Volkswagen Reportedly Buying Carbon Credits From Tesla China

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]

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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.

  • FreedMike Back in the '70s, the one thing keeping consumers from buying more Datsuns was styling - these guys were bringing over some of the ugliest product imaginable. Remember the F10? As hard as I try to blot that rolling aberration from my memory, it comes back. So the name change to Nissan made sense, and happened right as they started bringing over good-looking product (like the Maxima that will be featured in this series). They made a pretty clean break.
  • Flowerplough Liability - Autonomous vehicles must be programmed to make life-ending decisions, and who wants to risk that? Hit the moose or dive into the steep grassy ditch? Ram the sudden pile up that is occurring mere feet in front of the bumper or scan the oncoming lane and swing left? Ram the rogue machine that suddenly swung into my lane, head on, or hop up onto the sidewalk and maybe bump a pedestrian? With no driver involved, Ford/Volkswagen or GM or whomever will bear full responsibility and, in America, be ambulance-chaser sued into bankruptcy and extinction in well under a decade. Or maybe the yuge corporations will get special, good-faith, immunity laws, nation-wide? Yeah, that's the ticket.
  • FreedMike It's not that consumers wouldn't want this tech in theory - I think they would. Honestly, the idea of a car that can take over the truly tedious driving stuff that drives me bonkers - like sitting in traffic - appeals to me. But there's no way I'd put my property and my life in the hands of tech that's clearly not ready for prime time, and neither would the majority of other drivers. If they want this tech to sell, they need to get it right.
  • TitaniumZ Of course they are starting to "sour" on the idea. That's what happens when cars start to drive better than people. Humanpilots mostly suck and make bad decisions.
  • Inside Looking Out Why not buy Bronco and call it Defender? Who will notice?