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.
