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Tesla loses huge customer for emissions credits in Europe and the US


Tesla loses huge customer for emissions credits in Europe and the US

Getty / Aurich

In 2020, the European Union introduced strict new rules requiring automakers to average no more than 95 g of CO2 per kilometer, with heavy financial penalties for companies that missed this target.

With diesel no longer a palatable option, some automakers pivoted to electric vehicles, and European EV sales skyrocketed as a result. Others, like Fiat Chrysler Automobiles (FCA), looked at their product pipelines and decided it would be easier to buy emissions credits instead. FCA entered into a deal with Tesla to count its battery EVs as part of its fleet. But last year, FCA merged with Peugeot to form Stellantis, in large part to gain access to a modern BEV platform.

That plan evidently worked, because on Tuesday Stellantis CEO Carlos Tavares told France’s Le Point that starting next year, the company will meet its carbon target without help. “Thus, we will not need to call on European CO2 credits, and FCA will no longer have to pool with Tesla or anyone,” Tavares told Le Point.

That is likely going to leave a big hole in Tesla’s balance sheets. Between 2019 and 2021, FCA paid Tesla $2.4 billion (€2 billion) for emissions credits. The FCA deal was not Tesla’s only source of regulatory credit income. In 2019, we reported that General Motors was also an emissions credit customer in the US. And in late 2020, Honda joined FCA in pooling with Tesla in Europe.

But FCA did represent the lion’s share of Tesla’s regulatory credit income—which earned the EV maker $594 million in 2019 and $1.58 billion in 2020—and Tesla’s string of recent profitable quarters disappears if FCA’s contributions to the balance sheets are removed.

In 2030, the European Union will again tighten emissions rules, dropping the target to just 43 g CO2 per km.



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