60% of Tesla’s shrinking profit effectively came from regulatory credits
Why Elon Musk's crusade against government EV subsidies is a pretty baffling stance
Tesla’s latest quarterly profit shrank by nearly half from a year earlier, and regulatory credits revenues were equal to more than half the profit it did generate, the Wall Street Journal reported.
The electric vehicle company gets these credits at no cost from the government for building environmentally friendly cars and then sells them to other automakers who haven’t met regulatory requirements.
If we’re to assume there are negligible costs associated with the credits and that it's generally viewed as pure profit, here's how much of Tesla's profit those credits have accounted for over time:
Tesla has been criticized for how those credits could obscure its true profits, and make a bad quarter look better somewhat artificially.
The company’s reliance on those credits also makes CEO Elon Musk’s desire to eliminate government subsides as well as his pro-Trump stance seem like a liability. Trump has promised to end federal support for electric vehicles.
On the earnings call Thursday, Musk tried to minimize the impact a loss of EV tax credits would have on the company.
“I guess there would be, like, some impact. But I think it would be devastating for our competitors and would hurt Tesla slightly,” Musk said. “But long term, probably actually helps Tesla, would be my guess.”
