According to a recent SEC filing, Tesla CEO Elon Musk revealed that the company earned $1.79 billion from selling regulatory credits last year. This profit came from Tesla’s sales of electric vehicles to other automakers who have not produced enough EVs to meet emission regulations in the US, Europe, and China.
Tesla’s strong earnings from regulatory credits were a surprise as the company had expected this revenue stream to diminish as other automakers increased their EV production. However, Tesla’s earnings from these credits actually increased slightly from the previous year, when the company earned $1.776 billion. Despite this, Tesla is facing growing competition, particularly from Chinese automaker BYD, which overtook Tesla as the world’s top seller of EVs at the beginning of the year.
Despite facing competition from Chinese automakers such as BYD and others introducing hybrid vehicles into their lineups, Tesla remains a leading player in the EV industry. The fact that the company continues to profit from selling regulatory credits has confounded earlier expectations. Tesla did not immediately respond to a request for comment from Business Insider.