “currency” that credits are stored in and does not represent actual values of g/mi NMOG. The intent of this multiplier was to reward early production of vehicles.
Fleet Average Non-Methane Organic Gas Exhaust Mass Emission
Requirements for Light-duty Vehicle Weight Classes
(50,000 Mile Durability Vehicle Basis)
Model Year - Fleet Average NMOG (grams per mile), All PCs; LDTs
---------- 0-3750 lbs LVW ---- LDTs 3751 lbs. LVW - 8500 lbs. GVW
2001 --------- 0.070 --------------- 0.098
2002 --------- 0.068 --------------- 0.095
2003 --------- 0.062 --------------- 0.093
2004 --------- 0.053 --------------- 0.085
2005 --------- 0.049 --------------- 0.076
2006 --------- 0.046 --------------- 0.062
2007 --------- 0.043 --------------- 0.055
2008 --------- 0.040 --------------- 0.050
2009 --------- 0.038 --------------- 0.047
2010+ ------- 0.035 --------------- 0.043
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I will bet that the difference between 0.035 and 0.043 NMOG multiplier between a passenger car and light duty truck over 3750 pounds is why Toyota used the Rav4 EV.
Toyota will build 900,000 cars for California sales in model years 2012-2014, and Toyota will build 2600 pure ZEVs that are over 3750 pounds or more, so:
(2600 total Rav4 EVs * 3 credits per 100 mile range car) * 0.043 = 335.4 "NMOG" / CARB-ZEV credits for all three years. In the fiscal year ending Sept 30, 2013, Toyota carried a credit balance of 876.084 NMOG-CARB-ZEV.
I have no idea what balance they may have carried over since 1990. The 1007 Rav4 EVs * 3 = 3021 * 0.043 = 129.0 earned NMOG credits for California fiscal year.
(2600 total sold * 3 credit per car) / 900,000 Toyota cars sold in California in three years = 0.867%, and they need 0.79%. It looks like the perfect number, with a bit to spare. But that's not completely accurate, because some of these cars are being sold out of California and they either get zero or maybe one credit per car. It may get closer to the 0.79% threshold than Toyota would like. There is a $5000 penalty per credit not earned with a car, plus they would have to buy the credits on the open market.
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The thing I love about these numbers is that Tesla has a complete lock on the ZEV credit market. Other OEMs only transferred 63.696, with Tesla selling 1311.52. When you control 95% of the volume for sale in any market, you have a lot of discretion about the price you're willing to accept. I'm sure that Tesla's decision to retain 276 g/mi of credits has to do with controlling the timing of ZEV sales to avoid flooding the market and driving the price down.
BTW, in the U.S. there is no general prohibition on the exercise of monopoly power to raise prices, only on use of anti-competitive tactics to acquire monopoly power. (This statement is not true in every industry; for example, in the electric generation business, the Federal Power Act requires that all rates be "just and reasonable", so FERC can go after even non-rate-regulated entities for jacking around power prices.) This US standard is in contrast to the EU, where antitrust enforcement extends to prohibitions on monopoly pricing. Tesla acquired its dominant share of the ZEV market legally, and so it's perfectly free to sell ZEV credits at whatever price it chooses, or to decline to sell ZEV credits.
You might have already mentioned it, but in case not...
My understanding is that S3 is the 85 kWh battery pack, S2 is the 60 kWh battery pack, and S1 (which doesn't exist in production) is the 40 kWh battery pack. These designations are displayed on the crates the packs are delivered in.
Having read all of this, I am more confused than illuminated (even though I recognize the value of the information).
ZEV credits are going to be a huge driver of Q3 profit. The big question is:
Q1: $68 million
Q2: $51 million
Q3: ??????
Elon has previously guided very aggressively that revenues from ZEV credits would be more or less gone by Q4. Without any further info, the best I can think of is to assume Q3 will be half of Q2, i.e. $25 million. Thoughts?
ZEV credits are going to be a huge driver of Q3 profit. The big question is:
Q1: $68 million
Q2: $51 million
Q3: ??????
Elon has previously guided very aggressively that revenues from ZEV credits would be more or less gone by Q4. Without any further info, the best I can think of is to assume Q3 will be half of Q2, i.e. $25 million. Thoughts?
Huge question mark for me.
My understanding is that the ZEV annual period runs from 10/1-9/30 each year and that the highest value for credits is the first quarter (i.e. Q4) and the demand decreases steadily from there, but will then increase again the following year. This would imply to me that Q4 revenue will get a huge ZEV boost.
However, I don't think 2013 guidance accounts for any ZEV revenue for Q3-4, so I am not sure if that is correct.
Here is the new memo of understanding between the 8 states committing to future ZEV credits and ZEV promotion.
http://www.oregon.gov/deq/docs/MOUzev.pdf
http://www.oregon.gov/deq/docs/MOUzev.pdf
Mario Kadastik
Active Member
One thing I didn't quite understand.mwasn't it that the ZEV credits were capped per vendor. Does this expansion also rise the cap? The cap was the rason Tesla expected to get 0 ZEV after Q4, right?
stopcrazypp
Well-Known Member
There is no cap, but there is a minimum requirement. Once an automaker is above that minimum requirement, they don't have to buy any credits, so Tesla might not have buyers left for their ZEV credits if all automakers have filled their quota.
TonyWilliams
Active Member
Plus, someday Tesla will be big enough to be required to earn credits so that they can be allowed to sell all their oil polluting cars that they produce.
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