Carbon Pricing Tesla Tops US Large Luxury Car Sales

Published on February 27th, 2016 | by Zachary Shahan


Mandates Better Than Carbon Taxes?, Tesla’s Quarterly Conference Call (Cleantech Talk #20)

February 27th, 2016 by  

In this episode of Cleantech Talk, Matthew Klippenstein and I tackle the stories on our own, with Kyle out for one week. We start off by discussing some interesting research Matthew pulled up on the choice between mandates & regulation versus carbon taxes for tackling global warming & climate change. We then dive into some of the highlights of Tesla’s most recent financials report & conference call.

In case you’re just discovering us, you can subscribe to Cleantech Talk on iTunes or SoundCloud, and you can download the current episode here or watch it in the embedded player below. Matthew’s helpful show notes are below the player.


Fuel Switching Mandates as Impactful as High Carbon Taxes

The main thrust of the paper, Want an Effective Climate Policy? Heed the evidence, is that fuel switching mandates can have the same CO2 emissions reductions impacts as triple-digit carbon taxes. This is important, because in the near term, it’s much more politically viable for politicians to enact fuel switching mandates which have the impact of $100+/tonne CO2 carbon taxes, than to enact $100+/tonne CO2 carbon taxes.

We will need to price carbon at these levels, of course, but we’ll probably have to gradually build up to it. In the meanwhile, fuel switching offers the prospects of big “quick wins”.

Author Mark Jaccard explains how the province of Ontario’s decision to eliminate coal reduced the province’s emissions by 25 million tonnes of CO2 per year (25 MT, or megatonnes), a drop that would have required a carbon tax in the $100-$130/tonne range. As for directly pricing carbon, the government has only felt confident enough to sign up to $15/tonne, perhaps getting to $30 by 2025.

Counterintuitively, Jaccard thinks energy efficiency is a waste of time, due to his systems perspective. His findings have been that financial savings from energy efficiency result in financial spending elsewhere in the economy… which is predominantly fossil fueled… which means carbon emissions stay high. One can think of this as a systems-level version of Jevon’s Paradox, or the “rebound effect”, whereby efficiency tends to result in more use. The way to get around this is to fuel-switch the economy to renewables. That way, whether people are efficient or inefficient with their energy, it will all be clean.

As for Matthew’s stats, here in Vancouver, Canada, gasoline has gotten about 50 cents per litre cheaper in the past 18 months. If a government were to create a 50 cent/litre ($1.90/gallon) carbon tax , that would be equivalent to increasing the carbon price by:

   $0.50/L gasoline x 1 L gasoline / 2.3 kg CO2 x 1000 kg CO2 / tonne CO2 = $220 / tonne CO2

Any government trying to do this, would probably get annihilated in the next election. And unfortunately, even when gasoline was 50 cents/litre more expensive up here, our electric vehicle adoption rates were much lower than California. This is why Jaccard strongly, strongly supports a California-style ZEV/PZEV mandate.

Zachary had referenced a comprehensive Simon Fraser University electric vehicle study; the CleanTechnica link is here, while Matthew’s write-up on is here. For some reason, the charts aren’t appearing on the latter, so readers can navigate to for those.)

Tesla, Tesla, Tesla, Tesla, Tesla!

Zachary outdid himself in his coverage of the Tesla quarterly call – all the more impressive, since it was already the middle of the night in his time zone, when it started! Here are some explanatory tidbits:

Relating to Tesla’s full-year profitability target this year, two big reasons to be bullish on the company’s sales this year are the facts that it will have two models in full production – and that they still aren’t allowed to sell in all states. One has to imagine that at some point, Tesla will be allowed to sell their products in Texas, Michigan and elsewhere, which should mean an uptick in sales.

The biggest risk to sales would probably be if there’s a global recession; luxury vehicle sales do not do well during economic downturns, as this table of U.S. Mercedes S-class sales from shows. Check out the drop from 2007 to 2009. (Yikes!)

Mercedes S Class US sales

Zachary noted the Tesla Model S’s dominance of the U.S. large luxury vehicle segment, eclipsing Mercedes’ erstwhile-dominant S-class as the vehicle of choice among ubermensch. Sure, the S-class starts at a higher price point than the Model S (about $95,000 versus $75,000 prior to the US tax credit) – but Mercedes hasn’t had its brand vilified politically the way Tesla has, which immediately shrinks Tesla’s addressable market. Furthermore, Tesla has been effectively shut out from some important states by protectionist dealership lobbies.

Tesla’s 35% year-over-year Q4 sales growth helped mythbust – yet again – the notion that its sales are sensitive to gasoline prices, and the company is projecting 60-80% year-over-year sales growth for 2016. Lastly, Elon Musk directly addressed product reliability, perhaps to set the record straight that the reliability findings of early Tesla vehicles (whether by Plug-in America, Consumer Reports, or TrueDelta) is far below the level the company has achieved today, with the benefit of further manufacturing experience.

Drive an electric car? Complete one of our short surveys for our next electric car report.
Keep up to date with all the hottest cleantech news by subscribing to our (free) cleantech newsletter, or keep an eye on sector-specific news by getting our (also free) solar energy newsletter, electric vehicle newsletter, or wind energy newsletter.

Tags: , , , , , , , , , , , , , , ,

About the Author

is tryin' to help society help itself (and other species) one letter at a time. He spends most of his time here on CleanTechnica as its director and chief editor. Otherwise, he's probably enthusiastically fulfilling his duties as the director/editor of EV Obsession, Gas2, Solar Love, Planetsave, or Bikocity; or as president of Important Media. Zach is recognized globally as a solar energy, electric car, energy storage, and wind energy expert. If you would like him to speak at a related conference or event, connect with him via social media: Zach has long-term investments in TSLA, SCTY, FSLR, SPWR, SEDG, & ABB. After years of covering solar and EVs, he simply has a lot of faith in these companies and feels like they are good companies to invest in.

  • TCFlood

    I know this is a little weird, but the comments section of the report on Al Gore’s TED talk is closed and I want to post a positive comment. I was disappointed to see so many negative, small-minded, and childish comments there. So, in the hope you will transfer this, here’s the comment:
    What a wonderful presentation by an extremely smart and talented man. One benefit of his renown is that it attracts input from so many other knowledgeable individuals that give him the latest information and optimum ways to present it. It all makes for an increasingly powerful presentation.

    For a long time I was somewhat critical of Gore because I thought he was more alarmist than the data warranted. The data have gotten better defined and in this talk his projections ring true. His message of hope is also convincing based on good data on the increasingly competitive economics and exponential growth in deployment of renewables.

    Thank you, Al, for all you are doing. Keep fighting the good fight!

  • Kraylin

    Our gasoline is already heavily taxed in Toronto Canada with 10cents/litre(40cents/gallon) federal tax 14.6cents/litre(58.4cents/gallon) provincial tax and now a new tax implemented in this year’s provincial budget of another 4.3cents/litre(17.2cents/gallon If that wasn’t all enough you then have to add 13% sales tax on top of it all!!!

    My understanding is gasoline in the US is not taxed anywhere near this highly, would someone please take a moment to enlighten me on the tax structure on gasoline in the US? It seems to me the market should be able to handle a modest increase to fund many needs in the US, preferably green initiatives but we all knew that right? =)

  • Brian

    I’m going to have to read Mark Jaccard’s arguments in more detail, but I have a hard time understanding how it could take $100/tonne carbon tax to eliminate coal. Coal produces about 1 tonne per MWh of electricity, so every $10/tonne adds $0.01/kWh to coal-fired electricity. How could coal compete with even a $50/tonne tax? Just the fuel and carbon tax would be more expensive than building a brand new combined cycle natural gas plant, let alone a wind turbine.

    Now I do see the problem in transportation. Politically acceptable levels of a carbon tax won’t really do that much ($50/tonne is approximately $0.50 / gallon of gas). But to me, that just means we are prioritizing wrongly if we continue to burn coal while spending money on transportation. Still better to do something than nothing I guess.

    • Matt

      I guess Mark’s assumption is you can’t pass a carbon tax. Which I have to admit it backward countries like the USA (where I live) it isn’t very likely for years to come.

    • Ronald Brakels

      A carbon price of $40 US a tonne seems sufficent to eliminate coal use in the United States on account of the low cost of both wind and solar capacity there. That would add almost four cents to the cost of a kilowatt-hour generated by coal and the US can generate electricity from wind for under 4 cents and 6 cents for utility scale solar.

      Vehicles are another matter as people are much more concerned about the upfront cost when making a new purchase and so regulation is required here to rapidly reduce greenhouse gas emissions from transportation.

  • Freddy D

    On mandates vs carbon tax, look at how consumers spend money on housing or transport. Transport is a super-emotionally driven transaction that leaves them with the cost structure for at least a decade. It’s all about the purchase price and operating costs are very secondary. Shiny objects, bling. Extended cab, bigger engine just in case I need to pass sometime, fold-down seats, and so on. The EPA mpg requirements ( or engine displacement tax or pick your country) seem to be the only thing that matters. Housing stock is even worse – building codes are the only thing that matters. People buy for the location and the kitchen and the sq feet or sq m. Even commercial buildings, same thing.

    What a carbon tax would allow is a mechanism to reimburse capture and reforestation.

    • Brian

      That’s a good point. In an ideal world, carbon taxes are always better than mandates. In the real world, we don’t have infinite options or perfect information, so the economic signals don’t always work like they should.

      For example, it’s difficult to predict utility bills for an apartment just by looking at it. Landlords can’t increase rent to pay for the upgrades, so they go with the cheapest option every time. The problem isn’t with the cost of the upgrade; it’s a mismatch between who pays the cost and who reaps the savings. Here, efficiency mandates can have a positive effect.

      • Freddy D

        Exactly. As well as efficient markets assume perfect availability and perfect analysis of information, which couldn’t be further from the truth with regard to energy and buildings. It’s a little better with cars because governments rate their fuel consumption, but the purchase is still highly emotional for many.

    • neroden

      Building codes seem to be the *only* way to force developers to make energy-efficient buildings. It’s been understood how to do it since before 1981 when the _Super Insulated Retrofit Book_ was published in Canada. But developers *still* build leaky houses.

      • neroden

        I’m more optimistic about markets’ ability to sell electric cars, because *they have a nicer ride*. They don’t shake and rattle like gas cars. They have instant responsiveness — none of this “fuel injection delay”. They’re just better to drive and to ride in. So I think they’ll win on *features*.

        Better-insulated houses are also nicer to live in, but nobody seems to *care*. Part of the problem is the disconnect between the builder and the homeowner — developers don’t live in the houses they build. Green houses are popular with people who commission their own houses, but that’s a tiny fraction of the market.

        • Mike

          When I designed my place, I had 17 pages of technical specs. It took 7 months before the builder would sign off on such a contract. I had to use the builder who owned the land we wanted our home on……..we were a real pain in his a**.

Back to Top ↑