Emissions Credits Emissions credit systems around the world are designed to economically benefit companies with non-polluting products by Accelerating Deployment of New Factories allowing them to sell their credits to polluting companies. In order to meet various countries’ emission targets and avoid government fines, polluting companies pay non-polluting companies through credit purchases. The goal of this system is for every OEM to be incentivized to reduce emissions and themselves become non-polluting by selling more of their own manufactured EVs instead of paying another company for their non-polluting credits. We have seen strong positive signs from several OEMs who are launching competitive EVs rather than resorting to manufacturing “compliance cars,” which are usually EVs built on an ICE architecture. These compliance cars are designed to meet regulatory requirements rather than to create the best possible product to help create a more sustainable future for the world. Emissions credit revenue is used for EV capacity expansion, which in turn displaces ICEs In 2020, we generated almost $1.6 billion in revenue selling zero-emission regulatory credits to other OEMs. Proceeds from such sales will go towards building new factories to produce EVs that will continue to displace ICE vehicles. While it is common practice today for ICE vehicle OEMs to purchase regulatory credits from other companies (such as Tesla) to offset their total CO2emissions, it is not a sustainable strategy. In order to meet increasingly strict regulatory requirements across the world, OEMs will be forced to develop truly competitive EVs. EV sales by all carmakers need to accelerate, taking market share from ICEs In 2020, Tesla delivered almost 500,000 EVs globally. While many OEMs introduced new EV models in the past few years, with few exceptions their actual global deliveries of EVs increased only marginally. We hope that every car manufacturer will strive to produce hundreds of thousands of EVs per year, as significant reduction of emissions will only be achieved if all carmakers push for an industry-wide shift to EVs. Electric Vehicles Sold 500.000 2017 400.000 2018 300.000 2019 2020 200.000 100.000 0 Tesla Inc. VW Group R-N-M Hyundai BYD GM Stellantis Daimler BMW Jaguar Toyota Ford Alliance Motor AG Group Land Rover Source: EV-volumes.com; Micro-cars not included (Tata) 30