It appears selling cars isn’t the only way for electric vehicle manufactures to earn a buck. Thanks to California’s Zero Emission Vehicle program, some manufacturers, such as Tesla, are earning additional cash by selling their unused pollution credits.
The California Air Resources Board (CARB) requires manufacturers that sell more than 10,000 cars in the state of California to gather a number of these Zero Emission Vehicle credits. They can do this by basically selling their own EVs or low emission vehicles, or simply by purchasing the credits from companies like Tesla that have an abundance of them due to their full EV lineups.
The number of credits required by a company varies dramatically depending on sales volumes, market share and the type of vehicles sold. Credits earned through each sale are based on how far the vehicle can travel on a zero-emission fuel source. The Tesla Roadster, for example, which has a zero-emissions driving range of about 200 miles, gets four credits for every unit sold.
Selling unused credits can be big bucks for small start-up companies like Tesla. The underlying value of a credit is around $5,000 though this number should start to fall as more and more companies start to launch more green vehicles.
In Tesla’s IPO filing with the Securities and Exchange Commission, it was revealed that Honda had bought approximately $12.2 million of credits from Tesla. The practice is proving so lucrative that many other EV start-ups are actually including the sale of Zero Emission Vehicle credits in their business plans.
Importantly, without enough credits, companies can face massive fines and possible restrictions on sales in the state of California.
[Automotive News, sub req’d]