Volkswagen Reportedly Buying Carbon Credits From Tesla China

Matt Posky
by Matt Posky
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volkswagen reportedly buying carbon credits from tesla china

One of Volkswagen’s joint ventures in China has reportedly offered to purchase regulatory credits from Tesla in order to adhere to the regional environmental ascendancy. While VW may be doing everything in its power to swap over to an electric-vehicle manufacturer, it’s apparently falling short of government dictums.

FAW-Volkswagen — which shipped a little over 2 million automobiles in Asia last year — happened to be one of the biggest polluters of 2020 according to China’s Ministry of Industry and Information Technology. As it turns out, selling internal combustion vehicles consumers actually want to purchase in large quantities has some kind of environmental cost. Fortunately, it’s one regulators think can be solved by buying green credits from rivals who do all of their polluting during the initial assembly process and launder any future emissions through the national energy grid.

Reuters, which broke the story, stated that it’s currently unclear how many credits FAW-Volkswagen will need to purchase from Tesla. But the price was estimated to be around 3,000 yuan (about $450) per credit and is reportedly higher than previous years. While the per-credit estimate doesn’t make it sound like there’s much money in the practice, Tesla’s 2020 revenue just from selling regulatory credits totaled $1.58 billion and ensured that it turned a profit.

From Reuters:

China, the world’s biggest auto market where over 25 million vehicles were sold last year, runs a credit system that encourages automakers to work towards a cleaner future by, for example, improving fuel efficiency or making more electric cars.

Manufacturers are awarded green credits that can be offset against negative credits for producing more polluting vehicles. They can also buy green credits to ensure compliance with overall targets, though trade is usually between affiliated companies that share a major stakeholder.

The irony of the situation wasn’t lost on us. Despite China having fairly rigid emission laws for automakers, the country itself has the sweetest deal imaginable in the Paris Climate Agreement. Unlike other nations of its size and level of development, China’s reduction targets don’t come into play until 2030 even though it’s typically producing more carbon dioxide than the United States and European Union combined. The U.S. has even managed to reduce its emissions rather dramatically over the last decade while China has been building more coal-fired powerplants to maintain its energy needs. But it’s also building more EVs and automakers believe they can avoid future penalties by transitioning toward becoming totally electric marquees, which is ultimately what China (and other nations) seems to want.

[Image: Volkswagen Group]

Matt Posky
Matt Posky

Consumer advocate tracking industry trends, regulation, and the bitter-sweet nature of modern automotive tech. Research focused and gut driven.

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  • Jeff S Jeff S on Apr 03, 2021

    If you are really concerned about the environmental impact of manufacturing a vehicle then you would keep what you have for a longer period of time. Most people do not even think of the environmental impact of manufacturing a product.

    • Mcs Mcs on Apr 03, 2021

      @JeffS: Exactly. A cast-aluminum or heavy-duty stainless steel vehicle with (according to a published white paper) battery technology that will last hundreds of thousands of miles along with electric motors is going to last a lot longer than a steel-bodied ICE car that's lucky to make it 200k miles.

  • Jeff S Jeff S on Apr 04, 2021

    @mcs--I haven't gone to EVs yet but I keep my vehicles for over 10 years not because environmental reasons. There are consequences to the environment for making most things. I will at some point own an EV but for now I am happy with what I have. The ever increasing complexity of ICE vehicles with turbo 3s and 4s and CVTs and multi-geared automatics will give me more incentive to eventually buy an EV.

  • Kjhkjlhkjhkljh kljhjkhjklhkjh Dear whiny people .. keep a small number of diesel busses. replace the rest .. my god people like sticking poles in their own bike spokes...
  • Canam23 I moved to Los Angeles in 1968 and the air was barely breathable. Thanks to the mandating of pollution controls and the work of the Air Quality Management District, it's 100% better today. When the first pollution targets were set in the 70's, Detroit moaned that it would be impossible to achieve, meanwhile the Japanese sat down and figured out how to do it. As a result of the constant strengthening of the anti pollution laws, our air is much less dangerous for our children. Furthermore, engineering has now created very clean, powerful and efficient engines. So Stellantis, I'm not buying it.
  • Random1 So several of the interboro crossings are cheap: Brooklyn bridge, Manhattan bridge, Madison Ave, Willis/3rd Ave. One or two others I think.$18 is weirdly cheap, but "early bird" all-day parking is easily under $25 at many, if not most, places. That garage is actually on 62nd St, so I might be able to still drive in post-congestion, but I can't imagine they won't jack up that rate when the time comes, they're gonna be over run.
  • FreedMike Right, the fact that Jeep sales are down this year has nothing to do with it...nope. See FlyersFan's post above for the figures. They're ugly. Now, you'd think that a fact like this might be in this story, but a headline like "Jeep announces layoffs because its' sales are down" just doesn't have enought red meat to toss out. But toss "California" into the mix and voila! Political food fight. And given the political proclivities of a large bloc of Stellantis' U.S. customers, why not blame the big bad gubmint? And by the way, if Jeep has a beef with California, what's with this ad?
  • 3SpeedAutomatic Drove a rental Renegade in Florida. Tigershark engine vibrated like crazy at stoplights. Someone had bumped the plastic cladding and parts were ready to fly off at speed. If you could pick one up on the cheap, you would give to your kid for college or trade school. Once they were earning a steady paycheck, it would be traded in a flash!!🚗🚗🚗