Automakers have formed alliances to help them avoid hefty European Union fines on carbon emissions by purchasing credits from electric vehicle companies.
Several legacy automakers face potential fines as the transition to EVs in Europe has proved slower than expected in recent years.
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Here are details about the regulation and alliances for 2025, as of Tuesday:
FINES
EU fines — which automakers have said could reach up to 15 billion euros ($17.5 billion) — were initially envisaged on 2025 carbon emission levels. In March, however, the European Commission yielded to pressure from automakers and allowed compliance based on their average emissions over 2025–2027.
SCOPE
All current alliance agreements, identified by the names of their “pool managers,” will expire at the end of this year. They are expected to be renewed in coming years.
NISSAN
Japan’s Nissan (7201.T) in October pooled with Chinese EV giant BYD (002594.SZ).
KG MOBILITY
Another pool was formed at the end of September by South Korea’s KG Mobility (003620.KS) and Chinese EV maker Xpeng (9868.HK).
TESLA
In January, Tesla (TSLA.O) formed a pool with Stellantis (STLAM.MI), Toyota (7203.T), Ford (F.N), Chinese EV maker Leapmotor (9863.HK), Mazda (7261.T), and Subaru (7270.T). Japan’s Honda (7267.T) and Suzuki (7269.T) joined the pool in March.
MERCEDES
This pool was also formed in January to include Mercedes (MBGn.DE), Volvo Car (VOLCARb.ST), EV maker Polestar (A4N1y.F), and Smart Automobile. Volvo Car and Polestar are both backed by China’s Geely (GEELY.UL). Geely’s Chairman Li Shufu holds a 9.69% stake in Mercedes, making him the group’s second-largest shareholder after China’s BAIC Group (1958.HK). Smart Automobile is a joint venture between Mercedes and Geely.
EV FORECASTS
EVs made up 12% of total European light vehicle sales last year, according to consultant AlixPartners, and are expected to reach 15% this year. Their market share is forecast to increase to 24% in 2027 and to 40% by the end of the decade, according to AlixPartners.
($1 = 0.8575 euros)
