Tuesday Ticker: Tesla rakes in regulatory credit cash from other automakers; Stellantis sees significant profit drops

Toronto, Ontario ⁠— It’s eyes on automakers in this weekly Tuesday Ticker as Tesla rakes in cash from other automakers, while Stellantis reveals that profits fell 10 percent in the latter half of 2023 due to United Auto Workers strike action. 

Regulatory revenues

Tesla continues to earn funds in regulatory credit revenue, despite the OEM’s belief that payments would gradually dissipate. 

The electric-exclusive automaker made US$1.79 billion in regulatory credit revenue in 2023, bringing the total Tesla has gained from the venture since 2009 to nearly US$9 billion. 

Tesla earns regulatory credits by making and selling EVs, then sells credits to OEMs whose new vehicle fleets exceed the emissions limits set by authorities in China, the European Union and California, for instance. Regulatory credits produce virtually all profit for Tesla. 

“It really makes [auto executives] mad that Tesla got so much of a boost out of being the only purely electric-car manufacturer out there,” former chair of California Air Resources Board, Mary Nichols, told Bloomberg in 2017. “In effect, they helped to finance this upstart company which now has all the glamour.” 

Steep drops for Stellantis profits

Stellantis Chief Financial Officer Natalie Knight is warning of a “turbulent” year ahead for the automaker following its report that profits fell ten percent in the latter half of the year.

The OEM said the significant drops were largely caused by long stoppages at Detroit, Michigan, facilities amid strike negotiations last fall. UAW and Unifor strikes ended with record salary increase agreements for Ford, General Motors and Stellantis staff. 

Stellantis reported that its adjusted operating profit (EBIT) fell to approximately US$10.96 billion in the period between July 2023 and September 2023. Adjusted operating income margin dropped to 11.2 percent, from 12.3 percent the year prior. 

Annual profit-sharing payouts to Stellantis UAW employees will be approximately US$13,860, down from US$14,760 last year.

Knight noted that, for Stellantis, the strike’s impact is “certainly going to be on an overall level lower than what you have seen from [Stellantis’] peers.” 

The OEM remains positive in its forecast for double-digit margins on adjusted operating profits and positive industrial free cash flow. Stellantis has stood by this forecast in the last two years, as well.

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