Tuesday, August 06, 2013

How Tesla makes millions of dollars selling carbon dioxide hoax credits to companies that make real cars

How Tesla Makes Millions Selling Carbon Credits - F, GM, TSLA - Foolish Blogging Network
Tesla Motors (NASDAQ: TSLA) was formed in 2003 with the idea of building a car with an alternative current (AC) electric motor similar to Nikola Tesla's original design. Ten years later, Tesla eked out its first profit - an $11.25 million take in the first quarter of 2013.
...The company also makes money from its competitors in a very crafty way, however; it sells carbon credits to other automakers.

California has some of the most stringent state emissions regulations in the U.S. That state allows auto manufacturers who produce a surplus of zero emissions vehicles (ZEV) to sell credits to companies that need to comply with regulations. By 2025, all large-volume auto manufacturers need to have 15.4% of their fleets be ZEV. Similar rules are in effect for a handful of other states, and the Environmental Protection Agency also has emissions credit rules as well.

This gives Tesla a tremendous upper hand since the only product that it sells is emission-free electric vehicles. The company is able to sell credits to companies like General Motors (NYSE: GM) and Ford Motor (NYSE: F), among others. This has allowed Tesla to make $2.8 million in 2010, $2.7 million in 2011 and $40.5 million in 2012 from its competitors. This was a big contributor to Tesla's ability to finally show a profit.
The competition is subsidizing Tesla
Yes, the auto manufacturing space is a dog-eat-dog market. What's interesting is how Tesla has been able to cull cash from its two biggest American competitors, GM and Ford.


timg56 said...

It is certainly helping their stock price.

Anonymous said...

"Tesla has been able to cull cash from its two biggest American competitors, GM and Ford."

"Competitors" hardly describes the relationship. A gnat isn't a competitor. Ford will sell more cars and trucks than Tesla before you click to go back.