April 17, 2024

Taylor Daily Press

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Why does Tesla receive nearly $2 billion annually from other automakers?  car

Why does Tesla receive nearly $2 billion annually from other automakers? car

Tesla receives about $1.8 billion in “free money” annually from major automakers such as Volkswagen, Honda and Stellantis. Since 2009, the trademark has received according to Bloomberg Already nearly $9 billion worth of competition.

The purely electric car brand gets this money – approximately 1.68 billion euros – by selling the rights to CO2 emissions to car manufacturers that are lagging behind in the electrification space. They have to pay heavy fines when the average CO2 emissions of cars sold exceed a certain maximum.

Gasoline or diesel

By usurping Tesla's certifications – which the brand itself does not need because Tesla does not emit CO2 while driving – the competition can continue to shamelessly sell gasoline or diesel cars, making a lot of profits. Chrysler in particular (now part of Stellantis) sold profitable but high CO2-emitting models of Dodge, Jeep and Ram thanks to Tesla certifications.

Dodge Ram © RV

Tesla also benefited from this. Last year, Tesla made total profits of $17.66 billion (€16.49 billion). 10% of the profit was the result of carbon dioxide emissions allowances. In 2022, it reached $1.776 billion (1.66 billion euros) and in 2021 it reached $1.465 billion (1.37 billion euros). According to Transportation Topics, Tesla made a total of $9 billion (about €8.4 billion) from this.

transferable

Several US states distribute these credits for the sale of cars that do not emit any tailpipe emissions, eliminating penalties imposed on the sale of cars with internal combustion engines. However, it is transferable: Since Tesla only sells electric cars, it gets enough credit to resell it to automakers that don't sell enough electric cars. Emissions rights cost a lot of money, but less than paying emissions fines.

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It seems that the end is in sight

Historically, Fiat Chrysler Automobiles (now Stellantis) has been one of Tesla's largest customers. Even to the extent that credit purchases from this company in particular financed the Tesla factory near Berlin. Stellantis is late to introducing modern electric vehicles, but since the car company is now investing heavily in electric driving, it will no longer have to buy Tesla credits in the long term.

Tesla CEO Elon Musk.
Tesla CEO Elon Musk. © AP

Tesla's profitability declines

This may come at the expense of Tesla's profitability. This, combined with significant price cuts on Tesla's offerings over the past year, has investors concerned. Additionally, Tesla's offerings are aging quickly and new products like the Roadster and the long-announced $25,000 model have not been released.

Cars still emit as much carbon dioxide as they did twelve years ago

“Soon all cars will come from China”: The end is in sight for the once-powerful European auto industry (+)

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