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New York, USA (CNN) – Tesla recently announced its first full year of net profit in 2020 … But did you know that the reason for its bottom line was not its sales to its customers?
Eleven U.S. states require automakers to sell a certain percentage of zero-emission cars by 2025, and if they cannot, automakers must purchase regulatory credits from another automaker that meets those requirements. , like Tesla, which exclusively sells electric cars. .
It is a lucrative business for Tesla, as it has generated $ 3.3 billion for the company over the past five years, of which around half was in 2020 alone.
Tesla’s $ 1.6 billion regulatory credits last year topped its net income by $ 721 million, meaning Tesla would have recorded a net loss in 2020 without it.
“They lose money selling cars. They make money selling credits. Credits are erased,” says Gordon Johnson of Tesla’s GLJ Research.
Tesla’s senior executives also recognize that the company cannot count on maintaining this source of cash. “It’s always a difficult area for us to anticipate.” Physically of the business, and we don’t plan to get around that. He will likely stay strong in a few more chapters. It probably won’t be either. “
The 11 states that require a certain percentage of their cars to be emission-free or that car makers purchase credits from a company like Tesla are California, Colorado, Connecticut, Maine, Maryland, Massachusetts, New York, New Jersey, Oregon, and Rod. Island and Vermont.
The company reported revised 2020 net income of $ 2.5 billion, excluding items such as stock compensation of $ 1.7 billion. Its total automotive profit, which compares the total revenue from its automotive business with expenses directly related to building the cars, was $ 5.4 billion, even excluding revenue from the sale of regulatory credits.
The company’s $ 2.8 billion free cash flow increased 158% from the previous year, a dramatic change from 2018, when the company burned cash and faced the risk of running out of cash. funds.
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