Is California Bailing Out Tesla through the Backdoor?

Tesla will lose federal subsidies; so something big needs to be done.

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.

Tesla will soon hit the limit of the federal tax rebates, which are good for the first 200,000 EVs sold in the US per manufacturer beginning in December 2009 (IRS explanation). In the second quarter after the manufacturer hits the limit, the subsidy gets cut in half, from $7,500 to $3,750; two quarters later, it gets cut to $1,875. Two quarters later, it goes to zero.

Given Tesla’s ambitious US sales forecast for its Model 3, it will hit the 200,000 vehicle limit in 2018, after which the phase-out begins. A year later, the subsidies are gone. Losing a $7,500 subsidy on a $35,000 car is a huge deal. No other EV manufacturer is anywhere near their 200,000 limit. Their customers are going to benefit from the subsidy; Tesla buyers won’t.

This could crush Tesla sales. Many car buyers are sensitive to these subsidies. For example, after Hong Kong rescinded a tax break for EVs effective in April, Tesla sales in April dropped to zero. The good people of Hong Kong will likely start buying Teslas again, but it shows that subsidies have a devastating impact when they’re pulled.

That’s what Tesla is facing next year in the US.

In California, the largest EV market in the US, 2.7% of new vehicles sold in the first quarter were EVs, up from 0.4% in 2012, according to the California New Dealers Association. California is Tesla’s largest market. Something big needs to be done to help the Bay Area company, which has lost money every single year of its ten years of existence. And taxpayers are going to be shanghaied into doing it.

To make this more palatable, you have to dress this up as something where others benefit too, though the biggest beneficiary would be Tesla because these California subsidies would replace the federal subsidies when they’re phased out.

It would be a rebate handled at the dealer, not a tax credit on the tax return. And it could reach “up to $30,000 to $40,000” per EV, state Senator Andy Vidak, a Republican from Hanford, explained in an emailed statement.

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 EV 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).

The Tesla Model 3 would be tough to sell without the federal $7,500. But this new bill would push Californian taxpayers into filling the void. It would be a godsend for Tesla.

AB1184 would be a huge expansion of the current Clean Vehicle Rebate Project which has doled out 115,000 rebates for $295 million to buyers of EVs and hybrids since 2010, averaging about $2,550 per rebate.

Under AB1184, hybrids and hydrogen powered cars are not included, and rebates for plug-in hybrids are slashed – perhaps to keep Toyota’s technologies at bay.

Even the current, relatively small Clean Vehicle Rebate Project has been lambasted as a subsidy for the wealthy who can afford to spend $100,000 on a set of wheels. A study, cited by the Mercury News, showed that of nearly 100,000 rebates, over 80% went to Californians with incomes over $100,000. This notion of a subsidy for the wealthy also applies to the federal rebate.

So California’s program was adjusted last year to cut rebates for wealthy buyers and increase rebates for low and moderate income buyers. That hurt Tesla. Another reason for a new program to make Tesla whole.

I admit, I’m not totally impartial. Our next car will be an EV. Something with the performance of a Chevy Bolt would be able to handle 99% to 100% of our driving needs – commuting in the Bay Area and driving to surrounding recreational spots, and very rarely a little further. We don’t haul horse trailers across the Rockies.

By the time we’re ready to get rid of our internal-combustion-engine car, battery technology will have improved further. We’d even pay a little more, just to get the benefits of an EV. My wife drives 45 miles a day; she’d no longer have to go to the gas station. The EV would be charged at night in our garage. Fuel savings would be substantial. Maintenance hassles and costs would be slashed – a benefit for me. And EVs are great to drive.

We’ll buy that EV even without incentives if they go away by then, though we’ll try to maximize any incentives with a grateful nod to our beaten-up fellow taxpayers. But piling on incentives is no longer the way to go. Piling on incentives that might be $10,000 or $20,000 or more per vehicle is insane. Piling on incentives to support a money-losing company that will soon lose the benefit of the federal subsidy is going way too far.

How will the funds be extracted from taxpayers? California’s Cap and Trade has already been short-listed. Senator Vidak, whose district is beautifully gerrymandered from Fresno to around but not including Bakersfield, put it this way:

“Now the state appears to be in the business of subsidizing a billionaire’s company (Tesla) and millionaires who want to buy these boutique electric cars. In my backyard, where I live, people are very, very poor, and they are already paying into Cap and Trade. If Cap and Trade continues to go forward, that could add another 40 cents, 45 cents, maybe more to the cost of a gallon of gasoline, for those folks… [who] are still not going to be able to afford these $70,000+ cars.”

“Electric car companies are having trouble making it in the market-place without heavy government subsidies. So they propose this law to not only boost their sales but also to ace-out their competition. The Legislature is once again picking winners and losers in what is supposed to be a free-market.”

The bloodletting among Tesla short sellers has become legendary. Read…  4 Short Sellers Explain Why They Target Tesla – But Don’t Try to Do this at Home

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

  160 comments for “Is California Bailing Out Tesla through the Backdoor?

  1. Jim C says:

    I wonder that when this will last. California does not have ability to print money and tax people to the roof. No matter how this sounds good for the environment. If not within my price range, I am not buying. Simple, period.

    • Wolf Richter says:

      During the next stock market swoon, California will once again issue IOUs – as it did in 2009 because it ran out of money. The state is enormously dependent on capital gains tax revenues. And stocks have been booming for years. So for now, the state is swimming in money. It’s easy to promise to give away $3 billion in later years. Let someone else figure out how to find this money then.

      • Jim C says:

        Not to mention the CALPERS. How is that going to workout when the pension explodes? Who bails out who?

        • Realist says:

          California is probably hoping for a Democrat-run administration in DC the day reality is going to rear its ugly face …… although I suspect any administration would cave in the day California would need a bailout.

          After all Puerto Rico is laying the groundwork for bailing out California and other states although Cali will have a lot more political clout compared to those poor puertoricans …

      • Willy2 says:

        – Right. Tech stocks (think: FAANG) have made a very large move higher and are about to go crash.
        – And now the federal government wants to get rid of the property tax deduction (for federal taxes). That will hurt California right between the eyes.

      • Tim says:

        Half my neighbors here on the water in Newport Beach have Nevada plates on their cars. It’s where they “live”. I “live” in Arizona. I’m not giving one dime more than I am forced to to these insane idiots in Sacramento.

        • IronForge says:

          Greetings, Mr. Richter.

          First time Poster, JPN-born US Navy Veteran, and a Fan of your Site.

          I’m in SoCal, close to SpaceX and many TSLA Cult followers.

          IMHO, PHEVs(including the Volt) and HFCVs, may be better buys in California since (rolling) brown/blackouts do occur (and one may have to wait awhile for a charging station to be available). Models from DEU and JPN Majors are worth monitoring.

          The deals with the HFCVs (by TMC, HMC, and future rollouts from their Partners F and GM) are attractive due to the Infra Buildout.
          1) Fuel Costs are on the House for 3 years – I spoke with someone who signed a 3 year Lease – no Fuel Costs involved :-)
          2) One can drive from San Diego to SFO/Sacramento on H2 at the present, with more being built in-State and beyond.

          BEVs may get a bit too restricted. The Bolt/i3/Leaf appear too small and anemic. The Battery Only ranges of newer PHEVs now make most non-swappable Passenger BEVs obsolete.

          If Fuel Costs are a point of contention, those HFCVs may be a better deal for you.

          Best Regards

    • richard says:

      Why don’t the people of America Wake the “F” Up and learn that Elon Musk is nothing more than a FRAUD!!! His so-called fancy electrick car gimmick hasn’t made in a DIME in the 10 Years in Business and “SPACE X” is yet another FRAUDULENT SPACE PROGRAM that goes nowhere but into the Ocean after Lift Off and NASA continues to STEAL $ TRILLIONS from everyone..I sometimes wonder why people are so stupid to believe these sort of folks are HERO’S when all they are is a bunch of CON ARTISTS just like the Orange Headed Idiot running the Cuntry???

      • Suzie Alcatrez says:

        You can watch the Space X take offs and landings live on YouTube.

        They are not a shame.

        • Gary says:

          Yes, I had my doubts about Space X, but the recent ones have been pretty impressive (actually sent a real payload into space then landed in re-usable condition).

        • Jarhead John says:

          2006–First launch fails at 33 seconds.
          2007–Engines shut dow prematurely…fails orbit.
          2008–Launch with James Doohan’s ashes aboard fails as separating stages collide.
          Peter Thiel saves the company endeavor with emergency cash.
          2015–Rocket vaporizes shortly after launch.
          2016– Rocket explodes at launch.

          Hope you enjoy the view!!!

      • alex in san jose says:

        The term I’ve heard for Tesla is “Subsidy Dumpster”.

        Like any snake oil show, you shoot rockets, fire off fireworks, have dancing girls, hire a brass band, whatever brings in the money. In tesla’s case it’s make glorified golf carts and shoot a few rockets off.

        I’m not sure how much of this news is getting out to the nation at large but all reports are that Tesla’s a horrible place to work and the pay is below-standard; in other words on a par with all the other glittering shitshow “tech” companies here.

      • intosh says:

        If, and it’s a big if, any of his ventures succeeds, to the sheeple it is thanks solely to “free market” and genius entrepreneurship. People are so freaking stupid.

      • J Bank says:

        Per a 2 second Google search, if you can put down the caps lock key for that long:

        “NASA’s FY 2011 budget of $18.4 billion represented about 0.5% of the $3.4 trillion United States federal budget during that year.” So no, not trillions.

        And in case you wonder how wisely that money is invested in the hands of the greatest scientists on the planet:

        “For every dollar invested by the government the American economy and other countries economies have seen $7 to $14 in new revenue, all from spinoffs and licensing arrangements. That amounts to in $17.6 billion current NASA dollars spent to an economic boost worth as much as $246.4 billion annually”

    • Wolf Richter says:

      Here’s Porsche’s coming compact car – a four-door baby Panamera:

      All Porsche 911 models are actually sub-compacts! Starting at around $100K

      There are a lot of other high-dollar compact cars: BMW 3-series, including the M3, all kinds of Mercedes Benz models, the Infiniti G-35 and the successor models (“Q30”). Lexus has some nice high dollar compacts. Audi is big into high-dollar compacts…. You name them, they have them.

      “Compact” is a reference to wheelbase and occasionally to curb weight (depends on who is doing the defining). But it’s never a reference to price. Some of the most expensive cars out there are compacts.

      • BDWaters says:

        Not sure how CA would define compact car but no one thinks compact car when they think of a Porsche. They think sports car. CA would have to narrow the definition of compact car but I would not be hard to exclude sports cars or to put a price limit on the car. It is obvious that the spirit of the bill it to encourage the purchase of smaller, less expensive EVs like the Model 3 and the Bolt.

    • Wolf Richter says:

      Oh, and the article didn’t even mention the Tesla S or X. In terms of Tesla, it was about the Model 3, as you might have noticed if you read the article.

      • L T says:

        So, saying $100,000 Tesla doesn’t mean the Model S or X? Yeah, right. You have no idea if the Model 3 will reach $100,000, be that wouldn’t have made this article as interesting if you had said $70,000. Also, Tesla is doing its best to be a 50 states company and Elon Musk has even said that he doesn’t want subsidies. No, I don’t agree with California’s new incentive plan. But don’t demonize Tesla just because they may benefit from stupid big-government regulators on the Left Coast.

        • Wolf Richter says:

          READ the article, for crying out loud before you spout off this nonsense. This is what it said:

          “… a subsidy for the wealthy who can afford to spend $100,000 on a set of wheels.”

          Tesla is NOT (repeat: NOT) the only EV maker out there. By the time this subsidy becomes law and gets funded (if it does), EVERY major automaker, including the high-dollar German automakers, will have EVs on the market, if they don’t already have them.

          For example, even Porsche, a late-comer to EVs and a former EV denier, now is pushing deeply into EVs. They’ll all cost way over $100K

          But Tesla is the ONLY automaker that will lose the Federal subsidy in 2018. That’s why the CA subsidy will help Tesla the most – particularly its Model 3, which is what I heavily discussed in the article.

  2. BoyfromTottenham says:

    Hi Wolf,

    It sure sounds like a Tesla bailout to me, from here in Oz. Let me see, Tesla is based in Kali, the federal rebate for all its cars will halved shortly, Tesla says its going to sell lots of Model 3s that will ensure that rebate goes to zero in the next 12 months, the Model 3 will probably cost about $10-15k more than an equivalent ICE, and the Kali bill has a new way of calculating the rebate that gives an even bigger rebate to electric cars priced waay above the ICE equivalent. Yes, it ticks all the boxes. Well spotted Wolf!

    • Lee says:

      A Tesla would be ‘perfect’ for South Australia – you know with all their solar and wind power and the upcoming giant Tesla battery coming to that state soon, maybe, whenever……….

      Just don’t plan on charging your EV this summer though as Victoria shut 25% of its generating capacity in March (You people in SA, NSW, and QLD can than us in part for that 20% increase in electricity prices on 1 July as a result).

      We’ll get our share of the next price rise on 1 January 2018 – another 10% increase or even more………….

      Hopefully it won’t be too hot this summer in the wonderful world of Oz or in South Australia or you won’t even be able to make toast let alone charge an EV with all the blackouts coming. Super hot, cloudy, and no wind – perfect!!

      And the other states can forget about any extra electricity from Victoria as we won’t have any either.

      Wonder what will happen to the public transport system if there is no electricity?

      Oh, probably a meltdown like last week where 175,000 people were stuck on trains and on platforms during the peak rush hour home as a result of a computer fault.

      Yeah, the world’s worst ‘most liveable’ city – as long as you don’t drive, take public transport, use electricity, eat, or have to buy a house!!!

  3. Marty says:

    “We’d even pay a little more, just to get the benefits of an EV. My wife drives 45 miles a day; she’d no longer have to go to the gas station. ”

    Ah, Wolf, why don’t you apply a little math to your situation, and calculate the break even on your cost savings with an EV? And don’t forget PG&E–you’ll be paying a higher rate–and the replacement of the batteries. You could post it on your site so everyone can see.

    Jim C, electric cars are NOT “good for the environment,” as you correctly imply. Do people really think the electricity coming out of their walls is zero emissions????? Please… And who considers the environmental degradation of fabricating the parts and assembling the cars? Not the greenies, that’s for sure.

    • Wolf Richter says:

      We’ve already done the math. That’s why we’d pay a little extra up front. Savings during ownership are substantial for us, with the kind of driving we do (stop and go). And the reduction in hassles (getting gas, maintenance, etc.) is important too. We’re not doing it to be “green.”

      • ian says:

        Not sure about the US but in the UK your electricity is cheaper at night. The big assumption is that our grid will be just fine with all the extra kws that petrol used to provide because everyone will charge at night when consumption is lower. 2 problems with that logic, firstly this is like doing an engineering design using averages. An average does not exist in reality. Similarly everyone will not charge at night for many reasons. Secondly, as soon as usage goes up at night it will no longer be off peak and the power companies will charge accordingly.

        • CrazyCooter says:

          Some utilities have special charging units and rates – basically
          you plug in when you get home and the charging base kicks on after hours according to programming. There is a manual override – which would be at the normal rate.

          Not sure about SF, but they offer that where I live.



      • cdr says:

        In some retirement communities, golf carts are an excellent means of travel for most people on most days. The Tesla takes that concept and applies it on a larger scale.

        Government shouldn’t be in the golf cart subsidy business, even if they’re super deluxe golf carts.

      • Nathan Brazil says:

        Why Tesla though? If “the math” is your only consideration a Prius Prime makes much more sense. With your driving habits it would be in electric mode 99% of the time, but if you found you suddenly had to travel across the state you needn’t change vehicles.

        Of course it’s not a “Tesla” and perhaps you value the cachet?

        • Wolf Richter says:

          No one said we’re buying a Tesla. In fact, for reasons I explained elsewhere in this thread, we almost certainly NOT going to buy a Tesla. If I HAD to buy an EV TODAY, I’d buy a Bolt. But three years from now, when we’re ready to buy, the scenery will have changed, and we’ll look at everything on the market.

      • TJ Martin says:

        As strictly a short drive commuter and in N. California’s temperate and close to sea level climate EV’s are reasonably viable though if you truly do the REAL math including the projected lifespan of the vehicle you’ll still lose money in the end . And if you do the cradle to grave carbon footprint analysis .. you come out an even bigger loser . As far as taking it to recreation areas … think again Wolf .. and keep an ICE in the garage for such uses

        As for the VOLT/BOLT and any of the other Korean garbage EV’s built on ICE platforms masquerading as Chevy’s .. just say no ,,, head up the road a bit … and buy an i3 … if you must have an EV . The ONLY EV in production that IS … a bespoke EV .. not an ICE with EV trimmings

        As for TESLA ? Suffice it to say they’re the DeLorean of the 2010’s and deserve to die a quick and sudden death ,, before they bankrupt everyone within reach …. ;-)

    • Jim C says:

      Howdy Marty,

      Where can I buy a unicorn as good as Tesla? It seems pony and carriage work if we are seriously talking about good for the environment. Bicycles works best, plus a good workout. Cheers.

      • JK (the other John) says:

        Hey, I like that. And unicorns fly too right. Avoid the traffic, fly a unicorn.

        • cdr says:

          Yes, but flying unicorns as carriage providers must use EPA approved diapers to avoid polluting the environment. Otherwise, riders / flyers MUST turn back and scoop.

    • kraigie says:

      I thought the scientists worked out that even coal for electric car was better emission wise than gas. It makes it easier to phase in renewable sources, since the consumer no longer cares how the energy is generated. Besides the biggest problem is the pollution on the congested road/ streets (Asthma,etc) near large populations. The more people their are, the more cars Much better to pump emissions high up via chimneys in remote power large populations. (There is a reason steam engines and their dirtier coal had chimneys not tailpipes) Of course public transport is even better but electric cars are an easier sell (especially know we have secondary market and recycling options for batteries)

      • Gibbon1 says:

        A lot of cities in the developing world have terrible air quality problems[1]. And import most of their oil[2]. When electric cars become cheap enough those countries will outright ban the importation of gasoline cars. The petroleum industry in the US can buy off politicians, whine and propagandize all they want, but that will happen.

        [1] Thing about air pollution. El Presidente breaths the same crappy air as everyone else in the capital.

        [2] The leaders of countries that import oil hate the hit to their trade balance it represents and probably hate the dependency it represents even more.


    • RepubAnon says:

      The pollution issues from electric cars come from the batteries – lots of pollution from mining and manufacture.

      However, lectric cars don’t need much in the way of routine maintenance. Repack the wheel bearings every now and then, rotate the tires, and you’re good. No oil changes, no tune-ups… a friend of mine used to do maintenance on electric forklifts versus propane-powered forklifts. The electric forklifts were much cheaper to operate. Battery replacement was the only real cost.

  4. tony says:

    Only reason i’m in san diego is the weather. Otherwise if it makes no sense screw loose california will pass it. I am sure they will find a way to put some of the money from this to save some piece of shit nothing like ant’s mabye.

  5. SF Giants Fan says:

    Tesla’s lobbyist are earning their keep. They must do whatever is required to keep some form of a tax rebate alive.

  6. Pillowtalk says:

    Maybe I cant’t see it as clearly as our politicians. But what incentive does (in this case) Tesla have to reduce the cost of their cars if a third party will cover the difference to a car of similar capacity?

    In this case wouldent the opposite happen, it is in Teslas interest to keep the prices high to the taxpayers dismay?

  7. Stevedcfc72 says:

    Hi Wolf,

    So what you’re saying is without these subsidies Tesla would be finished?

    Whilst I think the EV is the future of vehicles, no business should get public incentives to help their business. If its such a good business surely private companies would invest?


    • Thor's Hammer says:

      Its amazing how people can ignore reality staring them in the face when it contrasts with their ideology.

      The internal combustion engine in our automobiles is subsidized in multiple ways:

      1- Medical costs, health effects and loss of life associated with its pollution.
      2- Cost of climate change degradation due to its contribution to increased Co2 in the atmosphere and the oceans.
      3- Underpricing of the value of mining and extraction on public lands.
      4- Public funding of road and bridge infrastructure to make it viable as a transportation device.
      5- Direct and indirect subsides through tax breaks.

      And this is just a partial list.

      Its disingenuous to criticize subsides for EVs during their introductory phase while ignoring all the subsides for the fossil fuel industry that help make it dominant. The real question is what kind of future we want to encourage.

      1- Is development of personal EVs as a transportation system desirable?
      Perhaps EVs are a bad idea because it is time to abandon the concept of individualized private transportation?

      Oil is finite and will not be able to be used for low priority uses like transportation in the future. If we do not drive over the Seneca Cliff of societal collapse, what should we replace it with?

      2- Are EV’s a long term solution, a bridge technology, or simply a delusional diversion in the face of biosphere reality?

      3- Is there a better model for technological development than subsidizing the most politically connected billionaire industry pioneer?

  8. Realist says:

    Now I’m beginning to understand why Tesla has anounced that they are looking into building a battery factory in Europe. Playing different governments or regional authorithies against each others, Tesla is trying to extract as much tax incentives and government subsidies as possible ( if the new factory is ever built ).

    The fact that plebs are sponsoring the luxuries of the elite, well, that has been the name of the game for quite some time, thus California’s new proposition is nothing new under the sun, although it is somewhat “juicier” than subsidies usually are ….

    Btw, I have undertood that Tesla’s revolutionary, incredible battery technology isn’t owned by Tesla, instead it is licenced from Panasonic, am I correct ? If I’m correct, the a nice percentage of the Californian plebs’ money are going to flow into Japanese pockets ;)

    • Petunia says:

      While I don’t like govt subsidies for industry, the reality is that most states are now vying for any kind of manufacturing to come to their states and are giving away all kinds of subsidies. So, I don’t think what CA is doing is such a bad idea. I like the idea of them attaching the subsidy to the car at the dealership because that will open up a flood of out of state sales for them. I’d go there to buy one.

      Since free trade agreements gutted our economy, we are going to need legislation to bring it back. I see this as industrial policy playing out on a smaller scale. We are going to have to subsidize employment, one way or another, to bring it back. and this is only a start. Free trade is only free for some people.

      • alex in san jose says:

        Because California believes as much as the rest of the US in Supply-Side Jesus, we believe things like the Civilian Conservation Corps or Basic Income are dirty rotten Communism. But, if we subsidize an electric buggy company and that hires proles who would otherwise be digging through your trash cans and stealing your dog’s food, that’s an acceptable way to filter dollars to the proles. As long as most of those dollars get to stick to fat cats’ fingers, of course!

  9. Dan Romig says:

    As Richard Ebeling has eloquently opined, this is a choice of ‘Personal Freedom Versus Political Paternalism’.

    If California passes this measure and the Governor signs it, it will be, in the words of Alexis de Tocqueville, “democratic despotism”. “The sovereign power extends its arms over the entire society; it covers the surface of society with a network of rules. It does not break wills, but it softens them, bends them and directs them; it rarely forces action, but it constantly opposes your acting; it does not destroy and it does not tyrannize, but it hinders, it represses, it enervates, it extinguishes, it stupefies, and it finally reduces each nation (the state of California) to being nothing more than a flock of timid and industrious animals, of which the government is the shepherd.”

    Wolf, all the best to you and your wife. I hope you do buy, and take utility from driving a new Tesla Model 3, but I do not believe that the US or California should in any way subsidize your purchase. Subsidies are a case of the government being an active player in people’s affairs. It is coercion to make people behave in a manner considered desirable by those who wield political authority.

    Senator Vidak is spot on in his comment, “The Legislature is once again picking winners and losers in what is supposed to be a free-market.”

    • Wolf Richter says:

      I agree with you on subsidies. But we’re unlikely to buy a car from Tesla. There is already good competition, and in three years, there will be a dozen models out in the category we’re looking at.

      BTW, the Model 3, which is just now in hand-made small-volume production, is already behind in some key technical features. It will be essentially a beta version for the next year. It will be very unreliable with lots of problems – just like the early S models. Eventually, Tesla will work out the kinds. But experimental cars are not for us.

      • alex in san jose says:

        Wolf – BMW makes a small electric, I saw one buzzing around the other day. Hard to beat BMW build quality.

        There’s also the Toyota (?) Mirai, a hydrogen buggy. There’s a hydrogen fill up “pump” at the corner gas station by me. I’m sure they have ’em in the City.

        • Wolf Richter says:

          Yes, a few months ago, I posted a list of some of the US, German, and Japanese EV models available in the US. There is starting to be a real choice.

  10. Gibbon1 says:

    Considering the reasonably small amount of money involved California is doing the right thing by continuing to bootstrap it’s EV industry. Basically this is what China and the South East Asian countries all do.

    What California should do is slap a carbon tax not on gasoline, but on the cars themselves and use the money to subsidize alternatives. Carbon taxes on fuels is bad politically because it hits poor people hard. A Carbon tax on new gasoline cars just encourages people to change what they buy to get out from under it.

    • Bobby Dale says:

      Would a carbon tax on new ICE vehicles simply send buyers across state lines? Would buyers opt for used vehicles? Would this slapdash tax punish lower income people? Would it punish industrial and agricultural buyers? I am unaware of any electric small trucks scheduled for delivery in the next few years.
      Car ads of the future, cone to Vegas/Reno and buy your car, get two nights free in hotel.

      • Gibbon1 says:

        Two things allowing people to arbitrage reduces the sting. And thus the political blow back from the policy. The second is at least initially, the carrot (subsidies) are bigger than the stick (taxes).

        Consider is 90% of new cars sold are IC/ 10% EV. If you have a $500 average carbon tax on the IC you can you that to fund a $5000 tax rebate on new EV sales. Anyone not buying new cars won’t be effected. Except as we’ve seen with a subsidy used EV’s will be very much cheaper.

        • Bobby Dale says:

          So you put forth that the person who can not afford the EV will be happy to pay an additional $500 so that the person who can afford it can save $4500(not $5000)?
          Furthermore farmers, construction tradesmen and others who MUST use a vehicle which is not available in electric will pay just because they see the benefit to subsidizing the people whom they perceive to look down on them?

  11. pete says:

    We have an inordinate amount of subsidies thru-out the system. Trump proposes to eliminate the ‘state tax’ break, which allows New Yorkers & Californians especially, but for all Americans to write off their state taxes, like they do their contributions to charity! Oil & gas extractors also are logically & hugely subsidized with breaks, and why not as almost nothing but life itself is more important than energy… I mean who wants to live again by ‘horse’ power alone. Best…PJS

    • Raymond C. Rogers says:

      They are state tax subsidies, not breaks. Why should I have to pay more federal taxes because I choose to live in a state that is somewhat responsible with its expenditures?

  12. unit472 says:

    I live in Florida and its hot now . My A/C runs on high most of the time. My car and truck use a tiny percentage of the available horsepower to power the A/C. The reverse issue occurs in Minnesota or Michigan during the winter though here waste heat from the motor is used to warm the car interior. EVs don’t have spare horsepower or waste heat so, while it may not matter too much in coastal California on most July days, it sure would be an issue in Lake Tahoe in winter or Needles in the summer and batteries don’t like extreme temperatures.

    Just how do EVs deal with A/C and heating requirements and are they required to disclose how range is affected by what is, in most of America, NORMAL driving conditions. Claiming an EV can go 250 miles between charges but only if the ambient air temperature is 75 degrees and you do not turn the headlights and other typical auto accessories on would be like claiming your ICE car can get 40 mpg if you only drive a steady 55 mph on an empty highway..

    • Ethan in NoVA says:

      Agree that EVs are best in areas with moderate temperature. Heating uses more power than cooling in them as far as I know, so one thing people do is to pre-heat the car while it is still plugged in. You can do this to cool it as well. My co-worker’s he can activate it from his phone so when we get outside it’s ready to go. EV owners in the winter are more likely to ride to work with it chilly versus taking a hit on the power.

      Also, the outside temperature can affect the battery performance significantly. Some cars cool (and maybe heat?) the battery packs some do not. Those that do not — range suffers a bit depending on the weather.

      Even if half the US vehicle fleet is electric half is petrol I don’t think that would be bad?

      Tesla is the most exciting thing that happened to cars in a long time. They triggered adoption of electric-only cars. And it’s not their fault that the speculators drove their stock so high :-) Also, Elon Musk didn’t start Tesla.

    • RD Blakeslee says:

      Not to mention a genuine assessment of the U.S. power system’s capacity to supply the extra electricity needed for a switchover to electric cars, including how much extra fossil fuel is needed to generate the added power.

      In addition to high-capacity transmission capability, Some parts of the “last mile” grid would need expensive capital expenditures, While it may be true that one living in the Bay area could rely on his garage convenience outlet being up to the task, grid substations supplying power in low population density areas may not be.

      Also, a genuine assessment of the costs, financial and environmental, of battery production on a scale needed to supply energy equivalent to that now supplied by IC engine fuels. Included would have to be an assessment of lithium extraction compared to petroleum.

      • Wolf Richter says:

        RD, most EV owners charge their EVs at night when there is almost no load on the grid. Utilities love EVs because they create demand during a time when this massive capacity is largely idle. So it will take a lot less infrastructure build-out then you think.

        • Mark in Denver says:

          Is PG&E still using those roving brown-outs in the summer because the electric capacity has reached the limit? Pretty damn hot in the Bay Area right now. It is 100 F in Novato right now. What about the Central Valley, don’t think they need AC in the summer nights? My point is the electric grid capacity is near its limit in the summer. Now add all those EV owners trying to charge their car batteries, day or night. Who pays for the needed infrastructure build out?

        • Wolf Richter says:

          In the 11 years I’ve been here, I’ve never encountered a roving brown-out. That’s a southern Cali threat … they retired one of their nukes and had that Aliso Canyon debacle that hit the natural gas storage and supply. But those threats have not yet been fulfilled either.

          We had a big transformer blow up in SF that caused a blackout in part of the city. And we had a big storm cause some problems, and the like. But nothing happened in SF due to high demand.

          Check the grid load charts. Grid and generating capacity is designed to be able to handle the biggest demand spikes during the hottest days. That’s how much capacity the system has to have in place. After those spikes in the late afternoon/early evening, demand starts dropping and by midnight there is plenty of idle capacity, even on hot nights.

        • Realist says:

          The infrastructure of built up areas will probably be able to handle a large switch over to EVs, but what is the situation in rural areas ?

          For me to switch over to an EV instead of an IC veichle would mean that it would cost an arm and leg ( a huge 5 digit amount ) to connect our summer places ( one in the south, the other up north) to the electrical grid, now we do just fine with a combo of gas and solar. In addition, the electrical grid in many rural areas isn’t robust enough.

        • Wolf Richter says:

          Yes, if you live off the grid, you’re probably not a primary target customer of EV makers at this point.

          There are other people for whom an EV is not the solution, depending on their driving and towing needs. But that’s the same with ICE vehicles. That’s why there are different ICE cars and trucks to satisfy different needs.

    • alex in san jose says:

      Unit – Way back before I lost everything, I had an 05 Prius. Initially the mileage was in the 60s then it went down and down … Like any good repair tech I wondered what the problem was and worked on isolating it. I had a theory the car came with special tires that make the mileage good and as they got worn, the mileage went down. But not wanting to buy new tires, I decided to work on my driving style and see if it was that instead. I gradually, by driving more smoothly and calmly, got the mileage to 62.x and kept it there. Even up at 6000 feet elevation. Warm, cold, day, night, on the highway it’d go higher, near 70, but even in the mountains I kept it above 60.

      Just by thinking ahead and thinking more like a bicyclist. No hyper-mile foolishness, no being a slug and pissing other drivers off (they’re pissed off enough all on their own) just being smooth.

  13. cdr says:

    Tesla – Finest golf cart made in the world.

    Tesla – (on a road trip) – Well, we’ve gone our 200 miles. Time to park for the night and fill up.

    Tesla – (used) – Only driven to the grocery store and back because that’s as far as it could go before needing to be plugged for the night.

    Tesla – great car if you can find someone else to pay for it for you.

    • Wolf Richter says:

      You really don’t know, do you? Amazing.

      The Chevy Bolt has a range of 238 miles. Some Teslas have a similar range.

      There are charging stations all over the place here. There is one on the corner from us. It takes about 30 min to charge the battery enough for 150 miles or so. Friend of mine has a Nissan Leaf and loves it. He doesn’t have a garage. So uses charging stations. He has a big commute. So once a day, he sits in his car for 20 min., doing email and sipping coffee, which he’d do in his office otherwise, while the car charges up. It’s really no biggie. And this stuff is getting much faster every year.

      For us, this would only apply on trips (once or twice a year) since otherwise we’d charge in our garage. We don’t drive 10 hours straight anyway, ever. They made planes to cover those distances. Our trips are 1-6 hours. But we never drive more than 2-3 hours before taking a break. That’s the time to charge for 30 min, go to the bathroom, stretch out a little, and have a bite to eat or a cup of coffee. It’s really no biggie.

      • Kasadour says:

        We take one or two long road trips a year. It would drive me crazy to have to stop every 200-ish miles for 20 minutes and pretend it’s ok as long as I have coffee and a donut. That a lot of coffee and donut/muffin.

        We when take roads trips, we tend to peel off 6-7 + hours of driving with one quick stop for potty. I have a BMW diesel- X5. Love it. It gets great mileage.

        Charging stations aren’t all over the place here yet.

        • Jas0n says:

          Kasador, stop the whining .. no one is telling you to buy an electric car. If you want to drive an ICE they will be around for decades.

          Electric cars are coming. If you don’t like it just bury your head in the sand.

        • cdr says:

          With a chevy bolt, the fastest recharge possible is 90 miles for 30 minutes assuming a special plug-in is available and there is no waiting line for the charge. I suspect all EVs are similar, they just don’t talk about it much. Full charge on the bolt takes 9 hours using the best plug. A 120 volt outlet gives you 48 miles after 12 hours of charge.

        • T.J., not the real TJ says:

          Memo to myself..

          Never go on a road trip with Kasadour unless wearing a Depends

        • alex in san jose says:

          What I don’t understand is why people forget rental cars exist. You can have your EV and the 1-2 times a year you do a long road trip, rent an ICE car for the trip.

          It’s like these people who drive huge SUVs around because they go to Tahoe a time or two a year.

          A friend of mine had a big van for everyday use but we’d do these long trips and rent a car for that. It was kind of fun. Toyota Avalon; awful car mainly because of the awful seats. Plymouth Neon with the V-6, fun.

        • Kasadour says:

          Unless wearing depends. . . >>>

          Haha, very funny.

          I make frequent road trips (2 a year) from Portland to Vancouver BC (because it’s cheaper to fly out of BC to Shanghai and there are no direct flights from PDX). I do stop. I just don’t wanna mess around with charging stations and muffins. Fair enough.

      • cdr says:

        You miss my point completely:

        An EV is a very local commuter car – around town and plug in at night – it’s like a golf cart – a very upscale golf cart. Common in retirement communities. Tesla and others expand the concept – but it’s still a local commuter cart – a restricted use specialty vehicle at a high price.

        The BOLT has a fast charge mode, assuming you can find a plug when you need it or you will have to adjust your route to find a plug-in receptacle.

        Super fast: 30 minutes for 90 miles with special plug in. Fast: 30 minutes per 25 miles. 9 hrs for a full charge at home overnight.

        Hopefully the battery will get you to the emergency room if you need it to. Not practical in any way for a main vehicle. Thus, it’s a 2nd or 3rd car and only for specialty limited uses.

        Only a minority of people could consider it as a main vehicle. More power to them but NOWHERE is it pumped up as a specialty vehicle. Media and most imply by reference it’s a substitute for a mainstream vehicle. Or militant eco-dummies don’t stop to think a little; they treat it as no different from the family station wagon, especially since the government helps pay for it.
        Per Chevy on standard recharge cycle: (see link above and click some links there)

        Things to consider

        Most U.S. homes are equipped with 120-volt, 3-prong wall outlets
        With a 120-volt outlet, you should be able to replenish the battery, based on an average commute, with an overnight charge. A 12-hour charge will give you about 48 miles of range

        The key is to plug in every day after work so you never empty your battery. That way, you’re just topping off what you used earlier that day

        240-volt home charging unit is recommended and is the fastest way to charge at home

        You may want to delay charging until utility rates are at their lowest off-peak prices, which is usually at night while you sleep


        • Dan Romig says:

          When I bought my home long ago, it had a 100 amp breaker panel with all 120 volt outlets. My TIG welder needs a 240 volt supply, so all it took was to swap out two 120 volt breakers for one 240 volt breaker and wire up the new breaker with an outlet to fit my welder. I used a good quality wire that’s long enough for me to weld either inside or outside. One tip is to not coil up any extra length of wire so you don’t make an inductor out of it.

          Cheap, easy to do, and if the breaker panel is in one’s garage, a perfect way to charge your EV.

      • cdr says:

        Per Chevy, a 30 minute recharge won’t get you very far unless you stop at specially equipped truck stops. Perhaps only 25 miles. No more than 90. I bet the wife and kids would love the inflexibility and the frequent stops. (“Honey, can we take the good car today? I want to get there.”)

        • Wolf Richter says:

          No charging station uses 110V chargers. They all have fast chargers.

          Even at home, you’d likely use 220V, just like your central AC.

          Friend of mine regularly drives from San Francisco to LA, stops once to recharge and take a short break. Like I said, no biggie. People do it all the time… this isn’t future stuff.

      • Wolf Richter says:

        Look, no one forces you to buy an EV. You can buy whatever you want. I have no problem with that. Why do you have a problem with other people buying EVs? Why is it that this decision by other people gets up your ire so much?

      • Lee says:


        While I have driven the Chevy Volt at my previous job numerous times and found it ok, the car reminds me of nothing more than a big golf buggy.

        Quiet and smooth, but subject to lots of repairs. Not popular here in Oz at all. Drove one the first time about three years ago. Also too expensive to buy. Can’t remember exactly, but think they were around the high 60 or low 70 thousand dollar area.

        Japan is another story. Perfect for those living in the big cities. Lots of charging stations and some of them are even free.

        Cheaper electricity than Australia too.

        • Wolf Richter says:

          Yes. Makes sense. I have no interest in a Volt (with a V). Hybrids are way too complicated. The beauty of EVs is their simplicity (except the dang battery). So the Bolt (with a B), a pure EV, is a different story.

      • alex in san jose says:

        That the Bolt is Korean-made makes me think better of it – I love my Samsung flip phone that refuses to die.

  14. beadblonde says:

    “Who will the funds be extracted from taxpayers?” Did you mean which taxpayers will pay?

  15. R2D2 says:

    I’ll be honest; I’m envious of Elon Musk. You have to be pretty sharp to so easily extract so much money from the tax payers.

    The poor bastard who mugs people at gun point should take notice. You don’t need a gun to rob people.

  16. james wordsworth says:

    It all pales in comparison to the subsidies provided to big oil and the military industrial complex. If you saw the real price you should be paying for fueling up an ICE car then a ZEV would be a pretty good deal, no doubt.

    That america can spend one half of the world’s expenditures on defense, but not have enough for decent health care, education, or a realistic energy policy says a lot about how screwed up the place is.

    Is Musk trying to work the system – of course, but the system is messed up to start with. Play by the rules and you will go bankrupt pretty quickly because the folks you are competing with are “cheating” too.

    Musk has done a great job popularizing ZEVs and on the rocket side as well. Not saying he is perfect, but the stuff he is working on is a heck of a lot more reasonable than Exxon or Raytheon or Lockheed.

    • California Bob says:

      “That america can spend one half of the world’s expenditures on defense… ”

      And many of the expenditures on ‘defense’ are ineffective at best, and disastrous at worst (see: 35,F).

  17. Michael Fiorillo says:

    Ya just gotta love those Glibertarians, with their touching “faith” in the “free market.”

    • JaS0n says:

      Michael, don’t be so naive.

      Your cheap ICE fuelwas made feasible by taxpayer funded wars and hundreds of thousands of innocent lives being lost to secure your gasoline “free market”

      Get a clue

  18. GSH says:

    Interesting subsidy concept. If this goes through what prevents Tesla from pricing $100k over comparable ICE vehicles? The tax payer will make up the difference. The sky is the limit.

    Of course, this will only work in CA. So I expect the price in CA will be at a premium over other states/countries.

    I remember Cash for Clunkers. Overnight prices went up $5k to “account” for the tax payer subsidy. And people thought they were getting a deal.

  19. nick kelly says:

    Good piece. Only thing I’d query is ‘battery tech will have improved by the time we get rid of our internal combustion car.’

    Maybe, but won’t this need a fundamental breakthrough not just a continuation of present rate of progress. Li-ion battery tech is pushing 40 (30 since marketed by Panasonic ) but that’s what is going into Tesla.

    There is something about an internal combustion engine
    that gives it an inherent advantage: the great energy- density of fossil fuel.
    Also, it only needs to carry a small portion of the inputs needed for the chemical reaction, combustion, which requires a fuel/ air mixture.
    Off the top of my head, I think its something like 1 part gasoline to over 100 parts air.
    Of course if it HAD to carry both components of its cycle it would be completely impractical.

    • Wolf Richter says:

      The improvement in battery technology and costs has been nothing short of amazing over the past few years. And it all has been incremental. So I assume – true, this is an assumption – that the pace of incremental improvements will continue.

      • Rob JM says:

        Batteries can only go so far, lithium cannot be improved so once they perfect that there is no improvement. Hydrogen fuel cell is the ultimate. High energy density of fuel plus highest conversion efficiency to power plus no polution. Compressed air can also work well.

        • Hydrogen, like lithium, is a battery, as is compressed air

          ie, you put more energy into the hydrogen energy system than you get out of it as usable power.

          Currently, we are searching for the ”holy grail” energy system that gives a return of 100:1 like oil did in the 30s and 40s.

          Sorry, but those days are over. We are having to run faster and faster just to stand still.

          It isn’t possible to run and economic infrastructure that was built on cheap energy, using expensive energy.

          In any event EVs cannot function outside a hydrocarbon based infrastructure

    • Gary says:

      Excellent observation nick kelly. It’s great to hear from someone who actually has a concept of energy math.

    • California Bob says:

      “Off the top of my head, I think its something like 1 part gasoline to over 100 parts air.”

      Um, no. From Wikipedia:

      “The stoichiometric mixture for a gasoline engine is the ideal ratio of air to fuel that burns all fuel with no excess air. For gasoline fuel, the stoichiometric air–fuel mixture is about 15:1[1] i.e. for every one gram of fuel, 15 grams of air are required.”

      Actually, the stoichiometric mixture for an ICE is 14.7:1 air-to-fuel, but 15 is close enough.

    • Jim Graham says:

      Stoichiometric AFR ratios:

      Calculated by weight (mass) , not volume.

      Gasoline – 14.7 to 1

      Straight alky – 6.4 to 1

      Diesel – 14.5 to 1

  20. RangerOne says:

    A push to subsidize electric cars strikes me as a waste of money. First this is not Hong kong. $35k on a car is about the median amount a Californian pays for a car anyway… certainly they could easily lease a car for that price…. given the average US car payment is over $350 clearly everyone has enough money for a $35k car…

    Secone electric cars are semi meningless for the enviornment unless the grid is powered with clean energy.

    Otherwise I don’t feel an overwhemling need to bash Californias legislature as every lopsided state Democrat or republican of any substantial size is grossly missmanaged… California will survive any recession as long as we don’t go into permanent drought or tech perminently implodes.

    Ideally I would think the best legislature may be a near even split between Repub and democrate. With waffling between governers from each camp.

  21. Michael says:

    Now that they have locked in their latest “slush” fund the transportation tax they are rushing to spend it on their favorite projects

  22. Bobber says:

    You have to have a garage so you can plug in the EV at night. Who can afford a garage in California, when crap shacks go for $2M?

    Also, why not just ride a scooter? 100 mpg. Low maintenance. Low cost. They go 30-40 mph or more. Great range. Great fun. Plus, they can be rigged to carry your groceries.

  23. SteveB says:

    Which auto manufacturers do you imagine will still be in business 3 years from now, Wolf?

    • Wolf Richter says:

      All the big ones, for sure.

      • Bobby Dale says:

        Is Chrysler/Fiasco a “big one”? ;)

        • Wolf Richter says:

          It is.

          Hence, even if it goes bankrupt, it will still be around afterwards, in restructured from, as GM’s and Chrysler’s bankruptcies in 2009 have shown. Big brands like this go on, though equity holders may lose their stake and some of their creditors may lose their shirts.

  24. Perry Maskell says:

    Another hidden subsidy that the EV folks are getting that is paid by ICE consumers is the tax levied on gasoline that is used to pay for the infrastructure. In other words, EV drives get to use most highways for free….

  25. Kf6vci says:

    Thanks for this – I read this here first.

    Audi A2, VW’s Lupo. Small lightweight cars with Diesel engines giving 60 mpg. Steel being replaced by carbon fiber. Reduce ICE’s weight by 500 lbs and use the latest engine designs (ceramic cylinder blocks with less cooling requirements)?

    Innovation is good. I’m for saving energy. But EVs don’t cut it, JMHO. The infrastructure adjustment will be very expensive. Not to mention the job losses everywhere!

    • nick kelly says:

      The engines don’t weigh 500 lbs now.
      The Audi 2 liter is about 350.

    • California Bob says:

      “… ceramic cylinder blocks with less cooling requirements?”

      Not gonna happen:

      Note this article is nine years old; heard much about ‘ceramics’ lately?

      • nick kelly says:

        Although I am a skeptic about a battery ‘break through’ I am more skeptical about the same for IC.

        The concept of limits to technology is not very popular. There is a consensus that the tech we will have in as little as ten years from now will be dramatically different than today, even though today is not dramatically different than ten years ago.

        A poster child for a plateaued tech is commercial aviation. If you travel air today you travel at the same speed as over half a century ago, about 500-550 miles an hour.

        With air resistance increasing geometrically, each increment past this speed is purchased at great cost.
        Concorde was a brave try although it never made an operating profit, let alone its development costs.
        Even streamlined like an arrow, with half the seats of normal, it still needed half its take- off weight as fuel to overcome the fundamental physics.

    • alex in san jose says:

      WV Lupo? Really?

      But then, they did make an SUV called the toe-rag

  26. JaS0n says:

    Wolf, PLEASE help clarify the MASSIVE subsidies being showered on fossil fuels in the form of multi hundred BILLION dollar wars, lives lost and what not. Apparently folks forget how these subsidies existed for a century.

    There’s clearly a misconception on the “free market” for fossil based fuels.

  27. walter map says:

    Tesla is a failed business model even with the cheap foreign labor.

    Hence the need to become another corporate welfare queen.

    Becoming a billionaire requires some combination of exploitation of the poor, gigantic welfare entitlements, financial fraud, monopolistic practices, and tax evasion.

    Behind every great fortune lies a great crime.

    – Honore de Balzac

    I’m sure there may be an exception yet to be identified. But I doubt it.

  28. Shawn says:

    If I were Toyota and GM, I would be piling into battery powered cars, despite how ridiculously outdated this technology actually is. In 1884, an inventor from the UK named Thomas Parker built the first production electric car in London using a his specially designed high-capacity rechargeable batteries. The dude is credited with electrifying the London Underground and tramways in Liverpool and Birmingham. Ya, EV vehicles are that old.

    • Shawn says:

      Oh, Ford Mystery EV, Hyundai, the New Nissan Leaf will both run 200+. And the Leaf looks a lot sexier than the Model 3.

  29. R Davis says:

    In Australia – HOLDEN put forward – The Holden Volt –
    On Youtube the promo: video is titled – Introduction the Holden Volt – How it works.

    Have a look at the add & yearn for the mechanics of this vehicle & the $2.60 per day that it costs to fill up.

    I found the Volt quite by accident – the price tag was aprox: $50.000 – way out of reach of the ordinary bloke & it look’s like an OLD COUCH –

    According to HOLDEN Australia The Holden Volt turned out to be a LEMON – or so they say.

    But if the concept of a duel fuel car was feasible – HOLDEN needed to target sales to the average Australian income & make it look a little more appealing to the average buyer & NOT THE PRIESTHOOD.

    The US government is offering $3 BILLION subsidy to Tesla … WHY ?
    Better the US government feed the $3 BILLION through the shredder.

    • R Davis says:

      If we were truly & sincerely concerned about “climate change” – we would have looked at the Holden Volt & worked out ………..
      Exactly what ………..
      Exactly which bit ………
      Of the SIMPLE MECHANICS of this BASIC car ……
      Actually went wrong

      If the will to put a viable automobile on the road were actually there.

      Elon Reeve Musk is the owner of Tesla Motors – isn’t he that billionaire genius who wants for nothing ?

      • R Davis says:

        There is no Rocket Science to this car – it is all basic stuff.
        So one can only guess what went wrong ?

        • R Davis says:

          I have a Pathrider Mobility Scooter that we could add a 2 stroke lawn mower “engine” to – a little modification & Bingo duel fuel.
          it could be the little cousin to The Holden Volt.

        • nick kelly says:

          There is nothing that pollutes like a 2 stroke lawnmower engine. In fact the two- stroke anything would never meet emission rules anywhere.

        • alex in san jose says:

          The ring-a-ding era of motorcycles was great fun but yeah, 2-strokes are filthy.

  30. Just Another Nobody says:

    Yet another California subsidy on the backs of renters who couldn’t charge their car over night if they wanted to, nor afford a Tesla.

    Taking Santa Clara County (the gut of ‘Silicon Valley’, and the most populous county of Northern California) as an example: even the 2010 census showed over 50% renter occupied residences versus owner occupied in quite a few large suburbs such as East Palo Alto, Mountain View, Santa Clara and Sunnyvale.

    Given the massive amount of horizontal Apartment Homes and Condos (many likely foreign owned for purposes of stashing wealth, renting and flipping) recently (and soon to be, in San Jose’s case, which, according to the 2010 census, still had more owner occupied homes) sprouted around Facebook, Apple, and Google (San Jose will be Google’s next victim).

    Imagine the power blowouts that would occur if they were to plug in EV’s over night, I guess eventually they won’t be allowed to own cars at all despite the stunningly overpriced and inefficient public transit and the should be illegal surge pricing going on in transportation.

    • Just Another Nobody says:


      Given the massive amount of horizontal Apartment Homes and Condos (many likely foreign owned for purposes of stashing wealth, renting and flipping) recently (and soon to be, in San Jose’s case, which, according to the 2010 census, still had more owner occupied homes) sprouted around Facebook, Apple, and Google (San Jose will be Google’s next victim).

      Oops, incomplete sentence. I had intended to add that those (never noted on The News) renter occupied versus renter occupied percentages have increased significantly since that 2010 census; as has and will, the working homeless populations in those areas.

      Additionally, given now entire long blocks of towering rental housing (though never neighboring those areas where the publically subsidized politicians live) where there used to be one story family owned businesses and mobile home parks, there would have to be entire long blocks of EV charging stations if it takes 20 minute to charge one up (and once again, can we say POWER OUTAGE). Welp, that would blend in quite nicely with the delivery robots and 5g cell towers on every block (see SB 649) around the corner.

      How quickly forgotten it was that Company Towns are particullarly brutal to all living and caring beings; they never will be democratic as they are designed for the profit of the company versus the society surrounding it.

      • Just Another Nobody says:

        correction, in bold: renter occupied versus owner occupied

        • alex in san jose says:

          Nobody – checking in from San Jose right ‘cheer. I live in a commercial building so I pay commercial rate for my juice, an electric car would be right out. Unless I charged it off of solar … I have 18 solar panels 40W each … (they’re for sale BTW) so that could work.

    • Just Another Nobody says:

      Speaking of horizontal rental housing and power outages in Santa Clara County , do you still live in San Francisco (as regards the below quote from you) Wolf?:

      There are charging stations all over the place here. There is one on the corner from us. It takes about 30 min to charge the battery enough for 150 miles or so. Friend of mine has a Nissan Leaf and loves it. He doesn’t have a garage. So uses charging stations. He has a big commute. So once a day, he sits in his car for 20 min., doing email and sipping coffee, which he’d do in his office otherwise, while the car charges up. It’s really no biggie. And this stuff is getting much faster every year.

      If you do still live in San Francisco, what is the percentage of renter occupied housing to owner occupied and what percent of renters own an EV (electronic vehicle) and what would happen if all the renters bought an EV vehicle?

      • Wolf Richter says:

        Just Another Nobody,

        Apartments that have garages have garages whether the person in the apartment rents or owns it. It makes zero difference.

        If you drive down the streets in San Francisco, you see that the ground floor of nearly all multi-family buildings (most buildings in SF) is a garage floor. Larger buildings, such as high rises, have big parking garages.

        That said, there is not enough parking for ALL cars in the garages, and plenty of apartments don’t come with garages, so for these people, it means street parking, whether they own or rent the apartment.

        Street parking can be tough because you can’t block garage doors, and there are garage doors everywhere.

        • Just Another Nobody says:

          So, do you know the ball park percentage of property owners to renters in SF? (I couldn’t find it on the wiki for San Francisco,, interesting, as for most, if not all, cities in Silicon Valley’s Gut – Santa Clara County – the 2010 Census Demographics are noted (e.g.,_California#2010, yet another thing one might despise about Little Jimmy Whale’s gold mine, I digress).

          I’m assuming there are far more renter occupied residences than owner occupied In San Francisco (as in most major cities?). I’m also thinking that your of the belief that EV vehicles are utterly geared towards property owners even as renters are not only required to subsidize them, but they are also implicitly faulted for not buying one, no matter how impracticable and utterly unaffordable it is for them. I very much appreciate the fact that you don’t support those California and Federal subsidies, thank you!

          After all, renters would likely be harder put to convert that unaffordable vehicle to a street home (e.g. 07/12/17 Working poor finding homes on four wheels in Mountain View It’s a new phenomenon, say city officials and social workers ) when the rent explodes one time too many; especially if it costs far more (thinking of Alex in san jose’s comment re the $60 tab) to fuel that EV. And too, I wonder what the insurance payments for a not payed off EV would be if one were a working homeless person (or whether it would even be possible find an insurer)?

        • Wolf Richter says:

          About 65% of the homes in SF are renter-occupied (2010 Census).

          I’m not sure I follow your logic. EVs are NOT “geared” to homeowners (vs renters). It helps to have access to a garage, and many renters have a garage. Since they occupy 65% of the homes in SF, they have access to the majority of the garages.

          That said, my friend who has a Nissan Leaf doesn’t have a garage and charges up at public charging stations.

          Renting is VERY expensive in SF unless it’s a rent-controlled unit that the renter has been renting for many years. No unit built after 1979 is rent-controlled. No condo that is rented out (many are) is rent-controlled. No single-family home is rent-controlled. Hence, many renters have to deal with market rents. And this costs a ton. So for many people, incomes need to be pretty high just to scrape by in SF.

          But it’s cheaper to rent in SF than to buy. If the income is the same, renters have more money left over after housing costs. So I don’t think your distinction between renters and owners concerning an “unaffordable vehicle” applies. If it is unaffordable for renters, it is even more unaffordable for buyers, all else being equal.

        • Just Another Nobody says:

          no rush dear, but I’ve got a response to you in spam, just to let you know (three ‘hyperlinks’: two wikipedia links, one Alden Capital/Mercury News link (oh, and, speaking of which, do check out Digital First Media Workers [dfmworkers . org] ) likely snagged my comment up).

        • Just Another Nobody says:

          I was referring to renter occupied residences (which include apartment buildings with either no garages, or those where less than a handful can charge up over night), not renter occupied Homes. I was referring to the percentage of those who rent versus those who live in owned Homes.

          Also, I’m getting that in San Francisco it is a bit different (as it would be, because the initial gut of Silicon Valley was orchards, with family homes wide apart, though I’m still interested as to how many horizontal apartment residences there are currently), but further southish in Santa Clara County – a far higher population – where over 90 percent of apartments and condos (vertically, or horizontally built) have no garages where one can charge overnight (if they do, there may be maximum 3 or 4 chargers for the hundred and then some dwellers). We’re talking about a reality (including vast power outages) where it can only be assumed that EV vehicles are absolutely geared towards home owners, otherwise, especially given the last few years of exponential horizontal Apartment Homes and Condos (mostly rented out, as they are fairy long term unlivable), vast entire blocks of EV fuelers need to be instituted if renters were considered in the equation.

        • Wolf Richter says:

          Most rented residences are in multi-family buildings. In much of the city, there are practically no single-family homes (houses). When I say “home” I mean any apartment, condo, TIC, co-op, single-family house, etc. So maybe that was a little confusing.

    • DK says:

      A lot of comments about charging at night, but I could see how many people will want to charge their vehicle while at work or some other activity where the car will be sitting for a few hours before being driven again. This will be far more day charging than is being discussed.

      • ft says:

        EV owners at the company where I last worked started lobbying for a charging station. Not a problem in itself, but they wanted it free which, in essence, means they wanted the rest of us in the company to subsidize it, and that is a problem. Bunch of Musk juniors.

  31. MASTERMIND says:

    Just do a youtube search for “Tesla Problems”. All sorts of electrical issues. Also Tesla has the big issue that there are only around 86 million garages for around 250 million vehicles in America. So they will never have very much market share no matter how cheap or how much they perfect them. Without a place to plug them in. They are worthless to the majority of Americans and people of the world.

  32. jo6pac says:

    So musk get free money from NASA to build rockets and now my state Calli will pay him to build cars. Looks like wealth fare to me.

  33. Bobby Dale says:

    Questions abound:
    Highway maintenance is paid for via taxes on fuels. What considerations are made for replacing them on EVs?
    If California disburses the subsidies at purchase, will it be restricted to residents of California? This could get very expensive otherwise.
    Can a company which has never turned a profit, while receiving large federal subsidies and having no competition survive in a competitive environment and receiving subsidy in California only?
    Would you purchase a car from them understanding this concept?
    On a personal level, in the case of extended large scale blackouts, think earthquakes or hurricanes, what mode of transportation will you have? 300 miles is not far.Most Gulf Coast states have laws mandating gas stations have generators to ensure availability of motor fuels. Will you be able to reach an area with a functional electric grid?

    • JungleJim says:

      Bobby, your whole problem is that you think in straight lines. You’ll never be able to understand politicians or central bankers like that. You have to lean back and think of possibilities, the bureaucrats will take care of the details. (sarc)

  34. Kevin says:

    Tesla sold 6 cars Q1 in Denmark after the subsidy was taken away.

    As an over-taxed-already-Californian the idea of bailing out a failing company like Tesla makes my blood boil. We need to let companies fail. Investors must take a bath. Privatizing gains and socializing losses is a recipe for disaster.

  35. Joe Smoe says:

    Long time silent reader.

    As a mechanic in California up on all the smog issues, etc. what no one seems concious off (for all the investment talk here) is that carbon-exchange efficiency (mpg, etc.) is not linear and returns plummet after about 60 mpg/equivalent.

    For the money California is going to give the rich, they could just give away newer conventional vehicles (heck the fed could have) to increase the state non-commercial fleets net fuel efficiency. If this was really environmental that would be the direction to go.

    It might even balance out the damage from cash for clunkers… that actually cost jobs,etc.
    And, lucky thing… I hear car dealers are desperate for unloading inventory.

    But that won’t happen. That would offend people to give out new cars for free…

    So we should call this program what it is, “up to four free Nissans for the rich!” but they in turn have to support the debt bubble to get it!

    As a conservationist I hate that California is seen as representing the movement. There’s nothing Green here.

  36. Realist says:

    Considering the future of IC veichles, the Chinese are going for non-IC veichles, the Chinese owned Volvo is going to phase out IC engines, India is going to phase out IC by 2030, France is to end all manufacturing of IC by 2040, Norway is going to end sales of IC by 2025 ( and Norway is an oil producer, although in decline ), where do these developements leave the US with its military-industrial complex and the eternal US oil wars ? Are the US going to invade countries like Bolivia, Chile or Finland to grab their Lithium deposits instead of trying to grab the oil of Iraq and other countries ?

    • Lee says:

      While you are on on an anti-American rant, could you please list the countries where the US has stolen their oil. Country name, date, and amounts please.

      Did the US steal Iraqi oil?

      If so, how and who is getting paid for it? Please list amounts and prices.

      Please back up your statements with facts.

  37. Roman T. says:

    Subsidies are everywhere and seem to be part of this politically managed economy. Doesn’t mean I like them either. And who bailed out GM and the others? Hmmm.

    I drove a Tesla once. A very nice car and easy to drive. Too many gadgets for me. Range is 250 miles which is plenty for most but since it’s electric only it requires logistical planning for long trips.

    But the electric motor sure does simplify the vehicle and you also have a lot of extra room. A rear and forward trunk.

    IIRC Germany is going to forbid combustion engines by 2020 in the large cities.

    I say put conditions on the subsidy. Tesla needs to make a pickup truck for under $20,000.

  38. Thomas says:

    Has anyone looked at how many Rare Earth materials are in a battery automobile? Does anyone here know which country controls 95 percent of Rare Earth materials? How does one dispose of an old battery. An ICE can be recycled. Without looking at the supply chain and environmental issues this could end badly.

    • Wolf Richter says:

      Rare earths are everywhere, including in the US. They’re not “rare.” They’re just horribly messy to mine and process. And so that activity has moved to China. If prices are high enough to make it worthwhile, rare earth mining and processing could be restarted anywhere.

      Batteries can be reused (utilities are experimenting with it) and they can be recycled.

  39. Raymond C. Rogers says:

    Since some are in the buisiness of telling what to do, I’ll throw in my 98 cents.

    Wolf skip petrol and the EV, find a clunker and put an 8 foot tall gassifier on the back. Make sure you use something like Cedar or Cherry so the rest of us can enjoy the pleasant smell. And, uh, only use it when the weather channel says high pressure systems are moving in for efficiency and all.

  40. raxadian says:

    Tesla should have lost the subsides money the moment it’s self driving car killed someone. The tech is still in Beta stage at best and most likely still not suitable to use for real. The fact they pushed to use it anyway in public to inflate the seld driving cars bubble is horrible.

  41. ft says:

    I think that most people are unaware of shenanigans like this subsidy. If they were aware of it, every Tesla out there would have key scratches down its flanks and a broken windshield.

  42. Lune says:

    I agree with Wolf that this new subsidy plan is ridiculous. But I don’t understand the vitriol of the commentariat towards Musk. Is Tesla’s stock price irrationally high? Probably, but that’s not Musk’s fault. Blame whoever is buying the stock. Musk himself has said on several occasions that he thinks the stock is overvalued. And unless he’s found to be cooking the books, the company’s finances, and the need for ongoing capital infusions, are in the open. So why blame Musk for someone deciding the risk is worth it and buying shares?

    I’m not a koolaid drinker (I sold my shares after he bought SolarCity b/c I thought that would tank the company — something I regret in hindsight :-), but Musk has created the most significant new American auto mfger in a century, massively advanced the case for EVs (much of it may be pre-existing tech, but no one else put it together like he did) forcing every other auto company to finally announce their own, and in the process has created tens of thousands of good paying American manufacturing jobs. This is the type of stuff we *should* be subsidizing, at least until the industry is more mature and can stand on its own (sort of like solar and wind subsidies).

    Similarly, SpaceX is on track to have 20 launches this year, and so far, each has gone perfectly, including a couple using re-used rockets. In the process, he has put massive pressure on existing launch companies (like ULA and Ariane) to lower their prices. The biggest reductions are supposedly yet to come as they reduce refurbishing costs and launch costs start to approach refuelling costs, but even if further reductions never come, he’s already done more to shake up that industry, than anyone in 50 years. IMHO, whatever subsidies he’s received have been well worth it, because we’ll make it back 10 or even 100x with reduced launch costs for NASA and the Pentagon. Not to mention put a dagger in the real sucker of the federal teat, the incumbent rocket company ULA.

    At the end of the day, whether Tesla or SpaceX goes bankrupt or not is only of concern to their investors. But I’m glad there are still people willing to take those risks and put their money where their mouths are. He could have instead coasted on the billions he already made. While criticizing their business models, or the tech, products, etc. is certainly valid, it seems people these days are so cynical, they’re actually rooting for Musk to fail. And then bellyache about how all the jobs are going to China. What, pray tell, *should* we be supporting, if not guys like Musk?

    P.S. No I don’t work for tesla or whatever. And I actually think they’ll be overtaken by incumbent car mfg’ers once they finally get their act together and build decent EVs. But that doesn’t diminish what he’s already done, and I’d be happy if Tesla succeeds and becomes a major American automaker.

  43. Chris says:

    Tesla will be the next Enron. Elon Musk only survives on government subsidies. If his inventions were as cost effective as he claims, corporations, not the government, would be investing in it.

  44. alex in san jose says:

    Welp, folks, I was walking back from the light rail station this evening, and decided to take a look at the hydrogen filling station at the corner gas station.

    It looks like if you have a hydrogen car, you have a card you put into the machine so your account can be charged, and they know who you are – useful for data like how much you’re driving your car, where you’re filling up, etc.

    Hydrogen is sold by the kilogram and the price is $16.66 a kg. The last user had bought about 3 kg, costing him $60-odd so I think there are some taxes on there too.

    The pump is simple … you plug it into the car, turn the spigot, and lift a lever on the “pump” and in the H goes. It would be interesting to watch someone fill up so I’ll have to keep my eyes peeled when I’m walking or riding my bike by.

    In fact that station is a microcosm of Silicon Valley itself. Cars that cost what a house used to pass through there, along with everything else down to some real jalopies. The mini-mart there is run by a bunch of nice old Sikhs, and there’s always a high school dropout security guard around, making more for standing around than I could for soldering circuit boards. There’s generally a knot of homeless people hanging around behind the mini-mart, but tonight it was one homeless gal working on her Max Max bike/trailer or something, and getting told to shove off by a big security goon. I guess the beer and cigs get-together held by the homeless there may be discouraged now that they have a fancy new hydrogen station.

  45. The discussions going to and fro on this subject miss the point:
    prosperity gave us wheels, wheels have not given us prosperity

    The growth in material prosperity over the past century has been mirrored by the growth in personal transport. We go where we want, when we want on a whim.

    The energy released from fossil fuels has given us that prosperity, nothing else.

    Unfortunately this anomaly of nature has become skewed in our collective thinking. Now we regard continued access to and use of wheeled transport as the key to infinite wealth and prosperity. As long as we have wheels, everything is going to be OK, wheels are the key to our future.

    It’s not the journey that creates wealth (on our current terms), it’s the purpose of our journey. What we do when we get there, not the travel itself.

    we have convinced ourselves otherwise.

    So building millions of EV’s won’t solve the ultimate energy depletion problem, because we must have energy input (fossil fuels mainly) to create ongoing employment .

    As energy inexorably depletes, so will our journey-purpose. the 50mile commute will no longer have purpose, so no matter how sophisticated and efficient the EV, if there’s no reason for it, it will not be used.

    If there’s no ”employment purpose” travel will become pointless. Nobody commutes in a 100 mile circle.

    This explains the futility of it in more detail:

  46. HudsonJr says:

    Ignored one other subsidy. Use of the HOV lane.

    Back in about 2011, use of the HOV lane was relegated to Leafs, Volts, etc. There was no status symbol, it was about people buying these vehicles in order to aid their commute time and the incentives also helped. Most wealthy exec types clung to their BMW, Mercedes, etc, the lone exception being the less pretentious crew that have been in the area for many years. The less pretentious were often “enthusiast” users taking pride in finding ways to make a given trip work with limited access to charging stations.

    However, once the Model S arrived as a luxury EV with an HOV pass just as the Bay Area started to blow back up traffic-wise following the ’08 crash. It was a status symbol and commute-hack all in one. It also grew entitlement. Tesla drivers would often hog charging stations to “top off” or just take them because of prime locations. Employers that had limited charging stations now had fights on their hands because VPs would take spots that a Leaf owner actually needed to make sure that he made it home at night.

    Now there’s a war on a new front. The HOV lane in many locations is now only slightly better than the other lanes, making those who bought EVs, particularly Teslas angry. There’s an angry mob claiming 30-40% of people are cheating the HOV lane and demanding enforcement. I have no idea how they are supposed to enforce it, when many of the HOV lanes occupy what used to be shoulder. So there’s no easy place for officers to sit or pull people over. And then there’s the cost aspect of it, wasting resources on what honestly has to be the bottom totem pole of criminal priority.

    And that begs the question. If everyone is actually concerned about pollution and HOV being crowded, why not move the 0-emission EV cars back to the regular lanes? They can happily sit in traffic without polluting anything.

  47. Roman T. says:

    Technology really will be able to solve a large number of problems here. Drone/autonomous/UTV(unmanned terrestrial vehicle) is and will be the answer to these transportation issues.

    Way fewer people will need to own cars. The cars that do exist will be autonomous and that means more efficient use of the roadways and EVs fit this plan (and this is the plan).

    You’ll subscribe to an EV schedule and the EV will show up (giving you high resolution data of its arrival time) and you get in and it takes you where you asked it to. Probably there will be others in the EV.

    All managed by the system.

    No more parking spaces, no garage at the house for a car (still need one for bikes, etc., but smaller. No driveway.

    Much smaller public parking garages (or none at all). No traffic jams because autonomous cars will all be in sync. The autonomous EVs will be 24/7 and can charge themselves as needed. They will also provide free networking via mesh tech.

    This is not far away at all. The high precision/accuracy GPS satellites are already up (IIRC).

    So what’s this to do with Tesla? California benefits from having a EV maker (or two) in the state. Don’t forget Apple are working on their EV too.

    One citizen’s subsidy is another’s bailout.

  48. Johnathan W says:

    Tesla will be fine without a rebate. The 400,000 people waiting on a Model 3 aren’t going to drop out because they can’t afford the extra $7500 that they aren’t getting off.

    Once other auto manufacturers start making electric self driving cars, then we can talk about Tesla being in trouble.

Comments are closed.