Tesla will Sell 'Green Credits' to Volkswagen in China (reuters.com) 37
Reuters reports:
A Volkswagen joint venture in China has agreed to buy green car credits from Tesla to help meet local environmental rules
The deal, the first of its kind to be reported between the two companies in China, highlights the scale of the task Volkswagen faces in transforming its huge petrol carmaking business into a leader in electric vehicles to rival Tesla. Shares in Volkswagen, the world's second-biggest automaker, have soared this year as investors warm to its plans to go electric. But in China, and elsewhere, the German company is still heavily reliant on traditional combustion-engine vehicles.
China, the world's biggest auto market where over 25 million vehicles were sold last year, runs a credit system that encourages automakers to work towards a cleaner future by, for example, improving fuel efficiency or making more electric cars. Manufacturers are awarded green credits that can be offset against negative credits for producing more polluting vehicles.
The VW-venture's gas-powered SUVs and sedans "have so far proved far more popular in China than their electric vehicles," Reuters notes.
MarketWatch adds that "A deal to buy credits from Tesla at a premium represents Volkswagen buoying the margins of one of its fiercest rivals in the electric-vehicle space." According to Swiss bank UBS, Tesla and Volkswagen will be the two global leaders in electric-vehicle sales within the next two years. The analysts expect that Volkswagen will catch up with Tesla in terms of total volume of cars sold as soon as next year, when the two companies could deliver around 1.2 million cars each.
The deal, the first of its kind to be reported between the two companies in China, highlights the scale of the task Volkswagen faces in transforming its huge petrol carmaking business into a leader in electric vehicles to rival Tesla. Shares in Volkswagen, the world's second-biggest automaker, have soared this year as investors warm to its plans to go electric. But in China, and elsewhere, the German company is still heavily reliant on traditional combustion-engine vehicles.
China, the world's biggest auto market where over 25 million vehicles were sold last year, runs a credit system that encourages automakers to work towards a cleaner future by, for example, improving fuel efficiency or making more electric cars. Manufacturers are awarded green credits that can be offset against negative credits for producing more polluting vehicles.
The VW-venture's gas-powered SUVs and sedans "have so far proved far more popular in China than their electric vehicles," Reuters notes.
MarketWatch adds that "A deal to buy credits from Tesla at a premium represents Volkswagen buoying the margins of one of its fiercest rivals in the electric-vehicle space." According to Swiss bank UBS, Tesla and Volkswagen will be the two global leaders in electric-vehicle sales within the next two years. The analysts expect that Volkswagen will catch up with Tesla in terms of total volume of cars sold as soon as next year, when the two companies could deliver around 1.2 million cars each.
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Pickup trucks are being sold north of $40K in the US, and with factory options are above $60K. Maybe this is a stereotype, but I don't think so-called progressives are buying trucks or jacking up their price.
In America, some of the actual socialists (not progressives) want to subsidize cars for the poor and greatly expand mass transit. Can you imagine giving poor people free shit? That's crazy. I mean we give Tesla free stuff but their a BUSINESS and deserve free stuff.
Re: Rob from the poor to give to the rich (Score:1)
Actual socialists want to give "the poor" free bus passes and free concrete boxes in the sky. It's a movement whose center of mass is in the dense East Coast cities, where it took root after being imported from dense European cities, so the provincialism is at least understandable.
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Decommodification is one of the two actual main tenets of socialism, so most would hold the position that we should apply that to both housing and transportation across the country not just the cities.
The argument isn't that Tesla deserves it (Score:2)
Now, mind you, trickle down never really works, even in tech. Take computers. Rich early adopters didn't drive the advancements, businesses did. Look at old crazy expensive computers and you'll find they were all sold to businesses. Yeah, the occasional wealthy hobbyist had one, but that's not what created the market.
There's a few exceptions to the business rule, but it still wasn't trickle down. LCDs took over
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Trickle up works. That's what consumerism does. The more people you have working and buying things, the more times a dollar multiplies as it passed through the economy. Where our system gets it wrong is we'd rather have one person working two jobs instead of two people. And a person too busy working isn't consuming and the economy stalls. To patch it up and keep your economy moving you need to start handing out free money to people without jobs so they can consume. Now you have one guy working twice as hard
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To patch it up and keep your economy moving you need to start handing out free money to people without jobs so they can consume. Now you have one guy working twice as hard so that another guy spending it for him. That's obviously not fair.
That's why you hand the same amount of free money out to people with jobs, too. Then they can consume more. The only people who lose anything in this model are the ultra-wealthy, who won't notice anyway because the money is literally coming out of the part they can't spend.
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You hand someone who works all the time some free money, they'll do something stupid with it like save it.
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Unfortunately, voodoo economics has been the official economic policy of one of America's political parties since 1979. The wealth has not actually "tricked down," Productivity has gone up by 70 percent, while wages have gone up 12 percent. https://www.epi.org/productivi... [epi.org] The tax policies behind this have fueled much of this robbing of the poor to enrich corporate shareholders. There were 55 companies which paid nothing in taxes last year. https://thehill.com/policy/fin... [thehill.com] While theoretically, anyone wit
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VW is free to create their own EVs in order to prevent having to pay for the carbon credits. It does, however, require building an EV that people actually want to buy.
If VW doesn't like the costs associated with manufacturing vehicles that spew poisons into the atmosphere, they can do a better job of manufacturing vehicles that don't.
Oh, the shame! (Score:2)
The fraudster who wants to become e-number one.
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Yeah, he's off by a couple orders of magnitude. Driving a Tesla 3 for 1900 miles would cost about $116 at superchargers - just use your favorite calculator to do a road trip from Cincinnati to Las Vegas (1950 mi). This figure will vary based on hills, speed driven, amount of stuff in the car (mass), etc.
Tesla has to make money somehow (Score:5, Informative)
As been said before, Tesla does not make money selling cars. It makes money selling these green credits [fool.com].
Tesla (NASDAQ:TSLA) is a car company worth over $800 billion that has never turned a profit selling cars. Despite a cult following and intense brand loyalty, Tesla has been unable to wring any profits out of the half a million cars it now sells annually.
To be clear, Tesla did report a profit for 2020, under generally accepted accounting principles (GAAP), marking the company's first full year of profitability. But that profit did not come from the core business of manufacturing cars. Tesla booked a whopping $1.58 billion of revenue from selling regulatory credits last year, more than the previous three years combined. Tesla's net income of $721 million in 2020 turns into a substantial loss if those regulatory credit sales are backed out.
Those credits are going away and even Tesla executives have concerns about profitability [mercurynews.com].
“These guys are losing money selling cars. They’re making money selling credits. And the credits are going away,” said Gordon Johnson of GLJ Research and one of the biggest bears on Tesla shares.
Tesla top executives concede the company can’t count on that source of cash continuing.
“This is always an area that’s extremely difficult for us to forecast,” said Tesla’s Chief Financial Officer Zachary Kirkhorn. “In the long term, regulatory credit sales will not be a material part of the business, and we don’t plan the business around that. It’s possible that for a handful of additional quarters, it remains strong. It’s also possible that it’s not.”
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Cap and Trade in general makes perfect sense, except it's likely to be ruined by dodgy accounting. But applying it sector-by-sector (in this case, car manufacturing) greatly simplifies it. Raising the quota for EVs every year makes sense and will work, and
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Except that emissions aren't being reduced - the purchaser is able to circumvent the emissions requirements by buying the credits. They're following the cynical math that its cheaper to buy credits than reduce emissions.
I believe in electric cars but the current situation is unjustifiable.
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To be fair that's just Tesla taking advantage of the systems that are available to them. Whether those systems are good is a different question although I am sure whatever lobbying Tesla engages in is in favor of those systems. If there was another electric car maker with those credits available they would be totally selling them off just the same.
Tesla's long term play is in their battery factories, Musk laid this out in his "Tera-factory" presentation. All these electric cars are going to need powerpl
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Tesla's business model these days is apparently running a cryptocurrency pump-and-dump scheme with a sizeable chunk of the company's cash reserves.
If i were an investor, i'd be seriously concerned here.
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They'll be in a growth phase for a long time. They have lots of mega-factories planned - they have factories in the US, China, they're building in Germany, and it sounds like they'll be building and building for years to come.
Their solar roofs have lots of room to grow - those have barely taken off. With CA mandating all new houses have solar roofs, and the Biden/Harris admin will probably be subsidizing that.
The energy market is huge - they already have some battery installations to support power grids, an
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What green credits does Tesla have left to sell? They have $1.5b in bitcoin that have literally burned it all up in processing. Most of it in China, as well.
And since Tesla takes bitcoins now, well, using that eats up even more green credits.
Tesla's beginning to be more about greenwashing now.
This is nothing new (Score:2)
Until US-PRC diplomatic relations sour (Score:2)
Subsidy is the price of conversion, get over it. (Score:1)
Some perspective is in order.
We cheerfully subsidize wars to maintain global oil flow. A few credits is a trifle. All the low-hanging fruit was plucked before anyone reading this was born and the trillions of dollars it will cost to convert to BEV won't spontaneously appear any more than it did for replacement of horse and buggy or laying railroad bed.
Selling credits to competitors is good for the US company (Tesla) while VW gets to pollute an enemy society who are de-facto fine with that as is their right
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Cars replaced the horse and buggy because they were in many ways better. Some people like BEV better than ICE, but that same huge improvement in utility is lacking so the analogy does not work.
Other than that, I agree. Outsourcing emissions to other countries is what the west does best.
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The petrodollar is much of why those wars were fought, the cost of oil being secondary. Fracking mainly supports US frackers but the oil/natgas industry is global and alternate energy won't change its importance any time soon (despite intense desire by its advocates).
Transit through the Persian Gulf and maintaining the petrodollar are why the US remains in that region supporting our KSA frenemy and other clients.
BEV will eventually provide a "huge improvement" but moderns are conditioned to expect industria
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A decade is nothing for sure. Reality may seem slow, but people on the internet today predicting what life will look like in 2120 are quite likely to be just as clueless as people in 1920 doing the same about today. If anything the pace of change is increasing, so they would be even more wrong.
Of course I don't care wha
Tesla can't claim greenness any more (Score:3)
Tesla has invested in the massively polluting bitcoin, and as such lose their claim to being "green". They should be forbidden from these carbon trades.
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Legislature is always behind and also are only ever allowed (politically) to react to a critical problem. That's why people with resources to exploit the system keep winning.
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