Tesla To Rake In $1 Billion From Rivals Through EU Fleet Pooling
It's unclear where Volkswagen and Renault will land in the fleet pool dating game
With the European Union imposing more stringent emissions rules this year, the world's automakers still rely on one neat trick to meet those standards: simply buying their way to compliance. Tesla is expected to collect $1 billion through fleet pooling agreements with at least five rival manufacturers.
A quick refresher on the EU's emissions rules. Regulators measure emissions on a fleet-wise basis with grams of carbon dioxide emitted per kilometer driven. The metric is typically referred to as gCO2/km, a succinct abbreviation. In 2025, automakers must be beneath a fleet average of 93.6g/km. Besides producing more zero-emissions models, manufacturers can reduce their average by pooling their fleet with another company with a lower average.
Ford, Stellantis, Toyota, Mazda, and Subaru have all reached agreements with Tesla to form a super pool, Reuters reports. Tesla obviously has ample emissions headroom in fleet pooling deals, which has provided the all-electric automaker with a steady stream of revenue. The door is open until February 5 for other manufacturers to join the super pool.
The Tesla-led super-pool also creates a dilemma for Volkswagen and Renault in finding its own pooling partners. Bloomberg explains:
It's unclear if Tesla is already "maxed out" in terms of the number of manufacturers it can include in its pool, or if there's room for more, [UBS analyst Patrick] Hummel said.
"In any case, we think the strategic options for VW and Renault have shrunk with yesterday's announcements," he wrote. The companies may be forced to sell more margin-dilutive EVs and face a roughly 10% downside risk to their earnings before interest and taxes this year, Hummel estimates.
While fleet pooling is convenient for automakers in the short term, it will create a problem down the road. Emission standards will become much harsher in the near future. The EU's target will drop to 49.5 gCO/km in 2030 and then plummet to 0 gCO/km in 2035. Manufacturers will no longer be able to pay to delay producing a zero-emissions fleet.