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I think you're missing the point: a direct subsidy is not the only way that businesses derive revenue from government. The ZEV credits are granted to Tesla by

I think you're missing the point: a direct subsidy is not the only way that businesses derive revenue from government. The ZEV credits are granted to Tesla by California. By regulation, other car manufacturers have effectively been forced to purchase these, giving them value. Put simply: these credits only exist and have value because of government. You can play games with semantics, and political pundits can argue about the merits of programs like California's, but those doing due diligence on Tesla should understand the regulations and how these credits may be valued in the future. For instance, if more auto manufacturers develop electric vehicles, the value of the credits will likely decrease over time, perhaps substantially, while the competition in the EV market will at the same time increase. Will Tesla suffer substantially in this scenario? Maybe or maybe not, but I haven't seen many analyses of the company delve into this, at least around here. As for Tesla's track record: I think one can be truly impressed by what the company has accomplished thus far from a technology perspective without jumping to the premature conclusion that the company's investment has produced a viable long-term business.

revelation 13y ago
Yes of course, but theres a very big difference between a direct subsidy with hard cash (or a loan guarantee) and an open-to-all incentive system, not last in public perception. Your wording simply suggested to me that you thought these were somehow backed with government money. I'm sorry if I misinterpreted here. Musk has said in conference calls that their 25% margin target is not predicated (at all) on credit revenue, but he can't magically make money appear, so that remains to be seen. There is a very worthwhile recap of the regulatory credits systems here: http://www.teslamotorsclub.com/showthread.php/16357-Regulatory-Credits-How-BMW-and-Daimler-Will-Fund-Tesla-s-Conquest-of-the-World http://www.teslamotorsclub.com/showthread.php/16357-Regulato...
- damoncali 13y ago
  It's semantics. The net effect is that the government forces the transfer - It's no different than if they had taxed it and granted it.
  - revelation 13y ago
    Huh? Much everything the government does to markets is incentive based regulation. The whole tax-code might be considered such.
    - damoncali 13y ago
      If it weren't for government force, those credits that netted Tesla millions would never have been purchased. Therefore, they have the same net effect as if the government had taken the money from the buyers and given it to Tesla. That is logically equivalent to a government subsidy for Tesla (or any company in their position).

revelation 13y ago

Yes of course, but theres a very big difference between a direct subsidy with hard cash (or a loan guarantee) and an open-to-all incentive system, not last in public perception. Your wording simply suggested to me that you thought these were somehow backed with government money. I'm sorry if I misinterpreted here. Musk has said in conference calls that their 25% margin target is not predicated (at all) on credit revenue, but he can't magically make money appear, so that remains to be seen. There is a very worthwhile recap of the regulatory credits systems here: http://www.teslamotorsclub.com/showthread.php/16357-Regulatory-Credits-How-BMW-and-Daimler-Will-Fund-Tesla-s-Conquest-of-the-World http://www.teslamotorsclub.com/showthread.php/16357-Regulato...

damoncali 13y ago
It's semantics. The net effect is that the government forces the transfer - It's no different than if they had taxed it and granted it.
- revelation 13y ago
  Huh? Much everything the government does to markets is incentive based regulation. The whole tax-code might be considered such.
  - damoncali 13y ago
    If it weren't for government force, those credits that netted Tesla millions would never have been purchased. Therefore, they have the same net effect as if the government had taken the money from the buyers and given it to Tesla. That is logically equivalent to a government subsidy for Tesla (or any company in their position).