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Tesla Has Collected $9 Billion Selling Regulatory Credits to other Automakers

Tesla is collecting billions from rival autoakers needing to buy regulatory credits
Photo: D.Boshouwers
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Daniel Rufiange
The EV maker has been selling credits to manufacturers whose new-vehicle lineups exceed emissions limits

Since 2009, Tesla has collected $9 billion from other automakers needing help to comply with current emissions standards. Last year alone, Tesla received $1.79 billion in regulatory credits.

When the program began in 2009, Elon Musk’s California-based firm knew it was going to earn revenue from selling credits, but it did not expect that it would last such for such a long time.

As Automotive News explained, “Selling regulatory credits is a tidy business for Tesla. It earns them by making and selling electric vehicles, then sells the credits to manufacturers whose new-vehicle fleets exceed emissions limits set by various authorities, including in China, the European Union and state of California.”

It's worth noting that for Tesla, there’s no cost associated with accumulating the credits, so its sales of them are practically all profit.

No end in sight
Three and a half years ago, Tesla's CFO said he expected revenues to gradually dissipate. But the trend is moving upwards. In 2020, Tesla raked in $1.58 billion. The total dropped by 7 percent in 2021, but it returned to just over $1.7 billion in both 2022 and 2023. 

Of course, other automakers aren't too happy about having to pay these sums to Tesla, but that's the way regulations work. Over the years, they have greatly contributed to Tesla's growth and financial stability. 

Automotive News also explains that even though other EV makers manufacturers have emerged, Tesla is still reaping rewards from sales of these credits. 

For example, Volkswagen and General Motors (GM) failed to meet their electric vehicle targets and delayed or cancelled their electric vehicle investments. Both companies have needed help in recent years to meet emissions standards, as have Honda and Jaguar Land Rover, according to Automotive News.

And all over the world, standards are getting stricter all the time, which puts Tesla in an advantageous position.
 

 
Daniel Rufiange
Daniel Rufiange
Automotive expert
  • Over 17 years' experience as an automotive journalist
  • More than 75 test drives in the past year
  • Participation in over 250 new vehicle launches in the presence of the brand's technical specialists