Tesla receives around $1.8 billion of ‘free money’ annually from major car manufacturers such as Volkswagen, Honda and Stellantis. Since 2009, the brand has received according to Bloomberg already almost 9 billion dollars from the competition.
The purely electric car brand gets that money – approximately 1.68 billion euros – by selling CO2 emission rights to car manufacturers that are lagging behind in the field of electrification. They have to pay heavy fines when the average CO2 emissions of cars sold exceed a certain maximum.
Petrol or diesel
By taking over Tesla’s certificates – which the brand itself does not need because no Tesla emits CO2 while driving – the competition can continue to unabashedly sell petrol or diesel cars, making a lot of profit. Chrysler in particular (now part of Stellantis) sold profitable, but highly CO2-emitting models of Dodge, Jeep and Ram thanks to Tesla’s certificates.
Tesla also benefited from this. Last year, Tesla made a gross profit of $17.66 billion (16.49 billion euros). 10 percent of the profit was the result of these CO2 emission allowances. In 2022 it was 1.776 billion dollars (1.66 billion euros) and in 2021 it was 1.465 billion dollars (1.37 billion euros). According to Transport Topics, Tesla has earned a total of 9 billion dollars (about 8.4 billion euros) from this.
Transferable
Several US states distribute these credits for selling cars with no tailpipe emissions, negating the penalties for selling cars with internal combustion engines. However, they are transferable: because Tesla only sells electric cars, it gets enough credit to resell to car manufacturers that do not sell enough electric cars. Emission rights cost a lot of money, but less than paying emission fines.
The end seems to be in sight
Historically, Fiat Chrysler Automobiles (now Stellantis) was one of Tesla’s largest customers. Even to such an extent that the credit purchases of this company in particular financed Tesla’s factory near Berlin. Stellantis is lagging behind in the introduction of modern electric vehicles, but because the car company is now investing heavily in electric driving, it will no longer have to buy Tesla credits in the long term.
Tesla profitability drops
That could be at the expense of Tesla’s profitability. This, in combination with the large price reductions in Tesla’s offering over the past year, worries investors. In addition, Tesla’s offering is rapidly aging and new products such as the Roadster and the long-announced $25,000 model have still not been released.
Cars still emit as much CO2 as they did twelve years ago
“Soon all cars will come from China”: the end is looming for the once powerful European car industry (+)
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