The Tesla logo and wordmark on the rear of a Model S. Justin Sullivan, Getty Images

Funding Tesla Angers Automakers Who Need Electric Car Credits

California requires automakers to sell electric and other non-polluting vehicles in proportion to their market share — and if they don’t sell enough, they have to purchase credits from competitors to make up the difference. Not many folks are happy.

Tesla Inc. has generated nearly $1 billion in revenue the last five years from an unlikely source: Rival automakers. Needless to say, the other companies aren’t happy.

California requires that automakers sell electric and other non-polluting vehicles in proportion to their market share. If the manufacturers don’t sell enough of them, they have to purchase credits from competitors to make up the difference. Tesla, which exclusively sells battery-powered models, sold $302.3 million in regulatory credits last year alone. 

“It really makes them mad that Tesla got so much of a boost out of being the only purely electric car manufacturer out there,” Mary Nichols, the chair of the California Air Resources Board, said in an interview Friday. “In effect, they helped to finance this upstart company which now has all the glamour.”

China and the European Union — two of the world’s bigger auto markets — are considering mandates and credit systems similar to California’s. For all the flack the state has taken from traditional carmakers for how its benefited Tesla, CEO Elon Musk has also been a critic.

Musk, 46, last year said the Air Resources Board was being “incredibly weak” and called its standards “pathetically low.” Rules should be tougher and the credits should be worth more, according to the CEO.

“Nobody’s happy,” Nichols said. “That’s my mantra.”

By John Lippert and Ryan Beene

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