1 Reason Tesla Investors Should Actually Thank Canada

Core Viewpoint - The relationship between Tesla and Canada is complex, with potential financial benefits for Tesla arising from Canadian regulations on zero-emissions vehicles, despite existing tensions between the U.S. and Canada [1][2][10]. Group 1: Tesla's Revenue from Emissions Credits - Tesla has historically generated significant revenue from selling zero-emissions credits, which accounted for approximately 40% of the company's profits in 2024 [3]. - In the previous year, Tesla reported $2.8 billion in revenue from the sale of these credits, which are considered pure profit and enhance the company's margins [7][8]. Group 2: Canadian Regulations and Market Context - The Canadian government has set ambitious targets for zero-emissions vehicles, requiring them to make up 20%, 60%, and 100% of light-duty vehicle sales by 2026, 2030, and 2035, respectively [4]. - As of the first quarter, zero-emissions vehicle market share in Canada was only 9.7%, indicating a significant challenge to meet the upcoming targets [5]. Group 3: Potential for Increased Credit Sales - Automakers in Canada face penalties of $20,000 per vehicle for not meeting regulatory targets, which may lead them to purchase credits from Tesla to avoid these penalties [7]. - Tesla is already selling credits in British Columbia and Quebec, with sales five times greater than those of General Motors and Hyundai combined [8]. Group 4: Implications for Tesla Investors - The potential increase in demand for Tesla's emissions credits could positively impact the company's financial performance, especially following a 13.5% decline in global vehicle deliveries in the second quarter compared to the previous year [10]. - Despite this positive outlook, the fundamental investment thesis for Tesla remains unchanged, and investors may want to wait for further clarity at the upcoming November shareholder meeting before making new investments [11].