NEW YORK (TheStreet) -- Tesla (TSLA) could see decreasing profitability if its zero-emission credits are limited by the California Air Resources Board (CARB). The government body met in Sacramento on Thursday and will regroup on Friday to discuss Tesla's incentive eligibility.
Tesla currently receives 7 credits for every Model S model produced. This could soon be cut to 4, according to Bloomberg's Cory Johnson, on the issue of whether the battery pack can be easily removed for fast refueling.
Credits are currently a substantial portion of the company's revenue. In full-year 2012, for example, of the $385.7 million in revenue, around 30% was generated from CARB credits, said Johnson.
At the time of publication, Tesla had not responded to requests for comment.
Shares closed 5.3% higher to $173.15, with an additional 0.38% added in post-market trading.
TheStreet Ratings team rates Tesla Motors Inc as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate Tesla Motors Inc (TSLA) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows: