Since 2009, Tesla has earned $9 billion in carbon credits. Including 1.79 billion in 2023. A regulatory practice to help car manufacturers who do not sell enough electric cars.
9 billion dollars thanks to carbon credits
Selling carbon credits continues to be a lucrative business for Tesla. Especially since the American manufacturer has almost nothing more to do to generate this money. Tesla just needs to manufacture and sell electric vehicles, a mission that the brand fulfills rather well.
Automakers that haven’t sold enough electric models buy carbon credits from Tesla. Authorities around the world have in fact set CO2 quotas to force manufacturers to produce “cleaner” vehicles, particularly electric ones. This is true within the European Union as well as in China and even in the State of California. In 2023, Volkswagen and General Motors still needed to buy these famous carbon credits from Tesla. Without this extra expense, they were off the charts.
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In all, Elon Musk’s company generated $9 billion in carbon credits since 2009. And 1.79 billion last year alone. This is an amount that weighs on the manufacturer’s results. However, three years ago, the financial director of the American brand thought that this financial windfall was going to “ gradually dissipate “. He was banking on a clearer move by other manufacturers to electric.
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Zachary Kirkhorn, CFO in 2020, explained that “ we do not run the business assuming that carbon credits will contribute significantly in the future. This will continue for a while, but this flow of regulatory credits will eventually diminish “. It is clear that the reality is very different. They have even increased in recent years.
A practice that pisses off manufacturers like Volkswagen or General Motors. But they have no other option. Mary Nichols, former president of the California Air Resources Boarddeclared in 2017 that “ it really makes them angry that Tesla can get such a boost by being the only 100% electric car maker ».
We can even say that Elon Musk’s company is also there thanks to these carbon credits. Indeed, in 2020, Tesla was not profitable without the sale of carbon credits. So legacy automakers helped fund a fledgling company. Other brands like Honda and Jaguar Land Rover are also among those buying credits from Tesla. And it’s not likely to get better with time.
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Indeed, Europe has set even stricter targets for CO2 emissions for cars. Although less restrictive than expected, the Euro 7 standard still provides for the application of the lowest thresholds of Euro 6. Manufacturers will have to comply with it.
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