[jfk13]

"Much" may even be an understatement here; according to the WSJ article,

> sales of regulatory credits to other auto makers to help them meet emissions mandates, which carry a 100% profit margin, reached $518 million. That accounts for nearly 100% of Tesla’s $533 million in pretax income

it sounds like "almost all" would be a reasonable description.

[bryanlarsen]

Tesla had a 24% gross margin in Q1. They made a massive amount of money selling cars. They also had a massive amount of R&D and capital expenditures. The emissions credits required R&D and capital expenditures in prior years so you can't say that the R&D and capital expenditures should only be charged against vehicle sales and not emissions credits.

[carlivar]

Agreed, but you CAN say that the business of selling cars is a long term endeavor and the regulatory credits are transient. Invest accordingly.

[bryanlarsen]

Tesla's Q1 also included a massive number of transient expenses (like Musk's stock options) that were significantly larger than transient income like emission credits.

[hwillis]

They also spent $1,491 million on R&D. "Much" is more correct than "almost all", which implies that profit is just the leftovers once expenses are subtracted.

Profit and expenses are choices; the fact that a firm puts all its revenue into SSG&A and R&D does not mean that they can't be profitable. If Tesla's revenue decreased by $533 million, they would probably still target $300-400 million in profit by adjusting their spending. They would do that because even at a lower revenue it still benefits them to report profit, and that benefit is still there even if they spend less on other things.

If a $533 million decrease would not lead to $0 profit, then it doesn't make sense to say that their profit comes from credits. It only makes sense to say that 7% of their revenue comes from credits, and that a significant (but not all, and probably less than half) part of their profit comes from credits.