Tesla posts a hefty loss

Via Canada Free Press:

  "Tesla Motors, an electric car maker backed by the U.S. Department of Energy (DOE), posted a $49.8 million loss in the first quarter of 2014. This loss compared to a profit of $11.2 million in the same period a year earlier despite selling more cars.(i) Last year’s profit was not due to electric car sales, but to sales of California zero-emission-vehicle environmental credits to other auto manufacturers. Those lucrative credits have declined and tight battery supply has made it harder to produce the carmaker’s electric vehicles."

The family and I test drove a Tesla sedan last fall, and it was an interesting experience.  I packed them all in, and the car drove very well with that load.  Acceleration was magnificent, since there were no big metal engine parts to spool up.  It had a gigantic touch screen on the center of the dash board, which while handy, would be a temptation while driving and thus probably a hazard.  It was as silent as the grave while driving - the electric motor made no engine noise.

The subsidies from the government came with all sorts of conditions, the most annoying to me being that the money didn't come in the form of a nice check, but rather a credit on your taxes in the next year.  Meanwhile, you must pay or finance the entire price of the car.  An irritating delay, and thus not that attractive, especially since at 100,000 + per car, most people are going to finance.

My take: It is an expensive Buick.  It will seem to save you money on gas, but not really after you pay the huge premium for the the privilege of purchasing a cool electric car. Keep in mind that at it's price, your registration and insurance costs are also going to be much higher than a reliable but very conventional Buick.

But, the real story is that Tesla makes most of it's money, when it is making a "profit," from selling government credits back to other car makers.


Last year, Tesla Motors paid back its $465 million loan to the Department of Energy, nine years before its full loan was due.  Tesla was awarded the loan, requiring matching private capital obtained through public offerings, in 2010 as part of the Advanced Technology Vehicle Manufacturing program. This program was signed into law by President George W. Bush in 2008, but the awards were made by the Obama administration. While other electric vehicle and battery companies under this program went bankrupt, Tesla was able to survive. One major reason is that Tesla was able to amass environmental credits from California valued at $250 million for 2013.

Tesla has been able to garner millions from California’s zero emission vehicle standard. California’s Air Resources Board has mandated that zero emission vehicles (cars with zero emissions of tailpipe pollutants) comprise 15 percent of new-car sales by 2025. Those vehicles comprise less than 1 percent of new car sales in California today.  Companies that exceed California’s milestones towards its zero emission vehicle goal receive credits that are worth cash when sold to auto manufacturers that do not meet the state’s requirements.  Essentially, California has mandated the sale of electric cars, and enforces the mandate by requiring that companies that do not sell enough electric cars pay into a fund that subsidizes those companies that do.

During the first quarter of 2013, Tesla received about $68 million (12 percent of revenue) from the sale of zero vehicle emission credits. Note that without the sale of these credits, the company would have lost over $50 million during the first quarter of 2013.  According to a Wall Street analyst, Tesla earned as much as $250 million in 2013 on their sale. Translated into dollars per vehicle, Tesla made as much as $35,000 extra on each sale of its luxury Model S electric sports sedan through state environmental credits that it sold to other auto manufacturers that need to buy credits to satisfy California regulations. Adding in the Federal tax credit of $7,500 per vehicle and a state rebate of $2,500 per vehicle, the state and federal incentives totaled as much as $45,000 per vehicle that Tesla sold for as much as $100,000, depending on the model and options.[vi]  Essentially, regular taxpayers who buy typical cars, trucks and minivans are heavily subsidizing an additional car for a clientele whose average income is just under $300,000 per year.

One more tax bourn by the already heavily taxed productive class, imposed to support this silly environmental fetish of the ruling elite.  What a colossal waste of money and trust.