Tesla reported on Wednesday its first-quarter earnings, beating analysts’ expectations by selling more than twice as many carbon credits as in preceding quarters. Throughout the years, Tesla's revenues have been fueled by credit sales.
Tesla’s profits from electric vehicles came in at US$3.22 per share, exceeding analyst expectations of US$2.27. In addition, actual revenue was US$18.8 billion, which is higher than the US$17.9 billion forecast.
The company’s US$679 million in carbon credit sales are particularly intriguing. It’s more than twice the previous quarter’s sales of US$314 million, and it’s even higher than the sales of US$518 million in Q1 2021. Credit sales in Q2 and Q3 2021 are US$354 million and US$279 million, respectively.
Tesla has been obtaining carbon credits from a variety of sources, including California's Zero-Emission Vehicle program. These credits are subsequently sold, resulting in a profit for the corporation. This quarter, Tesla's carbon credit sales account for more than 20% of its income. Tesla has allegedly made billions from the sales of carbon credits.
So far, Tesla is the only company in the car sector selling a large number of regulatory credits. Others suggested that Volkswagen is also purchasing Tesla credits to make up for its massive emissions credit deficiency in China. While other carmakers are working to catch up with Tesla’s all-electric vehicle production.
Because of the urgent need to address climate change, governments are tightening rules to decarbonize the automobile sector. This appears to be propelling Tesla’s carbon credit sales upward in the future years. Furthermore, on volume, the firm remains the most valued zero-emissions vehicle manufacturer.
Tesla’s all-electric vehicle portfolio has helped reduce greenhouse gas emissions in the sector, which is also part of its objective to accelerate the transition to a sustainable energy ecosystem.
Nonetheless, the carmaker has yet to make a public commitment to achieving net-zero or carbon-negative goals. So far, only its intentions to make EVs more accessible to consumers have been revealed, which include utilizing earnings from new models to reduce costs of succeeding models.