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IPFS News Link • Transportation

Inside Tesla's lucrative side hustle: Automaker has cashed in almost $9 billion selling...


Tesla made almost $1.8 billion last year by taking advantage of rival car makers that failed to meet emissions regulations.

Because it manufactures only electric cars, the company earns a surplus of regulatory credits in the US, Europe, and China which it can sell to other automakers that would otherwise be penalized for failing to make enough low-emissions cars.

Last year, the sale of those credits made it $1.79 billion, according to company filings published last week. That is more than in any other year since its incorporation.

Over the last decade and a half, the company has made a total of almost $9 billion selling credits.

In many regions, automakers are required to produce a certain number of zero-emission vehicles (ZEVs). The number they need to make depends on how many non-compliant gas-burning cars they sell in that region.

Since Tesla only makes battery EVs, it accumulates an excess of credits which it sells for profit to other automakers that are not manufacturing enough zero-emission vehicles to remain compliant with regulations

California was one of the first regions to introduce a zero-emission vehicle policy back in 1990, according to the Pembina Institute.

Tesla's dependence on selling credits to generate revenue is often seen as a flaw in its business model and viewed by investors as a red flag.