Tesla, Elon Musk’s US$750 billion electric vehicle company, continues to earn huge profits on the carbon credit market. In the past five years, Tesla has earned over US$5bln by selling carbon credits. In the last trailing twelve months (TTM) alone, Tesla generated US$1.6 billion in revenues from selling carbon credits, comprising approximately 10% of its US$16.1billion earnings. However, these sales constituted over 50% of free cash flows in the latest quarter.
Tesla’s strategy of earning big money on the secondary carbon credit market contrast’s with CEO Elon Musk’s oft-stated green philosophy. The company does not disclose exactly who buys these credits, but a 2019 Bloomberg report cited Detroit manufacturers General Motors and Fiat Chrysler as key customers.
On Twitter, Elon Musk is massively criticized for his hypocritic “green policy.” Tesla can only survive through these carbon credits and not car sales. In other words, Tesla continues to live off the destruction of our climate.
Also called regulatory credits, carbon credits are government-issued corporate incentives to develop eco-friendly automobiles. As an electric vehicle producer, Tesla obtains a stockpile of these credits and sells them on to automotive manufacturers with less-green credentials.