In response to reinforced ecological standards, several European manufacturers are turning to Tesla to resolve their carbon footprint. This collaboration could save them from heavy penalties.
Tesla could receive more than a billion euros in compensation from European automakers. The practice allows companies like Toyota, Stellantis, and Ford to comply with strict EU regulations on CO2 emissions, by building on Tesla’s fleet of 100% electric vehicles.
Buy credits to have the right to pollute
Tesla finds itself at a crossroads in Europe, where stricter environmental regulations are putting traditional automakers in difficulty. This year, Tesla could collect more than a billion dollars from its European rivalsnotably Toyota, Stellantis, and Ford, thanks to a CO2 emissions compensation mechanism set up by the European Union, reports Bloomberg.
The principle is simple: manufacturers who struggle to comply with ecological standards can partner with Tesla to benefit from its excess carbon credits. By grouping their vehicle fleets with those of Tesla, they manage to reduce their average emissions and thus avoid fines. This process, although curious and open to criticism, represents a lifeline for many manufacturers facing difficult-to-achieve environmental objectives.
The report by UBS Group AG analysts led by Patrick Hummel states that Tesla’s compensation could exceed a billion euros. At the same time, Volvo, in partnership with Mercedes-Benz, could also raise up to 300 million euros this year, according to Hummel estimates.
Faced with new challenges, European manufacturers are increasing their efforts to align with environmental requirements. The stagnation of sales of plug-in cars, exacerbated by the gradual elimination of subsidies in certain countries such as Germany, has only amplified the phenomenon. For many of them, partnering with companies like Tesla or China’s BYD is becoming a necessary, albeit controversial, option to avoid financial sanctions.
Renault and Volkswagen risk suffering
This situation provokes a lot of reactions as it is absurd. Jens Gieseke, a center-right lawmaker in the European Parliament, has expressed reservations about the practice, saying it forces European brands to choose between investing in eco-friendly solutions or sending money to foreign competitors. “This is not the best approach”he declared. Europe has truly built a burden which considerably weakens the position of its builders.
Among this year’s surprises, Stellantis’ collaboration with Tesla. Under the direction of Carlos Tavares, the company had stated its intention to comply with European rules independently. Well, it is clear that this is not the case, because Stellantis has knocked on Tesla’s door to reduce the pressure.
Last point to note, Volkswagen et Renault must close a significant gap between their sales last year and the emissions targets set for 2025. UBS predicts that this could force these two brands to sell more electric vehicles, reducing their profit margins and leading to a risk of a drop of around 10% in their profits before interest and taxes this year. Renault, for its part, has criticized European regulations, saying they force manufacturers to make “counterproductive” decisions. The company believes that these rules weaken the European industry, making it difficult to predict whether it chooses to partner with competitors in this context.
Source: www.autoplus.fr
