The Washington state legislature passed a bill recently that would allow the state to tax Tesla for the electric vehicle emissions credits it sells to other manufacturers in the state.
According to King 5 in Seattle, Washington, lawmakers passed a bill on April 27 that requires any manufacturer selling zero-emission vehicle (or ZEV) credits to pay a tax on that sale. Currently, Tesla is the only car manufacturer that sells those credits to other companies.
In states like California, Washington, and 16 others, car manufacturers must ensure that a percentage of their vehicles are zero-emission when driven, either from electricity or hydrogen fuel. If a manufacturer can't deliver that percentage of ZEVs, they can purchase ZEV credits from manufacturers that are delivering a higher percentage.
So, a company like Tesla can sell those credits to a company like Ford or General Motors to ensure that they make their quota of EVs delivered, even if they're not meeting the actual percentage. And because Tesla is the only EV manufacturer doing this, it's raking in money from the program.
Tesla has earned $10.7 billion from the ZEV credit program, according to Politico estimates cited by King 5, and it accounted for 43% of the company's profits in 2024.
"We never intended for this program to be a source of windfall profits for one manufacturer," said Rep. Joe Fitzgibbon (D-Seattle), who was the bill's primary sponsor. The bill would charge 2% of the sale price of each credit sold, and 10% of the average price of a credit for each credit banked.
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Overall, the program is estimated to generate $77.9 million in its first year and $202.9 million between 2027 and 2029. At this time, the law only impacts Tesla.
Before the bill passed, an editorial in the Wall Street Journal suggested the proposal was "abusive lawmaking," per Teslarati. However, if other companies enter the ZEV credit sale market, they would be impacted as well.
Nonetheless, the bill faced pushback from Tesla, which saw a 71% decline in net income in Q1 of 2025, as a growing number of automakers are introducing EV offerings to the market for consumers seeking more eco-friendly vehicles — also known for saving drivers money on fuel and maintenance compared to gas-powered vehicles.
A number of consumers also view CEO Elon Musk unfavorably due to his increased political involvement and approach as a special adviser in the U.S. federal government.
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Elon is the man 🥰 A Tesla representative urged lawmakers to "put the bill down," per King 5. Tesla lobbyist Jeff Gombosky said the bill would cause the credits to be worth less while also expressing concerns about the precedent the law would set for other states taking part in the program.
Despite the pushback, the bill will land on Gov. Bob Ferguson's desk, where he has 20 days to sign it into law or veto it. Â
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