this post was submitted on 30 Jan 2025
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Yes you are understanding that correctly. For producing EVs, they get credits from the federal government. I don't know the exchange rate -- e.g., how many EVs per credit.
Then, Tesla turns around and sells these credits to buyers, usually other companies. Companies buy these credits from Tesla to comply with regulations requiring certain environmental outcomes, and credits count towards these outcomes.
In theory this type of program incentivizes and rewards companies who invest in the technology(is) tied to these credits, in this case EVs. In practice it's a way for other companies to comply with renewables regulations without actually doing anything to meaningfully reduce their impact and footprint (other than buying credits)
So it's a government subsidy at no cost to the government, funded instead by other companies? That's actually quite a neat idea.
I guess the issues arise if Tesla just pockets the subsidy without passing on the savings to savings to people buying EVs
This report shows that they do just that: without the emissions credit system they would operate at a loss. In other words: they sell cars for cheaper than the cost of manufacturing. Coincidentally the same thing the US and EU claims China is doing, as motivation for mercantillist tarrifs.
Why is this an issue. They have their incentive to keep building and selling. As long as they’re building and selling, it doesn’t matter to the rest of us what their profit is.
If they’re building make excess profit, that’s just more opportunity for legacy manufacturers to be competitive. Capitalism 101
"Issue" was probably the wrong word "potential for controversy" would have been more appropriate. It's potentially controversial because if the profits exceed the subsidies you're effectively just giving money to shareholders.
No. This is entirely the opposite of capitalism. Under capitalism there are no subsidies. If a business isn't profitable then it fails. Simple.
What we have is an abomination of capitalism and corporate socialism. That's the controversy I referred to above. Where governments funnel money to enrich corporations and the select few rather than helping improve population they are charged with governing.
Right, we want EVs, Tesla gets a little boost from legacy manufacturers, so now we have a market, EVs are available. GM gets a break do it has time to design EVs, but are really annoyed at funding that bastard Elon, so have incentive to get their shit together. EVs are built a little sooner m, no one goes out of business (yet), we all win