Tesla has been granted permission to sell automotive emission credits domestically in South Korea by the Ministry of Environment, starting this year. This move is expected to bolster the electric vehicle maker’s revenue stream in the South Korean market.
According to a report from Korea Economy TV, Tesla holds approximately 4 million grams/km of tradable emission credits in South Korea. This could potentially translate into a value of up to 200 billion won (approximately $145 million) based on current penalty rates.
Under South Korean regulations, automakers must ensure that their vehicles’ average greenhouse gas emissions are below the country’s standard. If emissions exceed this limit, automakers face fines of 50,000 won per gram/km ($36 per gram/km) or must purchase emission credits from other companies.
NEWS: The Korean Ministry of Environment has granted Tesla permission to trade its 'carbon credits' in the country for the first time
• With government approval, Tesla will sell greenhouse gas emission rights for cars in South Korea starting this year.
• Tesla has secured up… pic.twitter.com/Ivuuezrami— Herbert Ong (@herbertong) May 2, 2024
Tesla had been unable to participate in South Korea’s emission credit market due to regulatory limitations. However, regulatory changes in 2021 allowed Tesla to legally participate in the market, pending final approval from the Ministry of Environment, which was granted earlier this year.
Government officials noted that Tesla Korea had persistently raised concerns over its inability to participate in the emission credit market. The Ministry of Environment highlighted that the approval process required consultation with the Ministry of Trade, Industry and Energy, which contributed to the delay in approval.
The approval comes at a time when Tesla is gaining momentum in South Korea. The success of the Model Y in the country helped Tesla overtake Mercedes-Benz to become the second-largest vehicle importer in March 2024. According to the Korea Automobile Importers & Distributors Association, Tesla registered 6,025 vehicles in March 2024, compared to Mercedes-Benz’s 4,197 registrations.
“The approval of emission permits for Tesla was a matter that required consultation… The action was delayed compared to the timing of Tesla Korea’s application,” noted the Ministry of Environment.
