Tesla’s regulatory credit sales boost profits, while earnings fall

• Some of Tesla’s $25.5 billion in second-quarter revenue came from selling cars that competitors didn’t sell.
• Tesla, which sells only electric cars, always has excess credits.
• It’s an advantage Tesla needs as it faces a slow start to 2024.

Tesla’s record second-quarter revenue was driven in part by something unusual: all the electric vehicles its competitors were offering NO sell.

Elon Musk’s electric car company has always had an unseen revenue stream from selling extra regulatory credits to automakers whose fleets don’t meet emissions standards.

Because Tesla sells only electric vehicles, the company always has a surplus of credits — awarded to companies that meet regulatory requirements — that it can sell for a tidy profit.

That’s helpful news for Tesla, even as profits decline.

As the electric vehicle market becomes more difficult for traditional automakers, competitors appear to be increasingly relying on Tesla credits to avoid hefty fines for non-compliance.

Tesla nearly doubled its regulatory credit revenue compared to the first quarter of this year, recording $890 million in credit sales in the second quarter

That growth helped Tesla deliver record revenue of $25.5 billion in the April-June period, topping analysts’ expectations by about $1 billion.

It’s a bright spot Tesla needs after a slow start to the year. While the company outperformed revenue generation in the second quarter, its earnings per share of $0.52 fell short of analyst estimates of about $0.60 per share.

Tesla shares fell 7% in after-market trading on Tuesday after the report was released.