In a bid to comply with the European Union’s stringent emissions targets for 2025, several major car manufacturers have joined forces with Tesla. The collaboration aims to pool emissions credits, leveraging Tesla’s clean-energy surplus to offset shortfalls and dodge significant fines.
Under the EU’s regulations, overall fleet emissions must fall from 106.6 grams of CO₂ per kilometre to 93.6 grams this year. Each automaker has specific targets to meet based on their fleet composition. To address the challenge, Toyota, Ford, Mazda, Stellantis, Subaru, and Leapmotor have formed a “Superpool” with Tesla. Together, these brands represent 33% of the vehicle market and 30% of the EV market in Europe.
Tesla’s Role and the Financial Stakes
Tesla, the global leader in emissions credit trading, plays a critical role in this strategy. The pooling agreement narrows the group’s emissions gap to within 4 grams of the target, according to Will Roberts, Automotive Research Lead at Rho Motion.
“Despite Tesla’s contribution, challenges persist,” Roberts cautioned. “Tesla sold fewer vehicles in 2024 compared to 2023, and Toyota, Subaru, and Mazda are still lagging in BEV adoption. With Toyota alone selling three times more vehicles than Tesla, the offset effect has its limits.”
Pooling emissions credits have proven lucrative for Tesla, generating nearly 3% of its $72 billion revenue in the first nine months of 2024. Analysts at UBS project that Tesla could earn over €1 billion in Europe this year if it fully monetizes its emissions credit surplus.
Other Automakers Follow Suit
Tesla’s Superpool isn’t the only grouping attempting to meet emissions targets. Mercedes-Benz, which exceeded its 2024 emissions limit by 17.3 grams, has partnered with Smart, Volvo, and Polestar. Together, these brands account for 8% of the market and 20% of EV sales, aiming to avoid fines that could have reached €1 billion.
High Stakes for Non-Participants
Several automakers, including Honda, VW, Kia, BMW, SAIC, Hyundai, Suzuki, and the Renault-Nissan-Mitsubishi alliance, have yet to announce pooling plans. Without action, these companies risk falling short of their targets and facing substantial penalties.
Luca de Meo, Renault CEO and former chair of the European Automobile Manufacturers’ Association, warned that the industry could face up to €15 billion in fines if emissions targets aren’t met.
Future Outlook
While pooling offers temporary relief, long-term compliance with EU regulations will require accelerated adoption of battery electric vehicles and other low-emission technologies. Automakers must navigate an increasingly competitive landscape, balancing immediate financial pressures with the need to invest in sustainable solutions.
