Tesla nearly doubles carbon credits as U.S. automakers face credit deficits

The U.S. Environmental Protection Agency indicates that Tesla vehicles have the highest energy efficiency. (Photo: Pixabay) 

Tesla, the leading U.S. electric vehicle (EV) manufacturer, earned nearly 34 million carbon credits last year through its electric vehicle sales, ranking first in carbon credit sales. However, despite the growing trend toward vehicle electrification, the U.S. auto industry still faced a massive carbon emissions deficit last year.

U.S. tightens regulations cause automakers credit deficit

According to the latest report from the U.S. Environmental Protection Agency (EPA), U.S. automakers generated nearly 11 million tons of carbon emissions deficit last year, with General Motors (GM), the best-selling U.S. automaker, having the largest deficit, reaching 17.8 million tons. A carbon emissions deficit occurs when a company exceeds the carbon allowances allocated by the government, with one unit of carbon credit equivalent to one metric ton of CO2 emissions.

Last year, GM purchased approximately 44 million carbon credits, but even with the carbon allowances from the government, it was still insufficient to offset its total carbon emissions. The primary reason was the tightening of carbon emission regulations by the EPA, which has been particularly challenging for traditional automakers like GM. However, the situation may change after President-elect Donald Trump takes office, as reports suggest he intends to relax these regulations.

In March this year, the U.S. government finalized new rules requiring automakers to reduce their carbon emissions by 49% by the end of 2032, compared to 2026 levels. While this is more lenient than the previously proposed 56% reduction, it still poses a significant challenge for many automakers.

The tightening of carbon emission regulations by the EPA has placed immense pressure on traditional automakers like General Motors. (Photo: Unsplash)

Tesla doubled carbon credit, led in energy efficiency

Compounding the difficulties for GM, in July, the company was found to have exceeded carbon emission limits for 5.9 million vehicles produced between 2012 and 2018. As a result, GM was fined $146 million and had to forfeit 49 million carbon credits.

In contrast, while GM is experiencing growing pains in its transformation, Tesla, with its focus on electric vehicles, has been able to maximize its carbon credit earnings. Last year, Tesla earned nearly 34 million carbon credits, nearly doubling the 19.1 million it earned in 2022. However, this couldn’t change the overall emissions deficit of U.S. automakers. Compared to 2022, the U.S. auto industry generated a carbon credit surplus equivalent to about 3 million tons of CO2 emissions.

Moreover, data from the EPA indicates that the fuel efficiency of new vehicles in the U.S. reached a record high of 43.6 miles per gallon in 2023, with projections suggesting that this record could be broken again this year. In terms of automakers, Tesla leads in energy efficiency, followed by South Korea's Kia and Hyundai, while the multinational automaker Stellantis had the worst performance.

Source: Reuters(1)、(2)、Forbes