Washington legislators have approved a controversial bill imposing a 10% tax on Tesla’s carbon credit sales within the state, a move that could reshape the economics of electric vehicle manufacturing in the region. Legislation passed the state House in a close 52-45 vote before clearing the Senate and now awaits Governor Bob Ferguson’s signature.
The Washington State tax on carbon emissions credits targets what lawmakers described as a “financial windfall” for companies like Tesla that generate revenue by selling zero-emission vehicle (ZEV) credits to other automakers who need them to comply with environmental regulations.
How the new tax works
The legislation creates a two-tiered taxation approach:
- A 2% tax on direct ZEV credit sales based on the transaction price
- A steeper 10% tax on banked credits (those held for future use), calculated on their average market value as determined by state revenue officials
Tesla, which earns hundreds of millions annually from its credit sales, strongly opposed the measure. The company has historically relied on this revenue stream to boost profitability, especially during earlier phases of its growth.
Republican State Representative Travis Couture voiced opposition during debates, suggesting the tax would ultimately reduce EV adoption. “I drive a Ford F-150 gas-guzzling pickup truck,” Couture stated during floor discussions. “And you know what? I think there’s going to be more F-150s on the road as a result of this bill because you’re de-incentivizing it with this tax.”
The bill’s supporters counter that the measure levels the playing field between established EV manufacturers and traditional automakers still working through their electric transition. They argue the credits create an uneven advantage for companies that never produced combustion vehicles.
Industry analysts are watching closely to see if the Washington State tax on carbon credit sales will inspire similar legislation in other states, potentially creating a domino effect that could Tesla’s balance sheet in a credit crunch.
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