Tesla Motors has earned more than $295 million in state cap and trade emission credits during the past three years for a battery-swapping technology customers weren’t getting, a Watchdog investigation reveals.
In fact, the electric car company, owned in part by billionaire Elon Musk, may have earned credits up to nearly half a billion dollars in value from the 11 states that use the Zero Emission Vehicle barter as part of a green auto industry mandate. California created the program and leads the pack, doling out $173 million in credits to the Silicon Valley-based Tesla.
Tesla claimed the credits between 2012 and mid-2014 — part of a program designed to encourage the carmaker to promote its new battery-swap technology. The program did not require evidence the company actually provided the service.
“What they were getting (the credits) for was the demonstration that they had a workable technology. And they do,” said Dave Clegern, spokesman for the California Air Resources Board. “It was demonstrated (by Telsa). They had it at a Tesla facility in California; we went there and saw it.”
That demonstration was in 2012, the same year Tesla started selling its Model S sedan. For each car Telsa sold, it received four ZEV credits plus an additional three credits for being part of a rapid refueling program. Each credit is worth about $4,000, Watchdog found.
But even a state agency has limited patience. CARB re-evaluated its program and decided to yank the extra three credits last summer when it discovered that Tesla wasn’t providing the technology to its customers.
Even with this change of heart, California state Sen. Ted Gaines has nothing but criticism for an agency he claims gave Tesla an unfair advantage over its competitors for something Tesla didn’t earn.
“This isn’t a science fair. We should be paying for results, not ideas having no practical effect on CARB’s program goals,” said Gaines, who has clashed with CARB over its policies. “This strikes me as a giant giveaway. It’s like we are donating valuable credits for absolutely nothing, and that’s bad policy.”
Gaines accused CARB of creating “a huge market distortion. I’d rather see all of these technologies fighting it out in a marketplace where consumer choice – not a giant subsidy – is driving decisions.”
Tesla did not respond to a request for comment.
CARB started awarding ZEV credits in 1996 as a way to incentivize automakers facing the state’s mandate to sell electric cars. Any company that could prove a “rapid refueling” of 15 minutes or less was awarded an extra three credits. In 2014, Honda – and then Hyundai – introduced hydrogen cars. Hydrogen cars now earn nine ZEV credits because they can refuel faster and travel farther than electric cars.
The credits are typically sold in a marketplace to companies that haven’t met state mandates. Watchdog discovered that Tesla received credits worth more than $11.5 million from New York, $3.5 million from Oregon, $384,000 from Maine and $204,000 from Vermont. Data was not available in the other six states, and Tesla refused Watchdog’s request to disclose the information.
But a Tesla SEC report states that the company sold a total of 37,820 cars nationwide in 2012, 2013 and 2014. That would yield $453.8 million in extra battery-swap credits if all of Tesla’s cars were sold in the 11 eligible states.
In November 2014 – after collecting extra ZEV credits for nearly three years – Tesla built its first battery-swap station in Coalinga, California, a dusty spot on the map halfway between Los Angeles and San Francisco. It’s here, along the West Coast’s Interstate 5, that Harris Cattle Ranch – one of the nation’s largest suppliers of beef – has set up a rest stop for weary travelers with a hotel, restaurant, gas station, Tesla Supercharging stations and Tesla’s battery-swap facility.
But it wasn’t long before Tesla forum bloggers, magazines and newspapers began reporting that there was no sign of life at the battery-swap station. Soon, CARB figured it out as well.
The policy of extra ZEV credits “was changed on staff recommendation. We wanted to see proof that someone was actually using the technology,” said CARB spokesman Clegern. “We keep up with what (technology) they are actually using.”
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