Volkswagen CEO says Tesla is expected to continue selling carbon credits for 2 or 3 years more

The sale of carbon emission credits has become a lucrative business for electric car manufacturer Tesla and has increased the company’s revenue. Herbert Diess, CEO of Volkswagen Group, said that Tesla is rumored to sell carbon credits to Volkswagen to help the latter achieve its carbon emission target, which may last for “two to three years.”

Selling carbon credits will help Volkswagen align with regional emissions targets that may affect the company’s ability to do business in China and the United States. It can help automakers who buy carbon credits avoid huge fines and can also help sell carbon emissions. Automakers with points consolidate financial security and provide funding for projects.

Last year, Tesla earned US$1.58 billion in revenue from the sale of carbon emission credits, which is much higher than the US$593 million in 2019 and the US$419 million in revenue received in 2018.

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In the first quarter of 2021, the company earned US$518 million in revenue through the sale of carbon emission credits, accounting for approximately 5% of the company’s total revenue.

According to foreign media reports, from 2019 to 2021, Fiat Chrysler spent about $2.4 billion to purchase Tesla’s carbon emission credits.

However, recently, Stellattis, formed by the merger of Fiat Chrysler (FCA) and PSA PSA, stated that it will no longer buy carbon credits from Tesla to help meet EU emission standards. This move is expected to save Stellatis about 300 million euros (360 million US dollars).

Stellaris said that with the help of new partially electric or all-electric vehicle models, the company is expected to meet European carbon emission standards this year.