#3 Tesla and Its Subsidies
Less well-known are the hidden subsidies that flow directly to Tesla, thanks to “zero-emission vehicle” (ZEV) credits. ZEV credits are a mandate dreamed up by the bureaucrats at the California Air Resources Board (CARB), which requires manufacturers to build and dealers to sell an arbitrary number of “zero-emission” vehicles each year. (Note that these vehicles are actually “zero-emission” only in the unlikely event that the electricity used by the car comes from a zero-emission source — which, of course, would also be heavily subsidized.)
Tesla’s Model S generates four credits per unit sold. This means the company can sell $20,000 in ZEV credits to other manufacturers for each Model S sold — a cost borne by purchasers of other cars.
And that amount used to be even higher. Because ZEV law is so arcane, Tesla was able to game the system for additional credits; for example, it was able to generate an additional three credits per vehicle when it demonstrated to CARB that its batteries could theoretically be rapidly swapped. But in fact the battery-swapping pilot program is more than a year late getting started. Nonetheless, those extra credits netted the company an additional $15,000 per car sold — and the company is now trying to get them reinstated.
In 2013, ZEV credits to Tesla totaled $129.8 million — to a company that lost $61.3 million for the year on its actual manufacturing and selling operations.
In 2014, Nevada lavished the company with one of the biggest corporate-welfare packages in history: In exchange for building a battery-manufacturing facility near Reno, Tesla will pay no payroll or property taxes for ten years and no sales taxes for 20 years, and will receive $195 million in cash via “transferable tax credits,” which can be sold to other companies to satisfy their Nevada tax bills. All of this amounts to a $1.3 billion giveaway. |
[The Hill] Tech entrepreneur Elon Musk says he will quit President Trump's business advisory council if the U.S. leaves the Paris climate agreement.