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Tesla Profits Dip But Carbon Credits Revenue Up

I gotta thank Kaz for this gem of an article 🙂

Musk, in my opinion, is the Pied Piper: one that offers strong but delusive enticement

Carbon Credits Revenue UP- 38% of Net Income

That’s right 38% of Net Income from selling Carbon Credits

Elon Musk’s Tesla continues to capitalize on the need of its competitors to comply with emissions standards, a business model that has proven highly profitable for the electric vehicle (EV) company. As the EV giant incurs minimal costs to earn these carbon credits, the revenue from their sale translates to pure profit.”

As the EV giant incurs minimal costs to earn these carbon credits, the revenue from their sale translates to pure profit.”

While the specific recipients of these credits remain undisclosed, this revenue stream has been vital for Tesla’s financial success.

In its recent first-quarter 2024 filings, the company reported a $442 million income from the sale of carbon credits (automotive regulatory credits). This figure represents a slight 2% increase from the previous quarter of Q4 2023, which is $433 million.

Remarkably, this credit revenue accounts for a whopping 38.6% of the company’s Q1 2024 net income ($1,144 million).

Since the company started selling carbon credits to its peers, this revenue stream has become a billion-dollar bonanza for Tesla. Last year, the automaker generated a total annual income from carbon credits amounting to $1.79 billion. That’s a record high so far for the company’s automotive regulatory credit revenue.

Tesla’s Surge in Energy Storage Deployment

Tesla saw growth in other segments of its business, particularly in energy storage, which is becoming increasingly profitable for the company. As Megapack installations continue to increase and fleet expands, Tesla anticipates consistent profit growth in this segment.

Tesla’s Carbon Credit Surprises and Future Innovations

Despite previous expectations that carbon credit income would decline as competitors ramped up electric vehicle (EV) production, Tesla has been surprised by sustained revenue in this area.

In 2020, the company’s former CFO Zachary Kirkhorn anticipated a decrease in the significance of this revenue stream over time. However, contrary to these predictions, Tesla’s earnings from regulatory carbon credits have not experienced a significant decline. In fact, last year’s earnings slightly exceeded the income from the previous year.

4 replies on “Tesla Profits Dip But Carbon Credits Revenue Up”

Your Welcome Penny, Its a topic that I have been loosely following and its something which causes me annoyance, since it was introduced. I understand that Efficiency needs to higher and emissions(more than just co2) to be cleaner, more for the sake of air quality in urban areas (imo).

But the metrics they are using and stuff they allowed with regards to Carbon Pooling. They basically subsidized Musk with indirect tax from the EU population.

When I mentioned this at the time to people around me, nobody had issues with it. Because they looked at musk just as a goofy capitalist which helps make the world greener. I wonder if they think differently now, but what’s more is that most people are probably not aware of this Carbon Credit setup from which tesla is benefitting immensely.

Furthermore, they are tightening the limit of the emissions over 5 years “Cars: 93,6 g CO2/km (2025-2029) and 49,5 g CO2/km (2030-2034)” The penalty is € 95 * (cars sold) * (average emissions of sold cars – allowed average)

I am currently just wondering if they are going to change this carbon credit setup with all the things going on and the hurting its doing.

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