Tesla to earn one billion dollars from emissions credits – report

Producing cars isn’t the only way to make a profit as a car company – sometimes it’s what you don’t produce that sells.

A new report from Motor1 claims Tesla will earn an estimated US$1 billion (AU$1.6 billion) of profit in 2025 from selling offset emissions credits to its competitors in Europe and elsewhere.

Companies such as Toyota, Ford, and Stellantis – the parent company of 14 car brands, including Alfa Romeo, Jeep, Maserati, Peugeot, and Ram, among others – which have relatively few electric models are forced to buy emissions offset credits, as their fleets are above the mandated output set by authorities.

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By buying the credits, the companies can lower their reported emissions – avoiding large regulatory fines.

The report claims Tesla has already generated an estimated US$9 billion (AU$14.4 billion) profit since the business began from just selling credits.

Analysts predict a car manufacturer would need to have 20 per cent of its line-up as electric models to meet averages set by government authorities.

However, while carmakers are continuing to expand their electric-car line-ups, demand for battery-powered cars appears to be slowing in some markets – not helped by reduced government incentives.

Australia recently introduced the New Vehicle Efficiency Standards, which will require car companies locally to meet ever-tightening tailpipe emissions targets.