
GM and Fiat Chrysler Unmasked as Tesla’s Source of Cash - thenaturalist
https://www.bloomberg.com/news/articles/2019-06-03/tesla-s-secret-source-of-cash-unmasked-as-gm-and-fiat-chrysler
======
wongarsu
> they reached agreements to buy federal greenhouse gas credits from Tesla.

In other words it's not much of a statement about Tesla, it's just a credit
system working as intended. Tesla has credits left over because they don't
sell ICE cars, GM predicts that if the next president is Democrat they might
need more credits so they buy now while they are cheap.

~~~
new_realist
If Tesla were serious about advancing sustainable transport, they wouldn't
sell credits to polluters. By enabling others to pollute that much more, it
undoes much of the benefit from buying a Tesla.

~~~
ceejayoz
"We can go bankrupt, or we can let our polluting competitors fund our R&D.
Which should we choose?"

"Oh, definitely the bankruptcy."

~~~
jagannathtech
It's amazing how many here are so disconnected from reality....

(ps. the id of the person you are replying to :D )

------
zaroth
> _GM’s credit purchases illustrate how challenging the U.S. fuel efficiency
> requirements are getting, even for automakers that are adding more zero-
> emission vehicles to their lineup._

Hardly. It mostly illustrates how many trucks and SUVs they sell.

~~~
village-idiot
It’s not hard to make those fuel efficient, it’s hard to make them fuel
efficient cheaply all while maintaining the performance that customers expect.

~~~
8draco8
It's hard to convince customers that they don't need huge SUV or pickup truck
to drive solo to work in the office. On top of that there is clear, design
trend especially in pickup truck world to have biggest, most vertical grill
that is possible. Moving such wall trough the air at highway speed is far from
efficient. No matter how badly Fiat wants to sell cars like small and
efficient Fiat 500, Tipo, Alfa Romeo Giulia etc. that can be sleek and good
for environment, in USA they will mostly sell huge RAMs, Jeeps and muscle
cars.

~~~
ajmarsh
Some of these trucks are being driven solo by people who live on an onion farm
just FYI. Also, my truck gets better mileage than a Giulia. I live in the
midwest and sure there are guys who don't need a truck but most of us do.

~~~
_s
I can pretty much guarantee a beat up old FWD car will tackle pretty much all
towing and farm driving (having lived and worked on a farm). For the really
gritty stuff on the farm you have your tractors and earth movers and whatnot.

What makes the biggest difference is the tyres you have on a vehicle are
suitable for the terrain you are using them in.

In the US, Australia, Canada etc - pick up trucks or utes are just a symbol of
working class just as much as Tesla and Prius's are for the green-friendly
crowd.

~~~
saalweachter
Eh, there are applications. A pickup truck mostly becomes necessary when you
need to do both "heavy" and "far", when your alternatives are a car and a
tractor. There are some loads, eg, towing a livestock trailer to market, where
it is too heavy for a car (or even too small of a truck) to tow, and a tractor
would be infeasible from a "speed" perspective.

(But yeah, you definitely don't need to be using your 4x4 pickup as a people-
mover most of the time, and even most hauling applications a truck performs
can be handled by a car with a rather modest trailer.)

~~~
HeyLaughingBoy
Correct. But if you already have a truck that seats 4 or 6, there's not a
whole lot of incentive to buy a car for commuting.

------
carlsborg
~$200M/year, and it isn't a strategic cash infusion, they have to.

"Tesla has generated almost $2 billion in revenue from selling regulatory
credits since 2010"

"If [other car-] manufacturers don’t sell enough non-polluting vehicles, they
have to purchase credits from competitors like Tesla to make up the
difference."

How much is that relatively?

TLSA 2018 revenue: $21B net income: -$1B

~~~
lazyjones
> _~$200M /year, and it isn't a strategic cash infusion, they have to._

$420m last year and rising steadily.

~~~
carlsborg
I wonder who brokers these things.

~~~
deepGem
Yeah I can imagine a marketplace driven by demand/supply logistics. Short of
saying Uber for ZEV/carbon credits :)

------
matjazdrolc
Wasn't this reported two months ago?
[https://www.theverge.com/2019/4/8/18300393/tesla-fiat-
chrysl...](https://www.theverge.com/2019/4/8/18300393/tesla-fiat-chrysler-
credits-european-union-emissions-fines)

~~~
sanxiyn
That was EU credit, this is US credit.

------
Theodores
Something is not working with this carbon credit market, the article says
demand for electric cars is not there so the auto makers can't generate their
own credits. Yet people who are into EV cars view the big three as well as the
German marques as not even trying.

I bet that selling the credits was never in the Tesla business plan. But it is
now!

~~~
Shivetya
warning, I ramble quickly

Because the market isn't there. I know we like to believe otherwise but the
majority do not care. They will reply to a survey with what the expect the
person asking wants but at the end of the day they have no reason to change
their buying habits.

I really enjoy my Tesla 3 but I am a fan of sedans and coupes. The Y will make
it more useful to some but even then it won't solve the immediate issue. That
for all their supposed warts petrol powered cars don't require you to change
anything you are currently doing. The habits we have established over
generations are so ingrained that the time spent fueling and maintenance is
not an issue. Now of course they could just plug in at home but people see the
costs for charging station installs and say screw it. Infrastructure won't fix
this. EV's just don't match petrol cars in common capability in the eyes of
shoppers.

Finally, there just isn't enough coverage of the type of vehicles people are
buying let alone at any reasonable price. Don't get fixated on the average
selling price of cars to determine where an EV should be priced. Vehicles not
clean sheet designed to be EV show their failings right up front and cause
people to price compare to the petrol version; this includes the Chevrolet
Bolt, the Hyundai and Kia cars, and even the Audi and Jaguar cars. Those last
two are both incredibly disappointing on range.

Range also is only considered valid for fair weather or better. Get into the
40F/4C ranges and watch your range go goodbye. I can travel anywhere in the US
easily with the 3 without concern but not in winter, I do damn well better
than any other maker's EV in that regard. Range needs to be much higher to
offset any concern owners have, to let them be lazy in charging. Charging
speeds aren't too much of an issue but will be once range comes up.

Another option in the range category is, get mid one hundred mile range models
out but get them as close to 20k without tax incentives. that might get some
of the local only crowd to jump but that is a very price sensitive area.

~~~
larzang
Infrastructure is absolutely the deciding factor for those of us who are not
suburban home owners. I live in a building which has 1 EV space for
200-something units. I work in an office building which has 2 EV spaces
installed, but they're reserved for the Tesla-driving building owners. There
are no public charging stations remotely convenient to either location.

My next car will absolutely be a Prius/Insight/Ioniq, but a full EV is not a
reasonable consideration, and not because of range or habits but 100% because
of infrastructure. Despite a majority-freeway commute I still pass 5 or 6 gas
stations going to and from work every day. I ought to be passing at least one
charging station.

~~~
sokoloff
I daily drive an electric for the last 4.5 years. I can't see what possible
good _passing_ a charging station on my highway commute would do me. If the
car isn't going to naturally rest there, that charging station is only useful
for emergencies, IMO.

(I bought the LEAF with the intent to mostly charge at home. Since then, our
company moved and we have chargepoints at work, but I agree with your overall
point that no charging at home or work is a deal-breaker. I disagree that that
is meaningfully ameliorated if there was an intra-commute charging station.)

~~~
xienze
> I can't see what possible good passing a charging station on my highway
> commute would do me.

Helping people not driving an electric understand that charging stations exist
and are in abundance, thereby alleviating concerns that an electric will leave
them stranded. I know where at least ten gas stations are in my normal driving
radius, and where some are in adjacent towns. I have no clue where the nearest
charging station is, even though I'm aware that some exist. To the average
person, it appears as though charging stations don't exist at all and gas
stations are in abundance. It's a mindshare thing.

~~~
sokoloff
I'm not sure that "here's a place where you could park and charge for 2 hours
in the middle of your commute home" is a positive influence for adoption.

~~~
Klathmon
well to be fair, with a Tesla Model 3 it's not "park and charge for 2 hours",
it's "park and charge for <20 minutes" in most cases. (assuming it's at a
tesla supercharger)

I feel like throwing out exact numbers is disingenuous at best since a lot of
things vary charge rate (state of charge, temperature, type of charger,
etc...), but 20 minutes will almost always get you to the next charger or a
destination in the Model 3.

And while I agree it's not quite "charge on your way home from work", it is
something that at least Tesla is working on. Their "Supercharger v3" stalls
cuts the stop times roughly in half in the ideal situations. And IMO "stop for
10 minutes on the way home" is absolutely acceptable.

~~~
sokoloff
Yes, but the Tesla Model 3 already has enough range for most to charge 2x per
week at most. It's the $20K 80 mile electrics that have legitimate range
anxiety issues, not the $40K 200 mile electrics.

My LEAF has a fast charger (CHAdeMO) and a 6.6kW Level 2 charger. My car has
seen a CHAdeMO charger exactly once in its lifetime and that was before
delivery. Most non-Teslas are charging at 3.3 or 6.6 kW (~12 or ~24 miles per
hour of charge).

------
est31
Not the first time an established car manufacturer prevents Tesla from dying.
Ten years ago, in 2009, Daimler Benz invested about 50 million USD into Tesla
for a 9% stake. This saved them. Not my words, but Elon's:
[https://www2.greencarreports.com/news/1074375_elon-musk-
daim...](https://www2.greencarreports.com/news/1074375_elon-musk-daimler-
saved-tesla-doe-loans-a-bad-idea)

~~~
TomMarius
Daimler-Benz itself was created to prevent imminent death of two automobile
makers

~~~
fredgrott
did not prevent death,,US took over retirement plans of two automakers..that
is death right there no matter what the remains become as it means you have
more retirees than workers..ie firm decline

~~~
adolph
The poster was referring to a different time:

 _Because of the post World War One German economic crisis, DMG merged in 1926
with Benz & Cie., becoming Daimler-Benz and adopting Mercedes-Benz as its
automobile trademark._

[https://en.wikipedia.org/wiki/Daimler_Motoren_Gesellschaft](https://en.wikipedia.org/wiki/Daimler_Motoren_Gesellschaft)

~~~
TomMarius
Indeed I was

------
jonplackett
So does this mean all those zero emission Tesla’s are actually generating lots
of emissions but just via another manufacturer?

~~~
dwrowe
I’d assume it’s an “offset” right? So not making things “better” - just not as
“bad”

~~~
adventured
It's making things better by directly funding the killing of the ICE vehicle
industry. That money is coming out of the pockets of the ICE automakers and
being injected into Tesla, which is actively trying to replace the ICE
approach.

It's helping to enable the build-up of EVs and replacement of the ICE auto
industry. It has a rather considerable roll-on effect when you consider the
sprawling consequences, such as helping to fund Tesla's ability to build a
global charging network which can then enable it to more easily appeal to
consumers to sell more EVs and on it goes in dozens of other ways.

~~~
dwrowe
Maybe, I haven't reviewed the numbers in detail - but the need for GM/others
to purchase the credits at the rate they do, enables them to continue pushing
the ICE autos - possibly increasing the overall market supply, which in turn
is just as bad / worse? Something to watch, for sure.

------
wil421
Environmental Credits seem more like a scheme than anything else. It sounds
like politicians giving lip service to the people while keeping lobbyists
happy.

Regardless, it’s nice to see GM and FCA are benefiting Tesla is some ways. It
would be really interested to see a powered by Tesla GM/FCA car. Tesla
provides engines and battery and the other carmaker makes a car around it. A
partnership with a huge car company could help Tesla with production issues
and provide a cash boost.

~~~
jumbopapa
I would say that cap and trade is a fairly popular solution to curbing
externalities in the field of economics.

~~~
adrianN
If the caps would be reduced by meaningful amounts every year so that we reach
carbon neutrality in fifteen years or so that would be true. But nobody is
doing that.

------
phyzome
Bloomberg revealing another Big Secret without citing sources? Why should I
believe them?

~~~
jake_the_third
I also have difficulty believing anything bloomberg puts out after what had
happened.

With all the independent investigations and the lack evidence found, I'm
baffled that they still haven't admitted their mistake and issued a redaction.

~~~
gamblor956
What would they issue a retraction for?

Their Huawei article has been borne out by subsequent developments.

~~~
mikestew
SuperMicro, not Huawei. A story for which I've not seen one single shred of
not-flacid evidence.

------
exabrial
Tesla sells invisible objects. Elon Musk is truly brilliant.

~~~
matt4077
I'm continually baffled by wide-spread inability of the software(!)/tech crowd
here and elsewhere to grasp the idea of non-physical concepts having meaning.

------
vectorEQ
being able to buy yourself out of regulations... priceless.

~~~
TeMPOraL
That's the system working as intended - it forces companies to internalize the
costs that previously were externalized.

------
_pmf_
Probably gets them some leverage for cheap takeover when Tesla collapses.

~~~
asplake
That might not be their main motivation, but still it is a conceivable outcome
were Tesla to collapse. Not sure that leverage is quite the right word though
- there’d be others that would want it (or rather the capability) to survive

