Europe’s biggest automakers are wasting no time in forming alliances to meet stricter 2025 EU emissions targets, with Stellantis, Toyota, Ford, Subaru and Mazda planning to pool with electric-only Tesla, while Mercedes-Benz has created a group that will include EV-heavy Volvo and electric sister brand Polestar.
The EU’s 2025 CO2 emissions targets are about 15 percent lower than the 2021 levels, and experts say automakers will have to sell at least 20 percent full-electric vehicles — at a time the EV market has stagnated in Europe at less than 14 percent.
Missing the target results in a fine of €95 ($98) per gram of CO2 over the limit per vehicle.
According to an estimate last year by industry association ACEA, automakers could face a total of more than €15 billion ($15.5 billion) in fines. Transport & Environment, an environmental advocacy group, said in December that figure would most likely be much lower, perhaps less than €1 billion.
Matthias Schmidt, an analyst who closely tracks the European EV market, said Jan. 7 that the rush to form pools showed automakers were seeking an early backup plan if EV sales do not accelerate.
“This could suggest that manufacturers are struggling to meet targets but also indicates that OEMs are aiming to secure a redundancy option if they fail to meet their weight-based fleet target by the end of the year,” Schmidt said. Automakers’ individual targets are based on the average mass of their vehicles, with brands that sell larger cars, including Mercedes and BMW, having higher CO2 limits.
Industry experts have estimated that the sale of one full-electric car can offset the emissions of three to four gasoline- or diesel-powered vehicles, hence the logic behind pooling. EV makers such as Tesla can reap billions from joining with automakers struggling to sell EVs.
A number of automakers pooled their emissions in the last step-down, but a few missed their targets, resulting in total fines of more than €500 million, including Volkswagen Group, Suzuki and Jaguar Land Rover.
The bZ4x is one of just two full-electric models that Toyota sells in Europe, along with the upcoming Urban Cruiser.
Tesla pool includes Stellantis, Toyota, Ford, Mazda
Tesla will be the manager of one “open pool,” according to documents published by the European Commission on Jan. 6, with members so far including Stellantis, Toyota, Ford, Mazda and Subaru. The Tesla group is open to new applicants until Feb. 5, according to the document.
The automakers in the Tesla alliance covered nearly 30 percent of all sales in Europe through 11 months last year, according to sales figures from ACEA. Tesla’s market share was 2.2 percent during the period.
A spokesman for Stellantis said Jan. 7 that the automaker was committed to reducing its CO2 emissions and that participation in the Tesla pool ”will contribute to meeting our 2025 European emissions targets while optimizing our resources.” The pool includes Stellantis’ new Chinese brand Leapmotor, which is starting sales in Europe with two full-electric models.
Toyota Europe Chief Corporate Officer Matthew Harrison said in an email that the automaker was pooling with Tesla as a “precaution.” The arrangement is in place for one year, he said.
“There is a gap between regulatory ambition and customer demand that is anticipated to lead to a challenge in meeting CO2 targets in 2025,” Harrison said, adding that while there is a process to review the regulations in place, “it is not certain that the results will come soon enough to impact the current calendar year.”
Ford and Tesla did not respond to requests for comment.
Stellantis’ head of European operations, Jean-Philippe Imparato, in December said that based on EU rules, the group’s EV sales in Europe would have to increase to 21 percent of the current total from 12 percent, with potential fines of €300 million for any missed percentage point.
The Volvo EX30 small full-electric SUV has been a bestseller in Europe, giving the brand some breathing room to meet its CO2 targets.
Mercedes-Benz’s pool with Volvo, Polestar has Geely connection
In a second pool, announced Jan. 7, Mercedes-Benz will manage a cohort that includes its Smart JV with Geely, Volvo and Polestar. Li Shufu, the chairman of Geely Group — the parent company of Volvo and Polestar — holds a 10 percent stake in Mercedes. The pool is open to applicants until Feb. 7.
“We will have a significant CO2 surplus and intend to sell our surplus emissions target, in line with the pooling mechanism, allowing us to earn revenue which reward our efforts and good performance,” a Volvo spokesperson said in an email.
BMW, Volkswagen Group and Renault Group are the only major European automakers that are not yet part of emissions pools.
VW Group and Renault Group signaled last year that they would be receptive to pooling to meet their 2025 targets. A Renault spokesperson said Jan. 8 that it was “too early” to decide on a pooling arrangement, according to Reuters.
VW sales boss Martin Sander recently told Automotive News Europe that Europe’s largest automaker was “in a good place” to reach the CO2 target because of its expanding lineup of full-electric vehicles and plug-in hybrids. He added that to avoid fines up to a quarter of VW’s European sales this year would need to be full-electric.
Ahead of Jan 1., ACEA and some automakers had called for the new emissions targets to be delayed or modified. Others, including Stellantis under former CEO Carlos Tavares, had said they would be able to meet their goals. However, Stellantis said it would be willing to cut production of internal-combustion models to ensure it sold enough EVs.
BMW CEO Oliver Zipse said in November that BMW was ready to meet its targets.
