By Mike Ramsey

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Tesla Model X

Tesla Motors Inc. is racking up big bucks peddling pollution credits earned from sales of its $60,000 and up electric cars.

Last year, the Palo Alto, Calif.-based maker of the Model S electric car collected $40.5 million—about 10% of its total revenue—selling credits earned from states to other auto makers, according to the company’s annual financial report.

Auto makers are stockpiling these credits to avoid penalties in California and other states that require a portion of the vehicles they sell to emit zero pollutants. Tesla, which delivered about 2,650 vehicles last year, isn’t required to meet the standard, but still generates credits every time it sells a vehicle. The company can then sell the credits to other car makers.

The regulatory filing doesn’t say which car makers bought the credits.

In 2011, Tesla’s credits fetched $2.7 million. In 2010, they brought in $2.8 million. Regulations in California, Arizona, Connecticut, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Rhode Island and Vermont require the credits to be accumulated and each state is requiring more, particularly in 2018, so car makers are banking credits now that can be used later if the car makers don’t sell enough zero-emission vehicles to meet state mandates.

Read more in The Wall Street Journal.

By Mike Ramsey