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They took the money and used it to survive as a company to build more electric cars, which is the whole purpose of the credits.

> Every Tesla sold enables another gas guzzling SUV to come into existence

This is a very reductive and static worldview. First, on the surface of it "enable" is factually false: ICE SUVs existed before Tesla so Tesla is in no way enabling those. To steelman your argument, at best you could say it makes ICE SUV slightly more economically feasible to its customer, but the entire ZEV credit regime could have been nullified by now had Tesla and other mass-market EVs did not persistently exist. Ignoring even that, it marginally increases the economic feasibility of the SUV while transitioning one vehicle (the Tesla sold itself).

That is absolutely untrue. Selling the credits is the purpose of the credits system. It's a transfer of money from polluters (who buy the credits) to companies that reduce pollution. This system aligns incentives to reduce pollution - that's the point.