Tesla Motors Inc (NASDAQ:TSLA) is set to release its next earnings report on Wednesday, and among the items analysts will be looking at is how much money the company made selling zero-emissions credits. The company has said it intends to reach a 25 percent gross margin without the sale of those credits by the end of the year, so it’s expected that they will show some progress in that area. The credits were a large part of the company’s profits from the first quarter of the year.

Tesla

Rules allowing Tesla to sell the credits might change

One of the greatest concerns about the credits is the fact that they could disappear as a source of income for Tesla Motors Inc (NASDAQ:TSLA). In fact, California is considering a change in the rules that could take effect sooner rather than later—and have an effect on Tesla’s profits. During the first quarter of the year, Tesla Motors Inc (NASDAQ:TSLA) raked in $67.9 million in regulatory credits, which include zero-emission credits. On the operational side, the automaker lost $73.8 million.

Mark Rechtin of Automotive News reports that the California Air Resources Board (CARB) is considering if companies like Tesla Motors Inc (NASDAQ:TSLA) should receive bonus credits under what’s called the fast-refueling rule. It grants those bonus credits to electric vehicles which offer quick-swap battery options. CARB is expected to issue a decision whether those bonus credits will disappear at its meeting in October.

Tesla in California

Tesla filed documents with CARB so that it could begin building cars in California. It then asked the commission to add a rule which would give it bonus credits for including quick-change batteries in its vehicles. Tesla started earning those credits last September, and each of the three Model S trim types received upgrades in the number of credits they were worth. After the upgrades, they earned between four and seven credits, depending on the size of the battery.

Of course it’s worth noting that Tesla Motors Inc (NASDAQ:TSLA) was not required to specify where it sold the $67.9 million worth of credits it did in the first quarter. According to Automotive News, registration numbers from the quarter indicate that the automaker brought in about $19,000 in credits for each Model S sedans it sold in the 14 states which follow the emissions rules set forth by CARB.