The United States has a governmental policy that allows automakers to earn greenhouse gas credits based on the amount of electric vehicles they manufacture and sell. These are also known as zero-emissions vehicles (ZEV).
What happens when a manufacturer does not maintain a certain amount of credits? They pay a fine.
The main point is to encourage the sale and investment of ZEVs, and lowering our carbon emission and greenhouse gas effect.
Tesla and their credits
Given that Tesla only produces EVs, they have an excess of ZEV credits. It has been well-known that the company has been selling these extra credits to other automakers, allowing Tesla to generate over $2 billion in revenue since 2010.
To whom they were selling their credits was largely unknown and kept a secret. Up until now.
The main issue on the table now is that while Tesla is filling its coffers in exchange for selling their credits, they are in fact allowing other car manufacturers to keep polluting the earth. Not in line with their overall mission.
GM planning ahead
There have been no secrets around the fact that Tesla has been selling their credits for nearly a decade. On Monday, however, Bloomberg disclosed that General Motors (GM) and Fiat Chrysler are two of the companies purchasing EV credits from Tesla.
Eyebrows were particularly raised at the mention of GM's inclusion on the list. GM's years of sales of plug-in hybrid Chevrolet Volts and all-electric Chevy Bolts mean that they have acquired enough credits to not amass any fines. They do not in fact need extra credits to this day.
That said, the demand for their non-environmentally-friendly trucks and SUVs easily take the lead over their ZEVs.
Moreover, GM is worried that regulations will tighten up around ZEV policies and as an insurance policy, they are pre-ordering and buying credits from Tesla.
Even if this is forward planning, it could be argued that Tesla is offering an easy way out for GM, where they wouldn't have to make a speedy transition to EVs only. This defies the purpose of the credits in the first place.