Stellantis informed Tesla it will no longer purchase carbon emission credits to help meet European Union emissions standards, according to company executives.
Richard Palmer, Stellantis chief financial officer, told financial analysts during its quarterly call the company’s various brands, such as Peugeot, Citroen, Fiat, Jeep and Opel, sold enough EVs and plug-in hybrids during the first quarter that it no longer had to purchase credits from Tesla.
European rules allowed PSA and Fiat Chrysler Automobiles, which merged in January, to purchase credits from another automaker, such as EV-maker Tesla.
Palmer was careful to note that Stellantis no longer need to buy the credits to meet European standards but declined to say whether the change was anticipated as part of the $5 billion in savings from synergies the company expected from the merger of PSA and Fiat Chrysler Automobiles.
Tesla earned big money on credit sales
Sales of credits in Europe and the U.S. has developed into a lucrative sideline for Tesla and added to its revenue, in many cases, the revenue accounting for the EV maker’s quarterly profits.
Mercedes-Benz is another carmaker that previously purchased credits from Tesla to meet the standards in Europe, which has cracked down on the emission of greenhouse gases from vehicles with internal combustion engines as the impact of climate change and its damage to infrastructure has become more apparent.
Prior to the conference call with Palmer, Stellantis CEO Carlos Tavares told the French publication Le Point the auto company expects to meet its European carbon dioxide emissions targets without environmental credits from Tesla.
Stellantis could save billions
Stellantis spent about $2.4 billion to buy European and U.S. carbon credits from electric vehicle maker Tesla during the 2019-2021 period.
“With the electrical technology that PSA brought to Stellantis, we will autonomously meet carbon dioxide emission regulations as early as this year,” Tavares said during the interview. “Thus, we will not need to call on European CO2 credits and FCA will no longer have to pool with Tesla or anyone.”
California-based Tesla earns credits for exceeding emissions and fuel economy standards and sells them to other automakers that fall short.