Volkswagen to Buy Green Car Credits from Tesla in China

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Amongst a world turning to electric vehicles (EVs) to reduce emissions, some automakers are offered “green credits” which can help offset extra penalty costs associated with vehicles that don’t meet emissions standards.

On Thursday, Volkswagen’s joint venture with China state-owned automaker FAW, called FAW-Volkswagen, shared plans to buy green car credits from Tesla, according to three people briefed on the subject (via Reuters).

While a move such as this hasn’t been reported between these companies in China before, it depicts the scope of the task at hand for Volkswagen as it works to electrify its car lineup – even after spending the larger part of its existence producing traditional gas cars.

Volkswagen is the world’s second-largest automaker, and the company’s shares have increased substantially since announcing plans to go electric earlier this year. However, most global markets in which the company sells its cars still see a great volume of internal combustion engine (ICE) vehicles, considered integral to the company’s revenue at this point in time.

As an alternative to being awarded green credits, companies can also purchase the credits from other companies, often involving a trade of some sort between the affiliate companies.

Last month, for example, Fiat Chrysler also spent $360 million (EU) on European Green Credits, many of which came from Tesla.

Earlier this week, Volkswagen played a terrible early April Fool’s joke and lied to reporters, confirming it was changing its name in the U.S. to ‘Voltswagen’, only to later admit it was a prank.

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