- Tesla just reported record Q3 vehicles deliveries, which will result in more renewable energy credits it can sell to automakers like Ford, GM and Fiat Chrysler.
- Other electric vehicle start-ups, such as Nio, Rivian, Lordstown Motors and Nikola, could benefit from zero-emission vehicle credits in the years to come.
- More U.S. states are planning credit programs or will make existing ones stricter, and cover more classes of vehicles, including trucks.
- The emissions trading market has proven to be a successful example of climate finance.
Tesla’s ability to manufacture electric vehicles without losing money has been a constant concern for investors. As renewable energy credits have played a significant role in the recent string of quarterly profits from Elon Musk’s EV company, they have been a source of some frustration for Wall Street analysts — who have struggled to get a handle on how much revenue these credits will rack up in any quarter — as well as generating skepticism from investors.
But there’s nothing dubious about the renewable energy credit market. In fact, Tesla’s domination of zero-emission vehicle credit trading — where it is estimated to have sold more credits than any other company — is an example of a climate finance mechanism that is working as it was designed to work. Tesla, unlike traditional automakers, risked it all on making and selling EVs. Meanwhile, traditional car companies are required to pay up, by other means, for the choice of delaying their transition to battery electric or fuel cell electric zero-emission vehicles.
“The last thing a company wants to do is pay their competitor to eat their own lunch,” said Simon Mui, deputy director of the clean vehicles & fuels group at the Natural Resources Defense Council. But he added that