In This Article:
(Bloomberg) -- Tesla Inc. could collect more than €1 billion ($1 billion) in compensation from rival automakers that need help meeting tougher pollution standards in the European Union this year, UBS Group AG analysts said.
Most Read from Bloomberg
-
NYC’s Subway Violence Deters Drive to Bring Workers Back to Office
-
NYC Condo Owners May Bear Costs of Landmark Green Building Law
The US company will pool the fleet of electric vehicles it sells this year with at least five other manufacturers, led by Toyota Motor Corp., Stellantis NV and Ford Motor Co., according to an EU document issued Tuesday. The arrangement allows carmakers to average out the emissions of their fleets, with those selling fewer EVs compensating companies like Tesla that over-comply with limits on carbon dioxide emissions.
“Tesla’s compensation could even exceed €1 billion if it monetizes its entire long CO2 position,” UBS analysts led by Patrick Hummel wrote in a report published Wednesday. Volvo Car AB, which is pooling with Mercedes-Benz Group AG, could be in line for as much as €300 million in compensation this year, Hummel estimated in August.
Carmakers in the region have lobbied for the EU to ease CO2 standards that are ratcheting up this year, warning that they’ll be forced to either pay penalties, reduce production, pool with foreign competitors like Tesla or China’s BYD Co., or sell EVs at steep losses. Plug-in car registrations stagnated last year after governments in markets including Germany phased out subsidies.
“Our European brands are forced to check whether it’s a smarter idea to give the money to Tesla or to BYD,” said Jens Gieseke, a center-right lawmaker in the European Parliament who authored a paper last month calling on the commission to revisit its automotive policies. “This is not the best approach.”
Any other manufacturers wishing to join Tesla’s pool have until Feb. 5 to submit their application, the EU document shows. Applicants must sign a non-disclosure agreement and provide data to Tesla on their CO2 emissions, so that the company can assess any risk that the pool would not meet its targets.
Manufacturers keen to join the Volvo-Mercedes pool are subject to similar terms and have until Feb. 7 to apply.
Stellantis pooling with Tesla comes as a surprise, the UBS analysts wrote, because former Chief Executive Officer Carlos Tavares insisted the company would comply with EU rules organically. The tie-up eases pressure on Stellantis to ramp up production of EVs that launched behind schedule.