California – Tesla will now receive fewer credits for each Model S sold because the state is modifying its zero-emission vehicle program.
The Palo Alto-based automaker had its first profitable quarter last year thanks to sales of California environmental credits.
Tesla sold ZEV credits worth $129.8 million last year to other automakers. Tesla will now only qualify for four credits per car sold in California and other states that follow its rules, down from seven per Model S through 2013. The California Air Resources Board posted the changes April 3.
The credit rule change had been deferred from October based on the board’s desire to award credits based on how advanced vehicles are actually used and not on theories. Tesla’s competition argued Tesla was getting more credits than it deserved because it doesn’t meet rapid-refueling requirements.
Tesla co-founder and CEO Elon Musk has said ZEV credit sales will account for a smaller portion of its revenue as it increases exports of the California-built Model S around the globe.
California’s board, which sets emissions rules for automakers that rival those of other U.S. regulators, will require carmakers to sell a combined 1.4 million low-pollution plug-in hybrids, battery-powered autos and hydrogen fuel cell vehicles annually by the mid-2020s. This has created demand for ZEV credits from Tesla, which currently is too small to be covered by the requirements.
Tesla shares fell 5.9 percent to $212.23 yesterday in New York. The shares have risen 41 percent this year.