Stellantis, a Franco-Italian carmaker, is expected to achieve its European carbon dioxide emissions target this year without its environmental credits bought from Tesla. The recent announcement from Stellantis’ CEO poses a threat to Tesla’s cash balance sheet as the European carmaker looks to forge its path.
Stellantis was formed by merging France’s PSA and Italy’s FCA, which spent approximately 2 billion euros ($2.40 billion) to purchase European and the U.S carbon dioxide credits from Tesla during the 2019 – 2021 period.
The recent electrical technology advancement that PSA brought to Stellantis will enable the company to meet carbon dioxide emission regulations as early as this year, according to Stellantis’ boss Carlos Tavares in the French weekly Le Point.
Because Stellantis have reached the carbon dioxide emission target, the Franco-Italian carmaker will no longer have to poll with Tesla or any automakers around the world. The announcement can put a dent in Tesla’s balance sheet as much as $340 million in loss of profit.
Tesla earns credits for exceeding emissions and fuel economy standards, which then the company sells to other automakers that do not meet the standards. European regulations require all auto manufacturers to reduce carbon dioxide emissions for passengers to an average of 95 grams per kilometer by end of this year.
Stellantis is in discussion with Tesla about the financial implications of the decision to stop pooling credits. As a result, Stellantis is in a position to achieve the CO2 targets in Europe by end of 2021 without any pooling arrangements with other automakers.
Tesla’s sales of environment credits to rival automakers helped the company announced its first-quarter earnings better than expected this week. Now that Stellantis is leaving Tesla, the electric automaker will have to scramble for new ways to replenish the loss profit – amid a record delivery result of 184,000 electric vehicles sold in the first quarter.
The next round of proposals from the European Commission can further tighten the regulations with the 2030 target set to lower CO2 emissions as much as 43 grams per kilometer.
Tesla is set to lose roughly $340 million from selling environment credits to Stellantis. The electric automaker is ramping up its Supercharger stations around the United States using prefab strategy. Furthermore, Tesla will start delivering refreshed Model S and Model X to customers as soon as September 2021.
The Tesla Berlin Gigafactory is set to produce Model Y in late July 2021 after fending with the local German government for delaying approval to finalize the construction. Even though this is a temporary setback for the electric automaker, the company certainly has a lot on the plate coming this year such as the most anticipated Tesla Cybertruck due for launch by end of 2021.