Feb 15, 2021
Tesla announced that the company has been profitable for a full year in 2020 for the first time in its history since it was founded in 2003. But those profits didn’t come out of its car sales to its customers, according to CNN. Instead, the profits came from an accounting hat-trick that Tesla has been doing very well.
Eleven states, including California, New York and New Jersey require car manufacturers by regulation to sell a certain number of zero-emission vehicles like electric cars by 2025. If they cannot, the car manufacturers have to buy regulatory credits from other car manufacturers to meet the regulatory requirements. Because Tesla exclusively sells electric and the other car manufacturers cannot sell enough electric cars, they are forced to buy the regulatory credits from Tesla.
The selling of regulatory credits, $1.6 billion in 2020 alone, is a very lucrative business scheme for Tesla. If this very large credit were not included, Tesla would have reported close to $900 million loss.
Tesla is pretending to be a clean energy company. But, when it comes to profit, Tesla is ready to sell its credits to other companies so they can continue to pollute the environment.