CNN Just Now Learns Tesla's Secret Profit Sauce

I got a push alert to my phone over the weekend – CNN was saying Tesla had a secret to its profits. Intrigued, I clicked, but before the article could even load it dawned on me.

CNN was going to point out that Tesla made most of its money not from sales but from regulatory credits.

Yep, that was the case.

Briefly put – 11 states require that OEMs sell a certain percentage of vehicles with zero emissions by 2025. Automakers who can’t meet that requirement can buy regulatory credits from an OEM who does. Enter Tesla, which sells only EVs.

According to CNN, Tesla has brought in $3.3 billion in credits over the past five years, with $1.6 billion of that coming last year. Tesla would’ve had a net loss – at least in terms of net income – otherwise.

I don’t mean to pick on CNN here. While the TV side of the network has some issues – fewer pundit panels and more news please – I think both the online and TV news reporting is generally good (opinion is, well, whatever. You can agree or disagree with the prime-time yakkers to your heart’s content, and as long as they’re arguing with intellectual honesty and backed by facts, I don’t care).

It’s just amusing to me that CNN is calling out Tesla for having a “dirty little secret” now when most of us who cover cars for a living already knew Tesla made money on regulatory credits.

Of course, there are other ways for Tesla to measure profits, as CNN points out. For example, Tesla still made a gross profit if you simply measure revenue from the autos business against the costs involved in automobile production.

I’m not here today to argue about Tesla’s financials – I think I’d rather walk across the way into Lake Michigan wearing only boxers on a -15 degree day than get dragged into that discussion. I just find that there appears to be a theme this weekend of mainstream media either getting autos wrong (despite good intentions) or being slow to figure out what those of us who give our careers to full-time car writing already know.

There is, I suppose, a longer discussion to be had here about the slow death of automotive/transportation sections in mainstream media and how that affects coverage of cars. Or perhaps a chat to be had about how business reporters should take some time to study the automotive industry.

To be fair, as I said elsewhere, some business reporters do understand the weird (not so) little industry we cover over here at TTAC. And a quick search shows other mainstream/mainstream business outlets have covered this story from this angle before. CNBC, Fortune, and Reuters among them. Maybe CNN has covered this before and I just missed it.

I’m having a little bit of fun at CNN’s expense to make a broader point – niche media often knows the truth before mainstream, more general coverage figures it out. I am not sure if that’s fixable, or even really a problem – it simply makes sense that niche media, by virtue of concentrating on one industry, will be more knowledgeable about said industry.

That said, if you really want to learn an industry deeply, you may have to go more in-depth than mainstream business reporting is really capable of.

That’s what TTAC is here for.

[Image: Tesla]