EV Cheating Scandal [LOCKED DUE TO POLITICS]

[ARK]

The EPA needs to be defunded and eliminated. I am tired of them wasting my money.

I think they play a very important role in minimizing pollution, something that has been historically problematic with cars where I live (Los Angeles). It’s the conflation of greenhouse gas emissions with noxious chemicals that’s the bigger issue IMO.

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[Blue highway]

What about Tesla playing loose with the rules in determining the range of their vehicles? Remember Model Y ranges have recently been downgraded. Higher ranges, increased carbon credits, more income for playing loose with the rules.

hmm the change was that manufacturers have to test using standard drive mode, not an eco mode... it's a rule change by the EPA, not Tesla.

 

[Mirak]

Ok, so here is what I understand so far. Please help me with corrections and filling in the gaps:

• This starts with the CAFE standards. In 1975, Congress enacted Corporate Average Fuel Economy (CAFE) standards as part of the implementation of the Energy Policy and Conservation Act. The intent was to reduce oil consumption in the wake of OPEC's oil embargo of 1973–1974 that had limited oil supplies and spiked prices. Since 1986, the National Highway Transportation Safety Administration (NHTSA) has been tasked with setting the actual standards. In 2010 NHTSA and the Environmental Protection Agency (EPA) jointly developed a new set of standards to meet the requirements of both the Energy Policy Conservation Act and the Clean Air Act.
• CAFE standards regulate how far our vehicles must travel on a gallon of fuel. These standards have been raised over time. If a manufacturer's fleet does not meet the standards, they can be penalized with fines.
• Both the NHTSA and EPA standards offer certain flexibilities, termed “components,” to help manufacturers comply with the standards. The chief component is a credit trading system that allows manufacturers to carry efficiency credits forward by up to five years and backwards by up to three years to achieve compliance and avoid fines. Manufacturers can transfer credit between cars and trucks and trade credits with other manufacturers.
• Tesla rakes in a lot of these credits, because it only sells EVs. Other ICE-heavy manufacturers are in need of credits and buy them from Tesla. So, in a way, purchasers of ICE vehicles are subsidizing Tesla.
• But these credits are significantly influenced by the 6.67 multiplier to the efficiency number implemented by rule by the NHTSA. None of this comes from anything close to a Congressionally-passed statute, by the way... it's just all part of the administrative rigmarole we've turned a blind eye to.
• The multiplier gives Tesla... 6.67 times more credits than they would get, and it also helps other manufacturers get closer to CAFE compliance by selling more EVs, but it makes the CAFE standards more costly to everyone buying ICE vehicles, assuming (I think correctly) that these manufacturers are passing their costs along to the consumers.
• Eliminating the multiplier will result in less revenue from credits to Tesla overall, but it will also result in more traditional manufacturers having a harder time meeting the CAFE standards based on their meager EV fleets, which means they'll still need to buy credits from Tesla.

So if everything I'm saying above is correct (???), this is a bureaucratic mess, based upon phony baloney numbers.

 

[Mirak]

I think they play a very important role in minimizing pollution, something that has been historically problematic with cars where I live (Los Angeles). It’s the conflation of greenhouse gas emissions with noxious chemicals that’s the bigger issue IMO.

AMEN. The "Clean Air Act" being utilized (with the Supreme Court's blessing) to regulate CO2.

 

[Blue highway]

Ok, so here is what I understand so far. Please help me with corrections and filling in the gaps:

• This starts with the CAFE standards. In 1975, Congress enacted Corporate Average Fuel Economy (CAFE) standards as part of the implementation of the Energy Policy and Conservation Act. The intent was to reduce oil consumption in the wake of OPEC's oil embargo of 1973–1974 that had limited oil supplies and spiked prices. Since 1986, the National Highway Transportation Safety Administration (NHTSA) has been tasked with setting the actual standards. In 2010 NHTSA and the Environmental Protection Agency (EPA) jointly developed a new set of standards to meet the requirements of both the Energy Policy Conservation Act and the Clean Air Act.
• CAFE standards regulate how far our vehicles must travel on a gallon of fuel. These standards have been raised over time. If a manufacturer's fleet does not meet the standards, they can be penalized with fines.
• Both the NHTSA and EPA standards offer certain flexibilities, termed “components,” to help manufacturers comply with the standards. The chief component is a credit trading system that allows manufacturers to carry efficiency credits forward by up to five years and backwards by up to three years to achieve compliance and avoid fines. Manufacturers can transfer credit between cars and trucks and trade credits with other manufacturers.
• Tesla rakes in a lot of these credits, because it only sells EVs. Other ICE-heavy manufacturers are in need of credits and buy them from Tesla. So, in a way, purchasers of ICE vehicles are subsidizing Tesla.
• But these credits are significantly influenced by the 6.67 multiplier to the efficiency number implemented by rule by the NHTSA. None of this comes from anything close to a Congressionally-passed statute, by the way... it's just all part of the administrative rigmarole we've turned a blind eye to.
• The multiplier gives Tesla... 6.67 times more credits than they would get, and it also helps other manufacturers get closer to CAFE compliance by selling more EVs, but it makes the CAFE standards more costly to everyone buying ICE vehicles, assuming (I think correctly) that these manufacturers are passing their costs along to the consumers.
• Eliminating the multiplier will result in less revenue from credits to Tesla overall, but it will also result in more traditional manufacturers having a harder time meeting the CAFE standards based on their meager EV fleets, which means they'll still need to buy credits from Tesla.

So if everything I'm saying above is correct (???), this is a bureaucratic mess, based upon phony baloney numbers.

of course the Legacy Auto companies could avoid this if they made some combination of more fuel efficient cars and some alternative fuel cars.

The 6.67 has little to no effect in my mind because without it, a credit would simply cost more.

 

[Billyk24]

This sounds wild, but I am approaching with an open mind. I did some digging, and found some more 3rd party information from sites other than WSJ.

I found a paper written for Texas policymakers that seems to support this claim. Now, we need to understand that Texas is an oil state, and, in general, there is a decent amount of anti-EV sentiment in most places outside of cities like Austin, Houston, and Dallas. So, I encourage you to consider this source and it's potential bias.

https://www.texaspolicy.com/wp-content/uploads/2023/10/2023-10-TrueCostofEVs-BennettIsaac.pdf

The "foundation" that authored the paper self-describes as:


As an example of potential bias in the paper, we see things like this:


Now, this is indeed an accurate statement. In fact, since Tesla is a public company it is easy to unpack it's revenue and profit, and folks have known for years that CAFE credits add significant pure-profit to Tesla's bottom line, at least one fiscal year if not more the only profit the company made was from CAFE credits. That said, again I just want to be sure we are understanding the source before we continue to the issue at hand.

The "meat and potatoes" of the 6.67 involves CAFE standards (which are fuel economy and historically deal with petroleum based fuels). The setup is -- the government over the years has had to "translate" CAFE standards from petroleum to other alternative fuels such as ethanol, natural gas, hydrogen, etc. This seems to make sense no issue there.

The paper claims, however, that the translation made from petroleum to electricity is this 6.67 multiplier. I will direct-quote the pertinent portion of the paper dealing with translating CAFE to EVs (which of course do not use petroleum).


I've preserved the source links in the quote so you can read the rules and judge for yourself.

I found a paper written for Texas policymakers that seems to support this claim. Now, we need to understand that Texas is an oil state................Except Texas leads the country with at least
Texas – 28,843MW of wind power.

Wind power expanded significantly during GOP Governor Rick Perry's time in office.


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[Mach1E]

The tax credit likely was part of their calculation when they determine whether it was even feasible to build or expand. Without the carbon credit, Tesla may not have survive it's early days or may not have expanded as quickly. The carbon tax credit achieved what it was meant to do, and that was to promote EV production.

I dunno. My argument is that the credit changed nothing (other than making Musk one of the richest people on the planet).

Paying people “incentives” to do the exact same things they would have done in the first place doesn’t change behavior or the results.

Unfortunately it’s impossible to know what would have happened since we don’t have that power to go back and change it.

I’ll add carbon credits to my list of “head scratching” policies like being “carbon neutral.”

Keep polluting and plant a tree. Carbon neutral!

I joke that every time I recycle an aluminum can I also throw one in the ocean to remain “carbon neutral.” ?

 

[Mach1E]

I think they play a very important role in minimizing pollution, something that has been historically problematic with cars where I live (Los Angeles). It’s the conflation of greenhouse gas emissions with noxious chemicals that’s the bigger issue IMO.

I said this a couple decades ago- environmentalists picked the wrong headline.

They shouldn’t have focused on manmade global warming (controversial and no immediate payoff).

They should have focused on SMOG.

It’s obvious. It’s 100% man-made. And 100% preventable. Plus you can see the results of your hard work! It should be the headline. Oh…… and side effect of preventing smog? Less greenhouse gases.

 

[Mirak]

The 6.67 has little to no effect in my mind because without it, a credit would simply cost more.

That’s interesting. You may be right. Maybe ultimately this is all a wash and just results in the cost of a credit going up. But I think it introduces a lot of confusion in the short term… especially possibly removing it and then not updating the CAFE standards accordingly.

Basically, it sounds like the government introduced a totally bogus multiplier to their already convoluted “efficiency” calculations in order to encourage greater EV production. Not very honest, to say the least.

 

[Ghost Ryder]

I dunno. My argument is that the credit changed nothing (other than making Musk one of the richest people on the planet).

Paying people “incentives” to do the exact same things they would have done in the first place doesn’t change behavior or the results.

Unfortunately it’s impossible to know what would have happened since we don’t have that power to go back and change it.

I’ll add carbon credits to my list of “head scratching” policies like being “carbon neutral.”

Keep polluting and plant a tree. Carbon neutral!

I joke that every time I recycle an aluminum can I also throw one in the ocean to remain “carbon neutral.” ?

From what I remember, Tesla was a few weeks away from bankruptcy when they launched the Model 3. It was really touch and go for the company. Without the carbon tax credit, I doubt that they would of succeeded. The EV evolution would of taken a lot longer.

 

[Kamuelaflyer]

The EPA needs to be defunded and eliminated. I am tired of them wasting my money.

I’d try to be a bit careful with those types of comments Mike. They can easily derail things into a morass of political postings that serve no useful function, let alone shed light on an arguably biased opinion piece without examining the underlying policy.

 

[superdave80]

What I don’t understand is a company like Tesla that builds cars using zero gas, and never plans on building gas cars,
Somehow gets paid credits by other manufacturers so they can continue to pollute.

The reasoning behind it is that the government wants SOMEONE to build an EV instead of an ICE so there is less pollution. They don' really care who builds it. This is, effectively, Ford and others outsourcing EV production to Tesla, and they are paying Tesla to do it.

 

[Blue highway]

That’s interesting. You may be right. Maybe ultimately this is all a wash and just results in the cost of a credit going up. But I think it introduces a lot of confusion in the short term… especially possibly removing it and then not updating the CAFE standards accordingly.

Basically, it sounds like the government introduced a totally bogus multiplier to their already convoluted “efficiency” calculations in order to encourage greater EV production. Not very honest, to say the least.

The government gets locked into a lot of bogus "constants" in their regulation... once in place they rarely or never get changed.

 

[TheSteelRider]

I found a paper written for Texas policymakers that seems to support this claim. Now, we need to understand that Texas is an oil state................Except Texas leads the country with at least
Texas – 28,843MW of wind power.

Wind power expanded significantly during GOP Governor Rick Perry's time in office.


.

That is true, but it was probably not because of incentives (because there are none), which is the real point here. It was probably because the electricity market in Texas is "deregulated", ERCOT pricing for electricity producers is transparent, but highly variable (with a floor and a ceiling) and encourages low-investment-cost solutions, and Texas is one of the top locations in the US for stable wind.

I agree with your point, but I probably would rephrase it to, "Wind power expanded significantly during in spite of GOP Governor Rick Perry's time in office. "

The local politics around Austin vs. the rest of the state makes it clear why this paper was written, and it's probably something a reader would have to see first hand to fully grasp the political climate. Google "fights between the Austin legislature, Austin local mayors / councils-at-large, and the governor of Texas" and you'll see some examples.

Also, it might be good to reference a recently-voter-approved $10B investment in fossil-fuel plants, interestingly close in time to when the referenced paper was written.

 

[superdave80]

https://www.govinfo.gov/content/pkg/FR-2000-06-12/pdf/00-14446.pdf

It is clearly explain that this was intended as a reward to encourage EV production. It was neither hidden nor claimed to be a real-world number:

The 1/0.15 (equivalent to 6.67) factor used in the equation
is not intended to be a scarcity factor
per se, but it does result in a very
substantial adjustment to the raw
calculated energy efficiency of electric
vehicles. It is included to reward
electric vehicles’ benefits to the Nation
relative to petroleum-fueled vehicles, in
a manner consistent with the regulatory
treatment of other types of alternative
fueled vehicles and the authorizing
legislation.

Move along, nothing to see here...

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