Tesla has depended largely on the sale of regulatory credits to other automakers that didn’t meet emissions requirements in past years to retain a high level of profitability.
Stellantis, the owner of Fiat Chrysler Automotive and France’s PSA group said it plans to meet its emissions targets this year, without having to purchase them from Tesla anymore, as reported by Business Insider.
Between 2019 and 2021, Stellantis bought roughly $2.4 billion worth of the tax credits from Tesla, highlighting a major revenue stream for the EV company.
Volkswagen to Buy Green Car Credits from Tesla in China https://t.co/F6FpyRkfmW
— TeslaNorth.com (@RealTeslaNorth) April 1, 2021
With Stellantis indicating it will be ending its reliance on Tesla’s regulatory credits this year, the future of Tesla’s regulatory credit sales may have an impact on Elon Musk’s company, says one analyst.
Navellier Chief Investment Officer Louis Navellier said on Wednesday in a note that Tesla’s decline in regulatory credits “is devastating and brings into question the future profitability of Tesla.”
“The increased awareness of the role that carbon tax credits play in the company’s profitability may lead to a fundamental re-valuing of the company in the coming year,” added the analyst.
While the sale of regulatory credits worldwide amount to $1.58 billion in revenue for Tesla, the company saw a net profit of $721 million in 2020.
Last month, Tesla reported a record net income of $438 million in its earnings call from the first quarter of the year, with a total of $10.39 billion in revenue.
