What is the secret of Tesla's huge profit in 2020?

California based Tesla is an electric vehicle and clean energy based company. Tesla has declared $721 million profit for the year 2020. It is known for its revolutionary electric vehicles. Everyone thought the profit get because of selling of cars but it’s not. 

The company earned its breakout year with a record profit in 2020. Profit didn’t come from its core business of manufacturing of cars. Tesla has just managed to meet 500000 cars out of the estimated 70 million cars.

If Tesla’s income relied strictly on the cars it sold, the year would have ended with a negative balance. The company has booked $1.58 billion of business from other businesses. 11 US states award regulatory credits to automakers for selling electric vehicles. States have made it mandatory for automakers in selling of certain zero-emission vehicles by 2025. This forced automakers to buy regulatory credits from another automaker which meets those requirements. Tesla used this as opportunity and can sell these credits to make money.

As per Annual Report, Tesla has made $3.3 billion over the course of last 5 years by selling credits to its competitors. As per the wish of US government, many auto companies are ramping up their electric vehicle efforts. This regulatory credit system is an attempt by governments to encourage electric vehicle production and reduce emissions. Today, Tesla is one of the most valuable US companies in the world. It’s share is now worth $800 million in Nasdaq. As per its Annual Report, it has an estimated slates growth of 50% in coming years. Tesla is the inspiration for all electric car companies in the world.