Tesla Motors Inc (NASDAQ:TSLA) is the electric car industry right now. The company offers cars that refuse to compromise on comfort and style in order to deliver an electric experience. There may be more competition than thought coming from other players in the market, however, with Nissan moving into the California Green credits market alongside Tesla Motors Inc (NASDAQ:TSLA).

Tesla motors

Tesla doesn’t make its money off of selling cars, not yet anyway. The company uses a combination of government subsidies and the sale of green tax credits in California in order to make a profit. If the price of those tax credits is reduced, say by increased supply from Nissan, Tesla shareholders could see margins shrinking.

Nissan leaf competition

The Nissan Leaf is not the Tesla Motors Inc. (NASDAQ:TSLA) Model S, but it is much cheaper and its much more available. Very few consumers can actually afford the Model S and a cheaper Tesla is not coming until 2016 at the earliest. Nissan will be able to ride the coat tails of the electric boom created by Tesla, at least until the company competes in the lower end market.

If Nissan manages to improves its electric offerings on range and comfort it might be able to extend its market share to something appreciable in the years before Tesla Motors Inc (NASDAQ:TSLA) releases its next big thing. That means the sale of even more green credits in California which might cause the price of the credits to drop.

Nissan is able to compete with Tesla on almost all sides of its business, and investors need to be aware of the problems that could face Tesla Motors Inc (NASDAQ:TSLA) in the green credits market. Nissan is likely to be the biggest auto maker in the market on day one, and should have an appreciable effect on the market.

Tesla funding problems

The Tesla Motors Inc (NASDAQ:TSLA) master plan involves leveraging government subsidies and tax breaks in order to build a car that can stand on its own two feet. If the price of green credits declines in the coming year, Tesla Motors Inc (NASDAQ:TSLA) may have trouble funding that dream, and the company might have to return to the markets.

There’s no telling what would happen if Tesla Motors Inc (NASDAQ:TSLA) sought additional funding right now. Shares are trading at preposterous levels. Either equity or debt sales could result in an unsteady period for the company.