Elon Musk, all-purpose impresario of the future, is enthusiastic about electric cars. “Eventually,” he says in the forthcoming issue of Bloomberg Markets magazine, “all cars will go electric.”
As the founder and head honcho of Tesla Motors, he would say that. But he has some evidence on his side. Electric cars are culturally modish. They’re by most accounts fun and safe to drive. And their sales have been holding up lately, even as the price of oil has sunk and Tesla’s stock has had a bumpy ride.
One problem: The success of electric cars generally — and of Tesla in particular — is due in no small part to a government mandate. And that mandate is distorting the auto market without clear evidence that it’s going to achieve its stated purpose.
Tesla benefits from something called zero-emission credits. Pioneered in California and adopted by 10 other states, the policy will impose fines on large automakers this year unless zero-emission vehicles account for at least 4 percent of their sales, rising to 15.4 percent for 2018 models. Companies that exceed the mandate get credits they can sell to their noncompliant competitors. For Tesla, each new sale brings multiple credits, adding up to a windfall that could total more than $30,000 for each Model S sold.