Tesla might actually be earning a fair chunk of change on the Model S sedan, most versions of which go out the door for close to $100K, but that’s not necessarily where the money is:
When Tesla Motors reports its first-ever profit Wednesday, much of the money will come courtesy of the state of California.
In its zeal to push electric cars into the market, the state has created a system in which Tesla can make as much as $35,000 extra on each sale of its luxury Model S electric sports sedans. That’s because the Palo Alto company qualifies for coveted state environmental credits that it can turn into cash.
These Zero Emission Vehicle credits could put as much as $250 million in Tesla’s coffers this year, according to one Wall Street analyst, and they are a key reason the 10-year-old automaker has survived this long. Tesla gets to sell the credits to other automakers that need them to satisfy tough California regulations.
Remember when they said General Motors was basically a health-care outfit that sold cars on the side?
This is, however, California policy. They want electrics, they don’t care how they get them, and the auto industry simply can’t afford to blow off fifteen percent of the US car market at one fell swoop. And you have to figure Sacramento will get plenty of that quarter-billion back.
Update: In its 1Q report, Tesla says 12% of its revenue came from credits, about $68 million.