Tesla Shares Dive as Republicans Move to Abolish $4 Billion Green Tax Breaks

Tesla Share Price (Source Google Finance)

Tesla Share Price (Source Google Finance)

Guest essay by Eric Worrall

Tesla share prices have crashed in the wake of news that President Trump’s Republican administration is introducing a bill to abolish Federal tax credits for electric cars worth $7,500 per vehicle.

Tesla share crash amid Republican bid to kill off electric car tax break

Didn’t help that the automaker’s financial results also sucked

By Kieren McCarthy in San Francisco 2 Nov 2017 at 18:47

Tesla’s share price took a dive Thursday morning as Republicans in Congress revealed they were planning to kill off a US federal tax credit for electric vehicles.

The proposed House tax bill calls for an immediate repeal of the $7,500-per-vehicle credit: something that would have an immediate knock-on impact for Tesla given that it only produces electric cars.

Its share price fell more than seven per cent to about $296 apiece from Wednesday’s $321. The draft law emerged as the Elon-Musk-led automaker announced its worst-ever quarter, recording a $671m loss and admitting it had not met its production target for its new Model 3 car, producing just 220 of them against its 1,500 target.

Economists believe that the tax credit is a key driver for electric car sales, and cite the example of when the state of Georgia cut its $5,000 tax credit and saw sales of electric cars slump from 1,400 a month to just 100 a month in response.

Scrapping the leccy car deal will increase US tax revenues by $4bn, it is estimated. That’s a good saving seeing as the Republicans are desperate to balance America’s books while cutting things like the corporate tax rate.

Read more: https://www.theregister.co.uk/2017/11/02/tesla_share_price_drop_tax_break/

Its a little early to call the end of Tesla – Elon Musk over the years has demonstrated a rare genius for wheedling corporate welfare out of green politicians. Tesla shares have regained some of the ground they lost.

But this move could be the start of a larger trend. As I predicted in October, generous green subsidies are an obvious soft target for cash strapped governments.

209 thoughts on “Tesla Shares Dive as Republicans Move to Abolish $4 Billion Green Tax Breaks

  1. The stock drop was directly attributable to earnings, and production delays. Headline is very misleading.

    I understand that folks aren’t a big fan of the tax credit. Otherwise I have zero understanding of ill will towards Tesla. American cars, American workers, cool cars, fast cars. If you’re willing to pay $100K for a car, your willing to pay $107.5K.

    • Ok Todd,

      If I gave you 50,000 grand and told you to buy Tesla shares, what is the relationship between revenue earnings and subsidy’s and would you still waste 50,000 grand now understanding how the companies fundamentals work? Don’t go into your own business Todd, you’ll lose your home pretty quick.

      • Craig, you’re an apologist.

        If you gave Todd $50,000 to do as you require, then it’s you who has little business acumen.

        Todd is spot on. If a person can afford to pay $100,000 for a Tesla then that person can afford to pay $107,500.

        Why do greenies always want a leg up on the back of the honest, hard working taxpayer?

      • Craig,

        If you have 50,000 grand to give Todd, that is $50 Million. If you have $50 Million, you would be willing to pay $107.5K for a car.

      • Sam, read my post again, you’ve missed the connection between the company’s business model and subsidies, so I’ve actually asked Todd to think about why he would invest 50,000 in a company whose business model requires subsidies to stand up. I would invite you to read the companies financials and see when they last made a profit from sales (hint, never). This means Tesla, now has to sell MORE cars by either dropping the price per vehicle and rely on volume or RAISE the price per vehicle and hope that Musk has something special the competitors don’t have, can’t source, can’t make etc etc (another hint, Musk has got nothing special). Sorry your reading comprehension is not up to it. Moving on……

        Bob M, what?

      • OK Craig.

        Your writing skills are opaque. Revenue earnings? Really? What other sorts of earnings are there in your fuzzy accountancy land?? 50,000 grand? Really? Are you innumerate as well as illiterate?

        Notwithstanding your bleating, Todd is still correct.

        If you can afford $100,000 for a motor vehicle you can afford $107,500. And you can afford to pay for the electricity too.

      • Don’t be so judgmental. Gravity on Mars is on 38% of that on earth so repetitive stress injuries on the assembly line will likely be reduced. 😉

      • Starting new production in China to take advantage of the market there, not moving existing production there.

    • Todd you are wrong. Whenever the subsidies cease the sales have dropped 90 percent plus. Now make them pay another x cents per mile for the roads, and pay for their own charging stations and the decline in sales would be over 95 percent.

    • “I have zero understanding of ill will towards Tesla.”

      They are crony capitalists in an unseemly partnership with government. Few would resent them if they stood alone.

    • Only managing to cobble together 145 Model 3’s in October, announcing that full Model 3 production won’t be achieved until sometime next year, announcing that Model 3 production will cut into S and X production and delay all of Musk’s other Walter Kitty’s and Rube Goldberg’s… were much larger factors than anything Congress might do.

      Tesla’s $7,500 tax credit was already going to begin phasing out next year, when they delivered their 200,000-th EV.

      • Shhh! You’re ruining the narrative of Komrad Kieren. He’s the hyper-socialist that the Reg hired to replace their previous stalin apologist (which is saying a lot because the Reg is a brit site — apologies to those brit commentators who remain trapped behind enemy lines).

        The fact is that Tesla started bombing well before the tax plan was announced but by pure coincidence immediately after earnings announcement. Even worse was his cash burn rate. He’s going to have burned through his bond offering in less than a year. This one is becoming so obvious that even the stupid market may be waking up.

      • That’s correct David. I’m not entirely clear on the $7500 going away. Not all that simple I think. I think it was scheduled to drop to $3500 after the quarter in which Tesla delivers its 200,000 vehicle (probably early next year) then to $1875 six months after that. But I could be all wrong. And there are state level subsidies (bribes) to consider.

        In any case, I think the drop in Tesla’s absurdly high stock value was more related to the reportedly massive battery and Model 3 production problems than to the vanishing tax credit. But I could be wrong about that also. See https://seekingalpha.com/article/4120093-conference-call-confirms-teslas-model-3-faces-huge-problems

      • The other Tesla subsidy is the ridiculous CAFE standards, that force companies that make cars that people want to buy to buy “credits” from companies like Tesla.

  2. I wonder if Tesla has received the $1.8 Billion from Nevada yet?

    At present this is not a ‘real’ business – insufficient market place to succeed without sweetening buyers with subsidy, inability to achieve production levels and it reminds me of the dot come bubble and crash.

    • Actually, OE, the knockout blow to Tesla will be delivered by the large auto manufacturers’ massive distribution and marketing muscles. One of them may buy Tesla for their niche market.

  3. Making people poor ensures they will never have the means to save the planet or buy a Tesla .
    We are rapidly hollowing out the middle class and governments everywhere know it .
    President Trump did exactly the right thing cut the subsidy to not iust electric cars but to every other corporate welfare cause .
    Tesla might make it by just selling to the rich 1 percent . Especially in China which is likely where this boondoggle is headed now that Uncle Sam has pulled the make it competitive plug .
    Next up, the feed in tariffs that prop up bird blenders and uncompetitive solar panel companies .
    Man I hope the security detail is solid . The alligators are going to be PO ‘d .

  4. I agree, electric motors are wonderful creations, I size them all day. Problem is with the batteries, would love if there was a break through. Then there is the other problem, even with perfect batteries, where does all the electricity come from? Nuclear is the logical solution, but that is not on the table.

    • The best EV would be a small engine driving enough of a generator to sustain freeway speeds with batteries for handling peak acceleration and stop and go traffic. Best of all worlds. Good gas mileage, good range and good, green CO2 emissions.

    • “The best EV would be a small engine driving enough of a generator to sustain freeway speeds …”

      This is another item in Mazda’s pipeline (in conjunction with Toyota): It will use a small, low-weight rotary engine running constantly at its optimum speed, hence no seal-leakage problem to power a hybrid.

    • co2isnotevil, if you want to do that, why not simplify & get rid of all the batteries, electric wheel motors, generator, etc, and just run the wheels off the little IC engine?

    • “beng135 November 4, 2017 at 11:31 am”

      Because it’s the best way to extract as much energy from the fuel as possible and send it to the wheels.

  5. Cutting the corporate rate is also a good way to balance the books as it increases the federal tax income. Loads of companies pay little tax and cutting the rate reduces their incentive to “cheat” the tax system.

      • Well, I can dream can’t I? End double taxation.

        FTFY. Your dream is too small. As L. Neil Smith put it:

        No one in 1687 could imagine freedom from the constant threat of death by starvation, exposure, or disease, which characterized those times. Few in 1987 [or now] can visualize a future of vastly greater wealth, world peace, & no bureaucrats to pry into every moment of their daily lives. Historical blindness works both ways, of course. Those born in the future will react with a mixture of embarrassment & amusement when we try explaining to them. The insane were once beaten, tortured, & chained, a practice that seems ludicrous & terrible to us. The IRS will seem equally barbaric to our grandchildren. We’ll try to tell them, but they’ll attribute it to senile dementia & never really believe us.

        With taxation gone, not only will we have twice as much money to spend, but it will go twice as far, since those who produce goods & services won’t have to pay taxes, either. In one stroke we’ll be effectively four times as rich. There’s no simple way to estimate the cost of regulation. Truckers say they could ship goods for one-fifth the present price without it. Many businesses spend a third of their overhead complying with stupid rules & filling out forms. The worst damage it does is to planning. Since you don’t know what next year’s whim of Congress will be, how can you plan? Plans that require ten, twenty, fifty years to nature? Might as well forget them.

        Let’s figure that deregulation will cut prices, once again, by half. Now our actual purchasing power, already quadrupled by deTAXification, is doubled again. We now have eight times our former wealth!

  6. This is the inevitable result of building a business model on subsidies. The government might change, and not follow the policy of those who started the subsidies. It is not that much of a decline, though, less than 10%, which looks much larger on a cut-of graph.

  7. A drop from $325/share to $305 is hardly a “crash”, especially since the price stabilized at $305 for the remainder of the day. We’ll have to see what happens to Tesla shares next week and next month, but considering the manufacturing problems that Tesla is having, the loss of a government subsidy is hardly crippling.

    Especially since Tesla gets to retain it’s “green” cachet, and its ability to act as a virtue-signal.

    • Ken, yes it will. Donald is creating uncertainty in the EV market. Losing billions per qtr is not reassuring for any investor and not paying any dividends is not going to attract many new investors seeking income. This is an increadibly risky stock with a pe to the never never, both negative and positive and Future growth is not assured at 70,000 dollars per car when there are cheaper options available and sales are falling.

      • The signal DJT gives is pretty clear: disinvest from future technologies that have no future in the forseeable future.

      • It was a very risky stock before the threat of cancelled subsidies. The market cap is more than 5 times revenue.

      • Tesla dropped from $321.08 to $294.24 (down 8.4%) on Nov-02 (Thursday) and then rose the following day to $306.09 (up 4%) to close the week. Not much of a crash. Tesla believers probably have faith in the Model 3 production forecasts longer term. Tesla is a form of religion, not to be bet against.

      • So you’re saying CEOs and shareholders should be happy with a 4-6% drop, a $1BB+/qtr cash burn, missed production targets of more than 80%, AND a ~10% reduction in the next qtr forecast of sales for existing “cash cow” (in quotes because TSLA is FCF negative)? SIgn me up.

      • Jesus Steve, I’m just sweating bullets thinking about shorting this stock, be increadibly stressfulll

    • But it is still up by 50% over the past year without any positive news driving that. If anything, the stock should have pulled back over the past year with all the poor financial and operational results especially when the story came out that it has more market cap than Ford and other car-makers.

      Apple goes up when it announces it made $11 billion in the quarter and has $250 billion in cash, while Tesla goes up when they lost $600 million and burned through over $1 billion in cash.

      • Which demonstrates that, like Craig, the greenie supporters of Tesla have little business acumen.

      • Sam, you have COMPLETELY missed my point and that is because you did not comprehend my original post. Your post is so far off track that I’m bewildered to how you have linked greenies, Tesla and my support for them? I have no time for Musk, greenies or your illogical post, please take the time to read comprehensively before posting next time.

      • Mate, if you wrote clearly we would all understand where you’re coming from, as I point out above.

        OK, so you’re not a greenie. That’s a good start. But one’d never know from reading your erroneous earlier post.

        And Todd is still correct. That’s what you need to address.

    • Tesla has dropped 25% since September when Model 3 production issues were suspected. In September TSLA hit an all-time high of about $380/share. In less than 2 months it has dropped 25%, down to about $305/share.

      Musk is still blithely claiming that Model 3 production will reach 5,000/week by March 2018.

  8. Fully agree with most of the comments above. Electric cars may be cool but the ludicrous push they are being given by governments, in terms of subsidies and declarations to ban conventional ICE-vehicles over the next 20 years, is outrageous. Power supply limitations, with ever-greater government-mandated, intermittent wind & solar replacing reliable coal & nuclear, grid infrastructure shortcomings, battery costs and environmental consequences all undermine the case for EVs. Hybrids are the sensible way to go in terms of improved efficiency while still enjoying the wonderful benefits & convenience of hydrocarbon fuels.

    • They want to use electric cars to stabilize the grid. link If the wind stops blowing and the sun stops shining, the power to run the grid will come from everyone’s electric cars and nobody will be able to drive to work that day. That has to be great for the economy.

    • Phil Rae – I don’t disagree with much of what you say but long term a hybrid car makes as much sense as a hybrid wristwatch: 2 of veryting so inevitably more complex and more expensive than either EV or ICE

    • AFAIK Tesla has a 8-year ‘unlimited warranty’ for the battery. Problem #1: Tesla will be out of business in 8 years, Problem #2: it does not cover normal wear and tear. So don’t expect a full refund if a failure occurs after 6 or 7 years. Problem #3: Tesla cars are open to manipulations of all kind due to its interconnectivity to the manufacturer. The battery problem is absolutely crucial and far from reasonable solutions.

    • If you afford a Tesla (even a model 3) … then you owe a lot more than $7,500 in Federal Taxes. In fact, I expect most Tesla buyers actually receive their Tax CREDIT in the form of a REFUND check from the IRS … since their taxes were likely withheld for the prior year. Here’s your shiny new Tesla Ms. RICH! … and here’s your CASH bonus for being “green”! Thanks middle class Taxpayers! Suckers!

    • 1) Just more evidence that the subsidy is for the rich.
      2) You can carry over excess credits to the next tax year.

  9. There are two stock issues in America whose share cost/value makes no logical sense … Tesla … and Chipolte. Share prices driven entirely by wishful-thinking Progs. Signaling their virtues by investing in eco-autos, and Mexican infectious disease.

    • Kenji, don’t ignore Bitcoins! People are actually paying real money to buy imaginary money. If I read about Bitcoins in a novel, a work of fiction, I would probably say that’s too ridiculous to happen in real life. When I look at Bitcoins I can’t get over how incredibly stupid people can be. But just when I think that people can’t possibly get any dumber, I look at how many people believe in global warming without any real evidence.

  10. Electric Aeroplanes? Only if that electricity is used to power an imaginary anti gravity device. Ever heard of Maximum Take off weight vs Maximum Landing Weight? The diff with a 747-8 for instance is 300,000lbs, a A380, 400,000lbs. So even if the power to weight ratio of a battery were the same as kerosene, you lose that much cargo for the same size plane. Moronic is a kind work for this idea…

    • You’re assuming an electric airplane must carry significant cargo economically. Confine your context to a small electric sport aircraft, experimental examples of which are already flying.

    • Mat,

      You always loose that much cargo, even with kerosene, as you need to take off with all kerosene necessary. Thus even if you loose weight when flying, that doesn’t help in maximum cargo…

      The Solar Impulse 2 weights 1.6 tons empty and can take off with 2.0 tons weight, quite a good ratio. Main drawback: cruise speed is only 70 km/h…

      If they can increase the kWh vs. weight/volume ratio from the batteries to about what currently is delivered by fuel, it will get interesting, as they don’t need solar power anymore…

      Looks more like a huge glider than an airplane, but still an enormous technical performance of the engineers involved:

    • Ah, so we are only talking about planes with no Comercial or practical use.

      This really does sound like flying Tesla’s.


    • Well, if it can’t carry cargo, i.e., passengers/luggage or actual cargo doesn’t that make it just a rich person’s toy? It certainly doesn’t have practical value.

    • Ferdinand said:

      If they can increase the kWh vs. weight/volume ratio from the batteries to about what currently is delivered by fuel, it will get interesting, as they don’t need solar power anymore…

      That would be called gasoline (kerosene, JP-X, etc.). If they invent Mr. Fusion, then they can carry the sun with them too.

    • There are supposedly a couple of schemes for electric airplanes under development. Seems nutty to me. But what do I know?

      The one idea I’ve heard that might — and I emphasize might — be viable is electric aircraft powered by hydrogen fuel cells. Liquid Hydrogen requires an insulated fuel tank and is bulky. But it isn’t very heavy. Maybe the concept pencils out somehow.

      • No, the extreme expense and difficulty of [welding] and fabricating hydrogen tanks (and their huge volume and intricate cryogenic requirements) are fruitful ONLY in the upper stages of VERY EXPENSIVE, single use space rockets. Von Braun used kerosene for example in the lower stages with liquid oxygen. Multi-use hydrogen systems (space shuttle is the only example that “worked” required weeks of rework after each flight, days of intricate “dances” to refuel systems. The rockets could “get by” with the air resistance problem (large volume) because of the low weight of the fuel, but the rockets left the atmosphere quickly – so air resistance didn’t matter so much once they were above 60,000 feet or so. Airplanes? Have to stay in the heavier atmosphere of 35,000 to 45,000 feet. Have to be able to refuel in 20 minutes at any airport.

        Sure. Want to fly in daytime with one pilot in calm air at 30 knots? Run your solar-powered kite. But using a bicycle may be more efficient if yo ant to carry anything more than a water bottle. 8<)

    • Guys, my comment about a battery-powered sport plane was to refute the original derisive suggestion that an electric airplane was a ludicrous fantasy. Yes, currently they are toys, but there is a huge experimental home-built aircraft hobby for folks who simply love sport flying, building, and experimentation. Search “EAA” and marvel at what is being done, and not for practical commercial ends.

      • A fair baseline for a “real” electric aircraft would be matching the performance of a 1938 DC-3. My understanding is that was the first actual revenue producing aircraft, i.e. the airlines could operate it without a subsidy.

    • The Space Shuttle was not a “mulit-use” hydrogen system. The tanks and plumbing using liquid hydrogen were not “reworked” in the Space Shuttle. The external tank burned up when it re-entered the atmosphere. The orbital maneuvering system was hypergolic liquid based and did not use liquid hydrogen.

    • Rob Bradley

      The Space Shuttle external tank was not reused however the heart of the system the Space Shuttle Main Engines were reused multiple times and will be used again on NASA’s new heavy lift vehicle.

    • Someone who wants to actually carry some luggage, or be comfortable while travelling, or not get killed when they’re hit by a truck that didn’t even see them?

      The lack of doors will also be great when it’s raining or snowing and the seats get soaked before you can even get into them.

      • Ha! And every time I see some (admittedly beautiful-“looking”) gull wing door, or tilting hatch like this … I think of just how awkward and clumsy it must be to get in and out of these contraptions. Looking kewl, and being “different” doesn’t always make the idea “better”. Sometimes, things have remained unchanged (like side-hinged doors) for a reason … like they simply work best.

    • The original Honda Insight got that kind of mileage on the highway, without the electric battery assisting it. But government regulations put an end to their lightweight design.

      • Didn’t say that the model was shelved due to regulations, I said that current government regulations preclude the use of the same design.

        The car had poor sales and they discontinued it after the the second generation, but the first generation design (2000-2006) they used to get that mileage wouldn’t fly in the U.S. anymore for newly manufactured cars. I seem to recall that the aluminum/plastic construction they used to keep the weight down (even a plastic gas tank) is a no-go for current regulations.

    • Hi Grey Lensman – so what’s new? In the 60s I owned a Fiat Cinquecento. Fabulous little car – enough room for burly two mountaineers and two rucksacks. After some modification it would puff along at 130 kph on the straight and level – but not much faster off a cliff! However the brakes. half-shafts and lights were inadequate for that level of performance – but tremendous fun. cheers edi

    • That was seven years ago. How many of these wonderful, green unicorns have you seen on the roads?

    • Yes … what a massively good-looking (gas powered) golf cart. The only problem being that I usually need to get in and out of my golf cart … about 6-times per hole as I chase my ball down the course. Or in the case of this urban assault vehicle … chase down my multiple urban errands. This thingy makes getting in and out appear a little … difficult.

  11. I note that the Chevrolet Bolt outsold Tesla in October. link

    I would be pleased to see Tesla fail because Elon Musk is a rather nasty, arrogant guy who mistreats his workers. link He’s a great example of the Democrat party’s liberal elite. They believe they got where they are because they are, in all ways, superior to the rest of humanity. They believe that the poor and middle class don’t deserve anything, including decent working conditions. link Some folks think they are fascists. link

    • That’s a tough one. I hate to see any American company fail and have slack taken up by foreign competitors, even if they green. Better battery tech will help a lot and engineers are working overtime on the next Gen batteries. It appeared to me Tesla is having production issues and the model 3 is far from reaching quotas is why the stock dropped. No tax credit makes it doubly worse.
      Perhaps if Tesla needs money, they could plug in all their excess solar panels, and power some computers to generate bitcoins 😉 see how well that works 😉

      • Better battery tech will help a lot and engineers are working overtime on the next Gen batteries.

        And have been since 1903.

    • Yes … you’d think Marxist sympathizers like Musk would embrace his workers (certainly by UNIONIZING them) rather than EXPLOITing their labor for a pittance like all those evil capitalist corporations. I suspect the only salvation for Tesla will be to nationalize it. For our own creeping-Marxist Federal Government to take-over the means of production by seizing Tesla and “liberating” the workers. Then, government-Tesla motors can mandate eco-saloons in every garage to go along with 2-bunches of Kale in every healthy salad bowl.

  12. It’s OK, South Australian taxpayers will bail him out. He’s a smart man! Convinced a whole state Govn’t they need his technology.

  13. If they make it on their own great. But for now a Tesla is a rich man’s car paid for by the middle class, driven by a rich man for free on roads paid for by the middle class, often charged for free via public charging stations paid for by the middle class.

  14. The $7,500 tax credit phases out for each manufacturer once they hit a certain number of vehicles sold, and as I recall Tesla was getting close to that number anyway. Counter-intuitively, this may help them competitively; if no one is allowed to take the credit, other electric vehicle manufacturers who haven’t sold as many vehicles to date won’t have a competitive advantage over Tesla.

      • “200,000 as I recall. Based on sales, he’s got a way to go.”

        Tesla had over 100K deliveries in the U.S. by the end of 2016. As of October 5, 2016 and based on deliveries in the U.S. to that point, the expectation was that Tesla would add another 50K in 2017. So Tesla should be hitting it’s 200K next year and entering the phase out period during which EV competitors (none of which have total sales approximating Tesla’s) would have gained a competitive advantage from the subsidy.

        If the subsidy goes away, Tesla’s EV market share should benefit.

    • Initial reports have also suggested the bill hurts automakers, particularly Tesla, but the story there is more complicated. The bill does eliminate a $7,500 tax credit for new electric vehicle purchases. Tesla buyers have long benefited from that provision. But the benefit begins to phase out once a car maker sells 200,000 cars, a threshold that Tesla is likely to hit in the coming months.

      [ … ]

      In fact, the elimination of the credit could be spun as a positive for Tesla, since General Motors and Nissan were just getting started with their own electric efforts — with the Chevy Bolt and Leaf, respectively. For the Bolt, which starts at $37,500 the tax credit represents a 20% savings off the list price. Without that benefit, the company will face a tougher task selling the car.


      Qualified Plug-In Electric Drive Motor Vehicle Credit (IRC 30D) Phase Out
      The qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period.


      So the story is that Tesla was about to lose the benefit anyway and it is their competitors that have a benefit to lose.

      • The way I read the tax credit rule, it applies to each manufacturer separately. So Tesla will soon lose that advantage but other manufacturer’s tax credits will continue until their sales reach 200,000 or until the proposed bill removes everyone’s tax credits.

        Is there an estimated date for the new bill? How long will/can it take to pass both houses?


      • Now they weren’t about to lost the benefit. They are about to START losing that benefit. The phaseout takes a year (I thought it was 18 months, still a year).

        The qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period.

        Yes, this still hurts TSLA.

    • That article proves Musk is desperate and doesn’t know what he’s doing. That approach will eat you alive. I knew he was in trouble when he met with the Japanese automakers and rejected their methods.

  15. Like to know what snack bracket the average Tesla buyer is in . Got a feeling they can easily pop for the $7500 to save the planet . Think of it . No government subsidy how smug will they feel now ?
    Tesla can move to China , hire slave wage employees and sell to all those corrupt bureaucrats laundering their money in casino’s and real-estate . A win -win .

  16. Elon Musk dumped all his Tesla shares recently, like a month ago.. obviously he knew these cuts were coming. during the next economic downturn Tesla will go bankrupt completely, they have overspent trying to make this bad technology-the rechargeable car viable by placing ‘Free Superchargers’ all over the place; It still sucks and no-one is buying this crap-what dumbass wants an expensive car that is clearly inferior to an ICE car which can be ‘recharged’ anywhere, anytime in a few minutes. What’s ridiculous about the entire company is- If you are going to do it with an electric-motor car-which are pretty coo after all considering their speed, FUELCELL technology is the way to go. A fuelcell powered electric car has no emissions and can be refueled in just a few minutes like an ICE car; AND can even be fueled upto 1000’s of kilometers with a single refueling-making it even better than an ICE car not worse like a crappy battery powered car.

    • All of the bailouts should not have happened. If true capitalism was followed it was natural for those companies to fail. They should never have been propped up.Iceland let their banks fail and now look at them with their well regulated banks that know they cannot push their luck. The banks did not close and move and should have been the blueprint for the rest of the world.

    • I was even more hostile to the GM and Chrysler bailouts, than I am toward EV corporate welfare.

  17. Elon Musk dumped all his Tesla shares recently, like a month ago

    Does that count as insider trading? Is insider trading legal in the USA?

    • Don’t believe it without a credible reference. Musk is clearly not in it for the money. He bet all his money from the sale of Paypal on SpaceX and Tesla and nearly lost it all in 2008.

      Quote from Business Insider “Musk has said several times that when Tesla first launched he actually expected the company to fail, so he originally provided all of the money himself, refusing to take money from investors.”

      “I thought the probability of success was so low that I provided all of the money. All of the money just came from me personally. I didn’t want to ask people, other investors for money if I thought we were going to die because I thought we were. I invested entirely the money that I got from PayPal, all of that got invested into Tesla, Solar City and SpaceX,” (http://uk.businessinsider.com/elon-musk-shares-the-miracle-that-saved-tesla-2015-12?r=US&IR=T)

      • Anytime someone tells you they are not in it for the money, that is the strongest indicator that they are in it for the money.

  18. In 2012 Tesla shares were about $30 and it was at one point the most shorted stock on the NASDAQ. I took unseemly pleasure in the thought of all those squeals of pain from folk aiming to profit from someone else’s failure when it went up by a factor of 10

  19. I for one would love to see Tesla and anything else connected with the subsidy sucker, Enron Muskrat, crash and burn.

  20. So you’re basically cheer leading the downfall of an innovative company that employs circa 25000 Americans? You’re a particularly vile piece of excrement aren’t you?

    • I feel sorry for workers who were deceived into thinking they had job security. The subsidies must be abolished, the damage they do to the wider economy is intolerable. But there is no doubt removing the subsidies is disruptive and painful for people whose livelihoods depended on those subsidies. This in my opinion has to be considered part of the harm which accrues whenever some idiot politician thinks they know better than the market.

      • Nobody likes getting the pink slip. But these folks know know that they are doomed. So better slowly walk away now instead of running later – stampedes kill.

      • Eric…Do you have any follow up to this article from Lefty Financial Commentator …BusinessInsider.
        ‘It looks like the state of California is bailing out Tesla
        Wolf Richter, Wolf Street Jul. 17, 2017’
        …The California State Assembly passed a $3-billion subsidy program for electric vehicles, dwarfing the existing program. The bill is now in the state Senate. If passed, it will head to Governor Jerry Brown, who has not yet indicated if he’d sign what is ostensibly an effort to put EV sales into high gear, but below the surface appears to be a Tesla bailout…This is how the taxpayer-funded rebates in the “California Electric Vehicle Initiative” (AB1184) would work, according to the Mercury News:…
        …The [California Air Resources Board] would determine the size of a rebate based on equalizing the cost of an EV and a comparable gas-powered car. For example, a new, $40,000 electric vehicle might have the same features as a $25,000 gas-powered car. The EV buyer would receive a $7,500 federal rebate, and the state would kick in an additional $7,500 to even out the bottom line…and for instance, a $100,000 Tesla might be deemed to have the same features as a $65,000 gas-powered car. The rebate would cover the difference, minus the federal rebate (so $27,500). Because rebates for Teslas will soon be gone, the program would cover the entire difference – $35,000. This is where Senator Vidak ( Republican critic) got his “$30,000 to $40,000.”

        That last sentence that California may cover the whole 35,000 dollar difference. Come On!
        I know its Brown and California but if that was passed they may as well just give Musk the actual keys to Treasury. That would make Tesla the Approved (and Financed) State Car.
        Any updates from our California readers?

      • I am not a fan of subsidies either but in this case they apply only to the first 200,000 vehicles sold (each manufacturer gets its own 200,000) after which they are phased out. See my comment above.

      • rovingbroker,

        And in California?
        Do the Moonbeams power the state?
        Or just grow socialistically straight (Ref – EU) cucumbers?


      • Fossil fuels are subsidized to the tune of 0.6 trillion dollars a year in the US alone. Frankly I’d rather my tax dollars spent at home rather than propping up the Saudi and Venezuela governments but perhaps you and your readers feel differently?

        • That 600 billion is based on the Social Cost of Carbon claims, which are the next thing to imaginary.

        • Bruce, when communicating numbers, one must posses a sense of proportion. You would have us believe that fossil fuels would get a SUBSIDY of about 3.2% of the entire US GDP. Not.

      • Bruce, those “subsidies” are nothing other than tax breaks, the same or similar to tax breaks that every other company in the country gets.
        Why don’t you try learning something.

      • Dave, the standard moron line is that if it weren’t for our need to defend the middle east, we wouldn’t need a military at all. Therefor the entire cost of the military is a subsidy to big oil.
        Then they add in every tax break the oil companies use. Either oil companies are unique in that they are not allowed to have tax breaks, or all money belongs to the government and by allowing you to keep some, the government is subsidizing you.

    • In order to calibrate your personal antipathies to something objectively measurable, care to name a more ‘vile piece of excrement’ than a businessman ripping off his profit from the shared cookie jar.

      • Easy peasy.

        A union ripping off it members by selling out to management for a good old kick-back.

        A politician selling a 20% of a nation’s resource to the enemy.

        All green left progressives.


        Do you need more?

    • Bruce @ November 4, 2017 2:15 am:

      You are a concrete-head (in both the literal conceptual and material metaphorical senses of concrete) aren’t you? Have you any idea of all the jobs which were lost, or worse, never existed, because of all the capital diverted to subsidy whores / regulation exploiters like Musk? Capital which otherwise could have gone to create jobs producing things to improve the lives of the great mass of those workers rather than virtue signal gilding a handful of plutocrats and their sycophants. It almost certainly won’t penetrate your dense skull, but for the benefit of others who may read this, I suggest a search on “what is seen and what is not seen”.

      • Fossil fuels are subsidized to the tune of 0.6 trillion dollars a year in the US alone. Frankly I’d rather my tax dollars spent at home rather than propping up the Saudi and Venezuela governments but obviously you feel differently.

        • And, just how are “we” propping up the (socialist-communist Venezuelan government? US isn’t buying oil from them, and they can’t sell enough to anybody to feed their people.

          Fossil fuels are subsidized to the tune of 0.6 trillion dollars a year in the US alone.

          Just what are these “subsidies”? The same depreciation every other company on assets in the democrat-written code since the 1917 income tax was rammed through by them for Wilson? That total depreciation isn’t 2/3 of a trillion dollars, except in your propaganda machine (er, college class).

    • I feel sorry for the taxpayers who have paid billions of dollars in subsidies.

      If you choose to work for a company that is dependent on government subsidies, then you need to remember that elections have consequences. One of those consequences is that the subsidies will come to an end, and you will be out of a job!

    • The only thing innovative about the company is how good it is at farming for subsidies.
      Those 25000 will find work at other companies as other companies take up the slack produced by Tesla’s bankruptcy.
      Heck, a good many of them could end up keeping their jobs as other companies buy Tesla assets.

      The vile piece of excrement is you Bruce.

    • Altough very profitable, at least in the beginning. Cut subsidies on solar and wind energy and the owners of these plants and machines will soon find themselves in pretty hot water – but can’t get out w/o declaring bankruptcy. I expect that to happen with Tesla within 30 months…

  21. I for one can’t wait to see Tesla go bankrupt and take its Scalextric cars with it. Electric cars were abandoned in the 1890s as a bad idea and nothing has changed.

    • That isn’t exactly accurate. Electric cars were not ‘abandoned as a bad idea’. In 1910 38% of cars were electrics. What killed electrics was the development of electric starters & mufflers, as well as an expanded road infrastructure, making gasoline powered cars cheaper and more practical. An additional issue was Edison’s insistence on the use of nickel-iron batteries which proved to have a high internal resistance that made them incapable of powering a vehicle under certain circumstances.

      There are abundant conspiracy theories about ‘Big Oil’ burning Edison’s lab and ‘bribing’ Henry Ford to kill the electric car.


    • There are also conspiracy theories about tire companies killing early mass transit and a gunman on the grassy knoll.

  22. Ordinary Americans are proud to see their tax dollars used to subsidize elites and preening greenies. We’re stronger together! Now back to regular programming…

  23. EVERYBODY is getting this wrong, except Barrons. Tesla was already very close to losing their $7500 tax credit when they hit 200,000 EVs delivered, which would happen early next year – the credit is phased out – half $7500 for 2 quarters then half that for 2 quarters, then totally gone. I half expected Elon Musk to argue that the credit should be phased out altogether. Tesla Motors should be jumping for joy at the elimination of the credit- if extended, that would mean they would have to compete with the 120-odd EVs that automakers will start selling within the next 3 years – almost ALL of those dozens of automakers (except GM & Nissan) would have their 200,000 unit tax credits available, which provide them with a $7500 price advantage over anything Tesla sells. Tesla shares DID NOT crash as a result of the tax credit news. It crashed because of its much worse than expected losses, its cash burn rate, and another 3 month delay in Model 3 production rates.

    • Yes, exactly. But the tax issue is also a convenient distraction for Tesla to deflect attention from their poor performance. -Two gifts in one.

  24. You can argue against the tax credit in two ways : one – it is lousy because it used taxes of hamburger flippers to help pay for millionaires’ second (or third) car. Or , you could argue based on the original intent of the law, which was NOT to subsidize EV buyers per se, but was intended to make EVs profitable (well, at least not big losers) so that automakers would create electric cars.
    With more than 120 electric cars announced by the major world’s automakers , to go on sale within the next 3 years, no one can argue that the goal of the tax credit law has not been realized.
    It probably helped achieve the goal, but the MAJOR cause of the vast improvement in the competitiveness of electric cars was due to one, and only one thing: the enormous price reductions of lithium batteries over the past 5 years, and, secondly, their comcommittant improvement in recharge times. Roughly five years ago, a large battery pack cost roughly $40,000+ or $600 per kWhr. Today the cost is around $150 per kWhr. And recharge rates have improved as well.
    Tesla’s superchargers can recharge to 80% in about 30 minutes. Just recently Porsche announced that their CCS Combo 350KW chargers can recharge their upcoming Mission e electric car (out in 2018 or 2019) in less than half that – under 15 minutes. That charging rate, which will get even better, since CCS protocol is upgraded to 500KW as well, eliminates any concerns about
    recharging slowing you down (while on trips). It also makes owning an EV when you have no ability to recharge at home, much, much easier to live with..

    • It’s not the job of the government to make start up companies profitable.
      If they can’t survive on their own, let some left wing billionaire pick up the tab.

    • The super charges destroy battery life.
      You can either charge fast, or have your batteries last 5 years.
      You can’t have both.

  25. I have already posted it several times. The cancellation of subsidies is just the last drop that makes the pot overflowing. Tesla was previously sentenced to death: a collapsed production, incapable CEOs, and last but not least an erratic chief executive. A mixture that would over-salt the food of every cook. It was a mistake to bring Tesla to stock exchange anyway: government support to find buyers for electric vehicles at all and supercapitalism on stock exchanges do not fit. There, a company has to gain on their own feet, otherwise it is a treat for the sharks.
    Musk will be careful not to throw his own money after the lost one. Lately, he’s more likely to fancy flying to Mars than to drive his Tesla cars.

  26. When Republicans move to lower taxes for the rich, it’s bad. When Republicans move to discontinue subsidies for the rich, that’s bad. Common denominator: Republicans are bad. Vote for Democrats, the party of Jim Crow.

  27. Large aircraft such as the 747 have a fuel capacity of 63,000 gal of jet fuel. This represents about 8.1 billion Btu of energy. Converting this into kW-h gives 2.4 million kW-h. At a conversion efficiency of 60% for NG, this converts into 4 million kW-h. Converting this into scf of NG you get 13,324,260 scf.
    There is no way for any battery technology to pack this much energy for sustained flight. Liquid hydrocarbon fuels are the most energy dense fuel and therefore well suited for aircraft use. This has been studied a number of times and there is no substitute for liquid fuel.
    There are ways to make renewable liquid fuels, but they all suffer from lower conversion efficiencies than from petroleum crude oil. This is mostly due to the need to convert solids or gases into liquids. Any change in state of a material consumes energy, and in the case of biomass conversions, it is a lot of energy which make overall energy efficiency low.
    So as long as there is crude available, aircraft will fly on liquid fuel.

    • In my fictional world, I envision a material that can store the necessary quantities of energy as latent heat in a reversible phase change. The material costs nearly nothing to produce and solves the energy problem for the entire world. Since everyone has, ah, “free energy”, we now address what this means for human civilization and culture.

  28. Trump’s presence has increased economic expectations and along with his policies has pushed unemployment down to 4.1%. The stock markets are well into record territory and still rising.

    Chopping off the fat from ridiculous regressive programs, lopping off thousands of economy – killing regulations on industry, infrastructure projects, fossil fuel production, access to resources on federal lands and rebalancing fairness in international agreements will show the neo-left 5th column still in government, like the аррагатснiкs who calculate the cost-benefit of government policy, and the lapdog MSM where the tax cut money will come from! It’s not a zero sum game after all. it’s… errm.. like business. Wealth can be created!! (and wisely managed).

    So what kind of ‘experience’ in government were y’all thinking that the Pres should have? That of Nancy Pelorosaurus?


  29. No, the share price dropped because Tesla’s quarterly report and the deteriorating updates on Model 3 production ramp up were considerably worse than Wall St. expected. Note that the stock was doing badly in after hours trading after their report came out but before the news about the tax change was known.

    On the other hand, early elimination of the tax deduction should actually help Tesla. Since the deduction ends after the first 200,000 cars a given manufacture sells and since Tesla has sold far more electric cars than their competitors, but in much higher end models that are less price sensitive, if the current rebate continues as is, Tesla will soon be in the position of having to sell their most price sensitive and largest market model with a $7500 price handicap relative to their newly emerging competitors. If the deduction is eliminated now, they get a reprieve from that handicap. It’s bad news for GM, VW, Nissan, etc. though.

    The conveniently (for Tesla) timed news about the tax change was just an opportunity to deflect blame for the souring Wall St. mood from their poor financial and production performance.

  30. That’s not a crash, it’s a 10% drop, which improved to a 6% drop.
    Stock price is dependent on how they improve from delivering 1/4 of 1% of orders in a year which is their current pace(260 Model 3 in the last quarter) to 100% of orders which is the predicted rate for sometime in 2018.

  31. There seems to be some confusion between having an idea and having a good idea.

    For example, an idea proclaimed in luxury car advertising is comfort and handling. The last new car we purchased to replace the family mini-van was a 2007 Corolla. It handles just fine and my wife thinks it is a luxury car.

    The car is green too! That’s the color. I still think we deserve a $7500 tax credit.

  32. I think BEV are a good idea for countries that import 100% of oil and get a large share of electricity from nuclear. France and South Korea are example that also export nuke plants.

    It is in their national interest to subsidize BEV. It is not in the interest of the US.

  33. speaking of subsidies, can you
    start making fossil fuel producers and
    consumers pay for the damage
    done by their pollution?

    it’s about $200 billion a year now, lots
    of it in health care.

    i mean, everyone here wants a truly
    free market, right?

    • Scraping the barrel there crackers, that line’s been done to death and won’t fly. What is the cost in human misery and premature death of denying people access to cheap energy?

    • What pollution?
      The exhaust of most cars in most cities is cleaner than the ambient air.
      The CO2 they put out is good for the planet.

  34. Eric…Further to my posting. The bill in California was The (AB1184).
    California’s ‘Tesla’ Bill Dies In State Senate…
    Sep 5th 2017 From SeekingAlpha. Donn Bailey.
    The “Tesla” bill is done…Intended as a boost to BEV sales in California, it went too far in support of one company.
    With no new changes, current programs will offer only minor support for EVs.
    The California Senate on Friday enacted changes to the proposed legislation that effectively ended the bill….When the wording was reworked to include all electric vehicles with BEVs heavily favored in the calculations, it was dubbed the “Tesla” (NASDAQ:TSLA) bill…
    Incentives for zero emission vehicles (ZEV) play a major role in pushing buyers toward further adoption of EVs….Hong Kong allowed a tax credit program heavily favored toward pricey EVs such as Tesla’s Model S and X to end on March 31, 2017. Tesla’s April sales in Hong Kong were reported as zero, none.
    In the state of Georgia the end of a $5,000 state tax credit in July 2015 pushed EV sales off a cliff. Sales dropped from 1,426 registrations in July to 242 the following month, a decline of 83%. Efforts to revive the credit has been unsuccessful to date. Such rich tax credits favor the wealthy and that angers many legislators for better incentive distribution. At one time, Georgia had the second highest number of electric vehicles behind California with about 25,000 at the end of 2016……..The issue in California on AB 1184 really seems to have come down to why should a state incentive be geared toward a company producing a very limited number of vehicles representing a very small number of recipients. Had the program been approved, $500 million annually could have been shared by as few as 33,000 buyers receiving the maximum of about $15,000. Buyers could have purchased a $35,000 Model 3 for about $20,000, the cost of an ICE Honda Civic…
    Tesla increasingly talks about how much money their vehicles save over gas guzzling ICE vehicles. Why are those savings not enough to justify a purchase? By mid-year 2018 Tesla buyers will be facing a 50% reduction in the current $7,500 federal tax credit just as Model 3 production is approaching full steam….When companies like General Motors (GM) just delivered a record 328,425 units in China in August (bringing their 2017 through August total to 2.38 million units) without incentives, why are U.S. taxpayers providing $7,500 incentives to a company with total global deliveries of less than 80,000…This should be the point in time where logic returns and the Tesla share price falls to where it should be when compared to power house companies like GM that sell millions of vehicles and make billions of dollars in profits.

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