As the European Union’s carbon emissions regulations in 2025 draw near, automakers are embracing new approaches to comply with strict standards and avoid enormous fines. The new rules, which are intended to speed up the shift to cleaner vehicles, have prompted the largest manufacturers, such as Stellantis, Toyota, and Ford, to join forces with electric vehicle pioneers Tesla and Polestar. These deals include sharing the CO₂ emissions and buying carbon credits, an activity that is imperative for automakers that have seen low sales of EVs.
In its latest filing, the EU shows that such strategy enables old-world car manufacturers to offset their carbon averages with extra credits obtained from EV-centered car companies. Automakers have opted to combine forces with Tesla-led and Mercedes-led carbon credit pools to avoid what could potentially impose a cost of up to €15 billion to the industry as fines. In this solution lies the depth at which high-stakes battles to transition into sustainable operations continue, while balancing operational and financial headaches.
The parent firm of brands including Peugeot, Fiat, and Jeep has accepted participation in the credit pool established by Tesla. According to one spokesperson, “Our participation in the pool will help us meet EU targets while optimizing resources.” Toyota, Ford, Mazda, and Subaru will also join the pool with Tesla. Conversely, Polestar-a Swedish electric vehicle brand owned by Volvo and Geely-has entered an agreement with Mercedes to sell the surplus carbon credits. Polestar 透露斯： “Polestar, Volvo, and Smart will sell surplus credits to Mercedes,” demonstrating a collective effort by premium electric vehicle manufacturers to support traditional auto companies in complying with these measures.
There are strict limits on average fleet emissions under the EU’s regulations. If the limit is breached, fines could amount to hundreds of millions of euros for a company. Penalties are seen as a way to encourage cleaner vehicles, and these penalties are pushing automakers towards strategic alliances. With emissions offsetting by gathering them with EV manufacturers, companies that do not have a large footprint in the electric market can offset their higher-emitting models, bringing down the overall carbon print.
Lofty deadlines set a sense of urgency for the collaborations. To join the pool led by Tesla, car makers must submit applications by February 5. Meanwhile, applications will close for the Mercedes-led pool on February 7. As the volumes being traded remain private, the deals underpin how crucial carbon credit trading is for automotive firms’ compliance plans.
Industry leaders also recognize the cost of not making the grade at the EU level. Renault Chief Executive Luca De Meo recently warned that collective penalties for Europe’s automakers could reach as high as €15 billion from the 2025 regulations. This threat to their bottom lines has led ACEA and some governments, like Italy, to call for suspending or rewriting the penalties based on economic considerations.
Pressure on emissions is unlikely to let up, however. The EU has committed to achieving net-zero emissions by 2050 and remains committed to those goals. For the automotive sector, 2025 is a critical step along that path, and so carmakers are taking advantage of every trick in the book-from increasing electric vehicle production to carbon credit trading-to get on track with those ambitious objectives.
The partnerships between traditional automakers and EV manufacturers also underscore the shifting dynamics of the automotive industry. Tesla and Polestar, initially perceived as disruptors, are now essential allies for legacy manufacturers navigating the complex transition to electrification. This collaboration reflects the growing interdependence within the industry as companies grapple with evolving regulations, technological advancements, and consumer demand for sustainable mobility solutions.
The carbon credit pools led by Tesla and Mercedes offer a pragmatic solution to an immediate challenge, but they also highlight the broader transformation underway in the automotive sector. As companies invest in cleaner technologies and innovative business models, these partnerships may pave the way for more integrated and collaborative approaches to sustainability.
Ultimately, it will depend on the ability of automakers to adapt to regulatory pressures while remaining profitable. For now, alliances between traditional manufacturers and EV pioneers like Tesla and Polestar represent a critical step in aligning the industry with the EU’s ambitious climate agenda.