California Air Resources Board may drop fast-refueling rule, challenge Tesla profits

Article by Anita Panait, on August 7, 2013

The California Air Resources Board is evaluating whether to eliminate the "fast-refueling" rule that enables electric vehicles with quick-swap batteries to gain bonus credits under the agency’s regulations. This possible rule change could effectively limit Tesla Motors' ability to gain revenues by zero-emissions (ZEV) credits, which was a vital element in its first-quarter profit.

Those zero-emissions credits could translate to big money on the open market, as they are in high demand for carmakers that can't comply with clean-air regulations due to the nature of their offerings.

Tesla posted its first-ever quarterly profit in the first three months of 2013, boosted mainly from sales of its ZEV credits. Tesla logged $11.2 million in profits in the first quarter of 2013, thanks to $67.9 million in ZEV credits and $17.1 million in "other regulatory credits." Tesla posted $73.8 million in losses from operations if the first three months of 2013, compared with $89.9 million in the same period in 2012.

During the carmaker’s first-quarter earnings call, Tesla chief executive Elon Musk remarked that ZEVs would decline during the year as they sell more vehicles overseas.

He vowed to make Tesla profitable by the fourth quarter purely on automotive operations. CARB commenced holding discussions in May to eliminate the battery-swap rule, with a decision due at its October meeting, according to Analisa Bevan, chief of CARB's of sustainable transportation technology branch.

To earn the top level of ZEV credits, an EV must achieve a city-only range of 300 miles and must be able to refill 95 percent capacity in just 15 minutes. Although the Tesla Model S is still short of achieving the requirement with its Supercharger plug-in network, it earns the top credit level by changing batteries.

Bevan told Automotive News in an interview she won’t “presuppose” the outcome of eliminating the "fast-refueling" rule. She remarked that Tesla's emissions credits would not be nullified retroactively.

Featuring an electric motor on the front and another on the rear, the new Tesla Model S is able to control torque -- digitally and independently -- controls torque to the front and rear wheels. This way, the new Model S offers unmatched traction control in any situation. Moreover, while conventional all-wheel drive vehicles usually compromise fuel efficiency to achieve more traction, Tesla's Electric All Wheel Drive system actually offers higher levels of efficiency.

The new Tesla Model S could be the quickest four-door sedan in world, as evidenced by the fact that it could sprint from zero to 60 mph in just 60 mph. Its quickness is matched by superior handling from its low center of gravity. This attribute is achieved by placing the battery pack along the floor pan, just between the axles.

Since the new Model S has no internal combustion engine, it offers a roomy cabin that could accommodate five adults and two children – through rear-facing jump seats – as well as their cargo.

Tesla has provided the new Model S with a 17-inch center touchscreen that integrates several functions -- media, communications, navigation, cabin control as well as vehicle data -- into a single intuitive interface. Several of these functions -- also displayed on the instrument panel – could be activated through voice to allow drivers to focus on the road ahead.

One of the best things about the Model S is that it doesn’t use gasoline to run. Instead it runs on electric power, with an EPA-rated fuel economy rating of 90 mpg equivalent.

Topics: california, tesla, profit

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