Tesla Motors Inc (TSLA): How This Car Company Makes Millions Selling Carbon Credits

Ford’s research and development expenses have hovered around $5 billion the past three years. For GM, research and development dropped 9% from 2011 to 2012, spending a total of $7.3 billion last year. By comparison, Tesla spent $273 million on research and development, which is 66% of its total revenue of $413 million last year. GM spent 4.7% of its revenues on R&D in 2012, while Ford spent 3.7% of its revenue on research and development last year.

The R&D numbers suggest

The gigantic spending numbers on R&D by both Ford and GM would suggest that they are working towards fuel efficiency. They need to, since these two companies comprise a 29.2% market share of vehicle sales in the United States. That doesn’t mean that Tesla isn’t going to continue to make money from its competitors on credits, however.

The Wall Street Journal has reported that the number of credits that states will require from manufacturers will jump in 2018. Tesla saw a whopping 1400% increase in the amount of money it brings in via carbon credits last year. The increasing regulatory environment surrounding automotive efficiency suggests that credit sales is going to continue to be a way for Tesla to be profitable into the future.

The article How Tesla Makes Millions Selling Carbon Credits originally appeared on Fool.com and written by Daniel Cawrey.

Daniel Cawrey has no position in any stocks mentioned. The Motley Fool recommends Ford, General Motors, and Tesla Motors . The Motley Fool owns shares of Ford and Tesla Motors. Daniel is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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