California is the leading state in renewable energy, having gotten almost 25% of their total electricy there in the past year. Their clean energy reach even affects the vehicles sold in the state.
California has a regulation which requires some large car companies to sell a certain number of Zero Emission Vehicles (ZEVs) in order to meet clean energy criteria. In the past, companies have been able to meet this number by either building ZEVs or buying ZEV credits from companies that have earned them with their own vehicles.
This year, the state is considering increasing the reach of these regulations, not only by upping the required ZEV number, but by also including medium-sized or intermediate car companies to comply along with the large, top-selling car-makers.
Of course, as these vehicles cost more to produce, intermediate-level car-makers are less than happy about the possibility of these requirements reaching them.
On the other side of the debate stands our ZEV top dog: Tesla Motors (NASDAQ: TSLA). They argue that every one of these companies, “have access to the same financial markets” that Tesla does, and thus should have no problem meeting the new criteria.
However, they will allow that some companies will still not want to build even “compliance vehicles” to meet the minimum criteria. Their answer: buy Tesla’s ZEV credits! It’s cheaper than building new cars, and will, of course, give Tesla a little extra income to put towards their own.
The new regulations will not be in effect until 2018, so both sides of this debate still have time to plead their cases.
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