How exactly Tesla makes money by selling carbon credits?

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And shouldn’t Tesla’s costumers that should be collecting that money?

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3 Answers

Anonymous 0 Comments

They just do. Lawmakers have come up with a scheme where automakers are assigned a fixed quota of carbon credits, to cover the CO2 emissions from the cars they make. This is to encourage them to reduce CO2 emissions and to move to EV’s more quickly.

Tesla doesn’t have a use for these, and instead sells them to traditional automakers who need more than their assigned quota because they sell *a lot* of traditional cars and thus cause a lot of CO2 emissions.

This means that traditional carmakers are allowed to emit more CO2 as long as they’re willing to pay to buy other companies’ carbon credits. It also means that the actual CO2 savings of buying a Tesla is effectively negated because it just allows someone else’s Ford or VW or Toyota to emit more CO2 on your behalf.

As for who should get the money? The company is selling a good to other companies. The other company pays them for that. I’m not sure why you would expect their customers to be involved.

When Microsoft sells Office licenses to another company their customers don’t get the money either.

Anonymous 0 Comments

Tesla sells emission free vehicle regulatory credits not carbon credits.

There is a mandate that some fraction of the cars made in the US be emission free. Companies can either follow the fraction exactly, or produce less emission free vehicles than required and buy credits, or produce more emission free vehicles than required and sell credits.

Tesla is in the 3rd category.

It’s an effective and correct way for the government to mandate a transition to emission free vehicles. They can progressively increase the fraction till all vehicles must be emission free.

It’s a perfectly fine source of income for Tesla. There’s nothing wrong with it.

Tesla consummers are essentially getting the money since Tesla is able to sell its cars cheaper thanks to it. Gasoline cars consummers are paying indirectly for it, since the car makers companies are increasing their price to cover the price of the credits.

Anonymous 0 Comments

Imagine it takes me a minute to walk to the bathroom, so it’s easier for me to poop on the dining room table because it’s closer. Other people in the house don’t like that, and would like me to stop. But I’m upset because pooping will take me a minute longer if I stop.

So I offer to do some extra chores to get “cleaning credits”. If I amass enough cleaning credits, everyone agrees I can poop on the dining room table and they’ll just deal with it.

Eventually I start doing so many chores, I have more credits than times I need to poop. But other people in the house need to poop too, and they’re jealous I have an extra minute of billable time per poop. So I can offer to sell them some of my “cleaning credits” for money. Now two people can poop on the table, and everyone’s happy.

That’s kind of the idea behind “carbon credits” and “regulatory credits”. Big factories pollute a lot and we don’t like it. We’d like them to invest money in things that pollute less. So we added a lot of pollution taxes to punish people who pollute, then offered to give them credits to avoid the taxes if they pollute less. Some companies who happen to be better at not polluting than others feel like they have “too many” credits, so they make money by selling the credits to companies who don’t want to pollute less. That way everyone’s happy: factories in some places get to pollute more and we can pretend that having a factory somewhere else that pollutes less is better.