Tesla CEO Elon Musk has revealed that the company made a surprising profit of $1.79 billion from selling regulatory credits in 2020, according to a recent SEC filing. This revenue stream comes from Tesla’s sales of electric vehicles to other automakers who have not met emission regulations in the US, Europe, and China. Bloomberg calculated that Tesla has earned almost $9 billion from selling regulatory credits since 2009.
Despite expecting this revenue stream to diminish as other automakers increased their EV production, Tesla’s earnings from these credits actually increased slightly from the previous year when the company earned $1.776 billion. However, Tesla is facing growing competition, particularly from Chinese automaker BYD, which overtook Tesla as the world’s top seller of EVs at the beginning of the year.
Tesla’s dominance in the US electric vehicle market is starting to wane as competitors scale back their EV plans and introduce hybrid vehicles into their lineups. Even so, Tesla remains a leading player in the EV industry due to its strong sales of electric vehicles and continued profitability from selling regulatory credits. The fact that the company continues to confound earlier expectations has been attributed to its ability to adapt and innovate in a rapidly changing market landscape.