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GM and Fiat Chrysler have been funding Tesla by buying greenhouse emission credits from the EV carmaker, according to official filings by the two carmakers to the state of Delaware, as reported by Bloomberg.
The report certainly has an ironic twist given Elon Musk’s accusations that large carmakers such as GM and Fiat Chryslers have been trying to prevent Tesla from succeeding in the market. It is similarly ironic for GM and Fiat Chrysler, which have both tried to win some market share from Tesla but without a lot of success.
According to Bloomberg, GM no longer needs to buy emissions credits because it sells enough plug-in vehicles. However, these sales are meager in comparison to the sales of its gas guzzlers.
What’s more, the carmaking supermajor is preparing for increasingly tougher environmental regulations by continuing to buy credits from Tesla. These regulations are likely to become particularly tough if next year a Democrat wins the presidential race. A GM spokesperson confirmed this to Bloomberg by saying the company was buying credits as a hedge against “future regulatory uncertainties.”
“Until demand catches up with regulatory requirements and there is regulatory relief,” Eric Mayne said, “we will use credits as appropriate.”
According to Bloomberg, Tesla’s revenues from emission credit sales since 2010 have reached some US$2 billion, with the main market contributing to this being its home one in California. It is the biggest car market in the United States and it also has probably the most stringent emission rules requiring carmakers to sell a number of zero-emission vehicles that is proportional to their market share in the state. If they can’t make the necessary number of sales, they are obliged to buy emission credits from a “cleaner” carmaker.
A report by the Environmental Protection Agency earlier this year said most carmakers in the U.S. had complied with the emissions regulation in 2017, most of them did so with the help of credit purchases.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.