GM And FCA Are Buying Greenhouse Gas Credits From Tesla

Both General Motors and Fiat Chrysler Automobiles (FCA) are purchasing federal greenhouse gas credits from Tesla in transactions which have largely remained secret.

Both GM and FCA revealed to the state of Delaware earlier this year that they had reached agreements to buy federal greenhouse gas credits from Tesla. The Los Angeles Times reports that filings don’t give specific terms on how much money Tesla is generating on the sale of credits to GM or FCA.

According to founder and president of environmental credit consultant and broker Emission Advisors, Mike Taylor, GM is likely purchasing credits to stock up for future years when emissions rules are expected to get tougher, something which is likely inevitable if a Democrat beats President Donald Trump in 2020.

Thanks to sales of the plug-in hybrid Bolt and the all-electric Bolt, GM doesn’t need to purchase credits for current regulatory compliance, despite huge demand for its ICE-powered trucks, SUVs, and other vehicles.

Also Read: Tesla Sold $200.6 Million In Non-ZEV Credits Last Quarter

The rationale behind FCA buying credits from Tesla is similar. Filings reveal that the company purchased credits from the electric car manufacturer in 2016, 2018, and earlier this year. According to a spokesman from FCA, Eric Mayne, U.S. emissions standards are getting stricter at a pace which “far exceeds” consumer demand for electric vehicles.

“Until demand catches up with regulatory requirements and there is regulatory relief, we will use credits as appropriate,” he said.

In California, car manufacturers such as GM and FCA must purchase credits from companies like Tesla if they don’t sell zero-emission vehicles in proportion to their share of the local market.

The sale of tax credits has generated almost $2 billion in revenue for Tesla since 2010.