Tesla’s side business: This is how Musk earns $1.8 billion on the side

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The side business with regulatory credits has brought Tesla around $9 billion since 2009, according to Bloomberg. Pool/Getty Images

Last year, Tesla earned 1.79 billion dollars (around 1.6 billion euros) from the sale of CO2 certificates, so-called “regulatory credits”.

The company sells them to automakers that haven’t produced enough electric vehicles to meet emissions regulations.

According to Bloomberg, Tesla has earned $9 billion (around €8.4 billion) this way since 2009.

This is a machine translation of an article from our US colleagues at Business Insider. It was automatically translated and checked by a real editor.

Elon Musk’s Tesla earned $1.79 billion (around €1.66 billion) last year from the sale of regulatory credits (CO2 certificates). That comes from one Document the US Securities and Exchange Commission. The company obviously benefited from its competitors’ inability to sell enough electric cars to meet emissions regulations.

Tesla acquires the CO2 certificates through the manufacture and sale of electric vehicles. The company can then sell them to other automakers that haven’t produced enough electric vehicles to meet emissions standards imposed by regulators in the U.S., Europe and China.

This has proven to be an important business for Tesla, which does not disclose to whom it sells the credits.

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Tesla earned almost nine billion dollars from the sale of CO2 certificates

„Bloomberg“, which first reported on this, has calculated that the company has earned almost nine billion dollars (equivalent to around 8.4 billion euros) from selling emissions credits since 2009.

This should be as surprising to Tesla as it is to everyone else. The company expected revenue from sales of carbon credits to dry up as other automakers ramp up production of electric vehicles. Then-CFO Zachary Kirkhorn warned about this in a conference call for 2020.

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“We do not operate the business on the assumption that regulatory credits will make a significant contribution in the future,” Kirkhorn told investors, according to Bloomberg. “It will continue for some time, but at some point this flow of regulatory credits will subside,” he added.

However, for the most part, this scenario has not occurred. Tesla’s revenue from the sale of carbon credits increased slightly compared to last year, when the company earned $1.77 billion (about 1.64 billion euros).

Tesla’s biggest threat comes from China

Elon Musk-led automaker Tesla continues to dominate the U.S. electric vehicle market even as it loses ground to other competitors.

Still, many of its biggest competitors are scaling back their ambitious electric vehicle plans. Ford, for example, is postponing investments totaling twelve billion dollars (around eleven billion euros). General Motors, on the other hand, is reintroducing hybrid vehicles to its product range.

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The biggest threat to Tesla’s dominance currently comes from China. There, BYD overtook the automaker at the beginning of the year as the world‘s largest seller of electric vehicles.

Tesla did not immediately respond to a request for comment from Business Insider outside of regular business hours.

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