1) Expect to hear a lot of traders screaming this is the end of Telsa ride as ZEV credits may be cut from 7 to 4. This would cut TSLA profit from selling these credits. This argument hasn’t been realized for the past six months that I’ve heard it. We might see some dip as people shy away, but the true TSLA believers are banking on GEN3 not ZEV credit profits.
2) If the states really step up efforts to make it hard to just pay the penalty, we will see more ZEV plug-in hybrid (PHEV) and battery electric vehicles (BEV) in production. Players like BMW with the new i3 and others like Ford and Toyota will increase production squeezing GM and Nissan who have been volume electric mass market segment leaders with the Leaf and the Volt.
The winners here will be tier 1 and 2 suppliers as they scale to meet incremental demand. OEM impact will be slightly negative, but should insignificant.
Just a note. While the Leaf is a pure BEV,while the Volt is a plug-in hybrid (PHEV) the two have been positioned as the first two “electric cars.” Last year GM sold 23,416 Volts and Nissan sold 9,819 Leafs while Toyota sold 12,750 Prius plug-ins. Nissan cut the lease price on the leaf and is running neck and neck with GM, both with 16 thousand units sold through September. Toyota has pulled the cord on the Prius PHEV support and stands around 8,000 units. Put that in perspective; Toyota’s HEV Prius line has sold more than 200,000 so far this year in the US market.
From 2010-present, ZEV sales total 136,695. Just 3,163,305 more to go.
Bottom line: Look for benefits with secondary players, not real good nor bad news for OEMS. Nissan has been experiencing shortages on battery materials as Leaf volume have doubled this year. 16k is not going to make the year for Nissan, but it can impact a supplier. Not the end of the world for Tesla, but they have bigger obstacles to overcome. Namely volume for Models S &7 X and reducing cost at volume for GEN3!