The role of the RECs in the U.S. car market — in programs like California's ZEV (zero-emission vehicle) credit transfers — is going to grow in the years to come.
CFRA expects next quarter's revenue from the renewable energy credits to surpass $600 million and Nelson said there is a direct correlation between Tesla's market share in EVs, which keeps growing, and the size of the regulatory credit revenue.
By 2025, the California ZEV program requires over 16% of sales by large manufacturers to be pure zero-emission vehicles, either battery electric or fuel cell, or comply through credits market purchases.
California also adopted a ZEV advanced truck requirement this year, which will spur the development of the credit market for Amazon-backed Rivian and Tesla's semi truck program.