Bad Times for EVs – Good Times for Tesla

By
eric
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You’ve probably heard that the EV “market” isn’t doing so well; but it’s been doing great for Tesla.

Elon Musk’s battery powered vehicle company took in (earned in this context is akin to using ask in the context of government demanding the payment of contributions to Social Security) just shy of $2 billion dollars last year extorting money for “credits” bought under duress by other car companies that haven’t manufactured enough battery powered devices of their own to meet the “zero emissions” regulatory quotas laid down by the government.

Buying “credits” from Tesla – which manufacturers only battery powered devices – is how these other manufacturers make up the difference.

It’s easier – and cheaper for them – than building enough battery powered devices of their own to meet their quota. Of course, they’re not paying for that. You and everyone else who doesn’t buy a battery powered device is paying for it. The cost of buying those “credits” is folded into the price of new vehicles that aren’t devices, but which do sell.

For more, courtesy of the cost of the “credits.” But the price is still worth not being stuck (literally) with a device.

Tesla has taken in just shy of $10 billion since 2009 via extorting these credits from car companies that make what sells rather than devices made to meet quotas. In this way, Tesla has used the coercive power of the regulatory apparat not only to enrich itself but also to impoverish the manufacturers of alternatives to Tesla’s battery powered devices. These latter have fewer resources to invest in designing new vehicles, having spent them on “credits” for not having made their quota of devices. It’s one of the reasons why there are fewer new vehicles – as opposed to new devices – coming onto the “market,” which is in air fingers quotation marks for the same reason that “vaccine,” in the contest of mRNA drugs, ought always to be bracketed in air fingers quotation marks.

But not many people outside the car business – who don’t understand the way the regulatory apparat works – have any idea this extortion/winnowing is going on. They have been led to believe that battery powered devices are merely the “latest thing,” not unlike the way CDs were back in the ’90s. A natural evolution of technology from something not-as-good to something better.

In fact, the situation with battery powered devices – what are styled EVs – is more like what the situation would have been if the manufacturers of CDs were obliged to buy “credits” from the manufacturers of compact discs, for not making enough cassette tapes to meet their compliance quota.

Of course, the government did not impose cassette tape quotas – and people were free to buy CDs instead. That’s what you call a market.

Tesla depends on the government to create its antithesis – a kind of economic Golem that is controlled by a few big players who have the money and political swag to stomp the market under their feet.

It is unlikely Tesla would have had the resources to manufacture more than the handful of Frankenstein devices – Lotus sports cars converted into EVs – that were its original offerings, absent the “zero emissions” quotas vehicle manufacturers have been obliged to meet. Or buy “credits” from Tesla for not meeting them. This provided the seed capital Tesla needed to manufacture its own devices, such as the Model 3 – with resources extracted from other manufacturers who didn’t need to rely on quotas (or extortion) to earn money.

Tesla has also enjoyed ballistic stock valuation, which seems to some to be a market endorsement of Tesla’s business. Rather, it is evidence of the success of Tesla’s grift. The market valuation of Tesla is predicated almost entirely on the “market” for devices created by the elimination of the market for vehicles that are not devices. That is to say, the value of Tesla stock correlates with the assumption that people will have to buy what the government is requiring be sold. There is also trendiness factor involved, just the same as was true of the meteoric rise in value of Apple Computer stock, back in the day when Apple was new and very trendy.

But Apple didn’t rely on quotas or the suppression of alternatives to its products. Tesla did – and still does.

“We don’t manage the business with the assumption that regulatory credits will contribute in a significant way to the future,” Tesla’s then-CFO Zachary Kirkhorn said during a July 2020 earnings call. “It will continue for some period of time, but eventually this stream of regulatory credits will reduce.”

Yes. Once Tesla has sucked the remaining life out of its rivals. Once there are no longer alternatives to devices – Teslas or otherwise – because the entire industry has been forced by a combination of regulations and quotas to manufacture nothing other than devices.

At which point, Tesla will have the “market” it has always wanted.

. . .

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Related posts:
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  2. RIP, Tesla: You Deserved to Die
  3. Tesla the Man vs. Tesla the Car
  4. Now Uncle is “Investing” in Tesla
  5. Tesla – and GM – Finally Admit It

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51 COMMENTS

  1. Thats why its always funny seeing Elon Musk call himself libertarian. Government pouring money in to his shit , government forcing people to buy his shit , government allowing him to do shit other people would end up in prison for (using shareholders money to bet on bitcoin) . And his fanboys now claiming that telsa is way more than cars they have starlink so subsidies are irrelevant.

    • Hi Puput,

      Musk is a master manipulator-grifter.He tells people what they want to hear. He comes across as an “aw shucks” well-meant regular guy. Yet he’s the guy who spearheaded this bum’s rush toward “electrification” and AI.He wants a carbon tax and his so-called commitment to “free speech” is just a pose.

      • When you look at it looking at the current deep state If he really was a free speech libertarian he would definitely be in prison. I know how much government used ambiguous laws to punish other people who followed those ideas. With him they wouldn’t even have to try due to his dodgy fraudulent schemes like solar city scam etc . So he is definitely tied with government.
        Technology he is working on is also one a dystopian tyrant would like. It centralizes power and creates horrible possibilities. There are technologies that help decentralization like 3d printing for example. Having a swarm of remotely controlled cars gives you ability to kill everyone around , you can kill driver , people on sidewalk ,you can crash 10 teslas in to one man, they listen and record everything , all that data can be processed by ai so you can order high level commands , for example locate and kill all people who oppose x.
        so ai figures you go to job at 7 at 25 x street and sends a Tesla to you. Because they know your patterns. Satellites and brain implants are also horrible for privacy ,brain implants also open up possibility of remotely controlled slaves. And all that software is proprietary so good luck making sure what I just proposed isnt already implemented .

  2. With the EV train being derailed by recent events (e.g. the recent, Chicago winter); with Toyota going more with hybrids; how can the gov’t outlaw non EVs? I mean, reality is reality!

    • The government of ice-cold Norway, that European EV dystopia, doesn’t seem to care. New non-EVs are practically outlawed there this year, and will be formally outlawed next year. Don’t expect reality to interfere with nefarious government plans. Reality means as much to government as citizens do, i.e. not at all.

  4. Elon Musk is a symptom, not a cause, of perceived inequities. Unlike the non-productive, he has created Tesla, Starlink, and SpaceX – not too bad for one person. I’ll take him, over an
    apparatchik, any day.

  5. ‘Buying “credits” from Tesla is how these other manufacturers make up the difference.’ — eric

    Today I got a response from The CAFE Team about individual manufacturer’s CAFE compliance calculations.

    As best I can tell, the latest public information is for model year 2020. Docket numbers are assigned for model years 2021, 2022, and 2023, but nothing is posted yet.

    Here is the download link to Ford’s 2020 Pre-Model Fuel Economy Report.

    https://www.regulations.gov/document/NHTSA-2020-0026-0067

    This 33-page report is too old to cover EeeVee models such as Mustang Mach e and F150 Lightning. It does list some HEV and PHEV models (Escape, for instance).

    So, nothing about the mysterious, notorious 6.67 multiplier for MPGe. Maybe it will turn elsewhere, in the report for Tesla.

    A hilarious example of mangled ‘crat jargon appears on page 16/33:

    ‘To communize NHTSA reporting with EPA reporting, we are using several EPA codes in this report.’

    HA HA HA … yes, it does sound pretty communistic to me, comrade.

  6. For all the good Elon tries to appear to do, I can’t get too excited about him due to this very fact that he made a large chunk of his fortune through non-market means. He should be in prison along with anyone else involved with the carbon credit scam. It’s a scam that directly affects the working class.

    • The only way Elon can publically redeem himself is to buy out the highway safety industry and start building cars with ICE engines. Bet there would be a big market for that.

  7. Was at the local Walmart yesterday for some window washer fluid and some potting soil. Also was looking for fiberglass screen for a ceramic floor project, you use it to create a barrier so the ceramic mosiac matte tile doesn’t crack.

    The cost was $9.32 for a 36 inch roll 84 inches in length. Fiberglass screen used to be $3.99 top price. Went to a local hardware store, $4.99 for the same size fiberglass screen.

    Walmart prices are looking more like ripoff mode than any kind of savings you would expect to find in such a store. I do avoid Walmart almost 100 percent of the time, but a request was made for some potting soil stocked there, so that’s where I went first.

    Musk must be selling carbon credits to potting soil companies.

    Have to be careful out there. DEI and ESG have become monsters.

  8. Soon to be barefoot, broke and hungry and dying by the millions while everyone waits for Trump or some other simpleton to save them.

    They just passed a 100 billion welfare package for Ukraine and Israel while the border situation here gets worse by the day. With a 34 trillion debt we don’t have a hundred billion laying around somewhere for nonsensical wars. Soon they’ll get a large war going killing off even more of us.

    Even the supposed good guy’s are not good. Gov. Abbot of Texas a WEF is or was a WEF member. They are controlling both sides. People are being flown in to Northern Mexico to cross the border into the US with the main agenda of breaking up the country. Divide and conquer. Anyone,,, anywhere ever associated with the likes of the WEF are the enemy.

    Ireland wants to kill a million sheep and a couple hundred thousand cattle in an attempt to starve many under the guise of Global Warming.

    Meanwhile back in the States they’re burning down food processing plants, forests and townships.

    In the skies their spraying toxic chemicals poisoning us,,, also dimming the light reaching the earth to reduce food crops. CO2 and Light is necessary for photosynthesis.

    They have huge machines pumping out CO2, storing it underground to reduce crops increase hunger.

    Jesus H …. !! They’re still pushing the killer covid shot even though they no its pure poison. Now they threaten with disease X. Wanna bet there’s a vaxxene for that?

    Every agenda they have in one way or another kills more of us. They are the barbarians at the gates today.

    • There could be some truth to them dimming the solar radiation reaching earth. While the summers have been hot, I noticed that the heat is in fact a little different. I used to get sunburned after sitting for more than an hour outside. Not anymore. Even when it’s 100 degrees out.

      At the same time this happened, about 2 years ago, I noticed that my plants in the garden stopped growing after a while, even after being watered every day.

      It was very strange.

  10. ¿Donde está el dinero?

    When you have 127,000 employees working at Tesla and its subsidiaries, Elon will have some extra time and cash for special projects. You are able to indulge.

    Ford, GM, Stellantis, etc. are in effect de facto employees of Tesla, you have to buy carbon credits from Elon to stay in business, you’re working for Elon by government decree. Looks like dot gov is doing a swindle of a sort and working for Elon, the auto companies become victims. Must be another project for Elon.

    It becomes a hierarchy and a pecking order. Elon is at the top of the food chain, high flyer, probably in the air right now.

    Every day is Christmas Day for Elon.

  13. The problem as I see it is the one tax payer/ one consumer problem. As costs for everything go up their ability to purchase at previous rates go down. In other words you’ll be driving what you have for a lot longer than you ever thought you would and Uber Eats will be a distant memory.

    And while some people think .gov will ban or confiscate their property at a certain point that will mean boots on the ground and at that point people will know what Janis Joplin meant by the phrase “Freedom means you’ve got nothing left to lose” and all that it entails.

    Or perhaps the next administration governs sanely and we all breathe a sigh of relief that we dodged a Michael Snyder level apocalypse.

    Plan according friends and remember hope is not a strategy.

  14. Indulgence, the original carbon credit:

    Indulgences were introduced to allow for the remission of the severe penances of the early church and granted at the intercession of Christians awaiting martyrdom or at least imprisoned for the faith.[5] The Catholic church teaches that indulgences draw on the treasury of merit accumulated by Jesus’ superabundantly meritorious sacrifice on the cross and the virtues and penances of the saints.[6] They are granted for specific good works and prayers[6] in proportion to the devotion with which those good works are performed or prayers recited.[7]

    By the late Middle Ages, indulgences were used to support charities for the public good, including hospitals.[8] However, the abuse of indulgences, mainly through commercialization, had become a serious problem which the church recognized but was unable to restrain effectively.[9] Indulgences were, from the beginning of the Protestant Reformation, a target of attacks by Martin Luther and other Protestant theologians.

    https://en.wikipedia.org/wiki/Indulgence

    JOHN 5:14-15: 14 Afterward, Jesus found him in the temple and said to him, “Look, you have been made well. Sin no more, lest a worse thing happen to you.” 15 The man went away and told the Jews that it was Jesus who had made him well.

    That will be the next shoe to drop. Eventually Elon’s indulgence factory will be shut down and the old guard will have no choice but to “sin no more.” They of course will be fine, it’s far easier to build electric motors with few mechanical parts than it is to build complicated and fine tolerances required for modern ICEs (although not quite as simple as a power drill, as we’re finding out). But we’re the ones who will be forced to adapt to the new normal. Moving closer to our workplace (in many cases the return of the company town I imagine), losing even more retail choice and living with subpar options.

    But at least we’ll have the Apple ski goggles to paint a rosy facade over our lives!

    • ‘But at least we’ll have the Apple ski goggles to paint a rosy facade over our lives!’ — ReadyKilowatt

      With your Apple beer goggles on, even Kamala Harris will look like a nubile, fetching Dallas Cowboys cheerleader.

      And you’ll wake up hating yourself. 🙁

        • Hi Ready: Sorry, no porn on Apple Vision Pro…

          But how much you want to bet the Chinese knock off will? VR porn is a mainstay of science fiction . Ex: Demolition Man.

        • Shot themselves in the foot on that one.

          The hard cold reality is that sex drives the world, sex sells, and sex built the internet in large part. These facts are easily gotten with a simple web search. Some obscenely high level of web traffic is for porn sites and always has been.

          Want to sell $3500 goggles? Better let the wankers be first in line.

          • The want to sell it to business and military, not consumers. Meta and Microsoft have shown the consumer interest is very low. But training departments are salivating over the prospect of immersive learning. And how about instead of telling people where to find something in the warehouse, just follow the yellow brick road.

  15. Did anyone catch the Superbowl commercial from Honda (in between Taylor Swift sightings). Honda’s spot was touting its hybrid with long range and no wait times for recharging. Seems like they know the public is aware of the final limits of these electrical devices and hitting the competition where it hurts. How soon will it be before Honda is under some sort of investigation for something?

    Smaller snack packaging for Brandon.

  16. Never mind charging your EeeVee — how you gonna keep the lights on?

    ‘Destabilization of the power grid is the result of what analyst and author Meredith Angwin deems the “fatal trifecta.”

    “The Texas grid almost collapsed because of what I call the fatal trifecta,” Ms. Angwin states. “The first part of the fatal trifecta is over reliance on renewables, which go on and off when they want to.

    “The second part is over reliance on natural gas, which is delivered just in time and can be interrupted just in time,” she says. “And the third part is relying on a neighbor to help.”

    ‘Interconnection of the North American power grid allows one region to shift electricity to another region if one has an excess and the other a shortfall. Increasingly, however, with excess reserves dwindling as coal plants are aggressively shut down across the United States, this ability to “phone a friend” is going away.

    “The grid is already cracking under existing demand,” Robert Bryce said. “We’re seeing the grid’s reliability, resilience, and affordability all declining, while pressure groups [such as EeeVee pushers] are trying to put yet more demand on it.

    “This is a date with disaster.” — Kevin Stocklin, The Epoch Times

    http://tinyurl.com/35w8pztc

    TICK TOCK, EeeVee-ers: you have been warned.

    • Exactly Jim,
      That’s the point I make whenever I encounter an EV fanboy. There’s this insane push to “electrify” everything while simultaneously shutting down reliable base load power plants, these people need a course in basic physics. Around here the greenies are pushing to ban natural gas and get everyone to switch to heat pumps; another failure of education in that they obviously haven’t heard of what happens when you put all your eggs in one basket. Hope I’m still above ground long enough to see their “Net Zero” scam slam into the brick wall of reality.

      • Awww, cmon, Mike,
        You heretic!
        Rightthinkers bellyfeel that eeelectricity seeps outta tha walls when a tap is installed, and properly blessed by a high priest, just as maple syrup oozes out of trees in Vermont when the trees are tapped. Eeeelectricity is “magic holy fluid,” UC.
        No steenking “power plant” is required, only the sacred Will of Gaia.

  17. I get the feeling if this “economic” model gets expanded to other industries such as fast food, we’ll see a vegan restaurant upstart. McDonald’s, Wendy’s, etc. will have purchase calorie credits from this vegan “business” to stay within Fed calorie regulations to stay in business. The vegan restaurant would never have to open its doors to be profitable.

    • “Buy local” was the drumbeat in the 90s and early 00s. Then suddenly it wasn’t. American beef became a valuable export to Asia and the Middle East, while Americans eat Brazilian and Argentine meat. It wouldn’t surprise me one bit if the Argentines were dining on Australian or African beef, if there is such a thing.

      That’s one thing I have a hard time squaring with the “free market,” the idea that it decided the best way to sell beef was ship it all over the world. I get that ranchers are just acting in their own best interests, but it really seems odd, especially considering that one of the big reasons for the rise of Asia is their lower labor costs, yet somehow American ranchers are able to sell into their markets at a high enough premium to be a better choice than selling locally.

      • Hi Ready, apparently even apples are now shipped to China to be turned into apple juice and shipped back here. I suspect the invention of the shipping container was the start of things going wrong.

      • Yeah, all of a sudden, that kind of dropped off. Like any other theory teh “free market” only operates well at the state, local and national level. When you start bringing it up to the international level, its operation breaks down.

        An electrical engineering analogy is the operational amplifier. When it is operating in its linear region, the gain is constant and the performance is predictable. As you get further to the edge of its limits, the behavior becomes non linear, and astable or at least, the returns diminish when you apply extra voltage to the circuit.

        Economists and think tanks think with their heads clearly up their ass when they think the free market is applied at the international level. It doesn’t work as the participating countries have very different politcal and economic systems.

        It is the libertarians biggest blindspot.

        • I’m no expert on exports/imports, but I can only guess that international trade has very little to do with market forces and more to do with government interference and manipulation. If a government is involved at all, the free market no longer exists and can’t be blamed for failures or unintended consequences.

          • True. I’ve bought small electronics from the Big Rock Candy Mountain for almost nothing, and with free shipping. When devices were dead on arrival, the seller/manufacturer just sent me a replacement (again for free). I was specifically told they didn’t want the bad product returned.

            Turns out China post will pick up shipping for exports but not for returns. Maybe they pick up the shipping for US beef to keep the party members well fed.

  18. Tesla proves that one can be a tech laggard and still get ahead if one has government on one’s side. And also, that it is possible with only a handful of tech gimmicks, one can fool a lot of people into thinking that a tech laggard is actually a high-tech company.

    At the end of the day, though, Tesla is a tech laggard, as the abysmal charging performance of its devices irrefutably proves.

  19. ‘It’s easier – and cheaper for them – than building enough battery powered devices of their own to meet their quota.’ — eric

    In isolation — with the Kultursmog and Misrule of Law taken as a given — it IS easier and cheaper to buy an indulgence, rather than design and build another banal iPhone on wheels that nobody wants or needs.

    In the words of Jim Rogers, when he faced shakedowns by crooked cops while driving his motorcycle across Asia and Africa: ‘Surely there is some fee I could pay?‘

    As a Potemkin Senate prepares later today to whoop through a $95 billion looting of the Treasury — not one penny of which will be spent on the American people — there’s a fee for all of us to pay. But they don’t even show the respect of asking us to cough up their corrupt tribute.

    To paraphrase a former president while addressing a future one: ‘Mister Trump — tear down this battery plant!‘ [and defund those Ukies, despite H.R. 815 setting you up like a bowling pin to be impeached again]

    • SOLD like slaves in New Orleans:

      Senators Rand Paul and Mike Lee filibustered all night. But 22 RINOs helped most Dems pass H.R. 815 just before dawn, by a 70-29 vote.

      Three Dems — Jeff Merkley (OR), Peter Welch (VT) and Bernie Sanders (VT) — opposed giving $14 billion to Israel to slaughter Gazans. Twenty-six Repubs stood for America First, but were sabotaged by the Mitch McClownells and Mitt Romneys of ‘mend not end.’

      This is a day that shall in infamy.

      • Hi Jim, if the State wishes to treat you as a cash cow the best solution is to go Galt as much as you can thereby lowering your taxes and expenses. I’ve cut my expenses to a great degree and I can cut more if I have to. I’m just a few years away from collecting a pension that will pay all my costs and I’m getting fed up being mulcted by leeches that don’t appreciate the work I did to get where I am today (and taxes paid).

        • Yeah. They demand more and more. Not just monetarily but in your time. In fact, they care more about your time. Othwerwise they wouldn’t submit 1099s for the 5 cents you earned on your savings account. It costs them more to generate the statements than they will collect in taxes for your 5 cents in interests earned.

          Where are Raaaaand Pauuuuls and the Mike Leeeeees on this. I’ve had it with the whole rotten bunch of these bums. All of them.

  20. Seems like there could be some sort of class action suit brought by the other manufacturers.

    Oh, I forgot that our entire legal system is corrupt. Shakespeare had a good point about lawyers.

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