When automakers fail to meet government regulations on emissions or EV share, they can pay fines or improve their quotas by doing business with competitors who over-comply with their obligations. It is regulated differently in detail in parts of the USA, the EU and in China, and Tesla regularly generates quarterly revenues in the three-digit million range. In China alone, the value of Tesla’s CO2 credits in 2021 could have been around 430 million euros.
BYD and Tesla with the highest credit
According to a report by CnEVPost, this is the result of new data that the Chinese Ministry of Industry has now published. Accordingly, the two largest electric car manufacturers in the country were also able to collect the highest credit.
Because they are also available for plug-in hybrids, the local company BYD (some of which still produced combustion cars in 2021) was even at the forefront: it came up with 1.66 million credits and thus around 24 percent of the total, Tesla followed with 1 .4 million credits. Other companies had less than half a million each.
For the first quarter of this year, Tesla reported $679 million in revenue from the sale of such regulatory assets worldwide — more than double the previous quarter and also well above Q1 2021, which had marked an all-time high. The company in the EU may have been stuck with part of its CO2 overachievement. Because after the merger to form Stellantis, Fiat-Chrysler withdrew from the paid pool with Tesla, which now only includes the relatively small manufacturers Honda and Jaguar Land Rover.
Potential for revenue also in the USA
In China, however, Tesla may not have realized the value of its credits from 2021. While CnEVPost does not mention this explicitly, it did write in a previous report that trading in those from 2020 started last year in mid-July. The price has not yet been determined either. For credit transactions in 2021, it should have averaged around 310 euros.
If it stays that way and all credits find a buyer, Tesla could earn a good 430 million euros this year with its 2021 CO2 credit and BYD even around 510 million euros. In the meantime, Tesla can also expect a further income of this kind in the USA by the end of this year at the latest, because there the NHTSA put stricter consumption rules into force in March, which result in penalties for many manufacturers without the purchase of credits to compensate.
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