The Regulatory Roaches In Tesla’s ZEV Credit Soup

On Wednesday of last week, I speculated that Tesla might be counting on a billion-dollar regulatory credit bonanza in the last half of 2018.

Reader comments led me to a twitter feed that mentioned a recent proposal to withdraw a prior EPA waiver that enabled adoption of California’s ZEV mandates.

The proposed withdrawal of California’s waiver is, in fact, a joint action by the EPA and the NHTSA under Federal statutes that prohibit inconsistent state-level regulation.

While California has promised to litigate, I believe the joint EPA-NHTSA action is justified and the proposed waiver withdrawal will eventually become effective.

I also believe the issuance of the proposal on August 2^nd created enough uncertainty to immediately render Tesla’s accumulated and future ZEV credits worthless.

Over the years, some of the best ideas for my blog have come from thoughtful reader comments. It’s good to know the tradition continues.

Last Wednesday I speculated that Tesla (TSLA) might be counting on a billion-dollar regulatory credit bonanza in the last half of 2018. It was almost painful to write that after years of strident criticism I’d purchased Tesla calls.

Mercifully, a thoughtful reader directed me to a twitter stream from “People’s [email protected]
” that discussed a pending Environmental Protection Agency, or “EPA,” proposal that would put an end to California’s state level zero-emission vehicle, or “ZEV,” mandates.

I investigated.

I learned that the EPA plans to withdraw a 2013 waiver of Federal preemption that was granted pursuant to the express authority if Section 209(b)(1)(c) of the Clean Air Act of 1963, or “CAA.” I also learned that the National Highway Traffic Safety Administration, or “NHTSA”, plans to issue a formal finding that California’s GHG and ZEV mandates are preempted by the Energy Policy and Conservation Act of 1975, or “EPCA,” which has no waiver provisions.