President of General Motors (GM) says that, with the arrival of new companies in the electric car sector, the reign of Tesla, by Elon Musk, may be close to an end.

The president of General Motors (GM), Mark Reuss, claims to be confident in the success of his company's strategy regarding the electric car market and states that Tesla's "reign" could end soon. While Reuss admires Elon Musk, he says that at some point, Tesla's biggest source of income could "dry up". This is due to carbon credits, a kind of currency for exchanging emissions that large automakers trade with each other.

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Understand about the carbon credits sold by Tesla

Several Tesla critics accuse the company of being a credit-based business, not electric cars. The auto sector pointed to several losses and the company was in the blue due to the sale of these credits.

The president of General Motors leads the company's regional operations in North America, China, South America and General Motors International. GM's Global Product, Global Quality, Global Design, and Operational Excellence development teams also lead to the President. In terms of stock market value, the automaker General Motors operates at around US$ 71 billion and Tesla, on the other hand, operates with something above US$ 905 billion, which is equivalent to R$ 364 billion and R$ 4,6 trillion, respectively.

However, Reuss claims that Elon Musk's automaker, despite the numbers, is "harmless". The GM president also highlighted that Musk has done remarkable work and respects the CEO and his company Tesla a lot. However, Reuss makes observations about the credits adopted by the USA for the production of electric cars.

Tesla is always in the black with carbon credits, says GM chairman

The president of General Motors says that, because Tesla only produces electric cars, it is always in the black with credits, unlike other traditional automakers, which are in the red for manufacturing polluting cars.

“By being basically alone in the market, Tesla, in a way, monopolized the electric car sector”, said the President of GM. But that could change, given that most automakers are entering the more sustainable market. In addition, the automaker will have to compete with manufacturers of old cars in the sector that were acquiring credits, that is, most of the traditional companies must take a part of the market in which Tesla “rose”.

The president of General Motors claims that Tesla will have to compete with a lower price to be able to be a full-service company. Reuss also reports having a lot of respect for startups that just hit the market and produce electric cars, given that it takes stubbornness to move forward with projects in a heavily regulated environment.

What is it and how are carbon credits generated?

A carbon credit is the representation of a ton of carbon that is no longer emitted into the atmosphere, contributing to the reduction of the greenhouse effect. There are several ways to generate carbon credits, among them, the replacement of fuels in factories, where they stop using non-renewable biomass, such as firewood from deforestation, and start using renewable biomass, which in addition to emitting less greenhouse gases, contribute to the reduction of deforestation. Thus, based on the difference between the two scenarios, it is calculated how much carbon was no longer emitted with this substitution, thus generating the credits.

The carbon credit is the currency used in the carbon market. In this market, companies that have a very high emission level and few options for reduction can buy carbon credits to offset their emissions.

Thus, they indirectly help maintain the reduction project and, in addition to balancing the level of GHG emissions in the atmosphere, contribute to the sustainable development of poor communities.

Click here to see the list of projects that generate carbon credits, developed by Sustainable Carbon. Check out how it works and how a carbon credit is generated in the infographic below:

Tesla isn't just blue on carbon credits, GM chairman's note may be 'out of date'

Apparently, the GM president mentioned an outdated taunt. Carbon credits were indeed an important source of income for Tesla, at the beginning of its arrival on the market and until 2019, the company's electric car sector had a net loss. ($862 million).

However, recent balance sheets released by the company show that last year, there was a record profit of US$ 5,5 billion. Income from carbon credits was only US$1,4 billion and from electric cars US$47 billion.