- Tesla sold nearly 34 million metric tons of greenhouse gas credits in 2023, helping automakers offset significant emissions deficits.
- Automakers face tougher EPA rules, which require a 49% reduction in emissions by 2032. This is driving a shift towards electric and plug-in hybrid vehicles.
- SUVs accounted for 58% of vehicle sales in 2023, as sedans and wagons dropped to 25%, challenging automakers’ fuel economy efforts.
Tesla sold nearly 34 million metric tons of greenhouse gas credits in 2023 by offering electric vehicles, according to the Environmental Protection Agency (EPA). The auto industry struggled with stricter emissions targets, leading to significant credit deficits.
U.S. vehicle fuel economy improved by 1.1 miles per gallon (mpg) in 2023, reaching a record of 27.1 mpg (43.6 kilometres per gallon). The EPA projects that fleetwide fuel economy will rise to 28 mpg (45.1 kpg) in 2024.
Automakers accumulated nearly 11 million metric tons of greenhouse gas emission credit deficits despite this progress. General Motors (GM) led with a 17.8 million metric ton deficit. GM responded by purchasing 44 million credits, while Tesla, leading the market, sold around 34 million credits.
Automakers, excluding Tesla, posted 43.5 million metric tons in deficits for 2023. This contrasts sharply with 2022, when the industry recorded a surplus of 3 million credits, mainly due to Tesla’s 19.1 million credits.
Even so, the industry maintains a total surplus of 123 million metric tons in credits, according to the EPA. GM also forfeited 49 million metric tons of credits in July as part of a settlement after an investigation revealed excess emissions from 5.9 million of its vehicles.
In March 2023, the EPA issued new rules requiring automakers to cut emissions by 49% by 2032, compared to 2026. This goal replaced a 2022 proposal for a 56% reduction by the same year.
Stellantis recorded the lowest fuel economy among significant automakers, followed by GM and Ford. Tesla, the most efficient, led the pack, with Kia and Hyundai trailing closely behind.
The EPA also noted other trends shaping the auto industry. Average horsepower, vehicle weight, and size hit new highs in 2023. Sedans and wagons dropped to just 25% of vehicle sales, while SUVs surged to 58%.
Electric and plug-in hybrid vehicle production jumped, accounting for 11.5% of total vehicle output in 2023, up from 6.7% in 2022. The EPA expects that share to reach 14.8% in 2024, driven by consumer demand and incentives for cleaner vehicles.
Tesla’s dominance in selling greenhouse gas credits highlights its leading role in the transition to electric vehicles. As emissions standards tighten, traditional automakers increasingly rely on purchasing credits from Tesla and other electric vehicle producers to comply with federal rules.
The auto industry faces mounting challenges, balancing consumer preferences for more extensive, less fuel-efficient SUVs with rising fuel economy and emissions requirements.
As automakers push to meet these regulations, Tesla’s market position as a top credit seller will continue to provide a competitive advantage. With its all-electric lineup, Tesla remains well-positioned as traditional manufacturers struggle to keep pace with the shift toward cleaner transportation options.