Summary
– Tesla granted permission to sell emission credits in South Korea by the Ministry of Environment
– Estimated value of Tesla’s emission credits in South Korea is approximately $145 million
– South Korea requires automakers to meet greenhouse gas emission standards or pay fines
– Tesla was previously unable to participate in the emission credit market due to regulatory limitations
– Final approval from the Ministry of Environment granted earlier this year; Tesla became second-largest vehicle importer in South Korea in March 2024
Article
Tesla has been granted permission to sell automotive emission credits in South Korea, allowing the company to generate additional revenue in the market. It is estimated that Tesla holds about 4 million grams/km of tradable emission credits in South Korea, which could have a potential value of up to 200 billion won based on current penalty rates. Automakers in Korea must ensure their vehicles’ average greenhouse gas emissions are below the country’s standard, or they must pay fines or purchase emission credits from other companies.
Tesla was previously unable to participate in South Korea’s emission credit market due to regulatory limitations that restricted trading to automakers selling more than 4,500 vehicles per year as of 2009. However, in 2021, domestic regulations were amended to allow Tesla to legally participate in the emission credit market. Final approval from the Ministry of Environment was required before Tesla could begin trading emission credits in South Korea, which was granted earlier this year after consultation with the Ministry of Trade, Industry and Energy.
The approval for Tesla to trade emission permits in South Korea was delayed compared to the timing of Tesla Korea’s application. However, the government officials have noted that Tesla Korea persistently raised issues over the matter, leading to the amendment of domestic regulations to allow Tesla to legally participate in the emission credit market. The company has been gaining momentum in South Korea, thanks to the success of the Model Y, which helped Tesla surpass Mercedes-Benz as the country’s second-largest vehicle importer in March 2024.
Tesla saw 6,025 vehicle registrations in March 2024, while Mercedes-Benz saw 4,197 registrations, according to the Korea Automobile Importers & Distributors Association. This success in the South Korean market, combined with the approval to trade emission credits, will likely further strengthen Tesla’s position in the region and allow the company to continue expanding its presence. The ability to trade emission credits domestically in South Korea will provide Tesla with additional revenue opportunities and allow the company to further establish itself as a key player in the electric vehicle market.
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