Elon Musk did it again. His Tesla is making a profit for the fourth quarter in a row. Ironically, his company didn't get into the black for making electric cars, but because Fiat still sells a lot of dirty cars. Tesla makes hundreds of millions of euros from selling allowances to Fiat Chrysler. This is how it works: the European Union sets stricter requirements for new car emissions year after year. Manufacturers are thus stimulated to deliver cleaner cars. That is the reason that more and more electric cars and hybrids are coming onto the market. Not every automaker is that far with that. Auto group Fiat-Chrysler is struggling to ensure that its cars meet stricter European standards. To avoid skyrocketing fines from the European Union - up to 1 billion euros per year - the company has purchased emission rights from Tesla through 2023. Emissions After all, a Tesla does not emit CO2, but it is allowed to do so according to European rules. The unused emissions can be traded and Fiat-Chrysler uses them. Tesla will receive a total of 1.1 billion euros for it, Fiat-Chrysler recently announced. Almost enough to finance the new Tesla factory in Germany. For a number of US states, car manufacturers also have to sell a certain percentage of electric cars. Those who do not yet succeed can buy rights from other manufacturers. So at Tesla. Last quarter, the CO2 trade generated Tesla 369 million euros, which allowed the company to book 90 million euros at the bottom of the line. Without the CO2 money, Tesla would therefore have lost 279 million euros last quarter. The previous quarter's profit was also entirely due to the lucrative accounting trick of masking Fiats emissions. Head Start In fact, Tesla is now being paid for the technological edge. This year, revenues from CO2 allowances will be higher than last year, announced Chief Financial Officer Zachary Kirkhorn. For 2020 he expects more than 860 million euros in income from the sale of emission rights. That is a finite revenue model, because other automakers will also become greener. Article from EPA
Tesla environmental credits I wonder what teslas eps would have been without the environmental credits.....
The answer was in the article: Without the CO2 money, Tesla would therefore have lost 279 million euros last quarter.
So 324 million US they would have lost Earnings were $2.18 or $403,000,000 So eps would have been around .42 without credits vs $2.18?
According to the article Tesla cannot produce cars without losing money. So their core business produces losses, not profits. Probably in a few months we will read how big shareholders dumped stocks at these insane prices.
Interesting What Are EV Regulatory Credits And Why Is Tesla Selling So Many Of Them? Wayne Duggan July 24, 2020, 7:31 AM https://money.yahoo.com/ev-regulatory-credits-why-tesla-113115520.html