Actually, this system is counterproductive, I think. Starting production of EVs costs you money, but it also takes time, and the penalties for not meeting quota

Actually, this system is counterproductive, I think. Starting production of EVs costs you money, but it also takes time, and the penalties for not meeting quotas are something you have to pay right now. So, in the end, the money you spend buying "EV credits" is the money taken away from your R&D budget on EVs. You might argue that the company receiving money for "EV credits" would invest them in increasing the production, but that's often not the case - since they have already met their quotas and are off the hook, they are free to simply hand this money out to shareholders in form of a dividend.