Tesla is benefitting from a surprising opportunity: carbon credits.
What’s happening:
- Electric vehicle manufacturer Tesla (NASDAQ: TSLA) has announced an all time high in revenue generated from carbon credits
By the numbers:
- Tesla made $1.79B USD last year from carbon credits
- Since inception, Tesla has now generated more than $9B USD in revenue from carbon credits
How it works:
- By manufacturing electric vehicles and deploying battery energy storage and solar panels that all reduce global emissions, Tesla is able to earn an abundance of high quality carbon credits
- Tesla is then able to generate revenue by selling their carbon credits to other automakers who are currently unable to hit their emission targets
Going deeper:
- While Tesla was not originally expected to have carbon credits generate such significant revenue, stricter regulatory rules from global governments around emissions for automakers has forced many companies to purchase carbon credits in order to offset the negative environmental impact of their operations
- Both Europe and the United Kingdom have recently announced that they are going to be imposing even more rigid rules for emissions for vehicle manufacturers as they push to transition to fully electric vehicles to get closer to net zero emissions
