Why Tesla's Zero-Emission Tax Credits Are at Risk

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Oct. 24 (Bloomberg) -- Bloomberg’s Cory Johnson takes a look at Tesla's tax credits in California and why they may be at risk. He speaks on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

It is something that is not well understood by tesla.

The company does have a gross profit.

The cost of the cars seems to be greater than the cost of making the cars.

Hidden in their revenues is something called the zero emission vehicle credit.

The state of california gives tesla credit for building these zero emission cars.

It is not even one credit per car.

Tesla gets seven credits for every car that they build.

That is a substantial part of their revenue.

Many of those credits come from the fact that tesla has made the claim that they have a battery swapping capability, and it can be a quickly charged vehicle.

By swapping the battery in and out, they can be a quickly charged vehicle which gives him three more credits.

The state of california had a hearing today and discussion about this, because they recognize that tesla people are not able to swap these batteries.

There are no battery swapping stations all around.

They are reviewing whether or not this is appropriate for tesla to continue to get this.

How important to the tesla business model are these credits.

Crucial.

It has been 60% of the gross profits over the course of the year.

60% of their revenues are just 60% of their gross profit.

There is no cost that goes into this, associated costs.

The zero emission vehicle credits over the last few quarters have been well over $150 million.

60% of their gross profits over the course of this year, it's a big deal.

You said this was material to their gross profit.

How material?

Not only 60%. the company has suggested that these will eventually go away, but if they go away faster than they want, it will be harder for them to be in business for a long time.

As a percentage of gross profit, it has been falling.

But we don't know how many credits they sell and a quarter, the price of the credits, or who they sell them to.

The commission did not reach a decision today, and table the matter for further discussion.

They said they will resolve this sometime within the year.

The shareholders' commission said something to the effect of, we don't want to have a hypothetical credit.

She seemed unclear about the fact that these tesla battery swapping things don't actually happen.

Tesla had no comment on the situation, but it is one that we will be watching over time.

Cory johnson, our editor-at- large.

This text has been automatically generated. It may not be 100% accurate.

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