Several automakers, facing the EU’s stricter 2025 emissions regulations, are planning to purchase carbon credits from electric vehicle (EV) companies such as Tesla and Polestar to avoid substantial fines, according to an EU filing released on Tuesday. Under the new rules, manufacturers with lower EV sales can “pool” their emissions with industry leaders, allowing them to purchase emissions credits and reduce their overall emissions averages.
Automakers including Stellantis, Toyota, Ford, Mazda, and Subaru are set to pool their emissions with Tesla, while Mercedes, Polestar, Volvo Cars, and Smart will form a separate pool. Manufacturers such as Tesla and Polestar, which produce only fully electric vehicles, can sell their surplus carbon credits to other companies in these pools.
For Tesla, carbon credit sales contributed almost 3% of its $72 billion revenue in the first nine months of 2024. A spokesperson for Polestar confirmed that the company, along with Volvo Cars and Smart, will sell surplus emissions credits to Mercedes. Volvo Cars, owned by China’s Geely, noted it expects a “significant” CO2 surplus this year and is on track to meet the EU’s 2025 emissions target. “Our global tailpipe emissions per vehicle have reduced by over 40% since 2018,” the company said.
The move comes as carmakers brace for potential fines. Renault’s CEO, Luca De Meo, estimates that European automakers could face fines totaling up to €15 billion under the 2025 rules. ACEA, the European auto lobby, has called for relief from the 2025 fines, with some European governments, including Italy, also urging a suspension of the penalties.
Automakers must notify the EU Commission of their pooling agreements by December 31 each year, but the EU will not assess their commercial terms. The pools are open to other carmakers, with applications for Tesla’s pool due by February 5 and for Mercedes’ pool by February 7. Mercedes stated it is joining the pool to “close the remaining gap and achieve the European CO2 emission targets for our new car fleet in 2025.” Stellantis added that participating in the pool would help meet its emissions targets for 2025 “while optimising our resources.”
Source: Reuters