Tesla Motors Inc Wages Another Battle With Automakers In California

Tesla Motors Inc Wages Another Battle With Automakers In California
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Tesla Motors is all set to defend the mandate in California which says that around 15% of the cars sold in the state should be zero-emission vehicles by 2025, says a report from Automotive News. Though the mandate is good for Tesla, for other automakers, it may not be easy to comply with the requirement.

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Mandate already “weak”

Other automakers are requesting significant changes in the rule, including the permission to comply using plug-in hybrids instead of pure electric vehicles and fuel-cell cars. Meanwhile, the Palo Alto-based car manufacturer wants to ensure that auto dealers such as Fiat Chrysler, Ford, General Motors, Honda, Nissan and Toyota do not get their demands met. These six car companies should either ship a specific number of ZEVs or buy “credits” from companies such as Tesla to compensate for their shortfalls.

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Terming the mandate as “weak,” Tesla Vice President of Business development Diramund O’Connell said pure-play electric cars such as Tesla were never imagined to be a successful entity, but then the company nailed it. “The inconvenient truth is that our success has revealed the weakness of the mandate,” O’Connell said. Tesla is eying California as one of the major regions where it can sell its Model S and other upcoming cars.

Major automakers have asked regulators to amend the mandate with a new formula which would be based on miles traveled on electric power, or e-miles, allowing them to sell more plug-in hybrids. However, Tesla is not ready to give in without a fight, which is why it has defended the rules challenging rivals publicly, going against the usual decorum of lobbying, in which companies talk about their interest and not criticizing the competition in public.

Tesla takes the fight public

Tesla made its stance clear on May 23 during a hearing of the California Air Resources Board in the state capitol. At the hearing, Tesla opposed the leniency plea from automakers including Mazda, Subaru and Jaguar-Land Rover, which argued that their size restricts them from coming up with pure EVs.

Although Tesla could benefit from the stricter mandate as it reported $152 million in revenue in 2014 from sales of ZEV credits, which is 5% of its total revenue, CEO Elon Musk, in May, termed it as not a “big deal.” O’Connell told Automotive News that credit revenue was once a hot item for Tesla, but not anymore.


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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@wordpress-785388-2679526.cloudwaysapps.com
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  1. Basic research still beats subsidies hands down, dollar for dollar, by a couple orders of magnitude. We need green energy to work without subsidies at some point. Might as well start now and get the market used to it. I’m confident green will win in the long term, because the physics and economics curve is better. But we need the research first.

    And again, imposing costs on people does not create jobs, or rather it always costs more jobs than it creates, through the mechanism of suppressed demand, and less product per dollar spent.

    Basically if I break the windows in your house, that creates a job for the window makers. But that isn’t economic growth, even if the window maker has a job. It’s the same principle.

  2. Also, damn….. I did not realize that Tesla was on this list. This is ridiculous. All of the other companies have at least paid some taxes on profit. Telsa has not paid a thing. This is even worse than I originally thought. He is both a ridiculous egoist and a thief.

  3. None of this matters. Who is a bigger thief does not matter to me. I do not manipulation of the tax code at all. But I would like to know what you are talking about as far as the 15B in subsidies that have gone to the fossil fuel industry. I know the depletion credit is a handout. What is the rest?

  4. Addressing your “milking the government” accusation, in all fairness we should consider the bigger picture. Perspective is important. Over the course of the last 15 years, the federal government has distributed over $68 billion in grants and special tax credits to businesses, with two thirds of that transferred to large corporations. Six companies have received $1 billion or more, while 21 have received $500 million or more.

    Boeing $13.4B
    Intel $5.9B
    Alcoa $5.6B
    GM $3.7B
    Ford $2.5B
    Siempra Energy $2.2B
    Chrysler $2.1B
    Royal Dutch Shell $2.1B
    Nike $2.0B
    Nissan $1.8B
    Cerner $1.8B
    Cheniere Energy $1.7B
    Dow Chemical $1.4B
    Tesla $1.3B
    IBM $1.1B
    Toyota $1.1B

    In 2006 when gasoline prices began to shoot up, the government gave $15 billion in subsidies to the oil, gas, and coal industries. This has to be considered corporate welfare because no goods or services are directly returned to the government in exchange for these expenditures. But hey, lets talk about Tesla’s loan (which, by the way, was paid back early with interest).

  5. He is God and soon all NADA dealers and their salesmen will bow before him. By the way, the amount of “milk” Elon has received is far less than the amounts received by Fossil fuel industry, Boeing, GM, Ford so by your logic (and to avoid being a hypocrite), you believe we should have disdain for them as well.

  6. I’d like to use this opportunity to let the National Automobile Dealers Association (NADA’s thieving dealers and their loser salesmen), know how I feel about the unfortunate situation they and their manufacturers find themselves in. BWAAHAHAHAHAHAHHAHAHA!

  7. So stupid. Would it not be a better idea to mandate that 20% have to be hybrid or pure electric . Musk pisses me off. He is just milking the government tit (and the gullible investing public) to try to force HIS vision. Like he is some minor god.

  8. I think the state of California should force Tesla to unionize. Personally, I’m a right to work guy but since California is the epicenter of everything far left, it should do it’s part.

  9. Automakers cried for decade whenever there is a new CAFE standard that there is no way that they could meet and then they met the stardards on schedule everytime when they had to. It’s a trick every school kid knows how to play. Try talk out the assignmets first before you actually need to do them.

  10. Need to go electric eventually – fossil fuels are not infinite and we will need supply left over for fertilizers to support food needs. Stop putting it off. Sooner the better

  11. Of course we can force cost on people and get them to change the buying patterns creating jobs towards any new desired buying pattern. Norway has a very aggressive policy adding tax on gas powered cars and gas while offering benefits to greener cars. In Norway you can buy three Model S cars for one BMW M5 (in the USA these car cost about the same). The effect is that in Norway the PEV/BEV penetration beats the USA hugely. More than 23% of all new cars (Q1 2015) sold are already now PEV/BEV. That’s more than 20 TIMES than in the USA! Thus the green energy revolution is already a reality just not executing equally fast everywhere.
    Also, Norway was the first country in the world to have electric cars topping the new car sales of all cars monthly ranking. The Tesla Model S has been the top selling new car three times, twice in 2013, first in September and again in December, and one more time in March 2014. In March 2014 the Tesla Model S also broke the 28 year-old record for monthly sales of a single model regardless of its power source.
    Obviously Norway imports their EV cars and the jobs earned are about the charging network construction incl. charging stations, EV service centers and EV dealerships. The jobs lost are in the traditional car business and gas stations.
    The two countries on this planet with the most expensive gas (due to taxes) are Norway and Holland and these two countries are also the ones having biggest sales of PEV/BEV cars. Thus clearly governments can make a huge difference. Unfortunately the USA public is against taxation and we end up with lowest cost on cars and gas among all western countries while driving our economy through printing money. It seems that adding taxes on gas powered cars and gas is highly overdue in the USA.

    California is known for strict environmental policies relative to other states and that also affects both the buying patters and the culture of research and engineering. California is the #1 place for green patents e.g. in areas like Silicon Valley, for example:

    My guess is that a decade from now, people (especially younger buyers) will buy their car from mall stores like the current Apple or Tesla Motors stores rather than the old-style car dealerships with annoying harassing dealers. And the brands succeeding are the ones who can execute their business through this coming market disruption (read the book “The Innovator’s Dilemma”). There is a moment coming where EV cars suddenly will become the consumer preference not only at the Model S price point but at much lower price point. That is when true market disruption will occur and where a car company will fail if it can’t reinvent itself (the iPhone effect that killed market dominant Nokia in record time).

    In terms of spending on basic research, obviously the issue is that basic research is far more risky as investment. A very high percentage of basic energy research fails and the money needed can be rather huge. Unfortunately the USA has a stronger tradition for spending tax Dollars on blowing up bombs in poor countries than doing basic research. The most interesting green energy project is ITER (fusion energy) in Europe. It involves some US funding, but it’s not even a project on US soil. Why doesn’t our president make a project of creating fusion energy within a decade similar to the Kennedy Apollo project announcement? I would love to see my tax Dollars spent on such USA advanced research driving lots of future industries and jobs. Now it seems Europe is running away with it.

  12. I suggest you read the ‘broken windows’ theory of economics. IE, it’s bunk. You can’t force cost on people and create jobs in the process. Regulatory cost always costs a non-zero amount of labor by depreciating investments that already exist in favor of different investments.

    You can’t mandate 15% of the cars in a state to be something. That means 15% of the people need to actually buy them. That will ONLY happen if the technology is in place, and I don’t the other car companies are up to the task of doing that kind of innovative engineering.

    Want to create a green energy revolution? Take all the money currently spent on subsidies and enforcement and put it into basic research. … the place that innovation can actually happen. Our problem is an engineering one, not a political one. And green energy will only be succesful, if it is succesful and competative with no subsidies.

  13. Guest. Actually the government is forcing the auto makers to come out with more efficient vehicles. The people are buying them because they want to.

  14. Aggressive goals favoring next generation greener car technologies will help breed more of tomorrow’s jobs and tomorrow’s innovative leading green solutions, that the world ultimately will want.

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