"Tesla posted its first full year of net income in 2020 -- but not because of sales to its customers.
Eleven states require automakers sell a certain percentage of zero-emissions vehicles by 2025.
If they can't, the automakers have to buy regulatory credits from another automaker that meets those requirements -- such as Tesla, which exclusively sells electric cars.
It's a lucrative business for Tesla -- bringing in US$3.3 billion over the course of the last five years, nearly half of that in 2020 alone.
The $1.6 billion in regulatory credits it received last year far outweighed Tesla's net income of $721 million -- meaning Tesla would have otherwise posted a net loss in 2020.
"These guys are losing money selling cars. They're making money selling credits. And the credits are going away," said Gordon Johnson of GLJ Research and one of the biggest bears on Tesla shares.
Tesla top executives concede the company can't count on that source of cash continuing.
... Tesla's lofty stock performance -- up 743% in 2020 -- makes it one of the most valuable U.S. companies in the world.
Yet the 500,000 cars it sold in 2020 were a sliver of more than 70 million vehicles estimated to have been sold worldwide.
Tesla shares are now worth roughly as much as those of the combined 12 largest automakers who sell more than 90% of autos globally.
While Tesla is the leading maker of electric cars, it faces increased competition as virtually every automaker rolls out their own EVs, or plan to do so.
Volkswagen has passed Tesla in terms of EV sales in most of Europe.
GM said last week it hopes to shift completely to emissions-free cars by 2035."
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