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Electric car maker fueled by tax subsidies

Tesla Motors has been basking in praise ever since the company became profitable in the first quarter of 2013, but critics point out that the company’s success would not exist without accounting gimmicks and massive government tax credits.

Forbes reported that the electric vehicle is overvalued partly because much of Tesla’s earnings come from zero emission vehicle tax credits (ZEV). The ZEV awards a hefty $7,500 tax credit to anyone who purchases a zero emissions car.

California, the location of Tesla’s headquarters, gives buyers up to $12,500 of tax credits if they take home one of these cars.

If the company sells an $80,000 Model S sedan in California, over 15 percent of the profits could potentially come from tax subsidies.



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