According to the latest report from Automotive News, Tesla earned US$1.79 billion in revenue from selling regulatory points last year and has accumulated revenue of nearly US$9 billion since 2009.
Tesla February 2024 latest news
These regulatory credits are purchased by car companies around the world whose new vehicle emissions exceed standards set by local regulators, such as in China, the European Union and California. In other words, in order to avoid huge fines, car companies need to control the average emissions of their entire fleet below a certain limit. So, how to do this if we only produce fuel vehicles? The answer is – buy points from Tesla, which only produces zero-emission cars, and “clear customs” legally.
Although we don’t know what kind of deal Tesla has reached with each car company that purchases credits, it is undoubtedly a good deal for the American electric car manufacturer. However, overall, selling “life-saving straw” to car companies that have not vigorously developed electric vehicles is not as important as people think. In 2023, Tesla’s total automotive business revenue was $82.4 billion, which means regulatory points accounted for only 1.4% of it.
Having said that, this is almost “no cost and no profit” for Tesla. There are almost no costs associated with selling points, so these revenues are almost pure profit.
Last year, Tesla and its U.S. battery manufacturing partner Panasonic also benefited from battery tax credits provided by the U.S. “Reducing Inflation Act”, with each electric vehicle sold in the United States receiving government subsidies of $900 to $1,400.
As early as 2020, Tesla’s then-chief financial officer Zachary Kirkhorn said on the July earnings call that the company did not assume that regulatory credits would make a significant contribution in the future. “This revenue stream will continue for a while but will eventually diminish.”
