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A secret you dont know on how Tesla makes profit

By, 2021-02-02

Tesla 2021


The American electric car manufacturer Tesla achieved its first profit for a full year in 2020, but the secret that not everyone knows is that this profit is not from car sales.


Most of this income comes from selling credits to other companies, as 11 US states require car makers to sell a certain percentage of zero-emissions cars by 2025, and if they can't, then car makers must buy regulatory credits from another auto company that meets these requirements. Like Tesla, which exclusively sells electric cars.


It's a lucrative business for Tesla, having brought in $ 3.3 billion over the past five years, nearly half of that in 2020 alone. The $ 1.6 billion regulatory appropriations received last year exceeded Tesla's net profit of $ 721 million, meaning Tesla would have had losses in 2020 had it not been for the regulatory appropriations.


The Future for Tesla


Tesla's stock performance, which rose by 743% in 2020, makes it one of the most valuable American companies in the world after it was trying to obtain financing from abroad.


However, half a million cars sold in 2020 is a fraction of the more than 70 million cars sold worldwide. Yet Tesla's shares are now worth nearly a dozen of the largest automakers that sell more than 90 percent of the cars globally.

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