Entering text into the input field will update the search result below

Regulation Credit Release For Tesla

Jul. 26, 2020 9:37 PM ETTesla, Inc. (TSLA)
Sunil Shah profile picture
Sunil Shah's Blog
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.


  • data for chart on article.
  • Tesla: Revelation of Regulatory Credits And 'Ludicrous Mode Accounting'
  • Note this info has rarely been compiled as the detail is within each quarterly financial statement. From each pdf, data was taken to excel.
  • Rather than match the regulatory credit with the sales of a given quarter, Tesla has afforded itself the discretion of booking it when it is sold!
  • This adds incredible discretion in managing quarterly earnings. For example, if in q2 2020 the average rate of reg/qtr had been constant, the profit boost would have been less than half the $428 booked! But voila, Tesla is eligible for inclusion in the S&P 500!

Quarter Reg Credit as a % of Sales Average
31/03/2016 0.38% 0.21%
30/06/2016 0.00% 0.21%
29/09/2016 0.56% 0.21%
29/12/2016 0.48% 0.21%
30/03/2017 0.00% 0.21%
29/06/2017 0.45% 0.21%
28/09/2017 0.00% 0.21%
28/12/2017 0.60% 0.21%
29/03/2018 0.17% 0.21%
28/06/2018 0.00% 0.21%
27/09/2018 0.06% 0.21%
27/12/2018 0.00% 0.21%
28/03/2019 0.34% 0.21%
27/06/2019 0.12% 0.21%
26/09/2019 0.14% 0.21%
26/12/2019 0.12% 0.21%
26/03/2020 0.40% 0.21%
25/06/2020 0.47% 0.21%
line 0.21%

The Regulatory Credit quantum if normalised to reflect sales, the basis on which ii is awarded.

What would Tesla's second quarter GAAP net income have been, if a normalised regualtory credit amount was booked? Using the average (orange line above) of 0.21% of sales, the quantum would have been $193m, versus the $428m actually posted. Hence the 'Ludicrous Mode Accounting for Regulatory Credits' is revealed. You read it here first.

Analyst's Disclosure: I am/we are short TSLA.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.