EU Emissions Rules: Automakers Unite to Avoid Hefty Fines
As the European Union’s 2025 emissions rules draw near, major automakers are joining forces to avoid massive penalties. By pooling their carbon emissions, companies with lower electric vehicle sales can purchase credits from sector leaders, saving them hundreds of millions of euros in fines.
Tesla and Polestar Lead the Charge
Stellantis, Toyota, Ford, Mazda, and Subaru are teaming up with Tesla, while Mercedes is forming a separate pool with Polestar, Volvo Cars, and Smart. This strategic move allows electric vehicle makers like Tesla and Polestar, with 100% fully electric sales, to sell their surplus carbon credits to other manufacturers.
A Lucrative Opportunity
According to a spokesperson for Polestar, the company, along with Volvo Cars and Smart, will sell their surplus emission credits to Mercedes. Volvo Cars, majority-owned by China’s Geely, expects to have a significant CO2 surplus this year and is on track to meet the 2025 EU CO2 emission target. In 2022, carbon credit sales accounted for about 0.3% of Volvo Cars’ total revenue.
Fines Loom Large
Renault CEO Luca De Meo warns that the 2025 rules could cost European car producers a staggering 15 billion euros. As a result, the European auto lobby ACEA is calling for relief on the EU 2025 rules, while some European governments, including Italy, are pushing for a suspension of 2025 fines.
Open Doors for Newcomers
The two pools are open to other carmakers, with potential newcomers required to apply by February 5 to the Tesla-led pool and by February 7 to the Mercedes-led one. The deals are based on 2025 sales figures, although the exact volume of credits being bought remains undisclosed.
A Strategic Move
Mercedes stated that it is entering a pool to “close the remaining gap and achieve the European CO2 emission targets for our new car fleet in 2025.” Stellantis, meanwhile, aims to meet its EU targets for 2025 “while optimising our resources” and continues to focus on developing innovative electric and low-emission technologies.
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