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Half of Teslas Q2 Profit Came from Your Taxes

25 points by ChumpGPT 2y ago

kwertyoowiyop 2y ago
And gasoline price without subsidies and tax breaks?
- dboreham 2y ago
  And the whole boiling the planet thing, on someone else's dime.
- bena 2y ago
  Wouldn't it be more accurate to compare against subsidies and tax breaks to other car manufacturers?
daghamm 2y ago
Are there any statistics on how much each automotive company has received? I assume Tesla is not the only one, but probably a very big recipient?
- deleted 2y ago
  [deleted]
- bena 2y ago
  They do get the bulk of them. And they sell them to other car manufacturers. To kind of make it simple: the government has a target for emissions for an automaker. Your cars can only release N parts per million (ppm) of carbon or other gasses into the atmosphere. In order to incentivize manufacturers to meet these goals, the government will essentially pay you to come under. There are likely also penalties for exceeding the target by so much. And you can then use the penalties to pay the credits. Blah, blah, blah. Ford, Toyota, Honda, etc are all over by some amount. Tesla on the other hand is way under. So since the entire automotive industry is under the target, and that's ultimately what we want, the government allows these credits to be bought and sold. So the manufacturers who are over buy credits from companies who are under. And since Teslas produce a negligible amount of emissions (if any, but I'll hedge for safety's sake), they have a lot of credits. So much, that it's apparently enough to be half of their profit for the quarter even though sales are not great at the moment. Tesla cannot continue this indefinitely. As they sell fewer cars, they will get fewer credits. Combine that with the other manufacturers making their own EVs. If Ford is under target because sales of the MustangE and Lightning F150 (that's what they're called, right?) brings them under target, then they don't even need to buy Tesla's credits. So Tesla is going to be hit twice by every other car manufacturer. Every Chevy Bolt purchased is another Tesla not being bought. And every Chevy Bolt bought is another credit Chevy doesn't need to buy. And that's kind of the best case scenario.
  - ryandrake 2y ago
    Thank you for this post. I never really grokked carbon credits and trading them until reading this. You explained it in a very understandable way! My first (probably naive) reaction is: Doesn't this set up a poor incentive? Why should the "dirty" manufacturers change their ways if they can just buy their way out of trouble and not seriously invest in EVs? Who sets the price on these credits? If they're cheap enough, the gas car manufacturers can just buy them forever?
    - bena 2y ago
      That really all depends on exactly how the program is implemented. But if Tesla goes under, there would be no one to buy those credits from. Manufacturers would have to either find another source or find ways to come under the target.
adolph 2y ago
This news is baked in a whole lot of irony considering Tesla CEO Elon Musk has long been in favor of eliminating government subsidies that encourage the development of EVs. . . I’m missing the irony; perhaps it is participating in a program with which one disagrees? If anything, Tesla is the best domestic automaker to operate without consumer subsidies. On the other hand, I understand that Tesla makes a material sum from selling non-pollution credits to other manufacturers, which aren’t a direct subsidy but act similarly.
- from-nibly 2y ago
  All of elon musks companies depend on government subsidies in one way or another. He isnt against it. Its the only way he knows how to run a company.
autokad 2y ago
this headline is false, from the article: > A truly wild amount of Tesla’s second-quarter profit – over half of it, in fact – was attributed to the sale of these credits to rival automakers that use them to meet emissions rules, the Wall Street Journal reports. Sure, the money – which is pure profit – isn’t technically a subsidy, but Tesla is still very much benefitting from government programs that are aimed at aiding the development of electric vehicles. correct me if I am wrong, but there is a difference between tax payer money going for something then a company purchasing credits from another company to meet regulatory standards
- bwanab 2y ago
  You are correct. This headline seems to be purposefully obfuscating the difference. That Tesla is benefitting from these programs is more an indictment of the companies that are paying the money than of Tesla itself and that's where the opprobrium should go.
  - imglorp 2y ago
    This might be difficult to quantify but it feels like Jalopnik has always had a negative editorial slant around EVs. I suspect this is all the legacy ad dollars at work. Does anyone else feel this?
asdasdsddd 2y ago
Glad to see the media demonize a supposed contradiction while traditional manufacturers had billions in liquidity only to come out with half assed EVs with no grander vision of charging.
- toomuchtodo 2y ago
  Clickbait.
7e 2y ago
Tesla sells these credits in order to stall the development of their competitors’ EV programs. When you buy a Tesla you’re just bringing into existence a gas guzzling, planet destroying SUV somewhere else in the world. No net environmental benefit at all to buying Tesla. In fact, it’s a net lose because Tesla is so inefficient at building cars (many employees == much CO2) and the battery materials are an environmental disaster to extract. I wish Tesla would not engage in this dirty practice.

25 points by ChumpGPT 2y ago

kwertyoowiyop 2y ago

And gasoline price without subsidies and tax breaks?

dboreham 2y ago
And the whole boiling the planet thing, on someone else's dime.
bena 2y ago
Wouldn't it be more accurate to compare against subsidies and tax breaks to other car manufacturers?

daghamm 2y ago

Are there any statistics on how much each automotive company has received? I assume Tesla is not the only one, but probably a very big recipient?

deleted 2y ago
[deleted]
bena 2y ago
They do get the bulk of them. And they sell them to other car manufacturers. To kind of make it simple: the government has a target for emissions for an automaker. Your cars can only release N parts per million (ppm) of carbon or other gasses into the atmosphere. In order to incentivize manufacturers to meet these goals, the government will essentially pay you to come under. There are likely also penalties for exceeding the target by so much. And you can then use the penalties to pay the credits. Blah, blah, blah. Ford, Toyota, Honda, etc are all over by some amount. Tesla on the other hand is way under. So since the entire automotive industry is under the target, and that's ultimately what we want, the government allows these credits to be bought and sold. So the manufacturers who are over buy credits from companies who are under. And since Teslas produce a negligible amount of emissions (if any, but I'll hedge for safety's sake), they have a lot of credits. So much, that it's apparently enough to be half of their profit for the quarter even though sales are not great at the moment. Tesla cannot continue this indefinitely. As they sell fewer cars, they will get fewer credits. Combine that with the other manufacturers making their own EVs. If Ford is under target because sales of the MustangE and Lightning F150 (that's what they're called, right?) brings them under target, then they don't even need to buy Tesla's credits. So Tesla is going to be hit twice by every other car manufacturer. Every Chevy Bolt purchased is another Tesla not being bought. And every Chevy Bolt bought is another credit Chevy doesn't need to buy. And that's kind of the best case scenario.
- ryandrake 2y ago
  Thank you for this post. I never really grokked carbon credits and trading them until reading this. You explained it in a very understandable way! My first (probably naive) reaction is: Doesn't this set up a poor incentive? Why should the "dirty" manufacturers change their ways if they can just buy their way out of trouble and not seriously invest in EVs? Who sets the price on these credits? If they're cheap enough, the gas car manufacturers can just buy them forever?
  - bena 2y ago
    That really all depends on exactly how the program is implemented. But if Tesla goes under, there would be no one to buy those credits from. Manufacturers would have to either find another source or find ways to come under the target.

adolph 2y ago

This news is baked in a whole lot of irony considering Tesla CEO Elon Musk has long been in favor of eliminating government subsidies that encourage the development of EVs. . . I’m missing the irony; perhaps it is participating in a program with which one disagrees? If anything, Tesla is the best domestic automaker to operate without consumer subsidies. On the other hand, I understand that Tesla makes a material sum from selling non-pollution credits to other manufacturers, which aren’t a direct subsidy but act similarly.

from-nibly 2y ago
All of elon musks companies depend on government subsidies in one way or another. He isnt against it. Its the only way he knows how to run a company.

autokad 2y ago

this headline is false, from the article: > A truly wild amount of Tesla’s second-quarter profit – over half of it, in fact – was attributed to the sale of these credits to rival automakers that use them to meet emissions rules, the Wall Street Journal reports. Sure, the money – which is pure profit – isn’t technically a subsidy, but Tesla is still very much benefitting from government programs that are aimed at aiding the development of electric vehicles. correct me if I am wrong, but there is a difference between tax payer money going for something then a company purchasing credits from another company to meet regulatory standards

bwanab 2y ago
You are correct. This headline seems to be purposefully obfuscating the difference. That Tesla is benefitting from these programs is more an indictment of the companies that are paying the money than of Tesla itself and that's where the opprobrium should go.
- imglorp 2y ago
  This might be difficult to quantify but it feels like Jalopnik has always had a negative editorial slant around EVs. I suspect this is all the legacy ad dollars at work. Does anyone else feel this?

asdasdsddd 2y ago

Glad to see the media demonize a supposed contradiction while traditional manufacturers had billions in liquidity only to come out with half assed EVs with no grander vision of charging.

toomuchtodo 2y ago
Clickbait.

7e 2y ago

Tesla sells these credits in order to stall the development of their competitors’ EV programs. When you buy a Tesla you’re just bringing into existence a gas guzzling, planet destroying SUV somewhere else in the world. No net environmental benefit at all to buying Tesla. In fact, it’s a net lose because Tesla is so inefficient at building cars (many employees == much CO2) and the battery materials are an environmental disaster to extract. I wish Tesla would not engage in this dirty practice.