In the first quarter of 2021, Tesla reported a net income of 438 million dollars, a new record and by a lot. It also reported 10.39 billion in revenue, as opposed to the 10.29 that was expected. The interesting thing is how they made this much, as it isn’t only from selling vehicles.
ce over Twitter. Whatever you think about it, Tesla’s investment certainly worked. Tesla decided to sell some of their Bitcoin and ended making 101 million dollars.
This isn’t the only thing they did. Tesla also made $518 million in revenue from selling regulatory credits. But what are regulatory credits? Around the world, many environmental emissions programs exist that give out credits to automotive manufacturers that produce electric vehicles. For example, in states like California (Which has the Zero Emissions Vehicle Program), if companies don’t get enough credits, they can face some sort of punishment. Since Tesla is a company that produces nothing but electric cars, they can rack up tons of credits, way more than it needs.
Since Tesla receives these credits free of charge, they can sell them at 100% profit margins to companies that need to comply with certain nation’s regulations. A prime example of the is the Fiat Chrysler Automobiles association, which committed to buying $1.27 billion in credits in order to comply with European regulations.
Why is this important, though? If you are invested in Tesla, this information is critical for predicting the company’s future. Tesla only predicted $1.2 billion for the next year, meaning that there are barely expecting any profit from actually selling vehicles. This could be worrying as selling credits is nowhere near a sustainable way to make income. As more and more manufacturers switch to electric vehicles, they will start earning more credits as well, significantly driving the value down.
Not only that, but the reason most companies don’t use crypto is because of the level at which it fluctuates. Who knows if Tesla will be able to hold its influence for a long time because when that happens, they will be just as susceptible to the vastly fluctuating prices of cryptocurrency. Also, countries such as India have taken steps towards outlawing Bitcoin altogether, and it is unsure just how big of an impact it will have on Tesla.
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