Tesla Enthusiasm for Battery Swap Wanes After Subsidies Disappear

Elon Musk IronManNLPC has extensively documented how Tesla Motors has taken advantage of market distortions to reap revenues – including government mandates, subsidies, and taxpayer support – not the least of which have been so-called “zero emission credits” from the state of California. But much of the revenue Tesla enjoyed last year – which often meant the difference between profit and loss – was credited based upon theoretical technological capabilities and not ones actually put into practice.

CEO Elon Musk has also relied on accounting gimmicks to enhance his bottom line over the last 18 months, during which a couple of quarterly earnings reports even showed a profit – albeit under non-Generally Accepted Accounting Principles. Those handsome returns were achieved in part thanks to a scheme administered under the California Air Resources Board in which additional zero emission credits are awarded to vehicle manufacturers based upon the ability for models to “fast fuel.” In the case of Tesla and other electric vehicle makers, the faster a car can recharge to the point it can drive a longer distance, the more credits it receives.

As automotive Web site Jalopnik explained, Tesla’s Model S could “refuel to 285 miles with full pack in under 15 minutes,” which would entitle the company to seven ZEV credits per vehicle. The credits are then sold to automakers that don’t produce enough vehicles to meet the Golden State’s clean emissions mandates. CARB awarded Tesla five credits based upon its Supercharger repowering technology and two credits thanks to its capability to “fast-swap” batteries.

That’s where the revenues based upon the hypothetical come in. Despite having received millions of dollars thanks to CARB’s recognition of battery swapping as a contributor to reaching the “zero-emissions” milestone, Tesla never actually employed the practice. In fact, the company earned credit for battery swap several months before they even showed it was possible!

“CARB gave Tesla these extra credits before any battery swap station had been built,” wrote researcher Alberto Zaragoza Comendador for the respected climate skeptic Web site Watts Up With That. “In fact, it happened about nine months before the feature was publicly demonstrated (June 2013).”

And a one-time demonstration is apparently all Tesla has shown the public. Existing owners of the Model S are skeptical, and barely any mention of swapping stations appeared in SEC filings. Yet according to Comendador’s analysis, Tesla had the potential to reach $60 million in 2013 thanks to the battery swap scheme, with the possibility of an additional $30 million.

Alas, CARB changed its criteria for ZEV credits to eliminate allowances for the battery swaps. But automotive Web sites haven’t let Tesla off the hook over its plans. When Jalopnik inquired, they were told that there was a “reprioritization.” And when the Web site asked how much each of the battery swap facilities were expected to cost, Vice President of Corporate Development Diarmuid O’Connell said, “I want to talk about that even less.”

Torque News was even more blunt, in a blog post last week that explained “why Tesla doesn’t really care about battery swapping.” As with everything in business, it boils down to economics.

“At present it is simply too difficult and expensive to deploy battery swapping on a large scale,” wrote Torque’s Luke Ottaway. “For one thing, the swap stations will cost a great deal more than your typical Supercharger that already runs up to $300,000. Automation is the most likely solution for battery swap stations, and the machinery required to handle heavy battery packs and make delicate connections would not come cheap. Companies simply don’t have the capital to roll out significant numbers of these stations.”

Which explains why Tesla never built any in the first place, and ran a dog-and-pony show in June 2013 to exhibit a battery swap for public consumption, and then barely mentioned it again. Meanwhile the State of California let them get away with millions of dollars on the phony premise that less pollution was being emitted as a result. Now that there’s no longer an economic incentive, it looks like Tesla is trying to let the idea die a quiet death.

Comendador called it “the hoax of the year.” If it wasn’t for the overall global warming ruse that schemes like electric vehicles were supposed to fix, he might have been right.

Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes CarolinaPlottHound.com, an aggregator of North Carolina news.