Tesla’s carbon credit sales reached a new high in 2022, increasing 47% year over year in the fourth quarter, the company reported.Tesla has been profiting from the sale of carbon credits for at least eight consecutive quarters.
Tesla has been selling carbon credits to other automakers. In 2019, the company made headlines when it reportedly earned $594 million from selling a large number of carbon credits to other car companies that did not meet emissions standards set by the California Air Resources Board (CARB).
Car manufacturer Chrysler, for example, bought $2.4 billion worth of Tesla’s Carbon Credits, accounting for the majority of the company’s sales in years past.
The big move came in 2020 with $1.58 billion in revenues from the sale of credits. Tesla then stunned the carbon markets with its landmark $679 million credit sales in Q1 of 2022.
This represents a significant portion of Tesla’s overall revenue and highlights the value of the company’s clean energy operations. Tesla’s carbon credits are generated through its clean energy business.
The transportation and energy sectors have been prioritizing to directly reduce their emissions as part of the efforts to address climate change.
Companies like Audi, Porsche and Daimler-Chrysler are accelerating their net zero and electrification plans. Audi, for example, aims to have 30 electric vehicle models by 2025 and 40% volume share of the EV market by the same year.
As the world continues to work on reducing carbon emissions and combating climate change, the market for carbon credits is likely to grow.
Tesla’s leadership in the electric vehicle market and its commitment to sustainable energy position the company well to continue to generate revenue from the sale of carbon credits in the future.