Thursday, April 3, 2025

Tesla's legal trick is worth billions of kroner again

Tesla, Volvo and Polestar are some of the brands that once again stand to earn billions of kroner from car brands whose fleet of models is not fully electric and thus risks stalling.

Tesla stands to earn billions of kroner by letting other car manufacturers buy access to their emissions pool.

The scheme, which is completely legal, allows car brands that do not meet the EU's stricter emission requirements to avoid fines by paying for lower average CO2 emissions.

The EU's stricter emission requirements are pressuring car manufacturers to find solutions to reduce their CO2 emissions. One of these solutions is to form emission pools with manufacturers of electric cars or cars with low CO2 emissions.

Reuters writes.

EU documents show that several carmakers have chosen this strategy. Stellantis, Toyota, Ford, Mazda and Subaru have entered into an agreement with Tesla, while Mercedes has chosen to cooperate with Polestar, Volvo Cars and Smart.

This scheme could generate billions in revenue for companies like Tesla, Volvo and Polestar. Tesla has previously earned 90 billion Swedish kronor from the scheme, and Volvo Cars has reportedly collected over 900 million Danish kronor in emissions credits.

"Our global emissions per car have decreased by over 40 percent since 2018," a Volvo spokesperson said.

Tesla and Polestar, which produce all-electric cars, have an average CO2 emission of zero grams per kilometer. Volvo, which still sells a significant share of plug-in hybrids, expects to compensate for the stricter regulations by increasing sales of electric cars.

Volkswagen and Ford risk paying billions in fines if they fail to reduce their CO2 emissions or join an emissions pool. Several carmakers have requested a postponement of the stricter emissions requirements.

The emissions pool scheme gives carmakers a flexible way to comply with EU requirements. For electric car manufacturers like Tesla, it is a lucrative business, generating billions in revenue.

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