Breaking Finance News

BREAKING- Possible California Rule Change Bad News for Tesla

Shares of Tesla (NASDAQ: TSLA) are trending lower Monday after a news broke that a pending rule change by the California Air Resources Board could eat into one of Tesla’s key revenue sources.

Automakers have to meet tough new environmental regulations that require more than 15 percent of sales in 11 states be zero-emissions vehicles by 2025. If they don’t hit the target, they have to pay fines or purchase credits from other automakers. Tesla only sells electric vehicles so it has a lot of zero-emissions credits for sale. In the first quarter of 2013, the company sold $68 million worth of credits or 12 percent of its revenue, according to CNN Money.

The rule change involves removing the credit for quick change batteries. If the rule is changed, Tesla will still receive credits but they will be worth substantially less. Read more here.

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Disclosure: At the time of this writing, the author had no position in the company mentioned.

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