Updated California ZEV Rules Cut Credits To Tesla, FCVs Get More Than Double

California’s Air Resources Board has announced Tesla’s Model S will receive fewer ZEV credits under revised rules while fuel cell vehicles will be eligible for more than double.

Under previous rules, the Model S was eligible for up to seven Zero Emission Vehicle credits, but this is being cut to four, and fuel cell vehicles are eligible for nine.

The rules were and are a perk for Tesla which is free to turn around and sell its credits to automakers needing to comply with California regulations. Being a small company, Tesla is not required to have ZEV credits, and being exclusively an EV maker only, it is free to sell all it earns if it wishes.

California’s rule change delayed from October now tentatively classifies the Model S as a Type III ZEV due to the speed at which it recharges. Yes, the Supercharger capability is relatively quick, but not as quick as a hydrogen refueling in a few minutes.

Further, California’s rules now assess how a ZEV is actually used, and do not weigh the classification toward theoretical best-case capabilities.

After a public review period, the California board said the final rule will be imposed.

“Right now it looks as though it will continue to be Type III ZEV until it demonstrates fast refueling,” he said ARB spokesman Dave Clegern.

Tesla is proposing to implement its already demonstrated battery swapping technology but this so far has not been put into public service. Further, even if Tesla does, it will be required to document in detail the extent to which battery swapping is being used.

The bottom line appears to be Tesla can profit less from selling ZECV credits. It declared net earnings of $11.2 million in part boistered by selling ZEV credits.

These are sold to automkaers at a supply and demand price that’s not regulated by anyone.

One analysis estimated Tesla may have profited as much as $100 million total to date from ZEV credit sales to automakers.

By 2025, aggressive California rules stipulate sales of 1.4 million ZEVs in the form of plug-in hybrids, battery electric and hydrogen fuel cell vehicles be sold.

The rules shine on FCVs as delivering a range and refueling experience as close to a traditional gas car does today, a point noted with displeasure by Tesla.

“The apparent preference for fuel cell technology appears to call into question California’s commitment to a California company employing thousands of people making thousands of zero-emission vehicles today,” Diarmuid O’Connell, Tesla’s vice president of business development, said to Bloomberg.

Bloomberg