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President of General Motors (GM) Says That, With the Arrival of New Companies in the Electric Car Sector, Tesla’s Reign by Elon Musk May Be Coming to an End.
The president of General Motors (GM), Mark Reuss, says he is confident in the success of his company’s strategy regarding the electric car market and states that the “reign” of Tesla may end soon. Although Reuss admires Elon Musk, he claims that at some point, Tesla’s main source of income may “dry up.” This is due to carbon credits, a type of currency for emissions that large automakers trade among themselves.
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Understand Carbon Credits Sold by Tesla
Several Tesla critics accuse the company of being a business based on credits, not electric cars. The automotive sector pointed out various losses, and the company remained in the black due to the sale of these credits.
The president of General Motors is in charge of the company’s regional operations, including those in North America, China, South America, and General Motors International. The teams for Global Product Development, Global Quality, Global Design, and Operational Excellence at GM are also led by the president. In terms of market capitalization, General Motors operates at around US$ 71 billion, while Tesla operates at just over US$ 905 billion, which is equivalent to R$ 364 billion and R$ 4.6 trillion, respectively.
However, Reuss states that Elon Musk’s automaker, despite the numbers, is “harmless.” The GM president also highlighted that Musk has done remarkable work and holds a lot of respect for the CEO and his company, Tesla. However, Reuss makes observations about the credits adopted by the U.S. for electric car production.
Tesla Is Always in the Black with Carbon Credits, GM President Highlights
The president of General Motors states 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 may change, considering that many automakers are entering the more sustainable market. Additionally, the automaker will have to compete with legacy car manufacturers that were acquiring credits, meaning that many traditional companies should take a portion of the market that Tesla “rose” in.
The president of General Motors states that Tesla will have to compete with a lower price to become a full-service company. Reuss also reports having a lot of respect for the startups that are just entering the market and producing electric cars, given that it takes stubbornness to push forward with projects in a heavily regulated environment.
What Are Carbon Credits and How Are They Generated?
A carbon credit is the representation of a ton of carbon that has not been emitted into the atmosphere, contributing to the reduction of the greenhouse effect. There are various ways to generate carbon credits, including replacing fuels in factories, where they stop using non-renewable biomass, such as deforestation wood, and start using renewable biomass, which emits less greenhouse gases and contributes to the reduction of deforestation. Thus, from the difference between the two scenarios, it is calculated how much carbon has not been emitted due to this substitution, thereby generating credits.
The carbon credit is the currency used in the carbon market. In this market, companies with 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 greenhouse gas 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 the infographic below for how it works and how a carbon credit is generated:
Tesla Is Not Just in the Black with Carbon Credits, GM President’s Claim May Be ‘Outdated’
Apparently, the GM president mentioned an outdated provocation. Carbon credits were indeed an important source of income for Tesla at the beginning of its market entry and until 2019, the company’s electric car sector had a net loss. (US$ 862 million).
However, recent balance sheets released by the company show that in the last year, there was a record profit of US$ 5.5 billion. The revenue obtained from carbon credits was only US$ 1.4 billion, while electric cars generated US$ 47 billion.
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