Tesla is demanding the reinstatement of a 2016 Obama regulation that more than doubles penalties for manufacturers who fail to adhere to fuel efficiency requirements. Gee, I wonder why it would do such a thing.
While focusing on the environment is an admirable endeavor, much of the discussion surrounding environmentalism on the corporate level really skirts around the periphery of Scamville. Elon Musk is no fool and understands that the more stringent regulations are enacted against his competitors, the more desperate they will be to buy up Tesla’s mountain of carbon credits. With a little help from the government, electric-vehicle companies can effectively bankrupt their more-traditional rivals while earning a nice payday for themselves. In fact, Tesla has only managed to become a profitable company because of this practice.
That’s not an attempt to bash the automaker, either. EVs are still rather costly to produce, haven’t yet achieved parity with fuel burners, and many have argued they would fail without government assistance. We’ve even seen countless startups wither and die in China as the government began pulling subsidies. Starting an automotive company is insanely difficult and building one that’s an affront to established industry players is borderline impossible. Props to Tesla for making the world work on its behalf through carbon credits and tax subsidies.
But the company is starting to look all grown up, making this whole deal look a lot less cute. Tesla stock remains extremely desirable and it’s officially become a global automaker. How much more help does it seriously deserve? Tesla Inc. reeled in over $3.3 billion from regulatory credits over the last three years. Roughly half of that came in from 2020 and was the only way to keep the company from operating at a loss. Meanwhile, its automotive arm is starting to see serious gains (thanks largely to its global expansion), and corporate leadership has claimed this will be sufficient in keeping it afloat, especially since it sees the carbon credit game becoming less profitable over time. The company claims it doesn’t need to sell credits to be profitable anymore, but you had better believe it’s still going to make use of them.
According to Bloomberg, Tesla has asked a federal appeals court in New York permission to join an appeal by the Natural Resources Defense Council and the Sierra Club. The group seeks to undo laws enacted by the previous administration they believed weakened the Corporate Average Fuel Economy (CAFE) standards.
The court hasn’t yet ruled on whether Tesla can join the case.
“The previous Administration’s egregious action presents a situation as extraordinary as it is unjustified and inflicts immediate and irreparable injury on Tesla and the public,” the Palo Alto, California-based company said in a brief filed March 4 with the Second U.S. Circuit Court of Appeals.
Tesla, whose cars generate no emissions, claimed the Trump administration’s rule harms it by devaluing the credits it’s permitted to sell other companies because it exceeds CAFE standards.
We’d like to take this opportunity to let anyone reading now that all EVs absolutely generate emissions when being manufactured (and shipped) and will continue to do so depending on how you’re sourcing the electricity. Meanwhile, President Joe Biden has ordered a complete review of the existing emissions rules. The National Highway Traffic Safety Administration said it expects to have it completed within the next six months.
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