The key is probably that the $12k replacement program is an investment in Tesla; they're cash starved, and are willing to sell the batteries at a loss in return for the cash advance. Also, they're betting on the batteries being ~half price in 10 years.

From further reading, they'd be $30k - 2.5 times the price - to buy upfront today.

But that doesn't mean that the subsidy doesn't exist - if 1% of consumers would buy a Model S due to its other advantages, maybe 2-3% would if that purchase returned $1500 a year back to them.

So while you're right that it's not outright going to pay for itself in 2012, it probably halves the gap between a Model S and a BMW in the same class, and it's only going to get better as battery/PV technology improves.